anchor: on mark crumpton with bloomberg's first word news. the house of representatives voted to ensure that all federal employees will be paid retroactively after the partial government shutdown and. the senate approved the billion and endlessly thursday. the legislation now heads to president trump who is expected to sign it. more than 800,000 workers, more of -- more than half of them so on the job mr. paycheck today. the shutdown is having an effect on at least one large airport. for federal security screeners are refusing to work without

willso miami international close one terminal. tsa screeners are calling in sick at twice the normal rate. long lines continue in mexico today after -- shutdown.pipeline he has ordered helicopters and 4000 troops to guard the nation's pipelines and fuel depots against massive fuel that. theft. more than 7 million people in united states have been sick with the flu, more than 83,000 hospitalized. the cdc says it plans to update

so estimates it friday virus.ns understand the -- the seriousness of the virus. global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. anchor: from bloomberg world headquarters in new york. anchor: we are 30 minutes from the trading day. we are coming off of our lows. we could rally into the close.

we've had every industry group and the green. anchor: for the day, we are in the red and we could see that and of this five day winning streak. the dollar weaker versus the chinese in and also the pound which is interesting because there have not been any movement on brexit. anchor: march 4 nine might not the exit if the u.k. pushes back. byhor: we do see oil down 1.7%, just $60 per barrel and that is dragging on energy stocks. if you look at the xl lee, the biggest drag out of the broader

market, prices seem to have stalled out. bit of maybe a little risk aversion as we head into the weekend and also a shutdown shutdown lingers. we can now listen to president trump. anchor: i accrued -- >> i appreciate your support. read that so many people that are saying the president is doing what is right and even doing it is -- we are what is right making sure everyone is being paid when this is over. i just really appreciate the it sohey have handled well in many of them agree with what we do. 24 hours ago you said you

wanted to declare a national emergency. >> no, i said i could do it. it is the easy way out, but congress should do it. congress basic and should do this. .f they can't do it this is a 15 minute meeting. if they can do it, i will declare a national emergency. i have the absolute right to do it. what will happen? beill be sued, it will brought to the ninth circuit. their andobably lose hopefully we will win in the supreme court, but that is what happens. you can take the most perfectly worded document as we have in this case and they will always

bring it to the ninth circuit in the new never know what is going to come out of the ninth circuit and how on appeal. fortunately, we have had a supreme court that has treated us barely. the is something that congress should do, something that the democrats should do it i don't want to give an easy way out for something as simple as this. not only simple, but easy. we have been a country that is under siege. we have a country that is being invaded by criminals and buy drugs and we are going to stop it. i want the democrats to come back to washington and vote. thank you very much.

[crosstalk] >> thank you very much. good job, appreciate you. [indiscernible] >> that is because we had a wall. anchor: the president making some comments about whether he would declare a national emergency to fund the wall. if he did do so, it would end up going to the courts, so he gained out what might happen there. there is no declaration of a national emergency to deal with the funding on the wall. we will keep you posted. to trade.ch gears another round of talks wrapped up wednesday. of course, no deal to end the dispute. the world's biggest economies

might be able to learn a finger to from video games. things canght of all teach us about globalization. it,t piece, loved reading especially because my son plays it over time. let's look it how fortnight is a global business phenomenon. it kind of caps it -- captivates her broader thesis. lose sight of how important the business relationships between u.s. companies and chinese companies can be. by aight is a product company called epic games and in 2012, tencent, the big chinese social media gaming company took a 40% stake and invested $330 million and that injection really cleared the way for epic

games to revolutionize the game industry by offering this brand-new game fortnight for free and upending the model where you can play a for free and the revenue stream comes from micro-payments. if you have a teenager at home or someone older who plays again, you know there is plenty of money they can spend on different skins, these outfits that come with funky dances and different weapons packs. it should be said, that tencent abouted in 2012 was worth $800 million then. capitaler, a venture and itd $1.2 billion

became a $15 billion company. anchor: you talk about these micro-payments, this is basically digital trade at work. this is when a teenager or someone older buys a product from north carolina. well,not really captured is it? than 200ght has more million users. there's a huge amount of money that is flowing from the users and most of it is not really getting captured by economic data and that tells us a lot about how we are failing in the world to capture the reality of globalization. a lot of those users are outside the united states. when they buy something, it is a digital good and it is not showing up in the data. arbitrage across

the world. thank you so much reporting from washington. let's go back to the cabinet room at the white house where president trump hosted a roundtable. >> we're going to take care of it. the easy solution is for me to call a national emergency. i can do that very quickly. i have the absolute right to do it, but i'm not going to do it so fast because this is something congress should do and we are waiting for the democrats to vote. they should come back and vote. they want to go home. they are probably home by now and nancy and chuck and all of the folks that could settle this thing in 15 minutes, uses say 45 minutes, now i say 15 minutes it is so simple. we need money for a barrier. we are just wasting all of the money great there is no technology that is any good. i think you know that better than anybody.

without the barrier, you have people driving in, loaded up with drugs, smuggled people, with all sorts of things that you don't want to know about, so we need a barrier. we can also do a much more major form of immigration reform and i look forward to doing that, along with many other people, including our vice president, but first we have to get a barrier because it does not work without protection. area, you just have to look at it to see how dangerous it is. one of, texas went from the most unsafe parts or cities in the united states to one of the safest cities in the united states as soon as they put up the wall. they built a wall and fencing

apparatus. they went from one of the most dangerous cities to one of the safest cities all within a short time. it is common sense. everyone knows it works. everyone knows it is not expensive. they say it is medieval, well so is the wheel. i look it all of the equipment they surrounded with -- surrounded me with yesterday. everyone of those had the wheel. some things don't change. wheels and walls. they have not found an alternative to either of those. job.nt congress to do its we want the democrats to come back and vote wherever they may be. i have not left the white house except to go to iraq where i had

a great experience. i met some great people, some great generals. we have great ideas having to do with syria. working out very well. out of isis,hell bringing our folks back home. a lot of things working out well. north korea working out well. a lot of things working out well, but the southern border is something that should be easy. what we are not looking to do right now is national emergency. will we want to do and have the absolute right to do, in many ways, it is the easy way out. this is up to congress and it should be up to congress it -- congress. it,hey yell we cannot do there is no way we can vote for security. there's no way we can vote for say secret all nancy and chuck have to do is tell me and you

know what? we will start thinking about another alternative. then, we go on to major reform in immigration and i look forward to that. after 50 years of talking about it, they should have done it. and frankly, previous presidents should have done the wall, not just sections. the problem with doing a section is they come around it. is, but for the area it when you have an area that is open, they just come around it. wall as weding the speak. it reason we have not spent is because the contracts are building it. unlike the government, i like paying after it is built.

you let your contractor do the work and if they do a good job, you pay them. told.of lies we are we are building the walls as we speak. some of the renovation, we had no choice. we had to rip it down. you will see that in san diego. anchor: you are listening to president trump speak. he says if congress cannot fund the wall, he would declare a state of emergency, but not ready to do that just yet. so, not declaring a state of emergency right now and continuing to say building the wall is taking place or renovations, but they will not declare a state of emergency to get that funding. we will continue to monitor. >> raymond james has been

$450ding that with a million price target. we are on a tear, up 4%, the highest since october for netflix. talk about this profit in flexion. what is driving it? >> the profit in flexion we are referring to is netflix is .urther along and a lot of pieces holding back margin the past two years, it has been the personnel investment and content to support the studio that netflix is building. if you start moving out of 2019, that starts to subside over the more. anchor: you make a good case for

what is coming up in the year ahead, what about what the company will report next week? everyone knows when it comes to netflix, the stock lives and dies when it comes to overseas. >> on the subscriber side we see good traction in the u.s. and international. strong.nd asia remain we think there is softness in latin america, the overall the markets trend higher and we think that is a good read for positive support and guidance. anchor: just after the golden globes, i'm thinking of films. >> could you repeat the question? filmmaking,erms of this seems to be strong for netflix. embarking ons been

a films ratcheted the past few years. it is really starting to inflect more. box had 45 million unique abuse -- views. a big subscriber base people.reach more we think it is a an opportunity for netflix to capture more anchor:. -- capture more. anchor: there would be the biggest competitor to netflix that you feel we should watch out for? us quite a bitk about amazon and the disney plus service. we have found these are more complementary than cannibalistic

. i would say did biggest risk is really more macro driven. it is taking share against movie theaters and lanier to the, but -- lanier tv. marketsee the capital close up, that could slow netflix's growth. another factor, i went to latin america earlier. tremendous volatility in countries like brazil and argentina. cheap financing and fx volatility. for joining correct as we approach the close with just 10 minutes ago, joe joins us at this hour as always. we have one piece of macro data

today. thatght now, the one thing could force the fed to not be patient is if there were signs of inflation. high, it wasently right in line. there was nothing you could point to that would say inflation looks to take off. you could slice the data in different ways. it is not gathering steam, so i think this idea that the fed can still look at the data and say there is no particular rush and backu see almost [indiscernible]. ofhor: we had a little bit risk-taking. we are basically flat on the s&p 500. anchor: i'm looking at the

bloomberg here. the nasdaq down 2/10 of 1%. the s&p have down -- the s&p and dow have made their way back. auto shares the best performers thanks to gm and also chipmakers. anchor: banks up for tenths of 1%. you can see concern about [indiscernible] andor: utilities also lower food sables. we are about seven and a half minutes away from the close. we want to take a closer look at the action. >> i'm going to take a look at ab inbev. lunar --'s largest brewer said it is considering an ipo in an asian market.

they are limiting the upside they would get with investors over in asia because while asia and africa are some of the fastest-growing markets, they are not forecasted to grow that much. they also need disk cash to shore up their balance sheet. i want to take a look at the miller acquisition. the industry average is to. they have a target of two times that. shoring up their balance sheet is going to be key for this company, especially if their competitors have stronger balance sheets, so getting that cash is something they will need. anchor: we were just talking to james patterson about raymond james.

the biggest quick boosts for the s&p 500, that is part of a big rally out of the christmas eve autumn. bullish.ndless list -- when we put this at the long-term prospect of an ipo, we see the shares of netflix at the and working its way down this chart may suggest that at some point in 2019, netflix may have a difficult go at it. anchor: a big slug of optimism today and it came from gm. today, is surprised analysts, saying it expects to earn one dollar more per share than analysts had estimated.

, and has fadedop today andust above 7% perhaps reflecting a number of endless who say when you look at , what gms saying predicts may not come. they say -- they are saying demand will hold up and cost cuts will help to improve earnings. today's stocks adding about $4 billion to its market cap, still trading at seven dollars below. >> great perspective on the equities. about four in the sector today. we have been looking at retailing. we have been looking at autos --

>> what a difference a day makes we had a lot of bad news yesterday. gm coming up with the profit forecast in some of the retailers coming back as well. you completely flipped the switch. autos are the best performing. anchor: what are we continue to ?ee people emerge and buy what explains this new environment? >> about a week ago, investors were saying we need to see -- we're at this point, three straight weeks of gains since the bottom back in late december , i sense that investors are feeling a bit more comfortable putting money to work. that does not mean that many could think we

potentially go to every test, -- i will say it does the seem like from the call of i've had people are more comfortable. anchor: three minutes to go before the close. we want to bring in a portfolio strategist. there is money to be put into work. when you look at the rally, ever sector in the green. what could in the celebration? endnd the celebration -- the celebration? the speed ofk at the drawdown, it wasn't consist it, so i think what you are seeing is a normalization back to that, but at the same time, there are tells and the fear is still out there.

the major one is trade and global growth. global growth continues to slow and trade is still on the table. i think there was a shift in negotiations post the g20 summit and i'm optimistic on the outcome, but if you look at the template or other negotiations, we are not going to seem like a deal -- it going to seem like we will not get a deal. anchor: the fed has kind of shifted. is the global growth scenario such a thing that you expect to see more active stimulus policy from other central banks and fiscal authorities around the world? >> one of my colleagues at merrill lynch said policy makers panicking when markets start panicking. there is not a lot of panic, so it is probably too early. are dealingot they with already and i think what you are seeing with china is it

is bucking the trend from pretty much everyone out there. while everyone else is tightening, china is actually simulating from a monetary perspective. anchor: do you expect more money going into the international companies? domestically focused companies have been outperforming. in need to see some change the underlying fundamental trends to get people excited. if you look outside the u.s., everyone is concerned about the u.s. slowing. seeink it is too early to that huge move into the international markets. move are not seeing a huge into the s&p 500. i am looking at the 2600 level as the ceiling. >> we cannot seem to get over it. have come right up against it to times.

>> today we remained pretty much flat. it seems to be the technical resistance level. >> risk off load and for the week we are up by at least 2.4%. the nasdaq is up three a half percent. for now, it is a red print. >> both the driver and a signal about macro factors. pretty impressive, we are down significantly more. futures were read overnight. eveninglly, a perfect >> it is the end of

the week and we are expecting earnings to kick off on monday starting with citigroup. all of the financials informance, most of them are the positive except for goldman sachs. of're getting a lot tailwinds from deregulation. there are some headwinds. weaker seasons with expectations. fresh downgrades from the streets. concerns about low growth -- loan growth. are still continuing to get a flattening yield curve with higher deposits on the shorter and. you do have earnings expectations moving significantly lower. we will have to see how much the tailwinds and headwinds play out

for the banks starting on monday. >> let's look at the s&p 500. the index ended with a small loss on the week, a big again of to a half percent. have had three weeks and a row. we have seen big moves up and down, big volatility. year, and summer last smaller moves but that was the resolution of the earlier volatility. there has not been 14-week winning or losing streak. that next may suggest week will be a down week for the s&p 500. earnings will probably tell that one. >> looking at the retail sector which remained under pressure today given the profit warning that we saw from macy's yesterday. gloom went from boom to

in 24 hours. look at the s&p 500 retail index since christmas. it is put in a 16% gain. from anome notes analyst today that said investors reactions to macy's number yesterday was knee-jerk. goodsaid there were some individual names in retail. not helping tiffany. bearish bets are building for is closeven though it to its two-year low. tiffany will ebb street -- update wall street with its holiday sales next week. >> still with us are our guests.

earnings season is upon us starting next week. we have indications of what we are going to see. about whatt tell us is to come? we have not heard any positive pre-announcements. the underlying results will probably come in ok. the issue is that no one cares. people want to focus on guidance. if you are a cfo, how can you have confidence? you will get some conservative guidance. the outlook on global growth, that will weigh on sentiment. will seenow that you huge rallies on the backend. >> how much can you believe when companies give positive guidance?

how much visibility do they have? >> would question. i don't know. focusedre going to be on what the companies are saying about the first weeks of the year. how they exited the quarter. that is where the focus will be. i don't know that people will put too much emphasis on the town of the ceos and cfos. other carmakers had brutal 2018. could that signal rotation relative to investor expectations? >> it is probably more bullish than people give it credit for. data, theiced in the biggest drag on the major economy is the auto sector. negative yearrst for china.

>> one that has been leading has been oil. energy has been killer this week. how much is oil dictating the sentiment in the stock market? >> there are two things going on. the debacle that happened with oil started with a policy to fall from the administration with iran. caused 90% of the initial destruction then it happened on the back of the loss of confidence globally in the slowing of growth. right now it is feeding off the overall sentiment on global growth.

a interestingly you see policy debacle coming from the government. >> if you look at the last six and any uncertainty index will tell you uncertainty is high today. you need to be a master psychologist to predict what will come out of washington not a typical strategist. >> is there any evidence that is shutdown specifically something that is on investors minds? >> i think it wasn't. there was a general sense of who cares. you have comments now saying that if this continues it might put a downgrade on u.s. credit. we all know how painful that was the last time it happened. investors are increasingly

concerned as we get to this point, we are now the longest ever shut down. we are seeing it show up in m&a activity. you can't travel because they are shutting down tsa lines. it is getting to a tipping point where it affects people, -- confidence. >> we also can't get data on the economy. when youlver lining is see the catastrophes in the past, people can write off the data for a while. because it is related to the government shutdown. >> will that come up on earnings? [laughter] what do we key off of that? will it be every little progression from brexit or trade talks? >> that is what the market is going to focus on. on the we want to focus underlying growth story.

the rest of the world has been slow and for some time. the u.s. has been the shining star. now the u.s. is slowing. if you can get some sort of turnaround in particular china because they are spending so much, that would be the thing to look out for over the next six months. i don't know about overall widespread emerging-market performance. they are struggling to keep the lights on. china is in a different boat because they are increasing the pace of the stimulus. china outperformance is more likely than overall emerging-market outperformance. >> anecdotal perhaps backing that up. thank you. that doesn't for the closing bell. romaine bostick is stepping in

for would you miss coming up next. from new york, this is bloomberg. ♪

live from bloomberg in new york, i'm caroline hyde. >> i'm romaine bostick. >> i'm joe weisenthal. is, what'd you miss. the partial shutdown is set to --e a just hit a record mix level.

g.m. forecasting -- confidence in cannabis. tilray vows not to sell any stock. >> time now for instant replays. the biggest voices weighing in on whether we can measure the effect of the shutdown on the economy and markets. >> we need a couple more weeks for that to happen. impact is too small to tell. right now, we think it is ok but it is very political and depend on what happens next. >> where it should matter is on treasuries. it's not just about this shutdown but all of the political risk that the u.s. is facing.

>> there has been so much going on elsewhere. >> this shutdown is just one source of worry in a 2019 that is full of concern like u.s. inflection and chinese manufacturing and also brexit and the china trade talks. our guest joins us now. thank you for joining us. let's start with the shutdown. is this a thing that, when you is on your list of concerns? >> in the list of things i would be worried about, the shutdown is pretty low. the main reason is it is a partial shutdown. it is three quarters of the government still funded for the foreseeable future.

political and front and center in terms of news but what it means for the economy at the macro level, we don't think it is a top issue. >> when you talk -- look at the market and even in the debt markets, we see a huge rally over the last couple of weeks. i wonder if we are setting ourselves up for a bear trap. are you seeing the macro fundamentals supporting the current rally that we have already had an extension beyond today? >> that is the question for 2019. december 26 the market was pricing in a full on recession. the rally from the bottom has normalized us away from the stream pricing. in our estimation, the markets

are still pricing in fairly weak economic data. the model that we have on the economy versus the markets still below it is 50% even after the rally. ism of below 50. both of these things are still away from where we currently stand. it is still the right framework that if we do not get riskession, the risk of assets higher is greater in our view. from your perspective, where does the rally come in line with fundamentals? strategist -- we rely on them to get these levels.

our sense has been that -- the last three days have been interesting. we start the market weaker and you ended up rallying today and grinding higher. that is in my view a pretty good sign. more importantly at certain levels but i do think that we could return to average valuation and that alone gets us to 2600. >> let's go back to the framing. if there is no recession, then we are due for a rally. that stock should be higher than they are here. let's talk about the recession scenario. do you see evidence in the data or how concerned are you about fed policy that will push us

into a recession? -- therecession risk are two ways to think about it. >> from a market perspective i don't worry too much about things that are priced in. if they do happen, so what. trade, fed,sks are the thing that i think that is out there that is not well priced for is an endogenous slowdown in china. if the domestic economy is slowing and a narrative takes hold the chinese policy is no longer effective, that is a big problem because that would be a paradigm shift. whether we get an official recession or not does not matter. it should mean lower asset prices. jay powell was asked the same question.

why are the economist expectations for a recession are so much lower than what we are seeing reflected in the bond and options market? >> i will take the equity market first. on the equity side, the market wider bandin a much of possibilities in terms of earnings because of the things we talked about. that creates the necessity to give the market a higher risk premium. december was weird because of a lot of reasons. that exaggerated a lot of movements. as people of that, find themselves on the wrong side of the price action again. that is the market coming back but the bond side is a little bit harder. i don't see the fact that the bond markets price and the rate

almost a full rate cut for next year, that seems to me to be too far because i don't know why it is. i am inclined to say that is the wrong price. >> great to get your perspective. irs is trying to assure taxpayers. one key democrat is calling that illegal. coming up next. this is bloomberg. ♪

time for a look at trending stories.

we are looking at attendees of the jp morgan health care conference. get creative to with their meeting spaces. the first time ever, the cdc has released numbers on the name of cases -- flu cases in flues season. than 80,000ore people and hospital since january 5. s&p global ratings crunch the numbers on the partial shutdown. we are looking at the new report showing if the partial shutdown goes on for two more weeks, it could cost the economy more than $5.7 billion. that is the same as the proposed border wall. thesen fall -- follow stories on your terminal and on

tictoc. isday 21 and the shutdown now tied for the longest ever. paychecks will not be going out to federal workers today. museums remain closed. willrs assures people it release refunds. let's start with individual taxpayers. -- once filing season starts, what are the chances that i will get my refund on time anytime soon? >> it will come. the irs is bringing back employees. they say it takes about three weeks. they have not given guidance on whether or not it will be delayed. they have not said how many employees they are bringing back. will need to bring back a lot of people and there is a lot agency couldat the

face a lot of problems. >> what does the law say and why is there a dispute about whether the irs is capable of sending them out? , if cannot send out refunds they cannot it becomes a serious problem for the president. >> there are strict rules about what agencies can and cannot do during a shutdown. it is to protect life and property. previous administrations have said refunds are a nonessential function. the trump administration has not explained the legality of this. the entity that would be challenging violation of this law is the office of his men and budget. the group within the white house that announced this would be happening. there is no legal backstop here. democrats have said they think this is illegal but it is a

problem for democrats to push back because it is their constituents who are also getting their tax refunds. they don't want to tell the offices not to send out refunds. >> let's talk about corporate. when i think about tax reform, there is a whole host of changes this year that companies have been trying to address in previous years. has that been muddied by the shutdown? >> there are a lot of regulations and guidance that are tied up in the agency that will not be coming out. corporations are filing their returns bright -- blindly. during the shutdown, if you had an audit under process, the agency is still charging you interest and penalties even though they cannot work on your audit.

mean thousands or millions of dollars in interest and fines that corporations are being forced to pay for something that was not their fault. enforcementany personnel on staff right now working? >> they just have the criminal unit. ordinaryors looking at course audits or white-collar issues if there was a dispute. all of that has totally stopped and none of that is happening. the agency has been declining in the number of audits they have been conducting year-over-year. reduce companies and individuals willingness to comply. >> thank you. shares of tilray getting a boost.

this is bluebird. -- this is bloomberg. ♪

i'm mark crumpton. president trump and vice president pence were in full-court press mode today as they made the administrations case for border security and funding. the shutdown that resulted from the political chaos over the wall funding is now in its 21st day with federal workers not getting paid. the president held a roundtable on the issue today. >> this is too simple. it is too basic. congress should do this. , this is a't do it

15 minute meeting. it, i will't do declare a national emergency. i have the absolute right to do it. >> vice president pence paid a visit to the washington headquarters of u.s. customs and border patrol. he acknowledged financial hardship and the concern of the agents. my word to each and every one of you is focus on the mission. know you are all about the mission. it is a long and storied tradition here. i want to assure you that we are going to finish this thing out. >> the vice president added effects of what is happening on our southern border speak for themselves. long lines continue at gas stations in mexico today. tanker trucks struggled to supply fuel normally delivered

through pipelines. the mexican president ordered the pipelines shut down after fuel theft sort last month. he has ordered helicopters and troops to guard mexico's pipelines and fuel depots in an offensive against fuel theft. helicopters are watching for .rganized games -- gangs the head of venezuela's opposition run congress says he is prepared to step into the nations presidency to replace nicolas maduro whose election has been released as illegitimate by most countries. he made the statement today in caracas. the announcement is a challenge to maduro, the socialist leader whose government has imprisoned many leading critics. u.n. rights investigator said negotiations on north korea's

denuclearization must also include its human rights situation which has been the subject of international condemnation. >> with all the positive year,pments in the past it is regrettable that the reality for human rights on the andnd remains unchanged continues to be extremely serious. >> his comments come days after north korean leader kim jong-un repeatedly -- reportedly told xi jinping that he is committed to setting up a second summit with president trump. authorities say three people were slightly injured when an avalanche hit a hotel in switzerland today. some houses were also struck. all of the injured were reportedly treated at the scene and returned home. global news 24 hours a day on air and at tictoc on twitter

powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bluebird. -- bloomberg. >> two big stories in the world of cannabis. let's start with tilray. the stock is surging. fundamentaling about the business. it just means there will be less shares. >> yes there is a lack of fundamentals in this space generally. people are trying to figure out how to value these companies. they are not shell --

selling for the first half of 2019. there are people looking for signs of strength wherever they can find them. this sent shares flying. >> is there any indication as to why they will not sell shares? >> it was definitely a question in the market of what would happen when the lockup ended. not going toy were sell right away and boom, there went the stock. >> look at the run-up in the last six months. expensivemazing how it is gotten too short. it is a very small float that is why it has been volatile. very expensive too short.

there certified to import into the u.s. for medical purposes. about after you. fria the allegations? >> it is that they overpaid for assets in the caribbean and south america. they bought the assets from a company that they have a relationship with. they pushed back strongly. there is also an issue of green growth brands may be making a hostile bid to take over. seen the tender offer from green growth. their revenue target did miss

estimates. we are dealing with a lack of fundamentals. >> is there a separation between how the business is doing versus what is being alleged about these executives? >> they have had a huge increase in revenue. they are selling marijuana now. they are showing signs that this is a real business and they are functioning. the questions are about assets abroad. i would put that in the category of what is going to happen in the future. >> coming up, why gm is forecasting presence -- record levels in 2019.

this is bloomberg. ♪

has agreed to share information with value act capital management. cartier is easing investor concerned about chinese demand for luxury goods. they have closed a pricing gap for big ticket items that used to cause -- cost much more in beijing. saggingnd of iphones is because to major retailers have slashed pricing on the latest devices.

one of them is offering the 10 at 12% below retail. >> thank you. g.m. is forecasting profits that conflict with record levels. fueling a rebound for its recently battered shares, we spoke with the ceo earlier at the new york stock exchange. >> this is a result of what we have been working on, working to transport -- transform the business. that coming to fruition. we still have more work to do. we are focused on this to make sure general motors is strong. >> it is also requiring a lot of

investment right now. going from electronic or -- electric to autonomous vehicles. can you get the money you need to invest by saving money elsewhere? >> we are investing. on of the things we did in this transformation is we are remixing our global product development. we have indicated that we will double the amount that is spent, that is not added to it is transitioning to. we have found signatures in engineering and a capital perspective. we have made investments in andsover -- crossovers other families of vehicles. tot is what is allowing us take the billion and a half out of our capital spend. >> talk about the autonomous vehicles. cadillac is going to be your

lead. why? >> cadillac is our technology brand. is appropriate that cadillac is our leader brand and will fill out the portfolio that makes sense and be customer driven. it is an important part of rebuilding cadillac and demonstrating that cadillac is a true luxury brand. delighting customers with the technology and the electric experience. it is been said that you will have autonomous vehicles by this year. autonomousve that vehicles should be electric vehicles. that is a leveraging of the technology and platform. we are working on the rate of iteration that we are demonstrating. we just posted a cool video yesterday.

we have demonstrated in the past that we will make decisions to make sure our visit -- vehicles are safe. canre going as fast as we and we believe we can take the driver out in a constrained environment and demonstrate our electric vehicle capability. you have also announced a new architecture for china and brazil and mexico. tell us why you are doing that. at being looking customer driven. customers one the latest withology and performance safety and conductivity. often those markets are served by older architecture. we looked at the scale and share we have in china and other markets like mexico.

we have dedicated architecture where we can deliver something special to the customer. the feedback we have gotten, we will share those vehicles today. wewill be significant and start of rollout later this year tochina then it will float south america and mexico and 40 countries. >> that was the chairman and ceo of g.m.. is our guest.ore this announcement, gm raising its forecast. it took a lot of people by surprise. she deserves kudos. what did we learn about sales growth and the potential to reignite it? >> you have a company that is able to operate in an environment with little sales

growth domestically and in china. they have shown that sales makes the ability to-- cut costs has been a tremendous benefit to gm and shareholders. 2018 a brutal year for all of the car companies. did people get too pessimistic? today we saw them specifically rallying at g.m.. negative about the dire straits of this industry? >> people are incredibly pessimistic. the truth is, we believe that this cycle can continue for a much longer. of time. this,f g.m. can't sustain we have the ability to invest in a company at a very low multiple, collect a nice dividend, and we think that sales will be resilient even in a potential market downturn.

againsthave tariffs steel and aluminum already. is it just because they are still so undervalued that the risk can be put to one side? >> there is always political risk. the bigger risk is macroeconomic risk. they got out of europe. we don't have issues on the continent to worry about. there production in china is served by chinese manufacturing so there are not cars moving back and forth. gm does not make the decisions today that are best for the company. >> one of the most exciting companies has been tesla. we saw a lot of progress the g.m. made toward moving into electric and autonomous

vehicles. are we going to see that area of the business highlighted more rather than just the traditional car business? >> i think so. ultimately all oems have electronic powertrains. have as the first one to mass-market electric vehicle. we can collect a dividend, to get into these low multiples, she has the ability to ignite this company and make it more valuable. here you get an incredibly low multiple stack -- stock. valued as a technology company. >> g.m. is valued as a slow old boring auto company. they acquired a cruise for a

billion dollars. they are creating value with big decisions. >> one thing we talked about earlier with regards to the market overall, the selloff at the end of the year is almost pricing in recession. are we at the point where if the u.s. economy were to decelerate and that would cause a hit to car sales for 2019, that you are being compensated as a g.m. owner for that risk? >> i think you are being very well compensated. you need a down tick and sales to show that this company has better cost structure than it has historically. >> thank you for giving us your time. up, this is bloomberg. ♪ there is something unusual

happening in the u.s. housing market. rental prices are going down. 2011, rental inflation has easily surpassed wage growth. this sounds like pretty good news for the consumer if housing is getting cheaper relative to their income. >> it is great if you don't own a home. this is not surprising given where we are in the cycle. as rates go up, house prices tend to slow. hopefully, wages will go up. this is not unforeseen but it is definitely the news if you are buying a home and good news for consumers.

>> i just moved to the city. certain esoteric things at play. this is a supply and demand factor. >> i live in brooklyn i can tell you it does not feel like house prices are lower. you have seen prices slow in cities and you will see more of it outside of cities. that is what you would expect. that is good. we have a piece out from my colleague who says she expects wage growth to boost demand for houses later in the year. people will have more buying power. we are expecting a pickup in house sales. right now we have wage growth that is at 3.2 percent.

rental inflation is still at 3.5%. you are still losing ground. it's just not as fast. >> you are not losing as much ground. do we have some precedent for one that flips? paycheck will my exceed my expenses. >> [laughter] you have to go back to the end of 2007 to start seeing that. we don't want to say we are in 2007 because we know what happened after that. later in the cycle, you do tend to see this dynamic happening. it is good for consumers. it is not good if you are owning a home and you are looking for a wealth boost. but it is good if you are looking to buy. huge know that rent is a portion of what drives inflation. if we have a building boom and

more construction and rental prices soften, is it possible to have real sustained upward pressure on basic core inflation and. a deceleration? >> shelter inflation is the biggest component of cyclical inflation. those are the things that respond to changes in the economic cycle. if you saw a pickup in demand like we would expect later in the year with a strong wage growth, you might expect prices to pick back up. that will put upward pressure on inflation which is already near the fed's target. see a pickuping to of inflation later this year. i know that seems crazy. i do think the economy is strong. housing could be something that pushes up prices. i remember when i was looking

for apartments here. a lot of the deals will give you three months for free but your overall rental -- the reason they want to do that is so they can say to their overseers our rent is still pretty solid. do the freebies get into the data? freebies, you end up paying for later. they will give you three months free then they will jack up what you would consider above market rates for the last nine months of your rent. you end up seeing a reduction but it will come back later. whether that averages out in the data in the market is an open question. you will see more discounting as prices start to drop. that is something to keep your eye on.

thank you. for what'd you miss. >> bloomberg technology is up next. ♪

♪ emily: i'm emily chang in san francisco, and this is "bloomberg technology." next hour,n the slack could be very hot of the usual ipo route by opting for direct. while the company might follow in spotify's footsteps. plus alphabet's board is being sued for claims of sexual misconduct. among the names, googles co-founder and circui one