tv Bloomberg Daybreak Americas Bloomberg June 27, 2019 7:00am-9:00am EDT
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we can make our government, our economy, our country work not just for those at the top. we can make it work for everyone. alix: the first democratic presidential candidate debates highlight the issues of the economy and corporate america. china unveils more preconditions free-trade deal. als forecasts,s de highlighting policy changes, global risks, and central-bank easing. the bar will be high for the bank to stop easing once it starts. david: welcome to "bloomberg thursday, juneis 27, back with alix steel. i did not watch all two hours of the debates, but there was a lot of policy. it was not just zingers. alix: and not really attacking each other. and you know who was watching? president trump.
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david: and what did he think? alix: board. he talked about all of the -- bored. he talked about all of the hasht ags. "boring." that much what he said. if you are corporate america listening to the democratic debate, you are saying oh my gosh, what am i in for? david: it is a very different attitude from president trump in 2016. they really want to take on big business. the ford motor company has put some numbers around their restructuring in europe. they are going to lay off 12,000 people. we already knew they were laying off 5000 in germany. the is -- this is part of overall restructuring effort. said they are pulling back in europe. alix: germany, ukraine, russia apparently the hardest hit. david: they haven't been making a lot of money in europe. that's be frank, all of the
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european automakers have been having a tough time. gm got out entirely. it makes sense, but it will be very difficult for a lot of people in europe. alix: take a look at what is happening in the market. not a lot come of the headlines are still quite interesting. euro area confidence the lowest in three years. futures put much go nowhere. euro-dollar pretty much goes nowhere. crude a little softer, down by 8/10. we have all of these different headlines coming out about any demands china will roll not like, that is going to bleed demands chinat -- will or will not make, that is going to bleed into the market. david: walgreens is coming in earnings. perhaps most important, comps store sales up 2.3%. the estimate was down 1.2%. in the premarket initially, a
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positive reaction. alix: and they reaffirmed their forecast as well. david: it is time now for the morning brief. read ofwe get the third u.s. gdp growth the last quarter, as well as jobless claims for last week. at 1:00 the u.s. treasury is offering seven your notes. result of theal bank stress tests, and find how much capital big banks can return to shareholders. after the bell, we get earnings from nike. finally, it is the second night of the democrat presidential bates -- presidential debates. for bloomberg first take, we are joined by mark cudmore and lanan nguyen. china overnight had something to say about these negotiations. this is what the spokesperson for the mystery of commerce had to say. "china's core concerns must be addressed appropriately.
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we can solve the problems through equal dialogue and cooperation. you predicted it on monday. you said china is not rolling over. mark: absolutely. i think the hardest part of getting a trade deal is coming from the chinese side. i think there is very much a narrative in the markets that trump will look for a deal, at least by early next year, ready for the election next year. that is very much his timeframe. china doesn't have a timeframe like that. they are happy to ride this out and demand what they want. they are convinced they must be on equal footing. they need the ban on huawei lifted. they need to get the tariff removed. they have to have that very clearly to make any progress in negotiations. alix: it feels like the rhetoric in the market is that a handshake will be good for the markets. i wonder if that is also a catch 22 because then the fed might not have to be as easy as the market thinks. lanan: i think the market is very much prepared for a deal, so people will be really
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disappointed if there isn't one. all of the rhetoric i'm hearing is that there is going to be some kind of handshake, some step forward in the negotiation. i don't think that changes the said's calculus -- the fed;s calculus -- the fed's calculus. for whenget nervous everyone expected one result. it seems that everyone expect they will not take all of the tarasoff and not put more on. what is it -- the tariffs off and not put more on. what if it falls off? mark: we expect these empty platitudes of we want a deal, we want to work together, and express mutual admiration, but no concrete steps going forward. some people think ultimately those steps will come farther down the line. we are getting really hyped up for this binary g20, and in fact, we are not going to have any clarity because most likely, we don't really know whether that actually means anything. alix: we will have in-depth
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coverage of that handshake that doesn't mean anything, live from osaka all throughout this week. our other story has to do with what is happening in the bond market. goldman the latest two/there forecasts the latest to sl -- the latest to slash there forecasts for the end of the year. how uncommon is an out to see yield price forecasts? lanan: jp morgan also did the same to the same level. let's think about the fact that we could go, goldman's forecast was 2.80, so this is a big change. they are flagging trade risks and the posture by central banks around the world, particularly the fed. this is a pretty major move. it is still not as low as commerzbank, which has 1.25. we are still starting to see all of these dominoes in terms of the forecasts on treasuries. david: mark, it is hard to answer how much of that is really trade, but it strikes me we will have a 10 year that has
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that low a yield with unemployment well below 4%. no one would have pretty good that. mark: if we have unemployment low for percent -- unemployment %, prince show that -- prints show that we are seeing some weakness. i'm not sure we will have unemployment below 4% by the end of the year. it is a lagging indicator, so will just be starting to see the pain in the unemployment market. alix: barclays had their global outlook as well, talking about the fact you cannot stocks and bonds rally because it really is about the market rewriting what the long-term neutral rate is going to be. it keeps going down, and that is a world where you can have everything rally at the same time. mark: completely. we were talking about this narrative of equities and bonds was rallying together. it is the playbook we saw before. that is going to get a further
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boost as we start seeing dollar weakness, which provides extra easing in the market, extra liquidity across global markets. that will see assets get another push forward in the next couple of months. alix: particularly when it comes to gold, and that leads us to our third story. gold finally breaking out. the white line is negative yielding debt, almost $13 trillion. the yellow line is the gold price. i was covering gold back into 2008, 2009 when the story was $2000. now we are all crazy getting to $1400. lananh: gold has been in the doldrums for a while. i'm not sure if you have any old rolexes to sell, but apparently those are selling like hot cakes to capitalize on this gain in prices. most of the reports i'm reading now are getting pretty bullish on gold because it has kind of been pretty quiet for a while. david: is this a safe haven bid, or is this seeing something more fundamental about the u.s. dollar? bid: one, it is a haven
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because of geopolitical risks. two, it is a lack of yield anywhere else. is cheaper to own gold in some ways. the third one is -- i've forgotten what the third one is. alix: dollar? mark: dollar, yes. i'm glad you are on the ball. [laughter] mark: those are the three reasons why gold will probably persist for the next six months to a year or so. alix: thank you so much. good to see all of you. you can find all of the charts we just used and more. go to gtv on your terminal, browse the recent features and save charts. coming up, more on the highly anticipated meeting between presidents trump and xi at the g20. we will speak to craig allen, u.s.-china business council president. cuttingd to break, ford 12,000 european jobs centered in the u.k., germany and russia.
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david: world leaders have arrived in osaka, japan as g20 talks begin tomorrow morning. we going out to bloomberg's chief north asia correspondent stephen engle. what we've heard in the united , from thefar is china ministry of commerce, really seems to be hardening their position. we need to stay mutual, we want the u.s. to change his ways. china is saying no trade deal
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unless you take those restrictions off of huawei. what are you hearing there? yeah, we've been digesting all of this optimism that has been built into the markets again today because of the comments either from the treasury secretary steven mnuchin or others saying perhaps we will not get a deal here in osaka. we will not get a resolution of the trade dispute, but we could get a path forward. we could get some nice optics with president trump and xi jinping shaking hands and smiling, and may be things back moving again. seven months ago, you had the previous g20 meeting and bonus areas -- think meeting in buenos aires. we know that fell apart in may, and now we are here couple months later at this impasse. there was some optimism that perhaps because they are talking sunday morning japan
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time, that you could get those comments. president trump says that the threat of extra tariffs are still there, and perhaps even forefront, but you are getting those comments from beijing that you just read out. , at leaste position publicly, hasn't changed one bit. they want a balanced approach from the united states that treats china on equal footing with the united states. david: thank you so much to stephen engle, reporting from osaka. he will be covering that for bloomberg throughout the g20. for more on the g20 meetings and meeting with president xi of china, we will come from washington ray gallen, u.s.-china is this council president, and former ambassador to brunei. you follow this stuff very closely. his china's position hardening,
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or has president trump overestimated the extent to which china really need a deal? craig: the chinese position has certainly hardened since the huawei going on the entities list. they have articulated a good number of times at a higher level than just yesterday that they are looking for balance, equality, and a realistic appraisal. that is a change, and i would expect that they are trying to reset the terms of the negotiation to go in a quite different way than they have been going for the first 11 rounds. alix: julian, if you take a look at the diverging views of what could or couldn't happen, what do you feel like is priced into the market, and where is that risk? guest: what's priced in is that the tariffs that exist at the moment are going to remain, and nothing incremental is going to be put on, and that there will
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be a handshake or smiles, whatever you want to call it, with the promise of further negotiation. if you think about it, it really is the base case, and the tails are very small on the upside and the downside, but that is where we have potential large market moves. david: if in fact it comes out as that base case, what does that mean for u.s. companies doing business in and with china? craig: u.s. companies are hurting in many different ways. as someone said, we are paying the short-term, and over the longer-term, the europeans and japanese are getting the benefits. i think that is very true. american companies, particularly in the tech sector, are facing really strong headwinds as chinese buyers are wondering whether or not they are reliable over the longer term. there are a lot of challenges, particularly in tech, but across
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many other industries as well. american farmers and ag are hurting. the service companies are very uneasy. david: you've negotiated these sorts of deals as a u.s. abbasid are to brunei. what is it -- u.s. ambassador to brunei. what could robert lighthizer do to move this forward more aggressively? craig: i think that we need to look for a good deal, not the perfect deal. the perfect deal is out of sight. we are not going to make all of orna looks like westchester washington, d.c. that is not going to happen. a historicdeal, and deal, is within sight. 90% of it is done, so let's get ae other 10% done and get deal that benefits american companies, workers, farmers and ranchers. it is within sight if we are
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realistic come of compromise, and work with the chinese on an equal footing. alix: i feel like that puts the marketing quite a conundrum. let's say we get that extra 10%. that doesn't take the pressure .ff the fed to ease do you see it like that, that a good deal is a bad deal because it changes the fed? julian: in the short-term, our view is that the market is expecting too much from the fed. i go back to earlier in the spring when we first came out with the call that the fed was going to cut twice in 2019. people look at us as this we had three heads -- as if we had three heads. there's way too much expectation to ease here. both powell and bullard tried to send that message, and moreover, they tried to send the message that what really matters here is getting something workable in osaka this weekend.
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david: is it possible we are all overreacting a little bit to the trade phenomenon? if you look at stocks, they don't seem to indicate quite as much. ofwill put up a chart here global stocks exposed to china. they have not fallen off a cliff by any means. they are right up where they were before the argentina g20 meeting. stocks don't seem quite as anxious as maybe we are. julian: it is a stock by stock basis. basically, the issue is when you think about all of these brexits, the fed, china, , there's a lot of unknowns to process, so the combination of all of those is causing us to fixate on the unknown that is right here in the immediate term . but the bottom line for us is if you don't get movement or stabilization this weekend, you are setting the stage for a potential global recession in 2020. alix: ambassador, you seem
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relatively optimistic that we can finally get some kind of deal. can you talk about how the innerworkings of the administration work in these circumstances? there have been reports that lighthizer and president trump may not see i to i. what are the internal politics like? craig: the internal politics in both beijing and washington are extremely complex. there are countervailing pressures going both ways. the most important countervailing pressure in both capitals is on the security side. there are folks looking after espionage whoy, are not anxious for a deal, and indeed, who are advocating decoupling. that is true in both capitals. those individuals who will be at the table, if this were only a trade issue, we would be able to reach an agreement. this is not only a trade issue.
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david: craig allen of the u.s.-china business council, thank you for joining us from washington. julian emanuel of btig will be staying with us. we will have live coverage of the g20 from osaka through the weekend. itsng up, goldman slashed outlook for treasury yields. more on that next. this is bloomberg. ♪
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with us. what is your call for 10 year? julian: not going to happen. alix: why? julian: first off, i have sensed in the last several weeks, as gold has rallied, our clients are starting to get very uncomfortable with the risk-reward presented by the cost -- or by the receipts, if you are german government -- of long-term money. it is a head scratcher. talk of austria potentially issuing 100 year bonds at 1.2%. it just doesn't make sense from a risk reward perspective. the bond market is telling you that there is the potential for this global recession that we alluded to a few moments ago, which again, reinforces why all of these events are so important. from our point of view, and we saw this at the end of the first quarter, there is likely to be a reset higher. we actually started seeing it in the stock market yesterday,
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where cyclical shares rallied and defensive shares, there was a lot of profit taking. that is the market telling you that interest rates on the long if the fed isrly successful in stoking info asian expectations, moves higher. david: is inflation coming -- stoking inflation expectations, moves higher. david: is inflation coming back? julian: you may not get an overshoot of 2%, but gold is telling you it is a possibility. obviously the oil market has been very strongly bid. you our point of view, if get a good deal or a handshake or whatever, some form of happiness this weekend, the first reaction is likely to be higher long-term yields monday morning. alix: but it feels like the problem is exhibit hide in this chart, negative yielding debt versus gold. we are almost $13 trillion in negative yielding debt. how do you not then buy gold or bonds that are yielding
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something, even at 1.2%? julian: and how can you not buy stocks, defensive stocks in particular, though there yielding 2%, 3%? that has been where the market has been putting its assets. notion -- itwhole is one of those things. the old saying is if something that doesn't make sense continues, at some point it is going to stop. it is hard to say when that is going to happen, but there is a sense it could. alix: julian emanuel of btig will be sticking with us. stay tuned for all things gold on "commodities edge." this is bloomberg. ♪
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movement in the equity market. we seen the dax flag. european markets slightly lower. area drope euro in confidence the lowest in three years. no doubt trade front and center with that. it is another 10 year yield cut by goldman sachs. 1.75 is what they see now for the end of the year. gold taking a break. oil still down 1%. that is also confusing to me. explain that to me because iran is going to breach their uranium -- theirent stock uranium agreement stockpiling today. david: i'm not going to ask plane oil to you. you explain it to us. let's talk can i grab for a acree -- let's talk can for a minute. they took down the earnings-per-share forecast slightly. they've seen net sales up about 1.5%. it is down over 5% right now in
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the premarket trading. alix: they do wind up seeing a lot of their progress is being overshadowed by transitory events promotional competition in certain categories, isolated many factoring related challenges, weak performance in one of its males. so i don't -- one of its mills. so i don't know. we will see. kind of like german weak gdp growth. david: fedex having a transition year. alix: exactly. david: the next thing they will say is they are having a transition day. [laughter] david: let's get an update on what is making headlines outside the business world. viviana hurtado is here with first word news. firsta: in florida, the democratic presidential debate exposed an ideological divide. 10 get it it's were on stage for the first night of debates in miami -- 10 candidates were on stage for the first night of debates in miami. they agreed on universal health
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care, but not on the ways to do it. elizabeth warren saying she is in line with bernie sanders. sen. warren: i am with bernie on medicare for all, and let me tell you why. i spent a big chunk of my life studying why families go broke. one of the number one reasons is the cost of health care, medical bills. and that is not just for people who don't have insurance. it is for people who have insurance. viviana: tonight, sanders and joe biden will be on the stage. we will have more on last nights debates in just a few minutes. for the first time, iran set to breach the land mark nuclear deal in 2015. iran's atomic energy agency saying today, the comedy will probably exceed a cap on stockpiles of low-grade uranium. that puts pressure on european powers trying to salvage the agreement from u.s. sanctions and trying to avert a slide to war. china's demands for a trade deal with the u.s. haven't changed.
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they call on the removal of tariffs and ensuring the deal is balanced. donald trump and xi jinping are set to meet saturday in japan to try to restart negotiations. 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. hurtado.na this is bloomberg. alix: thank you so much. investors waiting for direction ahead of the g20 meeting, and don't feel a lot of room to move up for stocks. here with us is taylor riggs. taylor: nothing is going to happen for the rest of the year, according to strategists. where we closed yesterday on the s&p is right at the average year-end price target of 2912, and near the median price target of 2950. strategists are saying that the second half of the year, most things are already priced into the market. interestingly, they are not changing the price targets even
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though we are starting to see some signs of a decline in growth on a rear year basis. we are looking at a 2.3% drop in the second quarter. that would be the biggest going back since the first quarter of 2016. at that time, you have five consecutive quarters of negative growth year-over-year earnings-per-share. what this means is we sort of look range bound here. you have the 50 day moving average crossing above the 200 day moving average in yellow. as you can see, really range bound between 2800 and 3000 on the s&p 500. alix: thank you so much. still with us, julian emanuel of btig. to drill down a little bit, lowering your profit estimates but keeping the base case for the year-end target the same, that is a fed thing, it is it not? julian: there's a number of these risks we talked about, and if all of them actually end up with a positive resolution, we said all along you could overshoot our 3000 price target
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to as high as 3400. if you look at the market set up , first of all, 29 53,000 look very improbable on january 1 -- veryor 3000 look improbable on january 1. but when we've had years like this, only two times in financial history have we had a new high, bear market, and new high taylor: the message -- and new high. in both of those other cases, you traded very high. david: do you have any other outlook for 2020 on earnings? julian: no, to be honest. again, tell me what is going to happen this weekend and we can get a greater degree of competence, but i think -- degree of confidence, but i think to doubt the ability of corporate america to do what needs to be done to create profits is a bet that is a
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losing bet. so we think you're going to grow. index ofti has an revisions up versus revisions down on earnings-per-share, and it is the lowest it has been since last january. they are outnumbering the upward revisions by a lot right now. julian: but at the broader index level, your starting to drop in terms of 2019 earnings expectations. you really have come down a lot over the first six or seven months. view, we thinkof there's actually two-sided risk going into the balance of the year. craig: does that mean -- alix: does that mean you want to buy cyclical's? julian: yes, absolutely. we would like to hedge it by under waiting offensive -- by defensives.ng if longer-term yields are going
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to creep higher, that is the place that is going to see an outflow of funds. david: we might want to talk about the 2020 election. democratic candidates on the debate stage last night were focused on u.s. companies, and not all of it in a good way. >> who here would abolish their private health insurance in favor of a government run plan? just a show of hands to start off with. sen. warren: look at the business model of an insurance company. it is to bring in as many dollars as they can in premium, and to pay out as few dollars as possible for your health care. medicare for all solves that problem. >> we should give everyone in this country health care is a basic human right for free. >> there is too much profiting off of people in this company,
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from pharmaceuticals to insurers. sen. warren: we have basically let giant corporations do exact they what they want to do. giant corporations have exact lay when loyalty, and that is to profit. if they can save a nickel by moving a job to mexico or canada, we are going to do it. sen. booker: we have a problem in this country with corporate consolidation. sen. warren: there is a problem with consolidation of giant corporations. it hurts farmers, it hurts our economy. sen. booker: companies like halliburton or amazon pay nothing in taxes, and we need to change that. david: julian emanuel of btig is still with us. let's start with health care. on the one hand, health care is pretty immune from trade problems. on the other hand, it has a big target on its back, and not just from democrats. julian: from our point of view, health care is actually starting to take on the more defensive properties that use to six or seven years ago, before
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consolidation became the theme. from that point of view, if you look at it right now, the multiples and health care have been crushed. absolutely crushed. certainly relative to the market, so a lot of this is already reflected in the price. from our point of view, in the next year we are not likely to see much moving simply because of the gridlock in washington. sectoroverweight the because we believe in the long-term demographics and the viability, so for us, it really is an opportunity to patiently accumulate here, knowing that you are going to have to live through this kind of headline volatility, but most sectors seem to be in that type of situation at this point. alix: what struck me most yesterday watching some of the debate is if i was running a company today, a non-small business, i would be very scared
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of the democratic field as a whole. naming halliburton and amazon directly as not paying any taxes and it they want, these are really stark statements. how do you price something like this at all into a model? julian: the question is in the history of presidents, we've really only had one who went out and said exactly what they were going to do and seems to be doing it, whereas the tendency tends to be, particularly if you are a democrat, to get nominated by running on the left and then running toward the center to get the electorate. david: but on this question of consolidation, particularly in the technology area, where is the center? we had the president yesterday saying he thinks he should be suing google and facebook. so it is not just the democrats. there seems to be something of a consensus here. julian: which goes to our view on technology that if you think about the tech sector, particularly with regard to china and what is going to happen between now and next november, we are neutral there
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because even though that sector is cheap, it is going to be under the crosshairs. alix: i feel like the last few elections have been about beating up on big banks, and that has totally gone out of the conversation. julian: give it some time. [laughter] alix: i don't know how much more you could beat it up. you like financials. is that dependent on your yield forecast proving right? do yields have to go higher from here? julian: no questions about it. it is less about the yield itself at the long end and more about the yield curve. implicit in the fed's message is that it would like to steepen the yield curve to really sort of relieve this angst about the probability of recession, which , we don't see as likely. david: we will just ignore the 3-d on -- the three-month 10 year yield curve. but? do you -- but do you? julian: they have never adverted
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forward eliminating about hundred percent of its european aboutrce, about 12,000 -- 20% of its european workforce, about 12,000 workers. ford will reduce the number of facilities in europe from 24 to 18. a takeover of the health benefits industry health equity agreeing to buy wage work. this as the 30 days before health equity's offer became public in april. bank of america will stop lending to companies that run private prisons and detention centers. bank executives meeting with civil rights leaders and visiting facilities before making the decision. last night at the democratic residential debate, elizabeth warren lasted the industry. sen. warren: it is doing great for people who want to invest in
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private prisons, just not for the african-americans and latinxs families whose lives are destroyed and whose communities are ruined. viviana: a spokesman for one private prison company says that bank of america based its decision on politics. i'm viviana hurtado. that is your bloomberg business flash. david: i found that interesting, based on politics. yeah. donald trump has taken action to try to address the over incarceration of minorities in this country, so this is not even just a democratic issue. alix: i guess you can say it is politics as long as you say it is both on the aisle. just in the last year, you had banks pulling back on lending to gun companies, but how long has that been? it is not a bipartisan issue. david: it was featured prominently in the debate last night. alix: it goes into the whole
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economy. it was basically a two hour debate on the economy. we turn now to wall street beat to cover three things wall street is buzzing about this morning. first up, shares rising the most in a decade after hiring a high-profile lawyer to fight cases that they are over its roundup weed killer -- cases that bayer over its roundup weed killer. chase coleman has seen his firm beat out other hedge funds, giving him a spot among the world's 500 richest people. they wiggled lost twins double their bit -- the winklevoss twins double their bitcoin worth. just all rich people, the last two stories. [laughter] david: joining us now is sonali basak, bloomberg investment banking reporter. ert's talk about the bay
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story. they jumped in with both feet. sonali: they already had one to billion dollar problem with the same issue -- one to billion $2 billion-dollar problem with the same issue. lawyer knownired a as a fighter, not known to settle easily. there's a lot of hope embedded in this. david: and they said they are going to get this thing resolved. they also have ken feinberg appointed to try to mediate things. sonali: they are really taking it seriously, and i think the hope is that they will pay less. alix: they take it seriously now, considering they were relying on the science. the court issue with them, the
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whole thing was look at the science, and that did not get them anywhere. david: leaving aside the question of why they didn't know about this when they bought monsanto. alix: where they did, but they looked at the science. because there were lawsuits at the same time. david: and juries don't necessarily look at the science. let's turn to chase coleman and tiger global. this seems almost too good to be true. he's like a made up character. sonali: he is the youngest wall street person on the richest 500 list for bloomberg billionaires. he started his own fund at 25 years old, splitting off from julian robertson. david: he was an analyst to julian robertson, and then he went to invest. sonali: his fund has risen 25%. there's a few things he has to worry about. at $30 billion, maybe he manages too much. skill is really hard for hedge
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funds -- scale is really hard for hedge funds. and if we are in a bubble, what happens to these technology funds? david: he talks about getting too big, and it gets geometrically more difficult to make good decisions. sonali: he did say in the last couple of weeks to investors. another thing that was really colorful is that the best investors, he believe, have the panic button very far away from the keyboard. we know he has the stomach. david: making very big bets. alix: didn't he also come from money? a little bit. david: he came from the north shore of long island. alix: so not like self-made. sonali: he does have a colorful life. the first line of the story is " if chase coleman didn't exist, hollywood would surely invent him." [laughter] we want toast story
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talk about his winklevoss. talk about the bitcoin surging. that is really good for their fortune the last few days. sonali: the investors combined are worth about $1.5 billion. they were worth half as much at the beginning of the year. speaking of panic buttons and keeping it away from the keyboard. they did go on a public chat and said they were sticking behind the currency. etf'sad two bitcoin rejected by the fcc. right now, at least, they are being rewarded for it. david: how much of this is because of libra? sonali: there's a real debate about that in the community. especially with their relationship to facebook, it is interesting. but it is becoming more advanced, and more institutions are joining on. david: time will tell. thank you so much for being with
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yesterday there was a fairly important decision for business because what the court did was basically reaffirm that when you challenge agencies for the purpose of regulation, you will defer to the agency. this is something that business had really wanted to overturn. surprisingly, chief justice roberts sided with the liberals in a 5-4 vote to keep the precedent the way it is. alix: what is also on the docket that businesses care about? david: we have two decisions in one order to come today. number one is the census, whether you can include in the census questionnaire questions about race, which is very controversial. ,he idea is if you include it the states that have more blacks willd
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underreport. the other decision is about gerrymandering, whether it is political or an issue for the courts. huge decision. all sorts ofs conversations about ethnicity and race. when you have the census, it is the census for 10 years. states get driven off of that for 10 years. -- it ising up exciting. coming up on the program, greenwood capital president and cio will be joining us. are the risks of g20 underpriced? what should you do monday morning? this is bloomberg. ♪
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can make our government, our economy, our country work not just for those at the top. we can make it work for everyone. alix: democratic presidential debate highlights the issues of the u.s. economy and has warning for corporate america. the long and winding road to a deal. set aent trump and xi date for a trade deal talk as china unveils more precondition. we speak to barbara smith, commercial metals ceo. yield forecasts. the bar will be high for the fed to stop easing once it starts. david: welcome to "bloomberg this thursday, june 27. we have news in the stock market because there are some earnings out. alix: we do have some premarket movers, and a lot of it unrelated to trade.
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boeing has another issue for the max 737. had to lower their 2020 growth forecast and had comp sales mix. david: forward announced they will -- ford announced today will lay off 12,000 in europe, and their stock is up a little bit, i think because people were waiting and waiting for them to say what they are doing. walgreens as well had good earnings. alix: if you go through conagra's press release for risks, the risks are actually idiosyncratic. it is less about the macroenvironment, so when you pile the macroenvironment on top of something like that -- david: but none of them have to do with trade, at least today. alix: we will wait and see what happens over the next 48 hours. s&p futures clinging to a gain. dow futures still off by about
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27. euro area confidence falling by the most in three years. yields going nowhere. crude rolling over, surprising considering today is the day iran said they would breach the nuclear stockpile deal. crude not responding. the rest of the market taking a pause. we are going to delve into it, that's for sure. david: it is time now for the morning brief. at 8:30 eastern come we get the third read of u.s. gdp growth for the last quarter, as well as jobless claims for last week. at 1:00, the u.s. treasury will auction $32 billion in seven your note. in seven-year notes, the bankthe last of stress tests come out. after the bell, we get earnings from nike. finally, it is the last night of the democratic presidential debate in miami at 9:00 eastern this evening.
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all eyes are really on osaka, japan. g20 leaders are gathering for their meetings that start tomorrow. the first meetings are somewhat overshadowed by the collateral discussion resident -- by the bilateral discussions presidents trump and xi will have on getting trade talks back on track. we welcome now shawn donnan. great to have you with us. what we are seeing overnight from china is a statement from the commerce ministry saying we are not moving very much. it has got to be a tit-for-tat, mutual agreements, or else we are not interested. then it was reported that china is saying unless you take huawei off the table and let us back in, we are not going to have a deal. this sounds like china is toughening their position. china inthinkshawn: some ways is restating a position. it has been saying it wants to see all of the tariffs go. it wants to see huawei let off
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the hook. the question now is whether that is all he precondition for the truce we have been gearing up for here, a pause in the trade wars we think the two leaders are moving towards accepting at their bilateral meeting, so still a lot up in the air here. certainly both sides are keen to be seen not to be backing down in the face of pressure from the toer, and both leaders came save face going into this meeting. david: that is such an important point. from president trump's point of view, he has climbed up on a parapet saying we are going to impose more tariffs unless we get something out of china. what does he need to get for president -- get from president xi to be able to say he did what he needed to do? wewn: that's why
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really need to take about what is going to happen beyond saturday. a short-term truce would see a pause in president trump's tariffsimris durin -- in return for a resumption of talks, but that deal that president trump has set out to get with xi jinping in which he gets a rebalancing of the economic relationship, its key concessions on intellectual property rights and intellectual property theft out of the chinese, and that the chinese in return are able to show that they get something, that is a much harder deal to get. both these leaders have domestic political constituencies, and thatof those have allowed are calling for them to be tough in the long run, not to be , inding down or kowtowing the chinese case in particular, to the u.s. and donald trump. david: thanks so much to shawn donnan, reporting from osaka.
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he will be reporting through the weekend on the g20. alix: while president trump and xi head back to the negotiating a note framing the expeditions. joining us from greenwood capital is walter todd, president and cio. what you feel like is the market position? walter: i fuel at the market has priced in the most expected outcome, a pause in the tensions and no new tariffs. if we walk in monday morning and that is the outcome of this meeting, that they continue to talk and pause the increase in tariffs, it is a nonevent for the market, and we will quickly
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refocus on earnings for individual stocks. i don't think there is really any probability of a best case scenario, that being a deal agreed to and all tariffs rolled back on these preconditions china has rolled out. i don't think that it's really a good start to the negotiations because i don't think trump is going to like being told what he needs to do. which these scenario market would respond negatively to is that they don't agree to talks, and there is a continued stalemate, and trump agrees to raise tariffs again on the additional $300 billion. david: you mentioned the trade issues and earnings. to what extent are they tied? that is to say if things go sideways, could it affect earnings through a lack of global growth? walter: i think we have already started to see that. continue to see earnings estimates trimmed down. what that would really start to impact is, as you go into
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earnings season, a pretty low bar for the second quarter, but the guidance going forward is undoubtedly going to be impacted by the uncertainty that is continuing. we are starting to see this in consumer confidence that we got this week. i think you are going to start to see a slip in business confidence. the longer this uncertainty goes on, and even if there is a truce there is still uncertainty, that starts to weigh on earnings. david: i am going to put a chart up from the citigroup global earnings index, which compares taking it down versus taking it up. downward has really climbed quite a bit, the highest since january. at the same time, i've heard reports that maybe that is turning around. what have you seen? walter: i think what we are seeing is a very mixed bag. what this sets up for the second quarter is that lobar that companies will likely be able to jump over, but i think the
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situation becomes when that geithner come -- when that guidance comes out for the rest of the year, that may continue the downward chart in the -- the downward trend in the chart you are seeing. we rallied on expectations for improvement in trade talks, as well as the fed, but i don't think that really gets at the crux of the issue, which is the earnings continuing to move lower. alix: so are we set up for bonds and equities to move higher at the same time? barclays says yes. goldman also revising their 10 year forecast down to 1.75%. and-term weakness in data asymmetric risks. does that wind up messing with higher equities at the same time? walter: we don't think so. if you overlay the 10 year with the s&p over the last three years, there's a tremendous gap.
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our belief is that gap has to close somehow, so we either have to get higher yields as a result of better growth expectations or trade discussions, or the market is going to have to close that gap on the downside. we think that higher yields would lead to higher stock prices and affect different sectors of the market different ways. but if we go to 1.75% on the 10 year, that would equate to lower stock prices overall. david: walter todd of greenwood capital will be staying with us. we will have in-depth coverage of the g20 summit, live from osaka, through the weekend. for what is happening outside the business world, viviana hurtado is here with first word news. viviana: the first democratic presidential debate exposed an ideological divide. 10 candidates were on the stage for the first debate in miami, florida.
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they disagreed on how to remake the economy and fix immigration. they agreed on universal health care, but nothing way to do it. elizabeth warren says she's in line with bernie sanders. sen. warren: i'm with bernie on medicare for all, and let me tell you why. i've spent a big chunk of my life studying why families go broke. one of the main reasons is the cost of health care, medical bills. and that is not just for people who don't have insurance. it is for people who have insurance. viviana: tonight, sanders and joe biden will be on stage. we will have more on last nights debate in just a few minutes. iran is set to breach the landmark nuclear deal signed in 2015. iran's atomic energy agency saying the country will probably exceed cap stockpiles of low-grade uranium. that puts pressure on european avoid trying to
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u.s. sanctions and avert war. fora has set preconditions renewed trade talks. president trump and china season paying are set to meet saturday in japan to restart negotiations -- and china's xi jinping are set to meet saturday in japan to restart negotiations. 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. on the vn art auto. this is -- i'm the the on art auto. this is -- i'm viviana hurtado. this is bloomberg. david: coming up, we talk about policy risk in the markets. that's next. this is bloomberg. ♪
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daybreak." it's a sign of how tough it is for automakers in europe, ford eliminating about 20% of its workforce in europe, about 12,000 workers. ford will reduce the number of facilities in europe from 24 to 18. more problems for boeing's troubled 737 max 8. a newhave revealed safety flaw unrelated to the two fatal crashes. bestseller.'s it has been grounded since mark. buythequity agreed to wageworks for about $2 billion in cash. this was 30 days before healthequity's offer became public in april.
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that is your bloomberg business flash. david: thanks so much, viviana. we saw the first 10 democratic candidates for president debate in miami last night. whatever differences they might have had, they seem to agree that we need to restructure a good part of u.s. business. >> who here would abolish their private health insurance in favor of a government run plan? just a show of hands to start off with. sen. warren: look at the business model of an insurance company. it is to bring in as many dollars as they can in premiums and pay out as few dollars as possible for your health care. medicare for all solves that problem. >> we should give everyone in this company health care is a basic human right for free. sen. booker: there are two any people profiteering off of the pain of people in america, from pharmaceutical companies to insurers. warren: we had an anustrial partially --
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industrial policy that has basically been to let giant corporations do whatever they want. they have one loyalty, and that is to profit. if they want to save a nickel by moving jobs to mexico or canada, they are going to do it. there is way too much consolidation in industry. it hurts workers, small businesses, independent farmers. it hurts our economy overall. companies like halliburton and amazon pay nothing in taxes, and we need to change that. david: walter todd of greenwood capital is to with us. listening to that come are you getting a little nervous about health care? shawn: i have to say yes --walter: i have to say yes. health care is definitely in the crosshairs, and specifically insurance companies, recognizing that pharmaceuticals will be under the gun as well in terms of the pricing. they are still going to sell drugs under the worst case an
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--a of universal health care worst-case scenario of universal health care. health insurance companies would cease to exist. alix: how do you look at 2020? how do you hedge sector risk? how do you understand it? walter: the headline risk is certainly there today taylor: -- certainly there today. i think it is a little early to position for that. as we get closer and see who the leading candidates are on the democratic side, we get a little better idea for that. you do have to be prepared for some headline risk related to these debates and going forward. in general, the backdrop for business, as you heard there, is going to be very unfriendly should one of those candidates win. i think as a consequent of that, you could see a pickup in m&a. you heard if they were to win,
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they would not allow big m&a transactions, so you may see companies pull that forward ahead of 2020, dependent on how the polls look. david: but is it bipartisan or partisan? the president says we should be suing google and things, and he is no fan of pharmaceutical companies. walter: that is a good point. that is a little bit unique from the past, where republicans and democrats are on two different sides. for health care specifically, there is some risk today because of the fact that the president has said he wants to get permissible prices down -- wants to get pharmaceutical prices down. alix: walter todd of greenwood capital, you're going to be sticking with us. coming up, more on those ford job cuts in europe in today's bottom line. this is bloomberg. ♪
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david: time now for the bottom line, where we look at three, nice work watching's morning. first of all, i'm watching ford -- three companies worth watching this morning. first of all, i'm watching ford, announcing they would be cutting 12,000 jobs in europe. the stock is up on the news because people are selling the rumor, buy the news.
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alix: take a look at bayer. the company hired a very toh-profile lawyer fight the lawsuits on ground up, the weedkiller that monsanto makes. now it feels like they are public facing, we are taking this seriously. the question is how much the damage, if they settle, would be. david: even if it is a bad number, know what it is. alix: it could be as high as $6.8 billion. some say more. david: the third company we are looking at is boeing, unfortunately for boeing. brooks now to sutherland. i almost -- two brooks to brooke -- sutherland. i almost couldn't believe this
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when i read it. brooke: no one could. many fronts, not only is this another issue with the plane, but also just on the transparency front, that this had to come out the way it did. there's been a lot of questions about why it is taking so long for boeing to submit a fix for that mcat system. they first said they would have that by the end of march. it doesn't make you feel a lot more comfortable to get back on that airplane, nor does it make me really trust boeing. david: at some point, one wonders is this just a coincidence? structural inhing the aircraft that makes it prone to these kinds of problems? courtney: i think it is getting harder and harder --brooke: i think it is getting harder and harder for boeing to say they don't need a successor for the max 737. i don't know how you can stand
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behind that at this point, given all of the questions people have and if they are comfortable getting on this airplane. for investors, the downside is those programs cost $10 billion at least. that is money that is not going to share buybacks or dividends. it is going to clean sheet design. alix: oh good, a second way that the plane can randomly nosedive. david: and don't they have a lot of orders on the books? if they switch the aircraft now, what happens to those orders? brooke: they do have room for airlines to change orders. you do have some flexibility to move those around. some of these airlines aren't going to want their planes -- some of these planes are going to want -- some of their airlines are going to want their planes because they need to capacity. still expect the plane to be granted six to nine months
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total -- to be grounded six to nine months total. alix: johnson & johnson had consumer goods with an accidental threat -- with an existential threat with tylenol, needing to get it back on the market. boeing doesn't have that because it is a duopoly stick -- is a duopolistic market. brooke sutherland, thanks so much. coming up, stress tests. banks sailed through the first round, so will be as easy? -- so will the second be as easy? this is bloomberg. ♪ the latest innovation from xfinity
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asset classes go nowhere. german inflation holding steady in june, did not stained -- did not change at all. -31 basis points on the 10 year bund yield. gold is up, safe haven trade front and center. here is your final read for the first quarter gdp. 3.1%. no change from the second read although a little lighter than initial estimates. consumption revised downward to .9% as the core pce quarter on quarter revised higher to 1.2%. jobless claims ticked up. david: they are creeping up, which you have to pay attention to your i will say that personal consumption, you focus on because we rely on the consumer so much in the u.s. economy right now.
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alix: personal consumption rising .9% in the first quarter. the fourth quarter had a huge rise of 2.5%. like you mentioned, something to keep your eyes on. nonresidential fixed investment, spending on equipment, that rose 4.4% in the first quarter. it is lower than the fourth quarter but still a decent rise. walter todd of greenwood capital is still with us. is this read consistent with how you view the economy and if not, how? walter: the headline number of 3.1% is misleading for your discussion you were just having around personal discussion -- personal consumption. there were a lot of one-off factors including a big inventory built that boosted the number including trade. consumption were to print again below 1% going
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forward, we would have a much lower headline number for the rest of the year. that concerns me a little bit. they relates to claims, remain near 50 year lows but tend to be a lagging indicator. everybody will be dialed in on that payroll report. david: at the same time, let's take a look at the gdp numbers. second quarter will not be as strong as the first quarter. what are you looking at for the rest of the year? walter: i think we're in that model through category -- that muddle through category, the 2% range right now. depending on how long the trade uncertainty lingers, there is downside risk to that number. it consumer confidence continues to go down, that is obviously going to be a drag on consumption and that is 70% of the economy. the labor market continues to be healthy and that is a good thing. to pivot off of
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that, corporate profits up 3.4%. profits thatial were down 11% in the first quarter and the nonfinancial sector profits fell almost 5% in the first quarter. what type of sector is going to be best whether to deal with profits shrinking while the consumer might not be as strong as we anticipated? walter: that is the tough part because the defense of sectors that may be would not be impacted by this like utilities have already run. they are very expensive. it is too late to going to those. the cyclical sectors are most at risk on the earnings front. some of that is reflected given the low valuation. it is very difficult area to navigate. that is why we are holding cash to get more certainty out of the trade situation over the weekend
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and moving forward. i do not think you need to be a hero and barrel into the market given these uncertainties. alix: walter talk, greenwood capital, you are sticking with us. david: a key component of economic growth is the state of our financial institutions, which went through a major crisis in 2008, leading to more extensive regulation, especially in the administration of stress thes designed to ensure banks are substantially capitalized to withstand the downturn. we welcome someone who played a key regulatory role throughout the financial crisis, sheila blair. she served in senior positions at the treasury and on capitol hill. she is the founder of the volcker alliance. great to have you coming to us from washington. we are to have the second round of the stress test out today. as we saw from the first,
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everybody passed with flying colors. this tells us how much capital is being distributed. let me put up a chart that shows something. when you look at the major banks and their net losses. they have been going down and down, which means the banks are passing more and more. is that because the banks are stronger because the stress tests are weaker? strongerhe banks are than they were prior to the crisis but i do not think they are strong enough. you get to the end of an economic cycle and the valuations are inflated, rates you have several years of benign economic activity. the stress test will not be an adequate reflection of how the banks perform in a downturn. staff itself has a knowledge this in the financial
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stability report. they say you cannot stress test enough to account for the cyclicality at the end of the cycle. that is what we are seeing. david: as i understand, the way the tests were designed was you cannot anticipate what will happen next, you have to judge for a lot of different factors. that seems to be more more simplified as a matter of policy . does that undermine the worth of the stress test? sheila: i think it does. first of all we need more robust laws for the stress test. we do not have a lot of transparency about how much loss is that going to cause the banks. there is something called a countercyclical capital buffer that we put in as part of the reforms we did after that terrible 2008 financial crisis. the idea is to raise capital buffers to the end of the business cycle as we are now.
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the fed has just decided not to do that. chairman powell, who i respect a lot, he has a lot on his plate, has talked about the measures in monetary policy. we need preventative measures with supervisory policy. if we get into a downturn in the financial system seizes up again we will have another recession and it will not be pretty. david: do you expect the fed will tell any of the banks they cannot distribute the amount of capital they want? sheila: my guess is they will approve capital distributions that will exceed earnings. the actual amount of capital they have will be depleted a bit more. banks, their common equity tier one capital, the highest quality capital has been declining somewhat. will exceeded earnings. alix: is there another area of the financial market we should be paying attention to, like
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regional banks, the leverage loan market? sheila: absolutely. -- it willl banks not be systemic, that it is something you want to avoid and prepare for. expensive toery mild agency, the fdic, so we need a focus on the regional banks as well, and leveraged lending, which is a problem in the non-bank sector is growing worse. there is a lot of handwringing on leveraged loans. there are constructive things regulators could do. a lot of banks lend to the nonbanks. that is a potential source of tightening. they could we propose their leveraged lending guidance. there are authorities and dodd-frank to deal with systemic activities, even if they are being done by nonbanks. that requires the fcc working with the fed.
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there are tools now they can use to address leveraged lending. a lot of handwringing but not seeing much action. david: compare what is going on in europe with united states. yesterday it was said they are raising capital requirements too much in switzerland. his united states getting looser while europe is getting tighter or is that a misperception? the good thing we did in the u.s. is four-star banks to recapitalize weekly. you are comparing apples and oranges. i want to address another facet of that question which is the myth that strong capital requirements restrain economic growth. you raise mores money through equities as opposed to death, it is still money that can be judged as opposed to debt. it is still money that can be loaned.
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david: thank you so much for spending time with us. sheila bair of poker alliance coming to us from washington -- of older alliance -- of volker alliance coming to us from washington. alix: walter todd is still with us. walter: i think banks are in a tough spot because of the bank drop of the economy. because thexposure valuations are inexpensive and i think you do get the payout we are referencing, which are good in north of the 10 year treasury yield. the flatness of the yield curve, the sluggish loan environment in the competition in the non-bank lending environment which we were just talking about, which is a longer-term risk to the system, make the backdrop difficult for banks. you want to have some exposure but not overly so to that area of the market. alix: walter todd, greenwood
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capital, thanks for joining us. , we speak with one of the few female ceos in the steel industry. barbara smith is next in today's follow the lead. if you're heading out, jump in your car in stage and with his on bloomberg radio, sirius xm channel 119 and on the bloomberg business app. this is bloomberg. ♪
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huawei appears to have closer ties to chinese military than the equipment maker knowledge. several employees collaborated on research projects with chinese military personnel. huawei says those projects were not authorized. bayer areares of surging after investor disclosed a $1.3 million stake in the german firm. bayer could unlock shareholder value once it resolves legislation over its roundup weed killer. volkswagen takes its truck unit public this year. bloomberg has seen a sheet that indicates shares will be priced at the lower end of a targeting range. hurtado.ana that is your bloomberg business flash. alix: time for follow the lead.
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a deep dive into stories making headlines in moving markets with insights from industry veterans and insiders are today's focus is the u.s. economy and trade. makes steeletals for sectors like construction. i recently spoke to barbara smith, the president and ceo, to get her read on the u.s. economy. barbara: arvest you the future is our internal backlogs, we are sitting on probably the strongest backlogs since the great recession. areing to customers, they sitting on nice backlogs and we still see a lot of good bidding activity. inx: has anything changed the last few weeks or months as the trade conversation between china and the u.s. has been down -- has broken down? sheila: not -- barbara: not really. for the products we produce turkey has been a private offender that has been abusing
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the u.s. market. alix: from that end user demand, have you noticed or heard anything different? barbara: everybody is watching and waiting. there is a lot of differing views out there. i've spent a fair amount of time with our customers and they remain bullish. alix: part of your last quarter that was so strong was construction activity as well as industrial production levels. what is your visibility for the back half of the year? do you match those levels? barbara: we are a seasonal business. you need sunshine to pour concrete and place steel. we generally see a slowdown we get closer to the holidays and the first quarter and we are now into our busy season. our backlog stretches much longer than that. we are optimistic for the next 12 to 18 months. alix: what is the effect of u.s.
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the ceo? how is that informed decisions you make? when we make investment decisions, a new steel meal is a 30 to 50 year decision so we hold ourselves to a long-term standard. we just concluded a large acquisition in november of last year and we pre-finance the acquisition earlier in the year when interest rates were quite attractive. long-term to put capital structure in place and finance the acquisition was good for us at the time. alix: with rates like that, did you think i will go look at more m&a, i will go borrow more than i would normally, are there any of those decisions you are looking at than you were four or six months ago? barbara: we are always looking for attractive growth opportunities, but you have to remain disciplined. it is about the right opportunity and the right strategic rationale.
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we do not make those decisions based on borrowing rates. we will take opportunities to refinance we find attractive windows. into how visibility your customers view the macro economic environment at a 2% level when you have a dovish central bank and there are questions about a slowing growth or not? barbara: yesterday i was listening to a report that indicated there is a housing shortage given household development in the u.s.. maybe as interest rates ease, that could spur housing and then nonresidential construction tends to follow housing, which would be good for our business. --x: much of the business going forward. barbara: for our business we have seen most of the in asian pressure last year -- most of the inflation pressure and things like our alloy cost and things have gone up. some of that has abated.
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we are not seeing significant pressure beyond what we have already experienced over the last 12 to 18 months. alix: we heard the supreme court allowing the tariffs trump has imposed on imports of steel go through, they can continue as is. what is next for steel tariffs? i would notarbara: be the one to predict. we have to see what comes out of the g20. in our business, we build our business irrespective of trade relief. we want to level playing field. that is what the president was trying to create when he took action. there are well-documented abuses by various countries around the world. i think he took the right steps but eventually the tariffs will come off and we will be prepared to be successful under any scenario. alix: you think we need to raise the tariffs? is that on the table? barbara: that depends upon the
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behavior of other countries and whether they respect our existing trade laws and whether dumpt they manipulate and product into this country. alix: if your prices have fallen 40% in the past year, doesn't that imply the 25% tariffs is not enough? barbara: you have to look at what the import levels are. i think the import levels have abated. i think the moderation of the pricing is probably due to other factors. we will have to wait and see. alix: what other factors would lead me to demand or oversupply but you do not see that to be an issue? barbara: and we are sort of a niche company branded toward construction markets as opposed to steal markets that can go into all sorts of things. our end markets, we still see a
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and likeactive demand i said, strong backlogs and strong sentiment from our customers. alix: that was barbara smith, commercial metals ceo. i was interested if some of the other steelmakers are seeing weakness in the market, how long can her business remain insulated from that? david: she seemed pretty -- about the whole thing. what i that was interesting was turkey. the big offender was turkey. i had not heard that often. it is interesting the problem is with turkey. also the idea steel prices are still falling 3%, that is there -- falling 40% -- that is their own fault. look at the airplane. you have these tariffs that let me sell more my product, and then prices wind up falling 40%.
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stay tuned with me for more and bloomberg "commodities edge," we will be talking about trade but also geopolitical risk which leads me to what i'm watching which hass iran breached the 2015 nuclear deal for the first time today. bloomberg users can contract with the charts you see throughout the program at gtv . the global earnings downgrade, a favorite of david's. check that out. this is bloomberg. ♪
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breaching the nuclear deal will be a big deal. david: it is not the weapons stuff, but it is putting pressure on your. -- on europe. iran europe can trade with things are allowed to be trading but they go out of the u.s. dollar system, and the question is will they continue to trade with iran in terms of oil? iran is not making their life any easier say negotiation is off the table, coming out much more aggressive to combat president trump. it is not making europe's job better. david: iran was reacting to president trump putting sanctions on the ayatollah. we will not talk with you because you're going after our leader personal. alix: we will talk about the need for tankers. if you have tankers in the region they have to take oil out of the region. you will now have higher
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insurance and at some point you will have to pass that on to the end market, anywhere between $.30 and $.40 for a barrel. that will spur demand. you might -- that will hurt demand. it is this feedback loop playing out. david: there is always a danger of getting out of control, but right now does not feel like it is spiraling fast. alix: we will see geopolitical tensions can say out of the opec plus meeting. that does it for us. coming up, mark connors, global .uites -- credit suisse nothing is happening. bonds go nowhere, holding for the g20. this is bloomberg. ♪
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lisa: coming up, a new round of trade talks between the u.s. and china. president trump and president xi preparing for an uneasy return to the ego shooting table. -- to the negotiating table. investors grapple with increasing uncertainty. confidence deteriorating in europe with sentiment following -- falling to the lowest since 2016 and for cutting 20% of his eu workplace. we are seeing a little bit of hope in the s&p futures. currency not doing much. the dollar slightly weaker. 10 year yield dropping as we get a slew of disappointing data out of the united states. let's begin with a big issue. markets betting u.s. and china will push off a trade deal but avoiding adding new tariffs. >> the market is anticipating the leaders will agree to carry
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