willneral, tax planning not be what drives my capex. will not look at something and say just because of this investment change, this expensing change, i can now afford to do a project. ahave felt like if you had project that was that marginal that you required a faster write off to make it useful, it's probably not a really good investment to begin with. alix: it winds up a knighting final demand. maybe demand will pick up because they have extra cash, that winds up affecting you. >> now you're talking about a tax cut in total. ask how you do that and not create a debt problem. if you do actually cut taxes overall as in less revenue coming in, the debt problem we have talked about from 80% debt to gdp today since the recession, consumer debt has come down, nonfinancial companies have come down, government debt has exploded. at some point, that becomes a problem. that was the executive chairman of honeywell earlier today. we will have more bloomberg markets coming up next. this is bloomberg. ♪ david: the pentagon's contract with the navy

is that part of the reason were not getting capex from private companies.u, but the private companies aren't exactly investing for the future. why is that? the anti-pollution measures become much more enforceable, and the amand is sluggish, particularly consumption and so on, so the private companies rather close their factories because labor costs as high, property rental costs are high and prefer investing overseas instead of reinvest their own money into their own business. infrastructure spending is a basically initiated by government. >> we saw that in the nonmanufacturing pmi. the overwhelming strong component of that, the reading was 60, was in construction. we think of it as services, but construction is what has been strong, and that tells me this is fiscal spending. >> ok, you have a low base and construction, some infrastructure related spending, and now another one, a new economic zone between beijing and tengion. place andbe a booming potentially will reduce the pressure. >> will authorities need to rely more on fiscal stimulus just because we

i think we are seeing from the empire state manufacturing survey, capex, tech spending, expectationshe next six months is near a cyclical high. so that would more teportend, w some from ibm earnings this week. can. >> thanks for stopping by. you are on the industrial trend. >> i bot if general electric. ge. they have a small position. i think if we're going to play this. ge looks fantastic. you have this long two-year sideways trend. i know where my stop is. i know if we get any type of whiff of fiscal stimulus. we are going, ge will be right in the midlet of it. >> i think playing the game, would you rather. >> would you rather. >> they both sea the same 16 tiles forward earnings. you will see a tremendous out performs. if you ask me which is better? honeywell is better. >> you better run for the hills. i got a little ge today. >> worlds collideling. >> tonight before they report earnings tomorrow with jim cramer, it was a really full bear debate on the name i think the stock is cheap. it's a fat yield. if you get that infrastructure. >> i hate to say it. i am long that multiple mak

here is your capex in white. that is where we are, .6 was the capex.expecting a drop of .3, so better than expectations. on your bloomberg, your charts. a decent start, not a screaming start, but we will take it. >> we will take whatever we can. tankanthank you so much survey to the reaction to the and markets today. let's get to first word news with rosalind chin. rosalind: the opec head says output cuts are working and the market starting to rebalance. downlobal glut will drive prices and producers calling for restrictions to be extended. speaking in baghdad, he said he was cautiously optimistic that reserves were starting to fall and the or price would begin to rise. tesla has beaten estimates for first quarter deliveries as it starts model preproduction in july. it shipped to just over 25,000 cars through march, on track to 47,000 to 50,000 in the first half of the year. tesla shares are up 30% on anticipation of the model three and a tencent has taken a 5% stake. singapore's unwinding of property curbs may be creating new problems. regulators clos

and whether that cash can be invested into productive capex.se you can create foremental enterprise value shareholders and if that is not the case, then we could go back in an environment of diluted share buybacks at much higher valuations, unlikely to create the earnings increase over the past five years. guy: this is a chart that gundlach has been talking about. it is duration. since the financial crisis since qe, the market has pushed down the curve and is now -- the yellow line is the average and precrisis, that number would have been lower. the number is so long duration. the front end of the curve is so anchored on the floor, if that starts to reverse, how aggressive does it get? kokou: this is clearly a reflection of the distorted effect of central banks. mathematical a dynamic, as the level of interest rates go lower, the duration mathematically increases. we saw that with taper tantrum, an important shift in asset allocation. why the shift, almost like tectonic plate dynamics, is the key driver between bonds and equities, and we think

capex, yeah, they're spending a lot on fulfillment.avid, once again you're hearing about robotics in fulfillment. robotics, robotics, robotics. when i was out at alphabet which is you know google, robotics. artificial intelligence. artificial intelligence said cured this advertising problem. >> when they frame international investment as a replay of the u.s. playbook, that can work? >> i'm buying it. i think you have to give them the benefit of the doubt. the artificial intelligence there too. i have to tell you machine learned artificial intelligence, they're saying that the machines are smarter than we are. there's a terminator aspect to it. as i keep hearing when i'm out there, the machines are learning faster than we thought they could. what does that mean? what if they talk to each other? what happens if they realize how flawed we should, or they don't like our policies or the way that the government is run? >> when they attain full consciousness. i have tried to talk to as many people as possible about this and it's very mixed as

capex i think it is difficult to put a forecast on exaggerations given the devaluation that we saw lastost economists are expecting that has had impact of the devaluation rolls off in eight months, we will start to see improvement in the inflation. confidence in the way in which the economy has been managed. that will prompt inflows of capital on the assumption. >> when it comes to their broader markets we have seen a rally in oil stocks just last week. this sector has been underperforming since the start of the year. we see some upside when it comes to the oil prices because of? >> to be honest i do not think we need to see a remarkable improvement. the energy sector to have some upside. as very substantial fall. this had nothing to do with energy. i expect a rally of ten percent in relevant terms. this sector has a lot of dividend yield around it. >> you can see how -- so, i have done this. you got some weakness. how would you divide this up? we still have a fixed income. i think everybody is waiting -- considering how was it performed during the first quarter as you're looking to pur

in general, tax planning would not be what drives my capex.use of this investment change i can now afford to do a project. i have always felt like if we had a project that was that marginal that we required a faster write off to make it useful, it is probably not a good investment. alix: it does lined up igniting final demand. becauseemand goes up they are picking up extra cash, it does. david c.: but now you were talking about a tax-cut and you have to say, how do i do that and not create a debt problem? , as incut taxes overall less revenue coming in, that debt problem, the debt timebomb timebomb, we are about 80% debt to gdp. nonfinancial companies, that has come down. government debt has exploded and at some point that becomes a problem, so are you accelerating that problem without making fixes? david: you are an animal, how are your spirits? david c.: i feel pretty good. i tend to be an optimist and i feel like there's a chance that if you take a look since the recession, corporate consumer, balance sheets are the best they have been, thi

what is the timeframe between a pop and capex spending, how long does that take?at is a good spending. i did not analyze the typical lags, but what we can see it was november obviously, and here we are in april and they have plenty of time to hire if they were so enthusiastic they were sure there would be a boom in the economy. carol: six months, right? >> five months, they have not done it. the march jobs growth was under 100,000. just taking the three-month average, first three months of the year, the average growth was lower than in the previous year before the election. capital spending, if you take out some of the volatile components like defense and aircraft, it was only up 0.3% in the most recent month over a year earlier. capital spending is what you would do if you are sure this was for real. my article is saying that there is a lot of optimism and hope, but companies after having been disappointed year after year through the obama years where there were these expectations, yes, now the economy will rally. did not happen. they are suspicious and holding b

they want capex. and it's the same thing with buy backs.or it. i mean, companies have to have the right balance sheet. but buying back stock is not a strategy. so i think that that was indicative -- that situation is indicative of these activists just running out of ideas. not a lot of companies you can break up anymore. not a lot of fortune brands out there anymore so what is your platform? >> so you think -- >> it's very difficult. >> the activists who embrace more of a managerial focus on changing the fundamentals of the company are still going to have traction? >> i think activists, you know, like tryon who is clearly very long term investor, with nelson peltz and very constructive investor, yes, i think they're going to have more traction because it's longer term. but those who expect to come in get a quick pop in the stock and get out, i think those days are over. >> what about hostile bids? you mentioned ppg. that doesn't seem to be going anywhere. at least right now there is that shticking. see? >> i can't say it. my mother wouldn't

they bought back shares, raised money to do that, rather than investing in capex or hiring staff.t raises just some interesting questions about if life is so great fsh, if we are escape velocity, why aren't companies investing in themselves more. >> you know this well having covered this meeting for years. it's always an opportunity for global central bankers and finance ministers to get together and talk about the biggest concerns what are the risks? whether it's the european debt crisis, the debt bubble, there's always a topic du jour. what could you say that is? >> i think it's france. that's the thing. i'm here. you sent wilfred to paris. i think that's where the story is. >> i dispatched him. >> we could have switched. i could have gone to paris, he could have stayed here, we would have saved on the air miles. the point is this, we know france was an anchor member of the eu. an anchor member of the eurozone. if we end up with a president in france anti-eurozone, anti eu, does the whole thing unravel? if it unravels the consequences would be enormous. that's the fear. so, whil

because north american oil and gas capex was a bill big part of this number. it's getting better and better. they are recovering for caterpillar, if you are a bear on oil, you got some message in there. you have earnings, lack of regulation or any new regulation. will you have some tax reform then the market gets pulled out underneath you. i believe we are set up for a 2%, a 3% drop. >> how do you position for that? >> you go to record high, that itself the hard part, right? >> just a handful of days. we were sort of kissing up to the 100 day. we can be down pretty quickly. a 3% move could take place. when you position that, i'm long on home builders. i'm long by monsanto. i think that's a defined upsize strategy. any time that trade happens, it comes off the table. >> every time we get a sell-off, it bounces right back. >> true. >> it's lashed to thread the needle. i want to make a clip. of course, i don't want to break. i try to clip those when you can. >> goldman sax, guys, right, back to the level before the bad earnings report. >> the goldman quarter was

yousef: what about the appetite capex?> we operate 14 airports in seven countries serving 400 million passengers. nowre growing a broad because we have finished all of the airports in turkey. we are now talking with cuban airports, the cuban airport authority in havana and in saudi which is a big market for us. we have an airport in the dena -- in medina. privatization and growth. we are looking at africa and service companies are growing as well. yousef: are you considering projects in saudi arabia? >> there are 40 airports. and we are there and interested. yousef: in terms of patterns and is a super hub. much like dubai. span. recent electronics affected the kanaan activity of istanbul in terms of numbers? >> we think this ban is unfair. it is not security but commercial and political. the airlines have taken precautions immediately. they are distributing ipads and laptops to passengers for in-flight use. we have not seen any negative numbers or material affects on passengers. and we are pressing to lift the ban. yousef:

there may be some pickup in demand on the side. -- on the capex side. westin, the numbers speak for themselves. david: as you know, president trump and his team are really focused on exactly this number. they want to get rove up 3% or better -- they want to get growth up 3% or better. some in the administration would disagree with what harm said. we should be focused on deregulation. that mulvaney -- mick mulvaney had that to say. the: we believe with research that is done by outside parties, we get twice the boost to gdp growth out of regulatory reform than we do on the best tax policies we could come up with. that is how overregulated our economy has been. there are a lot of things that we already have done on the regulatory front to send the signal to business that we are open for business again and that the layer upon layer of regulation and overregulation, that era has come to a close. you will see that impact gdp. he is harm bandholz, if right and deregulation is a more efficient way of getting growth than tax reform -- when might we see that the

on the capex or the labor side. that's what gets wages up and leads to prosperity. if they incourt something like that, that is exciting on the corporate side. cheryl: i agree with you, rich, that point came out yesterday that these big u.s. companies, apple, facebook, whoever, who have so much money overseas, trillions overseas, we need them to bring the money home but need to hire at home, and they could take the tax cut and open up a new facility in china. that could happen. he makes a good point. >> i don't see a policy you can reasonably implement to stop them from doing. that the name of the game is a much bigger carrot rather than a stick. the carrot is having rational corporate tax system, one of the highest rates in the advanced world that doesn't generate that were revenue, cut through with the loopholes and special interest exemptions, get it down to around 15, make it more rational, attractive for corporations to do business here. >> cheryl, to rich's point, he's absolutely right about the corporate tax code. what you have to do here if you want them to

>> all of these companies say they are going to boost capex.heir oil production would rise and that is for a couple reasons. first, it takes a few years for these projects to come online. bear theal projects to fruit of these. one analyst said we may see production rise starting in 2018 or 2019. the second factor is a shift toward natural gas. the government is trying to push more natural gas use in the energy mix as the country tries to reduce pollution from coal-fired generation. o boostan to natural gas production by 15%. has lower chinese production impacted the global crude oil market? it definitely has an impact. china is probably the largest producer. when production falls, they are going to have to rely on global markets. production fell this quarter. china surpassed the u.s. in terms of the largest, they became the largest oil importer last quarter. clearly it impacts global markets. yvonne: aaron clark joining us from tokyo. "daybreak for us on asia." we are seeing cautiousness inequities. china manufacturing pmi coming up. betty: loo

capex expected to increase significantly.eing green shoots come out of samsung in the first quarter. betty: shareholder friendly on that announcement. bank of japan making its way to a policy decision later this morning. all that one of 39 economists we surveyed expect no change to policy. investors will be looking for guidance on the economy, inflation, bond purchases, strategy. lower its inflation forecast for the fiscal year, they are just so far off from their target of 2%. is a scholar from the american enterprise institute. also, author of the new york times best-selling book, the upside of inequality, how good intentions undermine the middle class. ed, good to see you again. i know you were in japan last month. >> i was. betty: you're gone from finance to being an economist. when you look at what happened in japan, how difficult -- what a difficult time they have had to stimulate the economy. they are so far off from hitting their inflation target. what lessons do you draw here? ed: they will have a hard time stimulati

. >> but they would be quite significance given the ability to expense capex. are domestic companies so border adjustment tax means nothing. tax rate effective fairly high tax rate. so comcast would be one of the beneficiaries if you get a tax reform package. >>> this was a week ago, of course klaus kleinfeld was sum marley dismissed from his -- summarily dismissed from arconic. he's stepped down from the boards of morgan stanley and hewlett-packard enterprises. people were saying isn't that going to be next and it has been. his role in any sort of public companies is now gone. that's -- man, that's got to be quite a fall from grace. >> i think that -- you know, it's not about friends, it's about money. i know klaus. this is -- he's had a very public posture even maybe you -- maybe our viewers don't know, but badgette, which is a very important event for journalists, he was our host for -- he has been strident about protecting journalism. i think his public role was far bigger than people realized in terms of his posture about trying to be with the president, t

that leaves us with a moderate pace of capex.ouble-digit investment growth and time soon. francine: what will it take for that investment to kickstart? does it start with tax reform and then go on to something bigger? >> if we got significant fundamental tax reform or a significant infrastructure spending package, that would be something that could kickstart investment in a meaningful way. that is not something i see as a baseline likely outcome. we will probably get some kind of tax cut. increasingly it looks like it will be smaller. it will be a tax cut, not fundamental tax reform. i think we are not likely to see that soon in the u.s. tom: you mentioned the national rate before. people flock exams trying to do these plug-ins of newtonian functions into simple algebra. do you have a guess of confidence of what normal economic growth is? theeekend put together building blocks, which is population growth and productivity growth. tom: that is not a pretty picture. >> it is not. it is what it is. we are aging as a society. producti

when corporates are making long-term capex decisions and people are deciding to move businesses to the capital investments, they need some permanence of the tax code. the more permanent we can make the tax code, the more it makes sense to us. running a big deficit in the tax code would potentially make it not permanent. that said, as secretary mnuchin said and i said it, using dynamic scoring may allow us to get to a permanent solution. we would like a permanent solution, but again, we have to do what we need to do to drive job creation and drive the economy. and we're committed to driving the economy. >> we were talking about infrastructure backstage, as the panel was discussing. i know it's an important issue for you. i was making a joke this morning, every time i go to new york on the acela, on amtrak, it's a harrowing experience. tell me a little bit about your plans for infrastructure and how are you going to divide it between tax credits versus direct appropriations and spending? >> well, as you know, we talked a lot about infrastructure. >> yeah. >> our core, basic plans when we

because they think in terms of capex, a term everybody uses.that would be a way to help out. >> michele, do you have any thoughts to add? >> one thing i would say is that if you're going to move towards a system that puts more emphasis on experimentation, innovation, prototyping, you know, you have to have a slightly -- you have to have a somewhat higher tolerance for failure, that there are going to be certain things that you prototype, they don't work out, but you learn from the experience, and that makes the next thing better. i actually think in the model that you're trying to create with this new organization, you want to have a higher proportion of r&d spending relative to what we've had vis-À-vis procurement, and that you don't want to have such an emphasis on ultimate roi that you miss the learning curve that you get out of a very robust experimentation and prototyping plan. >> mr. chairman, can i ask a quick followup? >> sure. >> very quickly, iron dome in israel, that was done in three years, from pad of paper to operation. and i just

so they need to ramp hiring, ramp capex, but it's many years until you get close to the sale to start impactsing amazon's numbers. >> you cover microsoft? >> i don't cover microsoft, no. >> and just george buthe other . you said you like facebook. in terms of advertising play, you like that over google? >> we do you're seeing significant growth on facebook. it's amazing when you think about google, search has been around for 15 plus years, still growing 20 plus percent w mobile being a major driver of that now. on facebook, you're in the early days of social. they have 5 million advertisers, but more and more are allocating spend online and to facebook specifically. a lot of room to grow with facebook. >> anybody you wouldn't own in this space? >> it's really tough. i was listening to your segment prior to this. frankly, the large caps are working well here. here in the internet sector. you know, ebay is one that is still in the middle of a turnaround. they're doing good things. we're in a wait and see mode. for sure, facebook, amazon, google, it's hard not to own any of those. >> oka

it's a good quarter, a good sign, because you are getting that, that will spill through to cap capex, but the reality is we think the market will be out over skis here. a dollar's worth of cash here today will play into the coming months. you're walking into kind of the seasonally weak part of the equity markets now. >> you told me earnings will do great, and now we're walking into the weak part of the season. >> sell in may, go away. >> earnings are priced in. >> earnings are priced in the market is always forward looking. in two weeks i get the first look at q1 gdp, which will be 1 and some people think weaker than that, unless you get a pick up in q2, the real data point is friday's retail sales number. that will be big to see how well the consumer is continuing to spend. it's important. there's a lot in flux now going on. >> he's in flux, you're bullish, but sort of not. >> moderately bullish. >> and you're proposing the airlines use ebay. >>> coming up, secretary of state rex tillerson is in moscow. he's meeting with russian officials about the sear yab civil wa civil war. that w