tv Bloomberg Markets Americas Bloomberg June 22, 2018 10:00am-11:00am EDT
here are the top stories we are covering. open strikes a deal. the group agrees to boost oil production overcoming opposition by iran. crude is extending gains. which telecom giants will win the 5g race? whether more deals are in the work. interview.usive the stress debt investor in studio. into fridaynutes trading. julie is here and we are making some gains. script is a lip of the of the last you weeks. the dow is outperforming and the
nasdaq underperforming. that is the inverse of what we have seen. we have seen persistent strength. falling.e industrial stocks higher. foris partly responsible that. we have the opec meeting. we haven't opec agreement to raise production. a million barrels per day. 600,000 effectively because of the ability of the members to raise production at this point. because it is on the lower end of the negotiated targets it looks like that is what is responsible for oil gaining. back above $67 a barrel. if you look at energy stocks, the best-performing group today. exxon, chevron, all trading higher eerie a broad rally.
oilou look at the rest on people are rolling over a little too early. looking at the net long positions and you can see the net long. they are still going down. coming into the opec meeting. perhaps some people missed out on the rally and are chasing to catch up with that. other related movers we are 10%.ing, carmax surging first-quarter results beating estimates. morgan stanley called it a good print first stop that has had a strong run. shares,eleste you'll bidding for the protein business which it put up for sale earlier this year. tandem diabetics. fda has approved their
implantable insulin monitor to eliminate the need for skin pranks to check insulin levels. shares up 15%. , that software company came out with numbers that missed estimates. we are seeing a ripple affect. caroline: action in europe similarly risk on as energy companies overall. let's look ahead to the end of trading. green on your screen. equity markets. doing particularly well. energyf exposure to after that deal. seeing switzerland trading higher. , the real risk on flavor is pmi data that came out earlier. eurozone back on track in terms
of growth. ecb looks to be proved right very we are going to bounce back in terms of growth. germany and france helping drive that data. euro up 4/10 of a percent area and greek bonds, they are outperforming down 36 basis points. greece gets a reprieve in terms of its debt. check out how much debt it actually has. if you look at a chart it is 180%. today they managed to strike a deal overall in the early hours. a landmark deal. they are going to get an easier time of paying their loans. helping their gdp ratio area in terms of the overall markets, i want to show you in terms of airbus was speaking out
against the u.k. government saying we will give you an ultimatum. if you cannot negotiate an agreement that we will not see the u.k. fallout of the eu in terms of trade, that we will not be the transition making it difficult to strike a deal in to supply chain we are going pull back in terms of investment in the eu overall. it is putting the u.k. government on the line. they have voiced their concerns saying we are confident of getting a good deal that is mutually beneficial. >> interesting to watch the market reaction to that. vonnie: back to our top story. opec pumping optimism into the markets today eerie the cartel has reached a compromise on byde increasing out flow when million barrels per day sending oil higher.
is the beauty eyes best day in months. joining us, bloomberg oil trading order in london. can see why markets might be relieved. on the other hand you have to wonder why oil is higher. >> it is strange that they have been lifting up the end the market is taking it bullishly. it is one of capacity now that they have this higher. there was some fears giving russia wanted a 1.5 million barrel a day increase we could see a bigger figure. they haven't been completely clear after the meeting as to how much supply they're going to add. the market decided this is a good outcome and we could see higher prices down the road. vonnie: where does this leave iran? >> it is tricky.
iran and saudi arabia work ran standing head of the meeting. iran did not want any out would increase. saudi arabia said it was in the camp with russia of one point five million barrel a day increase. i now looking down the line will have to asap to u.s. tensions. we heard today japan has been asked to stop buying iranian crude. they come out with a win. the communiqué doesn't have too many details. that is in iranian move. they don't want to be seen to be leading saudi rape via take their market shares. they have done well. vonnie: in terms of a longer-term voice at the table, russia. talk about the super opec might see come out of this. this isn't just a small group of nations. we could see 24 countries coming together area >> that is one of the most staggering things.
,e have seen this movement russia and saudi arabia, even today there were knows apprise outcomes. a too close to call meeting. everyone knew there were three or four options on the table. that could be the new norm. we see less or fewer producers storming out of meetings. probably do that. >> who benefits? iran has wanted out of the communiqué but hasn't wrapped up the production. which countries will benefit? quite saudi arabia is going to jump in. one of the interesting haggling ofnts is a question countries who are not able to boost production with the
saudi's. the russians will benefit with higher volumes. donald trump lobbying opec over the last few weeks, the indian minister has been around the meeting saying it is not good for his nation. those guys will come out of this meeting with a sense of mission accomplished as well. vonnie: the spread coming in as we speak. our thanks to bloomberg. let's check in now on the first word news. guest: the european union striking back. levies on $3.3 billion of american made products in retaliation for tariffs on european steel and aluminum. motorcycles.on
u.s. house republicans have canceled today's scheduled vote on immigration. fights will take down a at the same to republicans confronting president trump's of--led policy of come splitting families. eu and chinas the are leading the charge and she predicts it will bring businesses big rewards. they struck a landmark deal to ease repayment terms. ingredientas a key in terms of financial health. global news 24 hours a day on air and on tictoc powered by
giving an update following the boost in wireless revenue, meanwhile at&t is also investing in new technology and new network 5g. we are joined by jennifer who just hosted there 5g for him. -- forum. what was your take away? >> 5g is a clear priority. been every other g has revolutionary this will be revolutionary. vonnie: one of the companies that plan to go all out my verizon is one. is it the correct strategy? >> verizon is taking a fiber centric strategy. doing what i are
will call the heavy lifting. making the investment now so models can evolve later. did at&t say in terms of what it is going to do next with acquisitions? it is obviously not done after the decision. >> they are definitely talking. i would expect messaging to build around advertising. i would not be surprised , ad technology specifically will be part of their strategy. they are cognizant of lowering their debt. they have sold off some non-core assets because of it. data centers just this week. caroline: let's dig into advertising. it is a $2 billion offering by at&t already. who are they muscling in on? trying to dominate in terms of ad technology with google and phase?
where does it work? >> nothing official in terms of acquisition as of yet but they have 1.8 oh yen in advertising. with turner that is three times advertising ad space. you have the opportunity to build it. ironically they are a small fish in a big duopoly pond. google and facebook. what do we see from at&t going forward in terms of m&a? they have already said we are still looking out there after they have completed the trend. see adding to it? >> advertising is the sweet spot. i would expect brian lasser to take a public role. advertising is going to be a major growth driver for them. i would expect them to build around that.
onyou have commented previously the t-mobile and sprint, and how that is going with the regulators. they're waiting for regulators to pass judgment. you are not bullish. what's we have the public statement put out. we will continue to see a pulse. it really comes down to the doj. do -- what at&t and time warner did successfully is widened the lens of how the competitive landscape should be looked at. with all the convergence we are you can make a case that the wireless competitive landscape is more than four players. if at&t and tweaks did that that will help their cause.
at this point it is tough to call. may be over 50%. it is still a coin flip at this point. the time it was announced sprint said they were not going to stop spending, it was all going in. is that correct? >> sprint was very clear. we have the cto of sprint. he was clear that the investment they are making will not wayne as they wait for the merger. he reiterated their spending goals are $6 billion this year. vonnie: we have a supreme court decision, the mobile phone privacy rights. one of the decisions widely awaited from the supreme court. mobile phone privacy rights have in bolstered by the supreme court.
more details on that, this is the idea that prosecutors have to get a wart for obtaining mobile phone records which would show a spurs this location over several months or weeks. it about a man convicted of taking part in a string of armed robberies. one of the ways the conviction was garnered was that prosecutors acquired this from cell towers without actually a warrant. but me ask you a question. what does this mean for mobile phone carriers? we have a decision that is pretty much final. >> i would have to digest it more. does that take away from their advertising hopes? i don't think at all you read a have always been following the privacy rules. verizon haveand been very cognizant of that. i don't think that one associates with the advertising. we will still see guns blazing
down that half. will rumor the caseload/year when apple had been asked for information and wanted to turn information over to lawmakers. prosecutors looking for information from telephone companies will have to seek subpoenas. we have to leave it there. thank you. thank you for all your information. back to this decision from the supreme court with david westin. bolstering mobile phone prizing. it was an expected decision. >> they had not really addressed this. they are just getting is
information about the location of the cell phones at various times. there were questions about this. you have gone over it already. it was a criminal case. they tracked and accused defendant. the question was whether they had to get a warrant. the cell phone companies are so divided. a lot of cell phone companies didn't want to come into a position. vonnie: it was a split decision of the court. the absence -- >> with the absence of justice scalia. tell us about what the fourth amendment says. it is a fascinating amendment. >> there are several things. one of the things, a protection of the individual against unreasonable search and seizure. that is requiring the government to go to the court and make a first showing of rubble cool --
probable cause to say this person may have done something wrong. give us a warrant. allows us to go into your home. >> what does this mean for further cases? this is the beginning now. >> people will look for a larger trend. i would be hesitant to say they are larger. how does it apply in the new internet world. british troops would break into people's houses in new england. that is why they so we have to have protection against that. apply of the internet of cell phones, a real pandora's box.
terms of corporate? in terms of them getting more power. will we see in the market reaction? >> you would know better than i would. from the point of view of most cell phone companies, we don't want it to be our fault. we have a client sue for invasion of privacy. we don't want to withhold information that is critical and be in trouble with the government. i think that is why most companies, verizon was the only that came in. most companies will be in the position of just tell us what the rules are. in that case some clarity may be helpful to verizon and people who have mobile phone operations. perhaps even mountains of power coming up at 12. the supreme court ruled in favor of timothy ivory carpenter.
they obtained for months of phone data and use the trial to show he was near places where robberies had occurred. time for the bloomberg business flash. a look at some of the top business stories in the news right now. goldman sachs and morgan stanley urging folks not to get stressed. the two banks had the two lowest capital levels. dividendsot affect and stock buybacks. disney is taking extra steps to win regulatory approval to buy fox entertainment assets. that is your business flash. vonnie: time for our etf ride a segment.
-- friday segment. julie: etf's have exploded -- here is james from bloomberg intelligence. a closed by that you can't get out of here you can't return your shares regularly. in a daily into them basis. they will offer redemption for your shares you have divested. that creates a liquidity risk you will not get your money out when you need to. julie: what are some investment strategies? >> they will go into strategies that regular public funds cannot. examples are direct lending.
barrierstariffs and are not broken down and removed we will be facing a 20% tariff on all of their cars coming into the u.s. bill them here -- build them here. there is a lot to talk about. for now, let's get to first word news. >> u.s. supreme court has bolstered digital privacy rights. law-enforcement officials need a warrant to get mobile phone tower records that show someone's location. the ruling could have a far-reaching impact. it took a last-minute compromise with iran to get it done but opec has an agreement to boost oil production. will ministers agreed to a 6000 barrel increase. one half of 1% of global supplies. the agreement is a much-needed
show of unity. there is a split in the trump administration over how to handle the trade fight with china. some officials are trying to restart talks with china before tariffs take effect. that is setting up a battle with other officials who want to take a harder line. president trump is telling republicans to quit wasting their time on immigration bills. the president says there is no sense in trying to pass a bill until they have a filibuster proof majority. the house has delayed a vote until next week. day onnews 24 hours a air powered by more than 2700 journalists and analysts in 120 countries. this is bloomberg. >> to reiterate some breaking news, this trade spat is quickly turning into more than a spat, moving to president trump
tweeting about europe. , ifd on the trade barriers these tariffs are not soon broken down and removed we we facing a 20% tariff on all of their cars coming into the united states. hilton here. the german car companies will not be pleased about that. can you tell us how they are moving? >> bmw already dropping. price, thebmw share maker of mercedes will also have a significant issue here. notably investors in the united well, bmw and diamond have been exposed to the fact that they might have tariffs on autos coming between the u.s. and china. they export a number of manufacturers, they go out to
china. these are countries that probably feel they have strong ties with the u.s. and are now feeling they need to be hit with a potential trade spat with the u.s. and china but within their own country. the eu with the u.s.. this is something that angela merkel has been a key concern about. we could see tariffs extend outside of the world of motorbikes. start hitting crucial exporters which are bmw and the maker of verse 80's. julie: david o'sullivan on this morning. it is dishonest to say things are going well. the eu is not giving up on the transatlantic partnership. we will see how things progress. let's get to craig trudeau in detroit.
>> this is something that has been in the works for some time. we know the commerce department has been conducting the same investigation they did on steel and aluminum imports. it has been reported since it emerged that one of the things the administration has been looking at is whether or not a tariff as much as 10% could be implemented after that investigation takes place. this is something the administration has been looking at for some time. it is something trump has talked about constantly. he talks about the mercedes-benz 5thls that he saw on avenue, wanted to bring a stop to that. bmws absolutely a risk to and volkswagen. it is also something that would
specifically hit the sedan market. you see bmw and verse 80's make a lot of suvs in the u.s. south. daimler took profit forecast down this week because of the number of suvs they make and shipped to china. the products that would be hit hardest would be passenger cars. they make a lot of five series sedans in germany and shipped them to the u.s.. julie: what response are you anticipating? -- vonnie: what response to you anticipating? ford, will they have a response to this? >> i do not think they will necessarily speak up. they have been passive through this process. criticism deferred
president trump talk about is the eu will not take our cars but it is difficult for trump to make that argument when general motors has pulled out of europe completely. they sold last year and they have looked into this idea of let's narrow ourselves down to the markets where we know we can get a return. they are primarily a company that has two big markets. the u.s. and china. they have pulled out of europe. it doesn't really make sense that europe won't take our cars when one of the biggest companies here isn't even trying to play in that market anymore. vonnie: they are saying build them here. they do have significant production in the united states. they do have significant investment in the united states. we are looking at gm building
the chevy blazer in mexico. do you think the u.s. carmakers could see higher coming from trump longer-term? absolutely. we have a story out today in addition to that story about chevrolet blazer about how much trade is coming back-and-forth from these trading partners trump has threatened. tariffse going to put on vehicles coming over from the eu it would not just affect german carmakers. it would affect ford. they have some bands that come into this market and make some vehicles. you have fiat chrysler which employs a ton of people. you have a situation where i don't know of the administration has addressed the fact that there would be significant
punishment handed down to some u.s. companies in addition to germans that he has taken to task. vonnie: we have had the u.s. late tariffs, the eu has responded on bourbon and motorbikes. what response could we see from the eu in response? as you were mentioning not quite so much demand for u.s. cars coming from europe. >> interestingly there was reporting this week about the german u.s. ambassador talking with the industry. both sides of -- both sides agree to take their tariffs. the term administration would be in favor. it is one that would allow
and where we are in this particular cycle. thank you so much. >> there have been reports you are looking to raise another stress fund. we have seen a lot of distress managers putting the places that pieces in place. about the duration of the next stress cycle? >> i can't talk about funds. generally speaking, it moves us to raise money in benign environments in anticipation of the next cycle rather than scrambling to raise capital. >> perhaps you are looking for the next cycle to begin pretty soon. history theok at average time between recessions is 63 months.
the longest was in the 1990's. we are at 108 months. that doesn't mean we will have a recession in two years but it relates to the business cycle. the economy is still sick with all. one of the things that interests us, we have been in such a low interest rate. something more akin to 01 and 02. i think we saw a glimpse of this .
70% of the stress of the high-yield market. the distress ratio, it got up to 40%. the economy was growing. what happens if we are actually economic contraction. made by forcedas outflows from etf's. >> it sounds like you're preparing for a longer recession. what would you look to buy in that environment? >> the last primarily a commodity company. oil and gas. if i am right, and the next cycle is a broader contraction we would have a more diverse of i opportunity set.
-- diversified opportunity set. we are seeing record prices paid as a multiple of cash flows and record levels of debt. so generally speaking firms like us look for good businesses that balance sheets. >> and also $74 billion of dried powder sitting on the sidelines. they are just waiting to the .ull -- to play this how do you operate in the environment? >> our smaller size is one of our biggest advantages. what is happening since the crisis you have had a concentration of the capital dedicated to this kind of investing amongst a few large
firms that you might have mentioned. manage lessfirms than five ilion dollars. that gives us an advantage to look at the runoff opportunities that are not focused on the gs is that you mentioned. you were talking about getting into retail. you're looking at mall operators and so forth. now you think it is cheap enough for the risk involved. >> we were short retail. that is in this has had a fundamental change area did it is -- change. it is the amazon effect. that is not changing. i think there have been some oversold situations but most exposure has actually been in oil and gas producers. >> you have taken position in equity. level star pushing for management changes.
are you finding it easier to find opportunities? >> we are somewhat security agnostic. that started as a credit investment. almost all investment starts his credit investment. our debt was converted into equity. .e usually stay involved in that particular situation we thought management should try and monetize. where the post bankruptcy was trading, low valuation on the mills that they owned area did they announced a process. it is gone from four to $20. >> we have had a trend of asset transfers. they left property outside of the reach of creditors. symptom.
how does that affect the investor? year, it the debt last is absolutely a trend, it is very good for the sponsors. as far as what it does for us, you just have to be good. you have to analyze documents extensively. i think it will weed out tourists. need to spend a lot of time understanding these documents. we use some of the best law firms on the planet. what's what difference will that make? what if you in the cds market area they govern loans but have not asked me about it yet couple issue is manufactured defaults. market, the volumes have
declined dramatic the. very large firms that just won't sell until there's more transparency and clarity around the rules. the rules need to evolve. >> just to touch briefly, with those defaults, hedge fund managers create circumstances to push a company into default. do you think this is a function of boredom? because there's not a lot to do and it is just going to keep continuing? >> i think they are separate issues. hedge fund managers are going to make money anyway they can. if they figure a creative way to do it, they are paid to do that. the problem was what these firms have been doing was allowed. none of them have been overturned.
a lawsuit was settled but there was a number of letters written to the determination committee and the determined there was a trigger even though the company didn't actually default. , and there is more clarity set up to do what it is supposed to come ensure against the default people are going to stop trading it. if people can make money doing it are going to continue to do it. volumes will continue to decline until there is rules put in place. it is what it is. the market will continue to decline at the rules are not that up in more transparent fashion. some people know what they are getting when they buy and sell
these securities. vonnie: talk about the opportunities you were seeing. you have been doing a nominally well. >> the most interesting things are in the small mid-cap space. we continue to invest in those opportunities. we are in a benign default world. as i talked earlier we were focused on the future opportunity set which will be driven by an economic downturn. a lot of what we are spending time, where we now own the company. we either control the business or sit on the business. is usually a sale of the company or ipo of the company. where it is ipo robust. there is a trillion dollars of revenue equity capital looking to be put to work. , youur folks like us
should be selling into that market, not buying into it. fascinating. thank you for joining us i have to ask one more thing. your north america focused. are you getting curious but other parts of the world? isi think in northern europe an interesting market. the problem is you need to have resources over there. we are exploring whether it makes sense. vonnie: thank you. bloomberg hedge fund summit. caroline. caroline: fascinating discussion. back to breaking news, all eyes on automakers, european automakers print president trump threatening 20% tariffs on all cars coming to the u.s. from the eu.
caroline: welcome back to bloomberg markets. opec and allies will increase oil out but, but by less than what markets anticipated. rally ins about the crude. quite a rally. you are seeing a positive reaction. the market anticipated more dissent. spreadu look at the wti narrowing dramatically, significant rally.
i think it is a function of the fact we are seeing an increase of supply globally. i think the fact of the matter is you are seeing a dollar influence as well. you continue to see that spread narrow. low sevenclosed dollars. it looks like the trend is lower. julie: great to get your expertise. cme.ng us from the chicago we are going to be digging into autos after the break. .
european close on bloomberg markets. caroline: here are the top stories. opec agrees to boost oil production over opposition by iran. a white house divided, some officials wanting to restart trade talks with china. we will go behind the about lines. airbus,atum from telling theresa may to get her brexit at together or else. president trump threatens to impose tariffs. equities. at european under 30 minutes until the close of trade.