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tv   Bloomberg Markets Americas  Bloomberg  February 8, 2018 10:00am-11:00am EST

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vonnie: here are the top stories we are covering on the bloomberg and around the world this thursday. markets on the move again yesterday after opening higher with u.s. stocks turning negative. in the u.k., meanwhile, governor carney says that u.k. rates may need to rise at a steeper pace. the senate deal to avert a government shutdown runs into turbulence in the house as democratic leader nancy pelosi delivers an unprecedented eight hour address. hour we askedt john ledger about his push into the streaming tv as the company forecasts slower mobile subscribing growth. all of that and much more in the next two hours. julie hyman has been keeping an eagle eye on the moves.
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julie? julie: we haven't seen as much swinging around and eason days for the mazer averages. we have seen stocks lower, remaining there, with modest losses for the moment. continuing that selling momentum that we saw yesterday. if you take a look at the groups on the move in the s&p 500, financials are the biggest drag on a weighted basis, accounting for a third of the drop in the s&p 500. take a look at the bloomberg for a look at the wheel, with financials down three quarters of 1%. selling off materials and real estate as well. here, it's not the big banks that are falling on a percentage basis, it is the insurers. surging about 12% yesterday after that company reported that they were drawing interest from some of the rivals, including alliance of germany. jpmorgan is skeptical that ollie allianz would be
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earnings with higher than average estimated expenses for the fourth quarter, perhaps shares on their trading lower. what is interesting today is that these are coming even as mann yields move higher. selling in the treasury market, just as we have seen all year. 2.8% is where we are right now, with an increase this year, typically that would be good for the financials, but it is not proving so, at least not in today's session. the yield curve, steepening again. have the spread between the five and 10 year, the two and five year. concerns over of
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whether it signaled a recession or not. since we saw an equity selloff in february, the yield curve has started to steepen again. trendat low levels, but a to watch. what are you seeing in europe? market watchnd is after the thursday session with the biggest increase since april of last year. the downward trend continues. of today, look at the sterling, the pound against the dollar, up by 1% midday when the announcement came up. the sterling has been drifting 24th. since january the rates meeting to rise at a steeper pace than previously thought to prevent the brexit weakened economy from overheating. money markets at a 77% chance of a may rate hike. announcement.ay's
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the hike by august is fully priced in with another for may of 2019. rates growth raising inflation in the forecast. carney saying that this is a crucial year for brexit negotiations. everyone would be better informed next year, having an effect on the central bank's thinking. this is the u.k. 10-year. the yield has seen it move upwards. midday today, the yield shoots upwards. biggest increase since january the second, highest since april of 2016. the yield has risen from an eight-month low on june 24 of last year. 1.65 is where we are today. that's the bank of england. we will chat later about this in more detail. the danish phone company is up by 19% today. a group of pension funds were leading the potential bid to buy the company, tdc saying they
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have already rejected the company. infrastructure and real assets, hearing news of the takeover bid following their own efforts to acquire parts of the modern times group of sweden. tdc, back in play. so the analysts say. vonnie: let's check in now on first word news with taylor riggs. taylor: congress voting today on a two-year spending plan that would avert a government shutdown at midnight. the proposal would provide $300 billion in additional funding for defense and domestic matters, giving members of both parties something they had wanted. want immigration addressed. vice president mike pence says we will see when it comes to a possible meeting with north korea.
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hence is in south korea for tomorrow's opening ceremony. there may be an inch it -- a chance for an encounter with north korean officials. another sign of the tight job market in the u.s.. unemployment benefits approaching a 45 year low. jobless claims fell last week, down 9000. china, exports held up last month, despite a stronger yuan. in.seas shipments rose 11% -- in dollar terms. chinese imports soaring at 37%. some of that may have to do with the lunar new year's holiday compared to last year. global news, 24 hours per day, powered by journalists and analysts in 100 coming -- 120 countries. mark: thanks a lot. the bank of england, holding rates unchanged today. start -- sterling surging,
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suggesting they may need to raise rates faster than had been previously indicated. to raise be necessary interest rates to a limited degree, in a gradual process. to somewhatlier and a greater extent than we have fought in november. is bloom david: we have been looking at this for a while. it didn't say one and done, more like two and through. , the seems to be boom stamp on it now. mark: sterling jumps by 1%. you recently raised the pound dollar forecast to 134 versus 126? david: yeah, that's correct. we were looking for a weaker sterling.
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but not weaker than we are today. you can feel the specific calorie -- specific nature of the u.k. economy, plus the equity market drawdown, where the dollar was looking a bit ropey. but the real thing to look at is the eurosterling. mark: throw it away. david: don't give me this is a good for brexit, this is bad for brexit. eurosterling is flat as a pancake because the market has kind of not moved on anything that has happened in the u.k. today. february, this month's gains have just come back down again. risks areyou say the actually to the downside? significant risks, both for the euro and the dollar. david: we have priced in the right hikes and we have seen that happen. and inflationsees
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threat, interest-rate rises and you sell the currency. that doesn't exist. it's just things that people talk about. you can see that we are ahead of the curb. -- curve. there is a current account deficit but politically there are still issues with brexit. yes, we are buying it today. ultimately, i would be selling sterling right here, right now. are you saying that this series is really exaggerated? david: yes, because what's a rigged flag -- red flag for markets? currency falling into the central bank, 1994, united states, raising rates from 3% to 6%, the dollar goes down, down, down. you think that the central bank is behind the curve.
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the market is saying no, no one is behind the curve. absolutely normal, no signs of inflation threats in their. maybe that is why the dollar is a by standard in this equity market selloff. what about the qe trade in general? is it over? i mean, i think, we've still got japan to come, i wouldn't call it over. switzerland had their flaw, then in 13, 40, with a taper tantrum. last year the esau the ecb going to move. , theuld be quite vicious yen. mark: you have upped your
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forecast in the euro-dollar to 125 through the year. i know it's all at pace when it comes to currency moves for discomfort levels, but is there a level at which the ecb really is going to push back again? david: central bank worries about jumping out and era plane. it is the rate of change in the speed and everything is fine. without it, you start going too fast. it is the speed at which it goes. in one week's time, that's a problem. as long as the economy and corporate has time to adjust currency levels, the central bank doesn't worry. but when you have these massive moves? go from 125 to 100 2250. you call that a move? i doubt anyone would call that a forecast. [laughter] , he staysdavid bloom
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with us. , online returns to the chinese yuan. this is bloomberg. ♪
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vonnie: live, from new york, i'm vonnie quinn. mark: and i'm mark barton. this is "bloomberg markets." drama, the currency weakening in shanghai today. the biggest move for the yuan since the 2016 valuation showed the chinese trade surplus at more than half last month. still with us, david loom, global head of strategy at hsbc global head of strategy at hsbc. david: as shakespeare said, even
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the path of true love is not smooth. nothing goes in a straight line. two things i would say about it, one, volatility is infectious. given an event on the back there , with bigger moves in the currency than we would ordinarily see. number two, numbers from china don't look pretty at all. basically the pboc is talking about account realization, particularly in the bond market as well, so we are getting some two-way moves. nothing in a straight line, i would not moved to -- read too much into this. mark: you are calling china's stable economic picture with the campaign heating up and rumblings about a trade war with the united states. going back to late last year, everyone is worried about china, china, china, but what can they do to stop dollar china
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from rising? what the can they do to stop it from falling? what's going on is more volatility and? 's, but the economy is rocking on, and i don't think it is part of the world solution. look at what happened during the drawdown in equities. china has been stable. one, chinese stability. two, commodity market stability rising. three, fed policy stability. that's one that has been a bit rocky, lately. that fxan that, i think has been well behaved. vonnie: can chinese authorities manage the change in the regime in an orderly way? well, of course, it feels like volatility, but it's not. we are going to increase the volatility and how did that happen?
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everyone looks for a drawdown and when it happens, that's just markets for you. everything going reasonably well with china, looking for 620 by the end of the year. 620 by the end of the month is where we are heading. volatility, things are happening, it's much more interesting and that's what happens when you open up your capital accounts. you get moves the go up and down. well, some people are talking about currency cold wars . are we heading into a time where that's the weaker dollar and the federal reserve? affect the currency and anyway, but a player in the field. , standoffs,ade wars at least? arguing, and im know it sounds bizarre, the currencies are a force for peace
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and love. instead of taking action, what happens is the dollar goes down. the u.s. administration doesn't have to do anything. we have seen the chinese import numbers improve. doesn't have to do anything about it. the markets have a way of working things out and currencies are a part of the solution. that's why the weaker dollar is in our forecast. it's not a currency war. what happens is the dollar weakens and many of these country's stop increasing their reserves, with a trade surface for the united states coming down, then the united states doesn't have to take much action. if they want to be a bystander in this crisis, for once they could be a force for peace, not anything else. i give them a pat on the back. as you say, the rbn, they cut their inflation forecast. still bullish?
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this idea that someone is behind the curve that we don't believe in. but which central bank is going to pull the trigger as the head of the market? yes, we are looking for a rate rise in sterling. we are looking for the central banks to push rates up much quicker than the market expects and when that happens, the currencies are going to rock. they have been doing brilliantly, a great start to the year. littlegood in the last time, but we look for these currencies, we like them. going sideways, this is where the action is. mark: when it comes to action, no currency has fared better for the dollar since the rand. investors, david, waiting for zuma to move on. is the bullish rand case, is it still there? we don't really think so.
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we think there is so much good news and it. the political moves that happen from december to now have happened, now, with equity striking in for the economy. there's a massive takedown going on. these things will start and from here on, we are pretty negative. and it's on whether or not the central banks will raise rates more than the market expects. the central bank is expected to raise rates by three times. in the three camp? doesn't it matter? david: the big first move was the first one. the one that goes against the market having to price in a series of rate hikes. bullish on the dollar. and then it's over. last year, big rally in the euro market.
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on the path to ending the qe, that has happened already. i'm looking for the rat -- the next one. the dollar, the dollar interest rate -- i'm saying -- mark: looking for the next story. david: yeah, that's right. scanning, that's were the action is. ofnie: we have got a lot elections this year. the mexican central bank is expected to hike for a second time, later today. a lot of moves down there as well. are you looking at that move, in particular? is nervous about mexico. currency is the best way to play politics, rather than bonds and ask -- bonds and equities. there is an election coming up in mexico. there are political rumblings in brazil. the big ones, brazil and mexico, they are a little bit more circumspect about them. mark: david, have a good week.
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david bloom, head of global strategy at hsbc. vonnie: still ahead, countdown to the shutdown. federal leaders looking at a two-year program to keep the government open. now it is up in the house. this is bloomberg. ♪
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mark: this is "bloomberg markets ." i'm mark barton, from london. york, i'md from new vonnie quinn. time for a look at the biggest business stories in the news right now. posted a real profit, revenue boost for the first time in four quarters. persuading advertisers to spend more on the social network. bloomberg a.p., by the way, operating a global breaking news network on twitter.
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earnings at yum! brands these days, they posted fourth-quarter profits that beast -- beat estimates. they are increasingly reliant on kfc for sales to rise better than expected at 3%. pizza hut and taco bell stores also posted sales gains. refocusing their bonus strategies this year, the swiss bank will hand out the biggest bonuses to star performers and younger employees, which they could lose to other industries if they don't. overall goals have stayed flat. blackrock wants to raise more than $10 billion to buy stakes in companies. according to people familiar they will bel, making investments on themes like the global middle class and seeking sovereign wealth funds,
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pensions, and other big investments. that is your latest bloomberg business flash. let's take a quick look at the markets. steam on the downside, the dow jones industrial average is down two thirds of 1%. the s&p 500 is down 2/10 of 1%. the nasdaq is the winner today, still down 3/10 of 1%. ,he worst performer in the s&p heath brands, followed by nielsen, down more than 5%. all right, coming up we will be speaking with the ceo of t-mobile about his push into streaming television, following the company's quarterly results. this is bloomberg. ♪
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retail. under pressure like never before. and its connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store
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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver.
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live, from bloomberg world headquarters come in new york, i'm vonnie quinn. mark: and live from the european headquarters in london, i'm mark barton. this is "bloomberg markets."
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first word news, taylor riggs has more. paul ryan says that he thinks there are enough votes in the house to continue the spending bill and avert a government shutdown tonight. some are unhappy, with democrats saying that they should have language covering immigration. president trump us next budget proposal reverses and obama administration decision to quit buying the fa 18 fighter jets. the budget will affect 24 of the planes. the plan will keep state routes in operation. for more of the newer f 45's to be deployed. in north korea, kim jong-un used thumb his parade to nose at the u.s., saying it marks the emergence of north forceas a global military against what he calls the worst sanctions.
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he informed his troops to maintain high combat readiness .gainst the u.s. and its allies the turkish deputy prime minister says the company -- countries not pulling away from the u.s. and europe. >> turkey is not drifting away or breaking up. i just want to make this clear. we have had relations -- >> they seem hostile. >> we had a rough patch in general. the relationship with europe is now back on the mend. i think the relationship with largely, there are huge disagreements over what they are doing in syria. taylor: the u.s. is providing weapons to kurdish forces in syria. global news, 24 hours per day, 27 hundred journalists and analysts in more than 120 countries, i'm taylor riggs, this is bloomberg. vonnie: taylor, thank you.
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aftershocks from the global stock selloff continue to reverberate in the markets today. you can see the major indexes are down. more so in europe. here in the u.s., though, all the two stocks in the dow are lower, and the s&p is down by two thirds of 1% as well. joined now by morningstar's top ranked fund manager. she called the capital ceo. congratulations, first, sarah i wonder how much you anticipate reverberations to continue over the next several sessions, in the u.s. and abroad , where your stocks are located? thank you, vonnie. i work with an incredible team. as for stock markets, this is what they do. they are supposed to be volatile. it was unusual, having such extremely low volatility. this is the norm.
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we should expect more volatility. central banks essentially are in a very different mode of taking some of that excess liquidity off the table. where will the pockets of liquidity manifest themselves? >> they already have insulated asset prices. the key for us, as portfolio forgers, with what we do institutional clients, is defined companies that we believe are resilient. even as valuations might reseed, as there is less money in circulation, and asset prices no longer have that upward momentum caused by the expansion of money supply, we are finding companies in the process of restructuring their own businesses, making them even more efficient and more profitable. can you give us an example of a few of these companies? much beleaguered or
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maligned volkswagen is one of them. international equity and global equity, this company has been used to crisis, affecting significant change, cost-cutting, being much more efficient. gulf, one ofe their vehicles, to go from 117 steering wheels the 40? 40 still sounds like a lot. let's listen to the hbb executive who spoke to us here. i know that abb is one of your holdings. >> first, we take any shareholder very serious. we are looking to have a .onstructive dialogue we've got a good, constructive relationship. talking about the activist investors that want to break up the company. he raise the profitability
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of a troubled power grid division to ensure that he doesn't need to break up the company? or will he have to succumb to their wishes? what side are you on? are always on the side of shareholders and what is best for shareholders. that should be were companies are heading. in the case of abb, we think they have done a good job and will continue to do well for shareholders. the thing about this company being such a leader in robotics and industrial automation, being involved in electricity, efficiency, they and a french-based come to me that we have in our portfolio, they are involved in electric vehicle injured -- infrastructure, which is going to be huge. the growth prospects for those likes in this industrial arena are very favorable. where else are you
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looking? and does it materially impact the countries that you look at? currencies will fluctuate, no doubt about it. preferably for the dollar-based investors in our mutual funds, we would like to own companies that have some sort of internal hit. where if it turns out that their toe currencies are going weaken, at least the companies will see a benefit perhaps u.s. dollar earners. that's very typical in oil and gas stocks. it's very effective when dollars strengthen. so, we can kind of get around currency fluctuations that way, but i promise you, just like a stock market, they will fluctuate, there is no avoiding it. vonnie: some energy types of
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companies, why them? if you are going to be in utilities, you want to be in the cheapest ones with the best restructuring potential. they are in that category. another french listed company that operates globally. they have an energy efficiency business, too. but the transmission business is operating effectively with a large regulatory business. good dividends. part of the portfolio is if you are going to be a sensible , you want increasing levels of volatility. some of these stocks should be in the portfolio, in part for return, but in another part to provide stability. you are not concerned about labor reforms in fact -- impacting that?
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sarah: perhaps, but it is about the risks of the fundamental concerns in labor reform. the discount that we use on the streaming cash flow for the stocks that should generate, thinking about the lower multiple we are willing to pay for the stocks, that is what we get paid to do, decide what those risks are, how significant they are, and put them in the valuation. sarah, once again, congratulations. spiking. woodward are the colorado company is being reported on by the dow jones, saying that boeing has been in talks for months to buy the company. they make energy control systems and components for aircraft engines. they are also tied to the , up 6%. once again, that's woodward, dow jones reporting that they are
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looking to buy the company. more breaking news now, the senate has gaveled into session and is preparing for a key vote on a new budget agreement, with the government shutdown deadline looming. we will bring you any headlines and continue to follow that onto capitol hill. this is bloomberg. that they will carefully review this bipartisan bill and supported. -- support it.
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mark: live, from london, i'm mark barton. vonnie: and in new york, i'm vonnie quinn. this is "bloomberg markets." our stock of the hour, i surging this hour is twitter. sinceck with her best day
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2013. abigail doolittle joins us now with details. abigail: twitter is really flying high, up by 2% growth, and that was the big story, as investors had been looking for another revenue decline. posting real profits for the first time. behind this, ad sales really moved higher, driven by better engagement figures. up 12% on a year-over-year basis . the monthly active users and the core audience looks the same, but it looks like it's getting stickier, the same active users going to twitter more frequently . plus, better video content. one point to make here, the expectations were low. they are still low, going forward. year, fromwth on the facebook or alphabet it wouldn't be impressive. vonnie: speaking of
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expectations, there were many that there might be m&a at some point. does twitter become more attractive? abigail: it's pretty funny, the price tag has gone higher, but suddenly we are looking at a cadillac as opposed to a pinto. people thought the company might go to the graveyard, but now they are being seen as a viable entity. the technicals showed that above the ipo price that happened not so long ago, this stock is now confirmed, especially in today's gap higher, for yet another big move up. 50 or 60, that could suggest there could be a buyer. alphabet is one candidate that wants to grow their social user base. pretty impressive here. i should mention that bloomberg lp does of course have a breaking news on twitter, tick tock. vonnie: plus they are awesome.
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abigail, that is the stock of the hour. speaking to robert kaplan at the banking series in frankfurt, kaplan gave his take on the recent market turmoil. >> for lack of a better word, that has been abnormal. there have been some market mechanisms the need to be looked at in hindsight, but i think that more volatility in the markets, maybe addressing some of the excesses and imbalances by having a bit more volatility is probably a healthy thing. i will be watching carefully to make sure that it doesn't transmit, so that financial conditions are over the economy. >> this is one of the things, tom and i chatted before we did this. push before the effect. where and how quickly might that
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manifest itself? in many ways people coming into the old studio say that the fed has a loose backdrop and can afford to tighten a little bit more. >> i'm watching for investment grade and high-yield credit spreads. other financial products, to see whether, for example, credit spreads are widening, gapping out, or if there are credit spreads in other markets. so far i don't see that, but it is something i have been watching for. the fact i haven't seen it is notable to me. >> we track fx volatility. the mob index relative to the equity index hasn't shown anything aggressive, despite the for your high in yields. >> it tells you something. >> what does it tell you? >> that this may well be a stock market event. it may have been accentuated by some structural issues in the
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market that need to be looked at. and iis is six days in have found that in my experience it takes more time to be vigilant and i will be watching that in the day ahead -- days ahead. >> friday was a data-driven market event. 2.9%. taking you back to the data sweeps of 2007 and 2008, when the wages rose by 2.6%. should i get that disturbed by that reading on wages? >> when markets go for a long time without a correction, whatever news around that correction, people are going to attribute to that. it's normally much more complicated. i would say that on the wage issue, we know that labor markets are tightening in the united states. i think that we have already overshot full employment. so, the issue for me is the transmission from wages to
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prices is a bit more muted than we are used to, historically. used to be that of wages went up, it got passed on through prices. pricing power because of technology abled disruption, it's much more muted than even five or 10 years ago. i will be watching to see these wage increases, lower margins, how much of it gets passed on to prices. the jury is out on that. >> in the room there, you used the words gradual, patient, deliberate. we have got williams, dudley, you. the language is very clear. last week you almost intimated that you could be brought to the value of for hikes, not three. has anything changed? >> let me start with why i say gradual increase is important. here's what i mean.
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the best chance that we have to extend this expansion is to remove accommodations. history has shown that if we remove it gradually and patiently, the economy can adapt. curve, webehind the have to move abruptly. that is normally when we find we can tip the economy into a recession. i want to avoid that, by moving deliberately and gradually, but still deliberately during this year. the only comment i would make about more or less in the base case is that this is not a static process. when i say my base case is three , that's dynamic. i'm watching the economy, watching labor markets and inflation. the most important part of my job is to be open to learning and adapting. i would still say that my base case and my best judgment is that three is appropriate for this year. speaking exclusively with
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robert kaplan, dallas president. vonnie: coming up, the ceo of t-mobile pushes it to streaming tv, joining us at the top of the next hour. this is bloomberg. ♪
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vonnie: live, from new york, i'm vonnie quinn. mark: from new york, -- from london, i'm mark barton. purchase a japanese conglomerate, taking control of one third of the swiss insurer, a deal that could cost over $10 billion. their stock jumped 7% on the news. let's bring in our bloomberg deals reporter.
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>> there's nothing surprising anymore. it was surprising news, i must say. them leader of softbank is -- market: begging the question, what would they do with it? manuel: exactly. so, you know, everybody is thinking that with the ,cquisition of up to one third he might be able to serve some of the customers he is already gaining in other industries. how might he do that? what would the strategy be? >> at the end of the day he is trying to diversify the business. telecoms used to be about changing the whole industry and have been disrupted.
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they are trying to diversify and get new and stable cash flows. at the end of the day it's like offering more services to those rickmers, the broader what -- broad array of customers. tdc, are they well and truly in play? manuel: it's one of our favorites. they are a potential evergreen takeover target. at this time will they be taken over? it remains to be seen. there is interest. it remains to be seen whether they can agree on a price. last week they acquired a media company and if investors didn't like the deal very much, that could create an opportunity for someone to come in. marketas the recent
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turbulence fed any of the appetites? that's a good question. we have not seen much of an impact so far. i think that m&a is back on the table for sure. great update their. time for a bloomberg business flash, with a look at the biggest stories in the news right now. signs that commerzbank , reportingtimes better revenues and profits for the fourth quarter. the commerzbank ceo is refocusing his business on retail clients, away from volatile trading. t-mobile, forecasting another year of slowing subscriber growth. the carrier says that it will add up to 3 million subscribers this year after adding 3.6
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million last year. t-mobile moving into another market, acquiring streaming video service. and we will be speaking with this seat -- t-mobile ceo in the next hour. bloombergur latest business flash. taking a quick look at markets, now, they are picking up steam, but not for the better. for the worst, in fact. the dow is now down 1.5 percent. the s&p 500 is down 1.2%. ,attel, nielsen, ralph lauren seems that apparel companies and retailers are not doing so well today. the nasdaq is also lower. this is bloomberg. this is bloomberg. ♪
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mark: 30 minutes left in the trading day in europe, today. i'm a mark barton. vonnie: and in new york, i'm
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vonnie quinn. this is "the european close on burp -- on bloomberg markets." mark: top stories we're covering from the bloomberg, majors are down 1%. the stoxx 600 is also trading lower today. then we ask the t-mobile chief executive about his strategy for dealing with slowing subscriber growth. is online television the answer? shutdown,overnment the latest on tense negotiations to reach a deal that the house and the senate can live with. check out what's happening to european equities. thet of deja vu, down for eighth day and night after the biggest increase yesterday since april of 2017.


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