tv Whatd You Miss Bloomberg December 5, 2018 4:00pm-5:00pm EST
14,000 in america than you can see $25,000 globally. jim hackett throwing cold water on the number. there will because, we just don't know how much. caroline: david welch, thank you for joining us. u.s.ts are closed in the but yesterday steep selloff is raising questions about what comes next. anthony andow is taylor riggs. taylor, is there anywhere left in the green across assets for this year? taylor: there was an amazing legendh piece out from a and he took a look at eight different asset classes. this is the worst going back since 1972. not from the magnitude of losses. we have seen a lot worse performance on the percentage basis but all of these asset
classes are either in the negative or returning less than 5%. i don't agree entirely with all of the asset classes, but for our purposes, we go into large-cap, domestic small cap, emerging markets,. on the bonsai, we have investment grade bonds and real estate. when you look it all of those asset classes, everything is 5% or under or in negative territory. we didn't have markets today, we could keep talking about yesterday's mayhem in the markets. theoryhave a favorite for why investors sold so intensely and what if anything that says about what we can expect tomorrow and the days ahead? to dohink it has a lot with what you guys are been talking about all day which is trade. there is uncertainty around what the agreements we got over the weekend really entails. it's really is only a 90 day cease-fire.
into 2019, i think it will be difficult for investors that the trade war, even though it is on hold for now, there is no guarantee that that is not going to escalate when we come in here next year. with thehe markets and slight inversion in the yield curve around the shorter side, it has spooked investors and, in -- year anddeal volatile market, yesterday is another indication investors are concerned about what the forward outlook for the market and economy is for 2019. scarlet: very anxious. taylor, that brings me back to the davis report. they did not necessarily pinpoint trade is the culprit. taylor: a lot of this had to do -- there is uncertainty, but the of it was about central banks. you have the fed raising and we remember, going back to 2010, all12, these were
experiments that had never been done before. not only do you have the fed but you have the ecp, -- ecb, talks with the doj, all trying to unwind this experiment. in the past, when equity selloff, in two dozen eight for example, you would expect a huge rally in the bond. but because you are seeing the fed unflinching you're seeing on one being -- seeing unwinding in the bond. we have the correlation here which is interesting because we have been talking about when equity selloff, bonds rally. this is actually -- you are starting to see asset classes becoming more and more correlated. if you want liquidity and they -- you want liquidity and negative correlation until you don't have it. anthony, from your perspective, where does one go
into? we saw gold get a bit, but is there a haven in this unknown unknown? anthony: it is difficult. cash is one of those safe havens. interest rates have moved higher, the safety of cash is adding value to a portfolio, but i think it is interesting that the benefits of diversification don't always work over a short period. they usually work over long periods. the time to move up in quality. for equities, that means looking at investments that have predictable earnings, stable earnings streams, and strong cash flows. on fixed income, that means moving up in credit quality, paying attention to duration, make sure you are diversified because over long periods of time, those assets to have negative correlations. during times when interest rates are moving higher, there is volatility in markets. they don't tend to exhibit those
benefits in a short period of time. joe: how are you thinking about the fed? is the fed going to blink? anthony: i think the fed is starting to blink. when you look at the october 3 statement from chair powell, he said we are a long way from higher interest rates. all of a sudden, you are seeing dovish comments on the chairman as well as a lot of the rest of the fed. our view, you will probably see more interest-rate hikes next year but maybe only two. that is what the market is pricing in. that does make the environment more challenging for risk assets. in an environment where the fed raises interest rates gradually, earnings grow is starting to decelerate -- accelerate, and slowing, ith is makes a harder for those risk assets to move harder. scarlet: thank you, anthony
saglimbene. and taylor riggs. there is breaking news. we have heard lam research's ceo has resigned. ceo andesigned as a members of the board because of allegations of misconduct. tim archer, who is currently president -- or no, he's promoted from president and coo to ceo immediately. leaving as ceo because of allegations of misconduct and the coo taking his place. that does it for the closing bell segment and for me. romaine bostick will be stepping in on "what'd you miss?" we will be looking at losses
mark: i am mark crumpton with bloomberg's first word news. following the funeral services at washington national cathedral, the remains of former president george h w bush are headed back to texas where he will be laid to rest thursday on the grounds of his presidential library and museum in kingston. george w. bush choked back tears during his eulogy today. said3rd president also about his father, it showed me what it means to be a president who served with integrity and
ask with love in his heart for the citizens in our country. >> last friday, when i was told he had minutes to live, i called him. andguy answer the phone said i think he can hear you but he has not said anything for most of the day. i said that, i love you and you have been a wonderful father. and the last words he would ever say on earth were i love you too. mark: the other former presidents obama, clinton, and karcher, and their wives were in attendance. mr. trump was not asked to deliver a eulogy, perhaps evidence of lingering tension between he and the bush family. russia is playing hardball over a nuclear weapons treaty that dates back to the cold war. russia will target countries where u.s. missiles are deployed.
the u.s. says it will pull out of the treaty if russia does not stop alleged violations. the european union wants internet companies along with google, facebook, and twitter to file monthly reports on the fakeess on russian backed news on their platforms ahead of next year's elections. officials say they will add a rapid alert system and add expert staff and data analysis tools to combat the spread of disinformation. nearly one month after being forced from their home by a deadly wildfire, some residents in california are returning to home -- returning home today. evacuation orders were being lifted for all neighborhoods on the eastern side of the time of paradise where the fire that begin november 8 be stored about 14,000 homes and killed at least 85 people. it was the deadliest u.s. wildfire in at least one century -- a century. global news, 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries.
i am mark crumpton. this is bloomberg. caroline: live from bloomberg world headquarters in new york, i am caroline hyde. romaine: i'm romaine bostick. joe: and i am joe weisenthal. caroline: china finally backs of president trump entree discussions this past weekend. meanwhile, housing hits a patch. pressure among rising interest rates. what it says about the economy. the u.s. labor market is expected to show strong hiring and healthy wage gains in friday's dovish report. will 2019 hold-- what hold?
president george w. bush was laid to rest earlier today in washington. -- george h.w. bush was laid to rest earlier today in washington. our next guest was senior advisor to his senior campaign. we are seeing pictures of the service today. charlie, how was it for you? it was a wonderful experience to be there. it was an excellent celebration, great man, and the elements and values that made him such a good man, not just a good leader, but a good man. i think everybody that's new him was very moved by it in a positive way. romaine: what is the most important thing to you to remember about bush's legacy, not just as a president but when you look at his life in totality.
he had accomplishments in the area of foreign affairs and national security and i won't recite those but he knew how to be a friend of than anyone else i have known -- a friend better than anyone else i would have known. he was always looking for way to help you out. if you happened to help him out, he would thank you. i got more thanks from president bush over four years than i did from all of the other people i have worked for put together. he was ahear him say decent, kind, generous person, he was. he was always going out of his way to help someone else. , lessbably had less ego self-centeredness than any politician i would know. joe: does it say anything about our times that so many people on different sides of the political aisle are remembering him so fondly this week? charlie: it does.
instability with everyone. he worked across the aisle to get things done. president,en he was his best friends or democratic congressman that he served with and the house 20 years earlier. people like lloyd ashley, and sonny montgomery were as good as friends and confidant as some of the republicans he knew. he was always focused on getting was righte, what for the country, and if it hurt him politically, so be it. he was always trying to do what was right. caroline: he was cut from the campaign trail but he was so gracious in office. . sometimes changing course from what his promise previously. do you think we could ever go back to an era such as that? charlie: sure we can. it depends on the individual, and it depends on leadership. leadership, honor, and
integrity. part of our problem thiese stepss if someone across the aisle, they get bombarded from people on their side of the base. some of the people in congress now and they want to do that. watch for some of the leadership you will see in the next congress. caroline: your final thoughts, your fondest memory if you could judge with us. charlie: my fondest memory was during the 1988 campaign when vice president bush was raining against -- running against michael dukakis. we had all of these different things michael dukakis had done of a liberal major, but bush did not want to attack him. he said i do not want to criticize him, i want to run a positive campaign. i said that he is not running a positive campaign against you. butwe finally, not just me
others, had to convince him that it was counterpunching. that, he not done would have lost. he counterpunch and we want. caroline: charlie black, thank you very much. bush george herbert walker do solemnly swear -- >> that i will face of elite -- faithfully execute the office of the president of the united states. >> that i will face of elite -- -- >> that i will faithfully execute the office of the president of the united states. >> his father was a banker and politician and the family living in connecticut where the younger bush attended private schools before attending yell. he did not go to you right away.
he enlisted in the u.s. navy on his 18th birthday. a naval aviator, he flew 15 combat missions in the south pacific including one where his aircraft was hit. with this plan on fire, he dropped his bombs on the target, flew to see, and floated on a raft for hours before being plucked to safety by a u.s. submarine. while still in the navy, started a bush family. captain of his fraternity idl as well as his baseball team. the bushes moved to west texas after graduation where george bush started his own oil company and began his career in politics. by the mid-1960's, he was serving as a u.s. congressman. later, president nixon would appointed u.s. ambassador to the united nations. he served as chief envoy to china, director of the cia, vice
president, and eventually as president of the united states. although he excelled at foreign relations, the national economy served as his achilles heel. to raisedging not taxes, he made a deal across the aisle to reduce the deficit through spending cuts and increased revenue. when the economy turned it down, he lost the presidency to bill clinton in a three-way race with his fellow texan, ross perot. had morelic life, bush time for his family as well as serving others. rival,, he handed his bill clinton, raised funds for the indian ocean tsunami victims. his wife of 73 years died earlier this year. when asked in 2012 how he viewed his life and what was to come, he simply said he was not afraid. ♪
joe: toll brothers reported its first drop in four years. the company almost recovered from the market closed but the sub index is not dropping more than 5%. let's talk about the homebuilders with our bloomberg opinion, one missed -- columnist -- opinion columnist in atlanta. the data continues to disappoint. >> the past couple months especially, the data in the housing market has been probably the worst in seven years. inhad katie holmes earnings the stock was down about 16 or 17%. the nxp housing index really disappointed last month as well. if you look at the real-time data, you would say these are
falling apart, yet now there is a new twist with the market turmoil and the plunge and 10 year treasury yields. the tenure has gone from about three and a quarter down to 2.9 or so. higher rates have been a problem housing, and now that we see a big cut in rates, maybe we will see improving data over the next several weeks. romaine: was there any evidence before interest rates really rose and by that i mean the mortgage rates getting up to the 5% on the year. was there any evidence of a housing slowdown prior to that acceleration? conor: we have had years and years of homebuilders complaining about labor shortages and costs. we have seen that even though fires -- know there has been this supply constrained market. a cost story has been with us
for a while and this year seems to be when it is taking hold of the market. naroline: you've written i the past that 2019 is getting better because they are going down the food chain and starting to build cheaper, more affordable homes. do you think this problem will get worse before it gets better or are we on the up? conor: over the past several months, you can see signs for optimism. toll brothers mentioned an interesting point that they believe they have not seen evidence of it yet that with the softening of the market, they can get better deals on labor contracts next year. ince we have seen this drop ten-year treasury rates over the past several weeks, you can see buyers come back into the market, the realtors might say we finally got a different rate so by now. joe: one of the ball arguments for housing is that there is a big secular case for housing because millennials are going to
increasingly want to have kids stuff,ds and all of that and the economy is better and because we are under house because we went for a long time post prices. do you think those factors are largely in place so that race this year, the long-term is still bright -- rates this year, the long-term is still bright? conor: everyone is looking at the inverted yield curve, but it is the end of the 2001 cycle. crash,the tech economy but the rate cuts did get housing going. if we were to see rate cuts over the next couple years, we don't have that tech sector to crash. we have a strong tech sector but it is different. if you see maybe the housing impulse be more positive than last time and negative impulse from the tech sector slumping might be less than it was last time. i think the housing conditions are in place for several more years of slow but steady growth. caroline: an optimistic note.
conor sen in atlanta, we thank you. off for ae paying canadian department store. revenue was up. forecast are raising doubts about whether sears can avoid liquidation. they will be hundreds of millions of dollars more than expected. an updated budget estimate says they will take about $1.7 billion in. that is about a quarter of a billion dollars less than originally perspective -- projected. a --joseph pencil deliver joseph de la vega published a book called confusion of confusions. the book describes how the amsterdam stock exchange operates and gives advice on investing.
it is the first known book about the stock exchange and it is up for auction for around $300,000. what struck me is that it is an expensive book but there is good advice. here are four things in the book it tells you. on the off chance you are wrong, never give anyone advice. don't give people stock tips. romaine: i fail on that one. joe: it's ok to miss the peak. sometimes it's ok to lock in profits and not worry about ireland's. profited a could be a loss tomorrow so don't assume you it, and i like this one, a trader needs patience and money to drive. joe: it helps to have money in the first place if you are going to trade. romaine: is that were 300 and -- $300,000? joe: maybe for collectors. caroline: an amazing piece of history. in the bloomberg building in london nick on the first ever documented trade. joe: i did know that. caroline: nice piece of fun fact.
mark: i'm mark crumpton with bloomberg's first word news. choked backbush tears eulogizing a man he calls "the best father a son or daughter could have ever had" as washington turned out to honor the late president george h.w. bush. the president also said of his father, he showed me what it means to be president who served with integrity, leads with courage, and acts with love in his heart for the citizens of our country. the other former president obama, clinton, and carter, and their wives were in attendance. was not asked to
deliver a eulogy, perhaps evidence of lingering tensions between he and the bush family. the biggest global increase of greenhouse gases in seven years was revealed while diplomats met as the c.o.p. 24 climate conference in poland. -- at the c.o.p. 24 climate conference in poland. scientists say the latest figures put some of the goals nearly out of reach. show world carbon emissions increased 2.7% from 2017 to 2018. this report is emphasizing exactly what we know already, that this is urgent. yearse the next 10 to 15 to half global emissions. the fact that we haven't even hit the peak goes to show there is no time to rest. he said politicians at the conference talked a lot about
strategy and long-term goals but were showing a lack of action. french protesters are welcoming president macron's decision to scrap of fuel tax increase but say it may not be enough to contain public anger. a spokesperson for one of the protest groups says demonstrations will likely continue. president macron said he would give up the idea of a tax increase amid fears of new violence. the country's seeing weeks of protest and the worst rioting in paris in decades. mexico's new president says relations with president trump are good and the two will talk soon about the immigration issue. amlo says he is hopeful the two sides to agree on aid for central america and southern -- southern mexico. migrants set
up camp on the u.s. border last month. global news, 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. caroline: job growth is celery did this year but they may be pleasantly surprised with the strength of friday's job report. calling for a payroll gain of almost 200,000 jobs. and an unemployment rate unchanged at 3.1%. let's bring the chief economist at indeed from san francisco. what is the most important number for you that we're looking at? willoughby the wage inflation that we see or will it be the strip done numbers of how many people are getting in and still being managed to be hired in what is seemingly to be a quite
tight market. >> the most important numbers we're looking for is what happens with wages. as labor market tightens, we finally see definitive wage gains and those gains have been highest for people at the low end of the wage distribution. that is great news. it is bringing some of these gains to groups that have not shared in the recovery earlier, in earlier years. one thing we are watching his wage gains. the other is what is happening age employment population ratio. that is the broader measure that goes beyond the unemployment rate because it takes into account whether people who are out of the labor force entirely .re coming back for work as the labor market gets tighter, more of the people going back to work are coming from outside of the labor force. the number has been going up, but it is not as high as it was. there is still room for the broader measure of employment to improve. joe: this is the key thing i
want to hone further into. some measures was suggest the labor market is very tight, but for the people who are not being counted as unemployed who could come back into the workforce, that's could mean there's a fair amount of shadows like out there. do believe-- shadow slack out there. do you believe there are a significant amount of people that would like to work but art? >> yes. there are still people also that are working part-time that would like to work full-time. year ago, but when we look at broader measures, we are back to levels we saw in 2000. that is a much less really picture than when we look at the employment rate which is at its lows level in 50 years. we talk about the wage growth, while we are seeing gains on the lower end of the spectrum, i do wonder whether or
not we are seeing those gains in some of the middle class, sort of wage level that we would maybe be more indicative of in a stronger economy. >> we are now finally seeing that wage growth. from multiple sources of data. we see it in the jobs report and we are also seeing it in the eci report that takes into account ways in which jobs are changing. this is the first time we have seen that acceleration across multiple measures. that does look like solid, good news at the moment for wage gains. caroline: is there any argument the fed should be pausing? >> it does look like which greens -- gains will continue to increase but the big question for next year is, will we need fed hikes in order to avoid overheating? i think there are other factors that will naturally start to bring a bit more slower growth to the labor market.
the first one is that the labor market growth we have seen this year has been dependent on industries that produce goods, mining, construction, as well as manufacturing. these are more volatile sectors. they are also sectors that are more susceptible to tariffs, and they are also sectors projected to grow long-term. the sectors driving job growth today are not the sectors that can sustain long-term job growth. i think the other factor is the population is aging. the workforce is growing slower than it used to. 200,000 new jobs a month is not what we should be expecting. we have gotten foiled in the last year or two. we actually only need about 60,000 jobs per month to keep up with the slow growth of the working age population. joe: earlier on the show, we were talking about a line in the beige book that some employers
were complaining that workers were ghosting them, never showing up at work again without even a resignation letter or email. u.s. indeed must have a sense -- you at indeed must have an idea of the stresses of employers. is this a phenomenon we need to start tracking more? jed: that is probably not the biggest concern that employers have. it is a challenge for let's of employers as they are looking for workers, particularly in technical industries and industries where immigrants make up a large share of the technical or specialized workforce. we are seeing that slow growth in the labor supply, and on top of that, certain policy changes like a slowdown in immigration can challenge employers in this industries that depend on immigrants with specialized education and skills. caroline: a great perspective to ended on. jed, thank you very much. to get employees are taking
caroline: a group of google employees wrote to the ceo wednesday demanding better pay, benefits, and protections for contractors. this is the latest in the public stands by google employees. here's emily chang. remind us how important, how big is this shadow workforce for google? emily: by some estimates, these contractors make up more than half of google's workforce together. meals,e serving programmers, writing code,
piloting google's self driving cars, so they make up a significant portion of google's workforce. they have published this letter we wantsly to say better treatments, better benefits, more access to companywide emails, want to be able to get into town hall meetings. some of them are not allowed into certain buildings at google. "we will continue to be mistreated and ignored if we stay silent. google has the power and money to be sure we are treated equilibrium -- equitably." this is part of a broader pattern. you mentioned the employees walking out in response to how the company handled sexual misconduct and we have seen employees protest how the company contracts with the u.s. government. we've seen protests about google's exploratory efforts to get back into china with a potentially centered search engine.
another case of employee agitation here in silicon valley. romaine: can you make one clarification? are these people working for people working for google meaning they are being paid by google directly or are they working for third-party companies? emily: they're working for third-party companies. google's response to this overall issue was that we work thesehis company best companies to come up with strict rules and policies to make sure they are treated equitably, but the relationship there is certainly interesting. contractors,es, have described themselves as feeling like second-class citizens. one of the most striking anecdotes in the story that we published on this letter is that when the shooting happened at youtube last year in san bruno, a few miles south of us, some of the contract workers were not getting updated communications about where to go, what was happening in the middle of this crisis.
that is a perfect example of a situation where you would expect these employees would get the same treatment as full-time employees if you will. joe: one of the bigger stories beyond this has been the rise of silicon valley worker activism. this is something growing as a force. do we see any support for the contract employees from the full-time employees? is this something for them they want to lend any of their leverage to this cause? emily: absolutely. we are seeing full-time employees speaking out much more wildly than they have in the past. on our show, we have had full-time employees come to protest discrimination, discrimination against workers the year ago,and two years ago you would never see a current employee of google coming online television to complain about the company and to really bring forth the
perspective of the workers on the ground. this is part of an overall movement, much in the spirit of how larry page and sergei brin founded this company. they want their employees to feel empowered but they probably did not foresee that they would use those voices to speak out against them. caroline: an important meeting is about to happen washington, right? emily: absolutely. the ceo was scheduled to testify before congress today. that has been postponed to next week as a result of the services for president george h.w. bush. sundar pichai is going to be washington tomorrow for the round the table with the white house. we don't know who will be there from the white house, whether president trump will make an appearance, and the imitation and topy jared kushner officials. the google seo will be there,
microsoft ceo will be there, as qualcomm,e ceo of ibm, a broad range of potential issues on the table. we expect trade will certainly ai, emerging technologies, but google particularly has been a whipping boy for the president. the president has attacked google, accusing google of having biased search results. romaine: emily, thank you. that is emily chang joining us from san francisco. the u.s. markets were closed today, but the fear of volatility is fresh on investors minds. exclusively toke john, 10 -- connatin. >> when you are in a late stage peoplecycle, i think want to be there at the end to get the last little bit, but when it gets near the end, they
that is a pretty good ratio from exit to entry. we saw in asia earlier in the year and health care, and tech at different times are at the year, i think we are seeing softening allowing us to buy particularly in the public markets. >> but relations are searching to come down a little bit. other pockets? is attacked, health care -- are there pockets in health care or other areas? john: generally. the sellers will hold on to the assets and the other thing that happens late stage in the cycle is that they will resell anything they have. those are not always the quality ones. people except lower values in this market, but for lower quality businesses. that is what we are doing with our portfolio. >> what about from a corporate
perspective? done the road from you, or your there's a name we are hearing may be divesting and they have spoken publicly about that. are there other big companies looking at their portfolio and in ourthis may be business and private equities has done well in taking over those businesses. john: over the last 10 years, strategic have outbid us on some of these assets to build low-cost capital on their platforms. we did not have a revenue growth recovery. we had a cost reduction recovery, productivity margin expansion recovery, lower rate recovery, and we are seeing the reversal of that. we bought a business last year, a diversity which was a corporate carveout of a business. we are seeing some of the d cohn the operation on what happened in the last 10 years which was
acquisitions by big companies. >> so competing less as you go out to buy with corporate at this point. are they pulling back? john: i think they are pulling back. when it comes to the ability just to do it because it's free, which was an element of their balance sheet capitalization, that is something advantageous to us but they were using it more than any other recovery i have seen. the m&a cycle for strategic's was robust this past recovery which was different the 1991 and 2001. it was a bit of a competition for us that we did have those prior cycles. caroline: our exclusive interview with the bain capital comanaging director there. we'll president trump and xi jinping's trade ease investors ll president trump and xi jinping's trade ease
romaine: now to asia had. global market suffered from the trade uncertainty between u.s. and china despite the optimism coming today from tron. sherry, we finally heard from the chinese government -- shery, we finally heard from the chinese government. reallywe were waiting if there was anything confirm from the chinese side and the minister of commerce said we had a successful discussion with the u.s. and want to implement everything, every item that was agreed upon. the problem was that we broke the news on their on bloomberg television yesterday. we were watching asian markets and really, there was a lot of skepticism because the first question that came to mind was what were the items. they did not specify what the items were. there was a lot of questions about what happened there. sense ofwill be get a
whether china is thinking about the same items when it comes to implementation as the ministration is here? shery: bloomberg news talked to some sources in china and we are now reporting that they are preparing to restart imports of soybean from the u.s.. --ember, soybean inverse imports just collapsed and they started importing more from brazil. this chart on the bloomberg shows the collapse of the imports from the u.s. and the gains that we saw in imports from brazil. the only thing is, this is not the main issue between china and the u.s.. agricultural goods and buying more from the u.s. is a simple matter. the problem is, a structural change -- structural changes from the chinese government such as technology transfer, we have seen some changes with china coming out with a statement saying they are going to put in 38 punishments for companies
that engage in ip theft. including potentially restricting access to borrowing and state fund support. caroline: markets are down despite the good news because there are really really -- there are clearly questions. shery: australia third-quarter gdp, the aussie dollar went on a roller coaster ride. third-quarter gdp really missing estimates growing only 2.8% in the third quarter. we had an analyst on yesterday from a&p capital looking at the reallyd saying i was thinking the rba might raise rates but now he is changing rba might raise a potential rates but now he is changing that view toward a potential cut. caroline: great analysis and we don't miss -- and you don't put miss anything else coming from shery ahn. daybreak:eak east -- asia. that is all from "what'd you miss?" romaine: "bloomberg daybreak: australia" is up next. joe: have a great evening.
paul: welcome to "bloomberg daybreak: australia." i am paul allen in sydney. shery: i'm shery ahn and bloomberg's headquarters in new york. >> we are counting down to the major market open. paul: here the top stories we are covering. oil slips after opec and allies --er plans to president trump is saying china is sending strong signals about a trade