tv Bloomberg Daybreak Americas Bloomberg August 20, 2019 7:00am-9:00am EDT
rosengren wants to justify evidence for a rate cut. desperate for growth. the white house considers options to avoid a recession as countries look to prime the recession pump -- primed the stimulus pump. orlando -- a lancome be set up lanco beefs up its pipeline. alix: coles came out early, missing comp sales -- koh l's came out early, missing comp sales. lightalso coming in a bit , and margins a bit light. none of that seems to be necessarily a surprise to me, but earnings coming in year on
year not beating estimates. david: it looks like their stock is down in the premarket about 2.5%. home depot before you so rudely interrupted me -- alix: david is funny today. david: not very funny. per depot beat earnings share, a little light on revenue. they basically blamed a lot on lumber disinflation, basically. they are warning a lot about china. one is how they want to eat up the lumber costs, a 21% drop in the cost of lumber. at the same time, you have continued slowing homebuilding, but there's a lag for that. home depot not necessarily feeling the full effect of that could weakness. because of the price of lumber,
overall sales are down. they took it down for the year. there estimates went down. l's, theykoh reaffirmed their adjusted earnings guidance on that comp sales mess. we will dig into retail more over the next couple of hours. the equity markets looking a little bit soggy here, with s&p futures party much flat. dow jones off by about five. it doesn't feel like there's a lot of conviction. in the currency market, the bloomberg dollar index yesterday hit the highest level since 2019. we are seeing the yen extend some of the safe haven gains. exports falling for the eighth straight month. south korea wants to hang out with china now instead of japan in terms of trading partners. all of that ironically boosting the yen. it feels like we are still developing a bit of a risk off kind of day. david: if we needed one, eric rosengren would help that a
little bit. let's talk about what is going on in jackson hole. we are joined by luke kawa and vince cignarella. eric rosengren spoke to bloomberg exclusive easily -- bloomberg exclusively yesterday and poured cold water on cutting a lot. eric: forecasters still expect we will get reasonable growth over the second half of the year. bond rates are low, but i think reflective of global conditions. i want to see evidence that we are actually going into something that is more of a slowdown. if i'm growing at 2%, i'm not as worried about that. david: this isn't a huge surprise. mr. rosengren was one of the two ssenters on the last cut. eric: he's been consistent -- vincent: he's been consistent.
so here he is saying basically the same thing. where i thinkates they should be, and i don't see a recession, so why cut? alix: does he have a point? luke: i think rosengren has two interesting points worth noting. the first is whether or not it is the job of the fed to offset global weakness. a couple of days ago, trump tweeted about another commentator, saying we need an america first central bank. i think rosengren just confirmed it is not one that's going to be lowering rates aggressively. point is i don't know if he appreciates the kind of endogenous factor here. the reason why all these forecasts are holding up so much is in part because all of those same forecasters expect the fed to cut rates. there's something involved
there. that's what's bull the outlook. i'm not sure that's as much -- that's what's bolstering the outlook. i don't know if that's a part of his forecast. alix: i don't know what eity is. david: that's a fancy word. vincent: i think what he was saying as they should be looking at a longer-term perspective of things. we are back to where we are, so he did bring that down to a little bit of perspective. we can't be the central bank to the world. if the united states is growing faster than other countries. we may or may not get the german financial stimulus package. what is the fed going to do for the german economy? absolutely nothing. the restd of the day,
of the world needs to pick up the slack for their own situation, if the u.s. tries to be the central banker of the world, it is probably going to ruin the u.s. economy. david: what about fiscal policy? the second story out of the white house, sources telling us that basically they are talking about what they could do to keep this economy going, and one of the things on the table is to .ut the 6.2% payroll tax they did this back in 2011, 2012, but it was $100 billion, and they cut it by 2%. also cut the capital gains tax and roebuck some of the tariffs. vincent: more from a psychological standpoint, that would be good. it's probably not had an effect on the economy just yet. if you roebuck tariffs, you can't take away summing that hasn't hit yet. -- if you rollback tariffs, you can't take away something that
hasn't hit yet. temporary tax cuts, though, people don't spend that money because they know it is going to go away sometime soon. good these are potentially ideas in their own right, but it is a part of the u.s. economy that is struggling. the consumer is the part that is holding up pretty well. the part that is struggling is the industrial parts that are more exposed to global and the trade war. they have the tool in their hand. they are just choosing not to use that. alix:alix: you have to wonder, is this reaction to the crazy market we saw last week, in which case, would be payroll tax be a big boost for the s&p? luke: there's the potential for it to backfire, but rational expectations would suggest we don't get that short-term boost. vincent: in the practical sense, for a republican president to get a payroll tax for a democratic congress who doesn't
want to help him very much, there is zero chance. david: they would like the payroll tax, but they don't want to give it to this president. vincent: and they don't want to injure social security and have to face that. alix: back in 2008, i didn't save that money i got from president obama. david: so it works. vincent: for me a dead. let's go to this -- for me it did. let's go to this revolving wall of money that maybe has nowhere to go. it was a great story about the majority of corporate credit is negative yielding, with the exception of the u.s., which brings money back to the u.s., which means a stronger dollar. luke: that's definitely one of the factors you can think about. for yields generally in terms of returns and in an environment where the u.s. is the best place for growth, as trump was saying during the midst of the downturn, look much money once to pour into our country.
he has a point there, but there are challenging technical factors in the corporate bond market, where supposedly, we are more on watch for recession than a month and a half ago. corporate spreads are tighter than when they initially moved up in may. to park it somewhere, so u.s. bonds are a good place. david: where does it all end? trillion in$6 negative yielding debt around the world. vincent: this is a rubber band that keep stretching. the classic carrier trade. everyone is in on it because this is the spread, this is where you need to go. sold yen toen you buy u.s. treasuries. when the yields fall off or the changes,the curve if pressure starts to build in these areas, these trades start
to roll over and the exit door is really tiny for a lot of people to squeeze through. alix: i was reading on the bloomberg that if you wound up hedging using dollar, you want long-term and you could actually make a nice pickup. vincent: those trades are very theoretical in a sense. whatever people write those up, they forget the funding side. you can say, well, i'm going to earn 4%, but what is your cost of capital? no one will give you that capital for free. sometimes it doesn't work out as neatly as it does on paper. -- luke kawa and vince cignarella, thanks so much. a reminder, you can check out all the charts on gtv . the hunt for return continues. we will speak to marvin loh, state street global macro strategist, when we return.
viviana: this is "bloomberg daybreak." home depot cut its revenue forecast. the largest home improvement chain cited lumbar price deflation, but also recently announced tariffs that will hurt u.s. consumption. they reported same-store sales growth worse than expected. elanco animal health agrees to aird's unit at $7.6 billion, one of the biggest a standalone -- billion. that will create one of the biggest standalone veterinary companies. starting today, the wealthiest
citizens in denmark facing a reality. one of the country's biggest banks will start imposing negative interest rates on deposits over $1.1 million. earlier this month, they made history by offering 10 year mortgages at negative interest rates. nextank's ceo says for the eight years, there could be negative rates. that is your bloomberg business flash. alix: thanks so much. those negative yields in denmark, germany selling an ultra long bond at 0% tomorrow, so what do you do? the solution seems to be u.s. investment grade credit. the blue line shows exactly that versus the orange line, non-us investment rate fixed income yield, now in negative territory. the only good safe harbor in the storm seems to be credited in the u.s. -- seems to be credit in the u.s. marvin loh, state street global macro strategist, joins us now. low credit on the
train now? marvin: finding income is going to be something all investors are really interested in. alix: we're just going to tweak your mic for a second. you also have mark mobius really committed to gold. here's what he said earlier on bloomberg television. mark: i think you have to be buying at any level. long-termld's prospect is up and up. money suppliers are up and up. alix: is that also an interesting point? marvin: hard assets are something we need to thing about. my aversion to gold has always been that it doesn't earn anything. owning something in your portfolio that doesn't earn anything is a challenge. having said that, with interest rates as low as they are, it is a two player role in that asset allocation discussion. david: also, it doesn't earn
anything compared to what? marvin: exactly. david: compared to fixed income around the world, it is earning. marvin: it is outperforming to the bond, certainly -- to the bund, certainly. david: how do you tie it all together? how do you wind up buying investment grade when there is it?uch money already in how do you buy gold when the dollar is so strong because of all the money coming into the u.s.? marvin: there are different ultimate goals between international and domestic investors. if you are a dollar investor, buying dollar assets, the total you're looking for. fixed income offers you a much more predict double stream of income. if you are international investor, you have to worry about hedging costs and volatility. depending on how you approach the basis is part of that discussion. david: if you want liable
return, where do you go with duration? marvin: i think a bit of what the bond market is signaling is a bit of the new normal, and that new normal is that low for longer is going to be out there. with demographics, with the fact that slower growth is starting to get built into not only maybe some of the japanese and german that still, but plays well. alix: u.s. equities? marvin: u.s. equities will certainly need to readjust to some of these lower interest rates. i think the other aspect of dealing with these is that growth is going to become more valuable. u.s. still offers some of the best growth prospects. having said that, we secretly are -- we certainly are in volatile times with equities. david: how do you take into account, if at all, the signals sent by the bond market about a possible recession?
if there is a recession, all bets are off. marvin: the bond markets are really interesting right now. lot of taking more of a long vol approach to things, but the market is saying slow growth is part of that discussion. this going to be a neutral rate adjustment that pulls fed friends -- that pulls fed funds on a long-term average. when you put all that together, interest rates are supposed to be longer. the curve is supposed to be flattery not tip of world. alix: to wrap it up in a nice bow, in relation to a move in the 10 year, we have a chart ist shows, like, the dax more negatively correlated to a 10 basis point drop in the 10 year yield and the s&p. then you have dollar-yen. do you have to look to the movement in the 10 year yield as a precursor to how you asset allocate? ,arvin: ultimately, the u.s.
while the fed tries not to be the central bank for the world, has a very important part in the world. the dollar is the most important currency in the world. that the u.s.ls market tells us has a influence influence on us. david: marvin loh of state street will be staying with us. coming up, a win for the pet -- owner end of that. we will speak with the ceo of a longo -- of elanco, coming up next. this is bloomberg. ♪
health -- the elanco animal health ceo jeff simmons. we appreciate you being with us. tell us about this deal. this has been rumored for some time. now you've got it here. what do you do with it? you say it will be accreted in the first full year. how does that work? elancon exciting day for and bayer animal health. first, it doubles our pet business. it balances our livestock and pet businesses globally, grows our emerging-market business for both pets and livestock. so that helps. it is very much strengthening and accelerating the current strategy we have. ,t all comes back to this society has never cared more than it does today about the well-being of pets. we bring a long heritage at a elanco worried about animal health.
1/3 of pet owners don't go to the vet, and it is growing. we are going to be able to meet pet owners where they want to shop with more portfolio, more information, and more price points. david: you pointed to it. the book on this business is it is a slow and steady business. you seem to point towards the growth in pets. how fast is that part of your business going to grow, and what portion of your overall business will it constitute? jeff: it is going to be almost a 50-50 balance, something that would be very hard to do bayercally for elanco, so has accelerated that for us. you got a few things going on. growth from both sides, but on the pets side, you've got a growing emerging-market business, a growing retail side, but the thing that we will be
sharing with shareholders today is innovation is the underpinning. very much like pharmaceuticals. we bring in eight new compounds ino filament, 1 -- compounds development, one to five years from launching. we will assess bayer's pipeline as well. debt you also have some that's going to be coming due. you also have the need to invest. there's pressure overall for shareholder returns. can you tell me how you're going to balance all three? jeff: it is a durable industry. this is a cash business, very value driven. if you look at the durability of this industry, it creates very strong cash flows. tos will be generating close $1 billion of cash flow in a year or two. when we came out of an ipo, we were delivering on a trajectory to be less than three times debt , and we planbita
the same for this transaction. david: you will be the number two company in the world in animal health. that is good news for you. it gives antitrust officials attention, whether in the u.s. or europe. what kind of resistance do you think you might get in the clearance of the steel? -- of this deal? jeff: very good question. we've got experience here. we are looking forward to working with the regulatory bodies in key jurisdictions. something very important to look at is this has many species of animals, many geographies, many therapeutic classes, and now many chancel's -- many channels to reaching a customer. owner, the farmer wins today. they get more options, more portfolio, and more price points. david: quickly and finally,
anything left on your shopping list? to dono, we've got work here in terms of executing, but we've got a long history of doing that. a lot of respect i have for the bayer animal health employees, having them join the team. ultimately, this is one of the most innovative and admiring ,ustomer basis of veterinarians farmers, and pet owners. alix: thank you to jeff simmons, elanco ceo. boston fed president eric rosengren says he needs to see more signs of a slowdown to justify rate cuts. we will bring you more of that interview next. this is bloomberg. ♪
a little bit of softness on the margin. european stocks unchanged. we are seeing some movement in the currency market. the dollar index hit its highest level yesterday since 2009. it is a mixed dollar story today, but you are seeing much stronger yen. germany is going to sell ultra long bonds, is your percent coupon. david: that is amazing. we will take your money and it gives you no money back. alix: for the long term. not reallynly ones giving over to the rally in the bond market. that has to do with the political. we will talk about that in a little bit. hays: bloomberg's kathleen spoke exclusively with boston fed president eric rosengren about why he dissented at the july meeting.
eric: it was tied to the fact that economic conditions are still pretty good. employment is still at a very low rate. inflation is a little bit low. you take outut if some of the outliers using dallas trim mean, it is closer to 2%. in fact, it is exactly 2%. my own view was that we have to be careful not to ease much and we don't have never can problems. -- when we don't have significant problems. we are supposed to focus on unemployment and inflation in the united states, so i think we are in a pretty good spot right now, and there are calls for easing at times -- there are costs for easing at times when you don't need to ease. kathleen: what are the costs? eric: you cause people to buy houses and cars earlier than the otherwise would. you choose to make an investment
now because of interest rates that you think will be temporarily low, so you make expenditures you might not otherwise make. when we lower interest rates, we make the cost of that lower. that means both households and firms are more likely to be leveraged. get leverage, people are in much worse shape. we have to think about the financial stability characteristics. households we want and firms to be leveraged whenever we go into a significant downturn. :astling: how can -- kathleen -- howcerned about you concerned are you about a potential downturn? even wall street banks have cut their gdp forecasts, and recession indicators have indicated risk is rising. is it rising in your eyes? eric: many of those indicators are tied to financial markets. let's start with what most
economists think is the most likely outcome. the blue chip forecasts, we just came off real gdp being at 2.1%. the blue-chip forecast for august had growth for the third and fourth quarter both at exactly 2%, roughly exactly the same as the second quarter. that is clearly not a recession. they also have the unemployment rate where we are right now, actually 1/10 less in the forecast. forecasters are seeing a lot of weakness in the data. what has people really focused on whether we are going to have a recession is a combination of volatility and stock market. we obviously had a big movement a week ago when we lost 800 points on the dow. but in subsequent days, we moved back up. if you look at the long bond, it is very low, so around 1.6%. one of the reasons is to global weakness, but the cure is for tontries around the world
expand with either fiscal or monetary policy in their own countries rather than the united states doing the easing. alix: that was boston fed president eric rosengren speaking exclusively to kathleen hays. bloomberg'sow is michael mckee, and still with us is marvin loh of state street. is anyone with him? michael: a number of fed officials have concerns about where we are going, but jay powell's view is it is better to get out in front. that seems to be the consensus of the members of the open market committee now. that's why they are at this point trying to move. the question is how much trouble are we in? can this be easily reversed? president trump saying you've got to go to almost zero, which they don't want to do because
there would be nothing left. what thee statute says fed is supposed to pay attention to. i will put up a chart right now. i don't understand how we are in so much trouble if you look at the dual mandate. --marvin:nemployment on unemployment, the market is doing fabulous. the consumer has been holding everything up. but two years into this expansion, the fed preferred measure of inflation, we are not even close to that number. if we are looking at a long and the tooth part of the expansion, it is going to be really hard to see how you get that number higher. global economy has not responded to all the stimulus that's been put forth not only by the fed come of all of the central banks in the any meaningful way. they don't know what to do, but they feel they need to do something. david: that point proves too
much. the global economy has not responded to all the stimulus, so therefore let's have more stimulus. they are short of a hammer -- michael: they are sort of a name or -- a hammer searching for a nail. even with the rumors and germany, there are some any speculations on the rules and what they can do. the u.s. isn't going to do a tax cut. how do you respond to these things? marvin says the economy isn't responding because the interest rate setting that their tools can address are not the problems we have. david: we have reports out of the white house they are think about fiscal stimulus. put aside the politics of it. but if it could happen, if it were the right answer, would it make a difference? michael: that depends.
if you're talking about cutting a capital gains tax, no. the rich are the ones who pay the capital gains tax. you would have to cut rates for the people at the middle and lower income who spend everything they get to get any significant bang for their buck. they try to couple of times during the financial crisis. george w. bush, during his recession, sent checks to people. that didn't help a lot. there's mixed evidence on whether giving people more money is going to solve the problem. there doesn't seem to be a consumer demand problem. alix: this all leads us to jackson hole, which has been on occasion a place where central bankers can do a policy bomb. you've looked back at it. what have you noticed? they really got the reputation from ben bernanke. he came there by coincidence, just a matter of timing that the
economy got weak in the summertime, and gave a series of speeches that made a lot of news. now everybody focuses on jackson hole. he started by saying into thousand eight, things were fine, and 2009 things were going to get better. he talked about the possibility of operation twist. in 2012 he basically announced qe3. as everyone looks to the fed chair speech about an announcement about what fed policy is going to be, we don't know if jay powell wants to make that announcement. slowly, lower rates versus the big bazooka is also a distinction. marvin: absolutely. the market is very aggressive and what it expects the fed to do, not only in 2019, but when you look at the end of next year. the markets are saying fed fund
is going to get to 1%. we need to stock you mount -- we need to start talking about negative yield. i don't know that jackson hole is the format the chair would use to start that discussion. david: to make news you could just say, "president trump, you're right." alix: thank you a lot. really appreciate that. let's turn to viviana hurtado, here was first word news. viviana: south korea will strengthen its economic ties with china. the government plans to speed up free trade agreement talks with china and the services and investment sectors at a time when japan has imposed certain limits on exports from south korea. is being launched at creating dialogue with government critics and hong kong. beginning over
legislation to allow extradition to mainland china, demonstrators now want carrie lam's resignation and more democracy. bidhe u.k., boris johnson's to renegotiate brexit begins on ireland. he writes he wants to prevent a hard border on the island of ireland. johnson promises not to build infrastructure or carry out in ireland if not. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. david: i found this pretty expert mary. after poor theresa may tried repeatedly to address this question, boris johnson says i've got an idea, i promise. i give you my legally binding promise. so they will say fine, that's good enough with us, without any
explanation of how this will happen. alix: we would be happy to help promises.nding david: there are some tricky double questions. if there isn't a border there, what are the rules governing goods going across the border. that was the whole idea. that was the backstop. alix: i love the eu's response. appreciate the engagement." thanks, but no thanks. david: october 31. alix: coming up, it is the rewrite of the simplifying of prop trading rules. and if you have a bloomberg terminal, check out tv . interact with us directly. go to tv on your terminal.
viviana: this is "bloomberg daybreak. coming up in the next" hour , adam pozen -- "bloomberg daybreak." posen,up next hour, adam peterson institute for international economics president. here's your bloomberg business flash. asdi aramco selected lazard an advisor on the world's largest ipo. sard was expected to take -- was hard expected to hat -- lazard was planning to have a role, with shares listing next year. shares of search
leader, the reported sales unexpectedly grew. that may reassure investors concerned with losing steam. there are advertisers from tencent and by damp -- and by te. apple is considering a nine dollars 90 five cents monthly charge for its streaming service, but likely to offer a free trial while it builds up his library of shows. is part of a drive to reach higher service sales. that is your bloomberg business flash. david: more power to them. it is a great company, very successful. they've got a long way to go to catch up with disney. alix: this is what they do, right? they let everyone else run before them, and then go in and make a better product. but i hear you on content.
it might be a different story. david: we've seen a lot of people go into hollywood and say we are going to fix the whole thing and make a lot of content. of them haven't done that. alix: i love this morning show with reese witherspoon and jennifer aniston that apparently costs more per episode than "game of thrones," and i'm guessing there's no cgi dragon in each episode. david: i don't even know how you can spend that much money. i've never seen morning shows. i know they can be expensive, but nothing like that. alix: no, it's like a tv show. not an actual morning show. i think it's probably salary. anyway, we turn to wall street beat. first up, volcker rule overhaul. walk-through regulators are set to rewrite the volcker rule on trading restrictions. then, banks are looking for job seekers with expertise in the field of machine learning and ai. and fake china accounts
targeting hong kong come about twitter and facebook say they found and deleted hundreds of accounts used to undermine the hong kong protests. david: we welcome now vince cignarella. are we getting too hot on the volcker rule? when it came out it was going to revolutionize all of trading on wall street. did it do that? is it hampering that much now? squash balance sheets. one of the things the volcker muchdid, they would carry larger balance sheets to accommodate customers, to trade on a prop basis. when the rule to men, that strength balance sheets considerably. if you are holding abc bonds and someone else issues, you kind of have to sell those off to take on that other inventory. david: what happened to the liquidity debate? these days we don't have as much because we don't have our own account. is that true?
certain it plays out at times. what traders words till you is we will be there to supply that liquidity. the truth is they don't. they run away when the markets move, and you get pockets a liquidity. , you dide days of old have proper liquidity. they had to price customers. -- you had toe price the gaps. this will provide banks with a little larger balance sheet to accommodate customer demand. alix: does it provide them with more help to make robots? and that leads us to our next story, basically if you are a finance company going out to higher, they are not looking for you anymore. they are looking for robots, looking for algo guys. looking they should be for me because i'm the one who taught a lot of those guys the
trading. the way the robots are built, they make a trade, enter it into the system, and the ai says, we will sit on a bid. if we don't get them, we will bid it higher. wait, we are getting too many. back down again. this is where you see those erratic trades and this is where guys come into better program this to make it more efficient. they are sitting down with traders to say how should we do this, and the input isn't always as good as the outcome. old-school dudes like me can actually trade against them because you fade a lot of these moves, and more like the knot, they come back to where you started. david: if you are running
a bank, how do you get the people who can deal with algorithms and understand what you just said, that can make use of this very powerful tool that is not going away? vincent: it is going to get bigger and bigger. i think the banks and trading firms think they are at a stage now when they understand that, and the models can just take over, if you will. but somebody needs to be the conductor on the train just in case the wheels fall off. that's usually what happens from time to time. alix: that's like one connector -- one conductor, not seven conductors. friends' sonbands is going into computer science, but they hedging programming. vincent: i know i guy who runs a major hedge fund, and he said there's no tv's. it's a whole bunch of guys programming. they barely talk to each other. david: where people are talking
to each other is in hong kong and china. this is our third story, which i found fascinating when it crossed. twitter and facebook said we've discovered hundreds and hundreds of fake accounts that originated from china, connected to the chinese government, spreading disinformation connected with the protests in hong kong. vincent: i think this is especially fascinating with the upcoming elections in the united states. people are hoping people like twitter and facebook get a hold of this. i think it is way more devastating to discover this in china and hong kong because you would expect the chinese government to have much more influence on how people think and how the protesters might be concerned about what mainland china is thinking. the hope is that the average american voter would try to find their news from a more reliable source than just what they hear on the internet, but it is still a really positive sign that they are able to discover these. david: as this is going on, we've basically convinced the
american voters there are no reliable sources, so we are doomed. [laughter] alix: but as a traitor, where do you do summit -- as a trader, where do you disseminate? vincent: i watched twitter all day long, not necessarily to find out whether news is real or or if it is a reliable source, or someone i've never heard of before, but back to the prior story, the robots are trading off of these tweets and such, and that is moving things, so you need to be aware of it whether or not you believe it to act on whether it is real or counter it because it is not. david: bloomberg's vince cignarella. coming up, so vini'final -- final pushsalvini's to secure elections for the premiership. alix: if you're jumping into
david: here's what i'm watching today, and it's italy, and it is complicated. we are having a speech from the prime minister shortly to say whether they will ask for a no-confidence vote. attemptsr. salvini's to take over a majority of the parliament. the count is 65 governments since world war ii. this is whether we will get 66. we've got a chart that sort of illustrates what is going on in the parliament. the problem is this. mr. salvini has popular support across the country, but that is not necessarily how the parliament gets divvied up. the five-star has a lot more support, but across the country
they won't, so they don't want an election. most people in parliament don't want an election because they will lose seats, so they may be able to stop it. alix: but if you didn't have a league and a coalition, but they hate each other. politics makes strange bedfellows, as we say. there's the possibility of five-star getting together with the social democrats, and you have mr. berlusconi waiting in the wings. alix: btp is the only bond in europe not getting a boost. coming up on the program, michael antonelli, baird private wealth management market strategist, will be joining us. this is bloomberg. ♪
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options to avoid a recession as countries continue to prime the stimulus pump. 2.0 is coming. how it might help investment banks as global yield curves drift to zero. reaffirms full-year guidance despite second-quarter sales miss as consumers keep delivering. david: welcome to "bloomberg daybreak" on this thisay, august tuesday, august 20. we are continuing to watch hong kong. carrie lam tried to take a step in the direction of protesters, saying let's have a wide-ranging fact-finding study. alix: here's what she had to say about potentially starting a dialogue. executive lam: we will start a dialogue with people from all walks of life. this is something we want to do
in a very sincere and humble manner. i and my principal officials are committed to listen to what the people have to tell us, and we want to reach out to the community as soon as possible. alix: she said before that a dialogue could start, but after stops, but too little, too late? david: it was one thing the protesters asked for, but now they say it is not enough. it is getting caught up in the trade negotiations completely. president trump yesterday said, if there is violence in hong kong, it is going to be hard to get a deal. alix: wasn't there video last week of after the approach best -- after the protests, they sang "the star-spangled banner?" in the markets, we are looking at a session that feels a little bit soggy. 3%, butres up by three, butup by
nothing to write home about. exports falling for the eighth straight month. trade issues and japan. all of that weighing on risk sentiment, and the yen is up. you are seeing a bit in the bond market. i wonder if we have a bit of a risk off day developing. david: sounds right to me. in the meantime, kohl's and home depot out with earnings. to take us through those results, emma chandra joins us from london. both kohl's and home depot moving higher despite both missed when it came to the key metric for retailers, same-store sales. let's start with home depot. the ceo really putting it down to weaker lumbar prices. that's been a problem for them throughout the year, from the first quarter into the second. that is what really pressured sales over at home depot, down around 20% for the past year. the company also cut its sales guidance, and said that was largely due to the weakness in
lumbar, though they did -- in , though they did quote tariffs. comp sales declined as well. that declined for a third straight quarter. is probablyket liking and why we are seeing that upward -- seeing that move upward, comp sales turned positive in the last six weeks of the second quarter, and the positive trend has continued into the current quarter. they say they've had a healthy back-to-school season, so a lot of people will be focusing on that. also, the company maintained its full-year eps guidance. another thing we heard from kohl's's they said they were seeing some increased traffic from their initiative with amazon.
you can now take amazon returns to kohl's, and they will return them for you. expected to get their results soon. supposedly they've been outperforming this year come up around 20% so far in 2019. a lot of people saying they are doing very well because of their experience. -- because of their treasure hunt experience. alix: joining us now is michael antonelli, baird market strategist. how does this fit into a portfolio right now? michael: great to be with you. i think the consumer is a great place to be right now. we talk about the consumer putting the world on his shoulders. look at some of the names out there in consumer discretionary etf's. it is at or near all-time highs. department stores, some are struggling. you look at macy's, nordstrom.
even kohl's is navigating these tricky waters, but look at something like target or walmart. look at something like chipotle or starbucks. there are names out there executing really well. there are names with good business is that the consumer still loves that don't scream recessionary to me at all. we talk about the u.s. economy be in consumer-based, and it is, but we overreact to manufacturing numbers all the time. it is something that really triggers me. alix: i get that, but how much more upside can there actually be? the ratio between the s&p and consumer discretionary, consumer discretionary continues to cross it. what is the upside, and where does that catalyst come from? michael: ultimately the upside is going to depend on how healthy the consumer stays. there something we haven't talked about, and it goes back to the fact that we could see a major refi boom given what rates are doing.
what is going on with housing? they get a refi boom due to rates. all of a sudden consumer discretionary can do well. that is a possible tailwind in the market. look at the names doing well. focus on the names in the sectors doing well against the broader market. that is consumer discretionary right now. that is names like walmart, starbucks, nike. they have a good tailwind because consumers still love them and might have a little more money in their pocket. david: i don't want to just try to find the half-empty part of the glass, but let me push you this to bid on the consumer. as you say, consumer is key. the consumer being key depends on wages and employment. at what point does the problems we are having in manufacturing and production start to spill over to consumer in this way, as people start cutting jobs? we are seeing that in financials, and in some other areas, too. michael: it is a much smaller part of the economy than most people give it credit for, but the number one thing i will be watching at baird's weekly
jobless claims. that all of a sudden -- watching at baird is weekly jobless claims. to bet all turns, got dialed into your bloomberg right when it pops out. sure, we will be watching the labor data. the monthly jobs reports. any common tory out of regional feds talking about labor -- any commentary out of regional feds talking about labor. alix: so you still want to play consumer discretionary even though it is done so well. we've been talking about this big ball of money coming into the u.s. because of negative yields elsewhere, and the outperformance of the high-grade corporate bond market. do you buy into that as well? is that where we need to put our money despite so much flowing into it? michael: it is certainly something that, like jobless claims, you should have a laser focus on. there was a guest to the other day on your show saying i really
just watch credit market, high lqd.s, l cutie -- remember, recessions are really born of joblessness and money becoming tight. money becoming tight will manifest itself right there in that credit market. so that is something we should be watching, like jobless claims , given this real sensitivity to recession right now. i still think the high yield sector looks good on a chart. let's not make rash decisions here. david: the sensitivity to a recession, no doubt about it. at the same time, are we better prepared in some respect? if you look back at the past, the state of the balance sheet is in a very different place today than before. michael: that is my favorite chart. i think household debt service ratio might be my favorite chart. this is something back to the 1980's level. pull it up on whatever your
favorite chart services. the consumer is in a much better place with their debt, whether it be there housing debt, which is going to be reified, and there will revolving loans. auto loans is a question, but the consumer is in a much better place. every recession doesn't have to be 2008. that was a once in a generation recession. it doesn't all have to be a catastrophe. you can have a shallow, business led recession with the consumer doing relatively fine. alix: that is a good point. you will be sticking with us. coming up, we discussed yields with jeff harte, sandler o'neill analyst. this is bloomberg. ♪
♪ viviana: this is "bloomberg daybreak." disney says claims the company has overstated revenue for years are patently false. a former disney accountant filed , series of whistleblower tips saying that employees in the parks division systematically overstated revenue by billions of dollars. elanco animal health agreed to buy bayer's animal health unit. that will create one of the biggest standalone veterinary medicine companies. will finance the acquisition with a combination of cash and stock. today, wall street regulators are set to roll out an overhaul of the volcker rule, meant to respond to bankers' complaints about responding to demands. your bloomberg business
flash. david: thanks so much. trouble with the curve. financials are following the yield curve lower, and i spoke exclusively to brian moynihan, bank of america ceo, about whether net interest margins will hurt his business. brian: the difference between our asset yields and liability yields is about 2.4% now. in 2015 it was 2.2%. since that time, we have $70 billion more in loans, $200 billion more in deposits. we have more raw material running through that percentage. joining us now on the telephone is jeff harte, sandler o'neill analyst. michael antonelli of baird is still with us. give us a sense of where we are with the banks right now. how badly will they be hurt by this yield curve? financials have
certainly underperformed. to me, it feels overdone, but it is hard to make a blanket you need to buy banks general statement because you are looking at 10 year under 2%, and a flat or inverted yield curve, so it is just a tough environment for banks. i think probably too much pessimism is priced in, but i am cautious to say to go out and buy banks. we've been pushing people more towards universal banks, where they've got a lot of capital return, high dividend yields, buying back 50% of their stock, and the scale to defend margins if the environment does get tougher. david: brian moynahan basically said the margin hasn't moved that much, unless it goes really low. on the other hand, they have a lot more volume in their lending , in part because of refinancing. is that true? can they make it up in volume? jeff: they could come about
realistically, loan growth has been sluggish for a while now. if loan growth continues somewhere close to where it is, that will probably help, but not offset all of the interest rate pressure. people do need to keep in mind recency. , 2009,look back to 2008 people are going to be very scared. if we do go into her to session -- into a recession, it is going to be more slow earnings growth than a full-blown recession. the banks can hold up much better than we have in prior recessions, but it is kind of hard to argue if the economy is slowing at loan growth is going to completely offset the impact of the great moves we've seen these last three weeks. alix: morgan stanley lowered the net interest margin for this year by about one basis point. what is your call, and which banks are going to be most sensitive to that? jeff: i think that's in the
ballpark of being right. if you look at the forward curve, the fed fund futures has not been a good historical moves,tor of fed but if you look at the curve, there's a lot of interest rate declines coming. if we look at down one, two basis points, maybe max down four basis points for a full year, that is probably the right all part to put it in. you look at banks, it is going to be who has the most assets, who reacts the most, and who has a higher dependence on fee income or net interest income as opposed to fee income. that's one thing i like about be of a my jp morgan, -- about b of a, citigroup, j.p. morgan. david: michael, i want to bring you in on financials overall. maybe we are all over reacting
the yield curve, and markets are overreacting to what that does to financials. it has driven down their valuations. does that make them attractive? michael: how i view banks is kind of along the lines of jeff. it is just a really tough sector. if you look at the s&p 500 banking index, it is under the level where it was 21 years ago. the sector is just really struggling. when you think about banks, obviously there's a lending component, the mortgage component. here's how i view banks from a market perspective. they are basically leveraged best on the global economy. we all know what the global economy is doing right now. it is really in a soft patch. that way i use banks versus the s&p, i use it as an indicator that says how is the worldview and growth right now. the problem is it has more head fakes than an nba point guard. it is just a tough sector. to me, just look at it as a risk
premium onhere is a library now, given streaming. ," somet "pulp fiction really great movies. alix: back in the 1990's, they were crushing it. they dominated the oscars. i'm taking a look at bhp billiton. profits riser had to percent, but it's had a really rough month for the underlying only price. >> we are ready for whatever the world might throw at us, and we can profit from a downturn, but we can also throw off a lot more cash potentially in an upturn. alix: a little dicey on the flipside because they are advancing five projects. at some point, the market expects a deficit of copper. but then you are still dealing with a downturn. michael antonelli of baird, you
are still with us. what do you do with commodities stocks right now? michael: you know, commodities certainly aren't going anywhere. gold has had a heck of a run with global uncertainty. copper, same thing. it is an instrument that isn't going anywhere. here's the thing with bhp and companies like that. what they really need is long only support. before this job, i was an equity trader. you want to see big funds buying into the narrative, into this idea that tomato these are the space to be. you just haven't -- that commodities are the space to be. you just haven't seen that yet. they are still kind of in no man's land with growth worries, but commodities certainly aren't going anywhere. david: stay with us if you would, please. joining us to discuss home depot is brooke sutherland. analysts took down their expectations, and the stock is going up. brooke: the stock is going up
because they maintained their earnings guidance, and i think that was a little bit of a relief to investors. they did take their sales guidance down, and part based on deflation. they are worried about what is going to happen with trade. it is not often you see companies adjust guidance because of potential impacts in the future. but that lumber division is actually one of their lower margin units, so to see the sales hit, actually helps their profitability. investors are relieved to see the defensiveness of home depot, that even if you get a bit of a sales slow down, you can maintain the momentum. david: at the same time, same-store sales were below expected. brooke: because you can't quite charge as much for the lumber, and then they are worried if we start to see some of this
manufacturing slowdown slip into the consumer sector, but right now they are seeing pretty good momentum. deals comeme depot's from repair and replacement. if your water heater or air conditioner or whatever breaks down, you have to fix it. i think they are hoping that that will stay the case. alix: the housing work it has sent a few negative indicators, so not necessarily new homes, but that is a lag for them to feed through. i don't know we have seen the full impact of the liking housing market yet. brooke: that should be coming in the future quarters. that may be another reason why you are seeing them be a little more cautious in terms of potential slowdowns down the road and the back half of that year, but this repair and replace cycle tends to be somewhat divergent from what is happening in the home market, so you could see that woman to hold up. david: what does this say about lowe's? we almost always talk about these companies in tandem, i be unfair to lowe's -- tandem, may
be unfair to lowe's. brooke: they are coming up tomorrow, so we will find out. it will be interesting to see if they can keep up with home depot. obviously they are under a lot of pressure, so we will see tomorrow. antonelli, what you do with the homebuilders? how do you trade those guys? michael: one of my friends on twitter made this point. if the world was ending, coming to some screeching halt, would homebuilder stocks be trading like they are right now, close to their highs? like i said earlier in the interview, we have this refi boom probably coming down the line, low rates that may be spurs millennial homeownership. these are a great signal for the consumer. home depot was issuing negative guidance and i would be much more bearish on the economy and consumer, but you haven't seen that play out. i just don't want anyone to
overreact to a yield curve inversion and the fact that recession has been googled 8.6 billion times in the last week. spending, housing, mortgage rates come of the things that drive our consumer, which drives the economy. point, and to michael's home depot is still expecting growth this year. they are still growing, just maybe not as robust as the past couple of years. alix: brooke sutherland, thank you very much, and michael antonelli of baird will be sticking with us. coming up, everyone watching fed chair jay powell. we will speak to adam posen of the peterson institute. this is a bloomberg. ♪ -- this is bloomberg. ♪
you got home depot. kohl's. no real conviction either way. it's a similar story in other asset classes. yes you have dollar yen. eurodollar going nowhere. some of the risk on currencies are rallying like the aussie dollar. the canadian dollar. not necessarily a full on risk off mode. are you seeing buying across the board in the bond market with the exception of italy. those yields are up by about one basis point. there was worse. we had a stronger selling a couple hours ago. i'm not quite sure what kind of session we are evolving into. it's a little risk off. but you can't blame it after the week last week. david: t.j. maxx is out. i am reading this off bloomberg. second quarters earnings per se it was 67 centser if suss $1.17. that's year over year. not versus the estimate. it looks like it's 63 cents earnings per share 65 cents.
for the third quarter. stock is down about -- now it's about 2.7% right now in the premarket. it was right on estimate. well off last year year over year but right on estimate. alix: coming in about 2%. they do say they are maintaining their full year outlook for com store sales and earnings. i'm reading through the press release right now. they are talking about good opportunities. they have a lot of initiatives to drive sales. they still feel pretty good about their business. i'm trying to look up margins -- david: their margin is 28.2% versus 28.9% year over year. just a little light on margin. also their net sales were off of the estimate. their earnings per share were right on it. net sales were 9.78 billion. alix: we did see a higher supply
chain cost. that doesn't necessarily seem like a big surprise. igher supply chain cost. all these overachievers for retail earnings. -- for retailers. alix: doip eager beavers. now turn to the largest state of the economy. president trump continues to press for federate cuts as the cure all for any weakness in the global economy. others are looking toward fiscal stimulus. particularly in europe. >> for now what we are relying on are international sources of stimulus, including fiscal policy in germany and perhaps other places in europe. >> just like in 2008 we had global monetary easing, we need to have global expansion. and fiscal expansion globally is the only thing that can try to overcome the savings glut we have at this domestic -- the private sector level.
>> stimulus is that adrenaline shot. eventually you have to pay for it. >> these are addressing the symptoms not the problem. >> it's a sign of desperation. monetary policy has just not worked in europe. >> unconventional monetary policy can do is avoid that deflationary trap. david: welcome from washington adam posen, peterson institute for international economic president. thank you for being with us. i'm mindful of the fact this comes between on the one hand last year with that really brief inversion of the yield curve but the yield's plummeting. and we have jay powell's remarks in jackson holcombing up. do we need anything? adam: that's the right question, david. i think what everybody agrees on is when we need something it's going to require both fiscal and monetary. but do we need something in the u.s.? probably not.
the arguments that erik has been making if you do monetary policy now you might just increase the amount of indebtedness when the crisis comes. it's largely a timing issue. i think the federal reserve is not behind the curve as president trump says. it is, instead, the federal reserve has to wait and see. and finally, if the president and the congress leapfrog the fed into further fiscal expansion, then there is even less reason for the fed to act. alix: adam, how do you seal it going forward when we do need it? a paper i was reading last week talked about basically monetary theory. where you have to a coordinated fiscal and monetary action together urgently for the short-term to make a dent. do you think that's part of the conversation right now? adam: i think that's definitely part of the conversation right now. the quartet of former central bankers who made that report i think got some of the economic analysis absolutely right.
i think they are a bit strange on the political economy to be honest because they are assuming some kind of automatic thing that could be triggered by central bankers assessment, whereas budgets have to be overseen by political people. i politically elected people. there is no question we are seeing it in europe, we have already seen it in japan. when risk aversion is this high, when there is this much of a savings glut, when long term rates are so low, there is only so much monetary policy can do. you do want the fiscal policy to take over when you need it. david: adam, you were clear in saying when it comes to the united states it may be we don't need anything. but there may be a different situation, for example, in europe. you referred to europe. yesterday it was reported that germany is in active consideration of possible fiscal stimulus to the tune of $55 billion to help the economy there. particularly the job market. is that needed right now in germany? is it appropriate? adam: it may be a little premature, but since germany has
a history at terrible times of engaging in excess austerity, better too soon than too little. i think that germany is exercising the hypocrisy that they were unwilling to allow fiscal expansion for other countries during the crisis, but they are doing it themselves. on the other hand, much better hypocrites than do nothing. yes, this is an important step forward for germany. it's time to do it. it will, we hope, have spill overeffects. alix: adam, yesterday in the u.s. in the afternoon there reports that perhaps the white house was considering a cut in the payroll tax. a conversation also about potential stimulus here in the u.s. anything on those tweets on the margin, do they really do anything to boost an economy? they certainly in some basic sense have some boosting effect. it is not the best thing you can do with your money. when unemployment is so low.
when wages are growing somewhat, when households maybe don't have excessive debt, thank goodness, but would potentially spend it on consumption goods, this is a time that if you want to do fiscal stimulus, the way to do it is through thoughtful public investment, which is possible. if you do this payroll tax cut, there may be some ex-post rationalization, now we busted the budget so we have to cut back on social security, medicare, everything else. which is deceptive. it would be better to just straight up spend on things or not. alix: thank you so much. it was great to get your perspective on this. adam posen for the peterson institute for economics. still with us is michael an toe nellie. it leads us to jackson hole this week. what's your best position in jay powell's speech? michael: certainly powell has to do his best job to not make a mistake like the last fed meeting. we can't have any more of these
murky terms like mid cycle adjustment. he has to come out and say the fed gets it. we understand the global weakness, starting to seep into the u.s. we are watching the yield curve. this isn't about an unshurens cut. we are on full watch. it's all about that language. then if he delivers it the right way, look into the risk sectors like banks and industrials, cyclicals, look at those. that will be the reaction you want to see when we see the speech. david: thank you so much for being with us. great to have you today. an update on what's making headlines from outside the business worrell. we turn to viviana. vonnie: in hong kong chief executive lamb is pledging new effort at creating dialogue with government critics after more than two months of protest. he plans to look at the causes of the protests and how police responded to them. the movement began over legislation to allow extraditions to mainland china. demonstrators now want the
resignation. they also want more democratcy. jeffrey epstein may have complicated efforts to collect money from his estate this. by women who say he abused them. two days after the disgraced finance year killed himself, epstein yote a will, he placed $578 million in assets in a trust. the trust remains a private document. and of court where it was filed doesn't have to disclose the details. over to italy, that's where the deputy prime minister raised the prospects of tax cuts and boost on government spending. its final bush to force new election that is could make him prime minister. he wants to end his alliance with the five star movement. today the prime minister addresses parliament that almost certainly signals the formal end of his administration. global news 24 hours a day. powered my more than 2700 journalists and analysts in more than 100 countries. david: the end of the administration, but not
necessarily a new election. it's possible they would reform the government with a different coalition. alix: it would be -- this coalition would be the league and p.d., right? david: that's one possibility. it esconia is in there. everybody has a piece of this action. at least if you read about it, i don't know the italian politics that well, a lot of it is these people in parliament like to stay in parliament. these are good jobs for thefment they don't want to give up. they have to go back to a new election. alix: unlike congress? david: totally different. alix: we were trying to figure it out yesterday. what is happening? here's 17 different possibilities that could not make any difference. david: italian policy is complicated. coming up, kentucky fried chicken drops fried and calls itself k.f.c. and dungin doughnuts is now dungin. next alix: bloomberg users interact
manages time share resorts. a warning from the world's largest miner, pooling growth in china from trade tensions could hurt raw material prices. the company raised its dividend payment to a record because of higher earnings. shares of beyond meat rising. it earned its only buy recommendation from j.p. morgan. it expects beyond meat to start testing with one or two more large quick service restaurant trains chanse. j.p. morgan upgrated campbell soup to neutral from underweight. the upgrade was faced on three factors, campbell's' evaluation, a forecast, and potential to mprove the top line. david: thanks so much. it's time for follow the lead. a deep dive into the stories making headlines and moving markets. with insights from industry veterans and insiders. as part of our week long series how we eat. today we are looking at how big food companies are marketing to
customers worldwide constantly changing their preferences. here's a look at one company evolving with the times, that's coca-cola. >> thank you. let's start by taking a look at how coca-cola shares have performed over the past five years. you can see they are up some 30% performing well in that time. it's been streamlining its asset bases made number of strategy moves in order to appeal to changing consumer taste. it's iconic products, coca-cola is still a major revenue driver. look how they have changed the marketing of that product over the past few years. we have a clip which we'll show you one of their adds from the 1970's and one from earlier this year. >> ♪ i'd like to buy the world a coke ♪d keep it company ♪ >> a coke is a coke. >> is a coke. >> it's the same for everyone.
>> you can see how those ads have changed. coca-cola soda still account for almost half of the global carbonated soft drink market. look where the growth is for coca-cola, which is bottled water, energy drinks, asian specialty drinks, and ready to drink tea and coffee. carbonated drinks and soda are still growing but decelerating. therefore the company is looking at ways to change that. it should be no surprise they now call themselves a total beverage company. it's made a number of strategy moves in the strategic moves in the past few years to counter that. we should be able to show the kes of coffee, teas, smart water, and moxie. they set up earlier this year a global venture unit. the idea is to build on recent acquisitions and scale them globally. alix: thank you so much. appreciate that.
for more branding technique 'll be joined by mike -- michael senackerib. joins us. he's perfecters healthy snacks before starting his own business had he extensive business in marketing including his global chief marketing officer of campbell soup. good to get your perfect specty. we are digging into the changing ways you eat. brand name seems to be front and certainty. your experience who is doing it right and how are they doing it? michael: first, hi. great to be back. you know, i don't know that i'm going to sit here be and the guy who is the critic for every single brand. what i can tell you the brands doing it right are the one that is first understand what it takes to be relevant today. what are the benefits. they are much more fragmented that people want. then they are creating something that's really authentic in everything that they do. that is what's critical. it's one thing to change a message. it's another thing to be truly
authentic in everything. the product, the increedents, message, packaging, social causes you believe in. they have to hang together. david: are there they have to hang together. david: are there any traditional brands that have turned themselves around. we looked at coca-cola. it's a strong brand to this day. they have done a lot of additional purchases. they started from scratch rather than just trying to convert millennials over to coca-cola. michael: that's right. that has been typical. certainly coca-cola has done a lot of things. they brought out a whole new line of flavored bedges --beverages under the diet coke franchise anti-tradition coke and coke zero. a lot of interesting things they are doing. at the end of the day a brand that was built on mass appeal in an audience that has much more fragment the benefits need to look at other places to find growth. that's why they have broadened their portfolio. that has more been where the big companies have gone. they have gone to bringing in new businesses whether they are
acquiring them, inventing them, often acquiring them, getting into new categories growing faster. alix: if you were going to talk to a company and say to them this is the right strategy, would it be, one, you are going to take your old school products like kraft mack and cheese and make it look cool and healthy, or double down and say we are just going to go all out and say this is a bad mack and cheese and eat it anyway. in your experience what is the best way? michael: that is a great question. there are some who will do that. i think with the exception of a few cases where you are truly indulgent product and there is no apologies needed. people are eating it for one reason and one reason only, they love the flavor, they don't care about any health benefit or anything else, fine. but for most products, you have to change because people are looking today for things that are less processed. whether that's organic or at least non-g.m.o. doesn't have a loft process and artificials in it.
mack and cheese got caught up -- mac and cheese got caught number a color ingredient that gave them fits and had to change it. if you make the change, the change has to be dramatic. the change isn't the marketplace and household composition and food preferences and the channels people buying products are dramatic. it's not just a tweak. it means you may have to change everything about your product and brand and maybe everything about your company because it's got to be -- to be authentic, it has to be consistent through every element of the mix. if you change one element of your product that's a little better, but you have other things that still harken back to something that is an incongruous message, consumers will sniff that out. david: i have always thought human nature doesn't change but maybe i'm wrong when it comes to consumers in this respect. i'm baby boomer, i was growing up, the fact people were heating heinz ketchup all around the world made me feel better. is it possible with millennials
that counts against it's the same product, with the same branding. they would rather have the artisal products? michael: there is a movement in that direction. i'm with you. i love hearing the old coke ad. coy hear it in the [ground t reminded me and made me smile. just being big doesn't -- first of all doesn't automatically mean you're good to a millennial. secondly, if anything there is a distrust of big institutions today. whether that's food companies or banks or government. it doesn't necessarily play to your favor. a lot of people want to pick the product that's truly right for me. this is my benefit. this is the badge i wear. i learned about this from a friend or microsocial brand ambassador influencer. that in some ways is more interesting than knowing that it's sold around the world and a big company is marketing it. alix: to wrap it up, when you market your brand, how do you go out and do it? is it primarily to millennials? is it on radio? tv?
social media? how does that strategy look? michael: when we are marketing farm and often snacks and our key message meaning we make veg yeas taste like cake. -- veggies taste like cake. we use brand ambassador or social influencers. they identify with our brand. they like the benefits. they are out there telling the story for us. and that is so much more powerful than us telling it ourselves. our second biggest way we market is actually through email. that we have a pretty strong database, we talk to people directly. we can easternize and customize messages. they can -- we can personalize and customize messages. they can get what they are interested in whether that's more vegetables or weight management. then we do everything we can to get our product in front of people. that means democratos in store. not necessarily broad reach tv and radio. alix: thank you for that.
alix: aim watching an amazing note from triteon research, the c.e.o. talks about wework. he talks about the company's i.p.o. perspective. here's what he says. he says prospectus is a masterpiece in obfuscation. why would a company go to so much trouble to prevent you from understanding them? he's not alone. but what's striking for him they had a good track record of dealing with and rating companies as they go towards i.p.o.'s. david: it is a pretty sfroord prospectus. it says we are going to run this
for ourselves. with ourselves and our friends and family. and you don't need to know anything. alix: when companies fight you in understanding the basic composition, it's always bad. people who have math trap, you put cheese in, it catches mice, it's great. david: same point. at this point in this market, when you want yields, you might put up with a lot. alix: a great point. it is not a real estate play. that does it for bloomberg daybreak, coming up, global credit c.i.o. this is bloomberg. ♪ from the couldn't be prouders
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coming up equity markets struggling to shake off the anxiety. the president calling for big rate cuts. investors question the effectiveness. another twist in identically's -- italy's political drama. good morning, here is your tuesday morning. futures are negative down around a tenth of 1%. eurodollar unchanged. treasury hold down five basis points. let's begin with the big issue. concerns that federate cuts won't be enough. >> if i was at the fed i would be worried about not spending too much of my ammo. >> i don't think the fed -- >> they haven't got loot of ammunition. >> limited amount of interest rates cuts. >> limited ammunition.