a lot of the capex has gone to replace old equipment.oyota move a small amount of production from australia back to japan. investmentactory's in ai and the laborsaving devices, as companies cope with a very tight labor market here. david: i am guessing it does not mean because we are getting capex, does not mean that capacity of the economy is expanding. that being said, this bullish sentiment across corporate japan, you think that will affect how the boj approaches policy from now on? brian: it is going to be interesting to watch what happens with of the boj. reappointedkuroda as governor. he has all the cards in his hand, he is in complete control. the economists these days are saying different things. see are saying we do not changes in policy until the sales hike. the most common sentiment i hear is that you can expect to the boj to start playing around a little bit with of that 10 year yield target, making the range after movement a little more flexible, allowing it to fluctuate in a slightly larger band while not touching that 0% t

the capex needs to be funded. this funding is a major issue for change. it's driving the u.s.wer. when you look at the real reason lower, i.s. dollar is would think most of that is related to the capital ability in the united states of america. people are looking out for funding. then, you look, for instance, at the markets, when they are issuing bonds in dollars, in hard currency. 9% of that is down in dollar terms. i would advise when the emerging markets are capital hungry, they are tapping u.s. markets, not tapping the yen market, not tapping the euro market. why is that? they have a limited capability in japan and limited capital in the euro. you need to make a differentiation here, the cost of capital, versus the availability of capital. the availability is always more important. tom: that is a great summary. if we are dollar centric in our analysis, how do we play the dollar? jason, bring up the chart. this is the dollar index. this is just beyond elegant down here. the strength of the dollar and the davos rebound, where we rolled over again on weak dollar. hans, what d

as a result, higher prices and let's not act like we have never had a capex bubble before. we had one 17 years ago. as a result, we had to have higher rates and that choked that off and ultimately we ended one a mild recession in the real economy, but an absolute disaster the stock market. >> can you make the case that earnings will be super charged enough that that's a reason right now to upgrade u.s. equities as black rock has done today? >> i think you are upgrading u.s. equities you want to make it look exactly the way it looks today, because technology is leading the way. and when you compare europe to the u.s., the composition of the u.s. equities market has far larger of an inclusion from the technology side. and that growth story. so if you believe that growth technology is going to continu to outperform as it has, then yes, you like the u.s., but i kind of agree with what kevin said before, part of this is a currency call. and given where valuations are on all of asset prices, the right strategy is to be diversified and have the u.s. have the european exposure and

starting to open the taps on spending a bit exxonmobil last week said it was going to increase its capex this year the emphases for the european companies is still very much pretty cautious really bp is dropping, saying it will drop its capex slightly. >> why are they doing it is it luck >> there were gas discoveries in egypt, a low-cost place to carry out exploration. that's targeted at the domestic market in egypt. also in the north sea we had announcements last week. not a lot of detail on those announcements yet on the north sea. so i think we have to be cautious about saying exploration success is guaran e guaranteeing the future of the company. >> they want to position themselves or reposition themselves for growth. it implies reinvesting and sweating the existing assets they have. >> yeah. bp has been focused on cost cutting, getting the company to break even basically at a $50 oil price. of course some executives are now being asked, you know, look, the oil price is higher, why don't you start spending the message from bp and shell is one of caught. >> longer term, decarbonizatio

if you go back versus ten years or so, we're seeing less m&a going on in europe capex builds are going up, but net debt is increasing where is the value proposition coming from? >> it's interesting. you have this situation where a capex cycle is contracting, they still are businesses that generate huge amounts of cash at certain points in the cycle. but the debt level is an issue you have the five main incumbents and then data pay the five main incumbents are all probably too highly indebted deutsche telekom has a 1 to 1 debt to equity ratio, which is probably okay. vodafone is way under. >> with interest rates rising, is that going to be a dangerous thing for the sector >> that's a good point if you go back 20 years to 2000, the price spikes, and it doesn't recover for telcos the nasdaq and ftse all fall but recover and go up. vodafone merges with liberty, that will be much bigger than all of them and the better value proposition. >> christopher, thank you very much for that. we'll speak to the ceo of deutsche telecom later today we go telco crazy next week at the mobile world congres

we are entering this capex cycle. it is late.rned the cash is being used to buy back. finally it is used for investment. we see capex in the u.s. two quarters in a row in the double digits, which is really good. we have plus investment. we're back to currency and twin assets. i think of that will offer interesting opportunities for specific companies. willes not mean the tide raise all boats. if you have a volatility it gives you an opportunity to add value. this is really hard. again, we have transformations on a global basis with china and advancements.gy the definition of what is successful is changing. it is understanding what companies in that context will do well, and not go to the pre-gfc model. ,vonne: virginie maisonneuve eastspring investments cio in hong kong. catch up with us on past interviews that we talk about. that is all on the right side of your screen. this is for bloomberg subscribers only. this is bloomberg. ♪ ♪ a quick check of the latest business flash headlines. berkshire hathaway has more jobs at its medi

and really doing more capex.ong growth is already happening and it is extremely rare has are great for unemployment to be below for the half percent, and it appears to be close to 60 -- and you need capex to square the circle. julia: can we make predictions of the volatility we have seen volatilityel of al going forward? >> would basically say the u.s. equity market was overdue for and was certainly position for in the sense of extended positioning for a pullback. i would call it a normal three or 5%, and that is what we got on the payrolls, whether it was rates, inflation, these are all up for debate. at say the following monday we had a blowup of as a result of what we had the options market and as with structured products. largehen led to a rather swing in the next couple of days, and then thursday we had a broad-based risk reduction of across the market. at the end of the day, what i would say is what began as a normal pullback got amplified by butstructured products, from the fundamental point of view, given

want balanced cash flow for capex and generate free cash flow.learlyhat plan forth and i would say everyone is like that to be yesterday but we expect to be in the situation the second half of 18 and we rates strong positive cash flow 19 and 20. >> to piggyback off of that, what is he doing about it for 2019 and 2020 two serve the cash flow when it has evaporated? >> we are 75% hedged right now 50 price chair we think we are good -- in good shape. have nothing at 20 at this point. we continue to watch the market and see how the macro develops. clearly, the curve, it probably wouldn't be prudent to add a lot of opposition here just kind of let it roll toward you and strike on that position they are a little poster in time. >> let's get your view on the macro. .his year, $55 oil anywhere between 55 and 60 for 2019. was the main upgrade for that 14 to 18%? was it an operational micro call? >> primarily operational. year aned around 55 this and we continue to talk about it. 55, it is not a bad premise of this point. we will be balanced in the second

mark: what are the signs that it will or will not remain the case. .uke: if capex picks up if we get fed that is aggressive with hiking and an ecb stopping in september rather than a taper. the fundamentals are great. ellen's sheets are fine. the leverage might be up a little bit, but nothing dramatic. goldilocks.hing is as long as the fed keeps gradual and inflation does not get out of control. are there signs for the metrics that you are looking at that inflation might be picking up more than the markets anticipated? friday -- with the wages, that is the direction we are going. you are seeing signs that big cities in the u.s. have been getting wage inflation. german and negotiations from the union going through now. in the next weeks or month, we could get results from germany. mark: the ig result was roughly around 3%. to the not to halt and not too cold, it is ok for ?ow it suggests some evidence of the ability to wage bargain. but that is germany with the lowest unemployment rate on record. what about spain, italy, other countries c? getting there. not quite full capacity, but w

this morning as well, boosting capex, dividend, buybacks.e on what big oil will do with all of this money they are getting from $60, $50 oil? >> the focus is very much on buybacks and dividends. we saw the news from conoco this morning. chevron said it would raise it dividend for the first time in two years. that is what investors are looking forward to, why they were disappointed with shell's cash flow numbers. numbersught that those made it less likely that they would return more money to shareholders through buybacks. people will also start spending again. exxon reports tomorrow. it is interesting that they are starting to invest more in oil production, a plan to spend billions in the permian. investors will be looking for that balance between return in cash and funding opportunity. oil production over $10 million -- barrels per day. then you have goldman subgrade. $82.50 because supply response will be pushed back. what did you make of that? >> that was a big call, the jungle more than $10 jolted the market. it illustrates a couple of th

that might lead to a widening of credit spreads and will lead to the slowdown of capex.is the risk ahead. francine: do you worry more about a repricing of treasuries or german bunds? nouriel: the repricing of treasuries might be driving the repricing of booms, rather than -- bunds rather than the other way around. markets are worried about the ecb and boj changing course. i do not think that is the case. until recently, the fed was holding the short end of the yield curve and there are concerns about domestic overheating, the tax cut is unsustainable, and so on, and that is driving it. weak dollarave a policy in this nation now? julia: i think we heard it from the treasury secretary, and although the measures -- messages were modeled, the trade trump administration favors the weak dollar. it has been one of the true ideals of this administration from the get-go. tom: julia coronado, nouriel roubini, thank you. in the next hour, a conversation with john cryan of deutsche bank. stay with us. much going on in the markets today. futures -21. ♪ retail. under pressure like nev

particularly earnings revisions this year showing that. 2019 and theisk is economy overheating if tax cuts capexpin., compared to china, the 10 year rates have gone up a lot. it has been policy driven, but the stock market has done well and the economy is doing well, so i don't think why the chain would happen -- change would happen in the u.s. the dollar has been weak this ber and we expected to benign from now on, so that is a good environment for investors. if the tenure goes to 3.5% or above, then we would get a short-term correction in risky assets. hold that thought. we still have a lot to talk about. he is sticking on the program. let's get you a preview of what is coming. on this edition of "bloomberg markets: middle east." what a rate hike means in terms of lenders in this part of the world, the uae's largest bank the point that it could seriously boost its bottom line. we continue our discussion around central banks with more market strategy from deutsche asset management and the risk of geopolitics. this is bloomberg. ♪ yousef: this is "bloomberg markets: middle east." we are live on

the relationship with america and china is a capex one because while the president wants to make america, china is the largest exporter to america. even if we think china is rebalancing and changing its own world domestically, it is still very reliant on the health of the u.s. economy. with the emerging markets can do better in a general, goldilocks environment, but we see goldilocks fragmenting during this year. doing well,the u.s. you're doing welcome, what happens the u.k. will be moot depending on your headlines on what is happening with the reason may and mr. corbyn, and we think is not going to be as easy this year to make the type of returns you saw last year. nejra: and perhaps not as easy to predict. thank you so much neil dwane. vonnie: great stuff, thank you for that. let's check at first world news. president trump is pushing for tougher background checks including screening from mental health and wants to raise the minimum age for firearms to 21, and at the same time the president raised when of gun control's most powerful enemies, the national rifle association. president t

. >>> and statoil reported it will raise dividends and capex in 2018 the norwegian energy producer posted a 4.5% jump in its dividend capital expenditure will rise in the fourth quarter earlier we spoke with the statoil ceo and asked him where he sees oil prices in 2018 >> when it comes to the world market, there is always uncertainty in the market. i think there's a lot of uncertainty going into this year, coming from almost $70, i think we have seen a stable strong demand growth, slightly more muted on the supply side. that situation will be the case. we will see a continued rebalancing during this year if you go beyond this year, we -- at some point we will start seeing the implications of the low investment levels over the last couple of years so there might be lack of capacity coming in from the conventional part of the industry >>> shires in handelsbanken are trading lower after delivering fourth quarter profits below expectations the ceo of handelsbanken joins us on the line you lost more than 1 billion swedish krona in bad loans earnings were below expectations but you paid a high

regulatory reform had a negative impact of 77 cents per share the company projected a 4% 5% t 60% growth in capexere will be more changes to the timeline, prioritizing communication between friends and content and changes they made last year to viral videos >> we expect time spent on facebook to be decreased by 5% we made changes to reduce time spent on facebook by an estimated 50 million hours every day to make sure peoples time is well spent >> in after-hours trading, facebook shares shot from the red to the green after sheryl sandberg said reducing time spent on facebook is not a bad thing. it's actually yielding higher revenue. >> we're not doing this to be positive or negative for revenue but it's the right thing for our community. the impact it has on monetization is not clearly negative >> sandberg and zuckerberg explaining how investing in the long-term will create a more valuable stronger platform out of facebook. >>> the co-founder and ceo of another social media network joins me now in the studio in london this is a social media network for communities. you announced expansion into fra

most of our acquisition activity last year was based in the u.s there's a lot of capex undergoing there we are bull nish thish in that t but that's no contradiction of investing in latin america and bringing ahealthier organic market there >> is this the strategy, the high growth areas, nutrition, pet care, bottled water and coffee there is a statement in the earnings report about your stake in l'oreal l'oreal doesn't really fit into any of those categories. what is the plan when it comes to that stake? >> we announced today the board's decision regarding the shareholders agreement that shareholders agreement between nestle and the bittencourt family is set to expire in 2018, and our board of directors decided not to renew that agreement we don't intend to increase our stake in the company, beyond that we did not make an indication when it comes to future intentions. >> the ceo of l'oreal said if you were considering on selling the stake, they would be willing to buy it. are there any conditions where you would consider selling the stake? >> i don't think it's wise to communicate those

about their capex plans yields, should they be budging more, less what do you make of it >> i think theh the yields is how fast they move you know, i think people are assuming we're going to drift up to 3% on the ten year, but it's how fast they move i think that gives some of the bulls pause. on the other hand, we had allen greenspan yesterday in an interview saying he was worried we were headed for stagflation that doesn't seem to be with everything going on. let's see how early he is with this >> yeah, he's been net negative for a while. art, thanks. we'll talk to you in a bit >> all right let's get to sue herrera for a cnbc news update a this hour >> good morning, everyone. here's what's happening at this hour u.s. special envoy to north korea joseph yun says recent tensions over pyongyang's nuclear program were not close to reaching a military confrontation. he spoke at a briefing in tokyo. >> i think you have to say it will -- it has to include military operations, but again, i would like to caution you that i don't believe we're close to it and so i think we are certainly -- we w

we do not spend a lot of capex on an annual basis.at we would focus on as we got tax reform would be to reduce our share count through the buyback which you saw us announce yesterday. as well as continue our capital strategies of returning cash to our shareholders. we increased our dividend yesterday by 14% and we also left ourselves plenty of dry powder for ongoing m&a activity that lines up with our strategies. >> heineken is the world's second-largest brewer. it has reported an adjusted output that beat analysts' expectations. the dutch firm a forecast profitability of this year will be a below its medium-term target after integrating a brazilian business in bought from japanese rival, kirin. is this the case where you will try to invest a lot, expand the business, take market share away from the number one contender in brazil? >> the acquisition in brazil is putting our strategy into action. winning in the premium segment -- which we have been doing in brazil with the heineken brand. rebuilt to a 2 million brand. and then, if we w

fly side in the last round of earnings, the capex a pd spend spending rn conservative i don't know we'll that far over our skis again, but tie it back to global demand and fu fundament fundamentals, i think oil has performed where it should. technically you have to watch oil here, but i don't think brent has overreacted here >> are you buying anything today? if so, what? >> as i look globally, stocks in asia are the most oversold again, some of these moves have been symmetric so the biggest moves ha s havs off the highs of the building point. i look at the asia tech stories, but i think they've been beaten up, a name like alibaba which we had data there, and i think the global story is very much intact for me emerging markets are the most oversold asset class. they were the most overbought on the way up these are place anybos people n. i don't think you need to do a lot today. the next couple days will be days where we settle out >> tim, thank you very much for joining us tim seymour. futures are higher this morning by 1%. >>> still ahead, the fed factor. what the market volatility mnsea

dynamics is important here because they use it to spend on and every thing else to grow the business -- capexat is what the business is for. apple is a cash flow monster and what we have seen -- one of the lines i don't pay much attention to is to relative revenue from different products. the end of the last quarter is just short of a hundred billion dollars of camilla to revenue from the iphone. to militant revenue from the iphone. cumulative revenue. qualcomm came out and said we have rising inventory in a certain kind of modem. didn't say who the customer is, but it is apple, they are a big customer of them. the idea that there is a slowdown in the iphone x and iphone 8 is disconcerting because we haven't seen a cycle so short for apple. production wrapped up like crazy because people couldn't get their hands on the phone they wanted, and they were waiting on the wings. will have to say that we are not going to have these couple of events every year, we are going to come out when we have something ready, because that is what happened here. the iphone x didn't blow people enough to spend $1

happens when it is great as companies buy back a lot of shares and make acquisitions and spend on capexysts have come on and said not to invest in high yields, whether european are u.s., you were making that judgment call, and dressing despite the fact that credit help pretty well, investors should be rotating from equities into high-yield credit because they have the same characteristics in many ways, you have a greater downside protection in high yields. explain the two things. -- that's no question is not a connection that most investors always make, but i do agree, we are on the more expensive side, but the same reason, the mathematical instrument, terms are going to be lower than normal, but it does mean you are going to have a high selloff. you'll get large credit selloffs even when equities fell off. joe: what is the best way to get exposure to credit? credit is not perfectly correlated to rates, in fact, and you go to high yields, you are inversely correlated. the triple c's, they have to highest default rate, and our are up since the equity selloff has begun. you can actually g

the sector has been cutting back on capex. companies are focused on shareholder return., butpowerful there are limits on it. of bigely, that lack picture investment in the sector will drive oil prices higher. peter, do you agree? peter: to an extent. there's a lot more capacity in the market to ramp up supply if necessary. i think to a large extent the demand has already factored into the price. if it were the case that demand were to spike up because growth outperformed expectations, opec has the capacity to ramp up if it wants to. i think there's enough supply out there. i don't think the price will necessarily spike as a result. francine: peter dixon, andrew sheets, stay with us. up next, south african president jacob zuma's fate is set to be sealed today. we are live in cape town next. this is bloomberg. ♪ francine: you are watching "bloomberg surveillance." south african president jacob zuma's fate is set to be sealed today when the ruling african national congress meets to finalize the transition to a new administration. zuma has defied pressure to resign since his

it will provide the opportunity for a boost when it comes to consumer spending and also capex and investmentnies use the tax benefit to do more of the same thing, share buybacks. matt: we have seen the oil up with rise, shale today beating expectations. just now, goldman sachs raising the six-month brent crude barrel. to $82.50 per do you think this could add as a headwind for the u.s. economy? areu: well, i think they symptoms of what the market is pricing in. ultimately, it will be positive to create asset price inflation, as we have seen so far. ultimately, it moves up as we get into the business cycle. one thing to bear in mind, we are roughly 80% to 90% through the business cycle -- it has been one of the longest in history. we see all the stars lining up for the end of the business cycle by 2019 to 2020. i think people should get prepared for more volatility and higher bond yields and also for equity to pick up in sort of six to 12 months. muncie the s&pll 500 continue to gain 20% a year? see the s&pl not 500 continue to gain 20% a year? at what point do you think u.s. stocks are overv

you either give more back to capex,rs, you invest in or you invest in marc anthony's. -- in more companiesieve in the business. it is about rewarding our shareholders with cash return. and it's about investing in the long-term. we have three drivers in terms of investment in the long-term. when we say growth, it is growth in cash flows. it is not volume or market share. we are not interested in being the largest. it's about being the most profitable. we havegrowth options, plenty of options. inare building a mine australia and mongolia. the second lever we have is about productivity. we have $50 billion of investor capital. there's a lot of capacity so we can do more. we are committed to a $5 billion market in the next five years. and the last is about a mende -- m&a. we are looking at them. it isl pursue m&a only if good for shareholders. francine: you say you are not largest.d in being the let me show you the chart of your shares since you took over in rio tinto in july 2016. that is an impressive increase in the share price. superiore talk about cash return for shareholders, it is not j

you start to see the funding of some of the economic activity expectations, the expectations about capex going to be challenged and in the past, it has been credit that is hit more than equities by these volatility events. guy: that is an interesting point. the ecb has a buyer of credit, needs the credit story to continue to keep the transmission mechanism working. at the moment, this feels non-systemic, but if we see and as going wider blowup happening, those central bankers buying credit need to respond. itk: it depends how far goes. the ecb is aware inflation is not at target. it needs to keep monetary stimulus going in, so if markets get to adverse and credit sells off too much, they will need to step in. right now, the central banks are sitting back and looking at markets. they are wary the fundamentals are still strong and they don't have to do more stimulus just yet. we are not in the world we were in before where whenever we got of volatility markets, the central banks would step in and worry about inflation falling lower. now, inflation is actually rising. they can sit back and

the debt numbers are what the market is going to be focused on. 2018, organic capex in the range of 15llion. that is what the market wants to hear, about capital discipline, news in terms of a return to perhaps the old normal. they are going to continue to target a range of 20% of 30%. organic fourth-quarter. a bead on the fourth quarter net adjusted profit. 2.11. that is above what the market expected. who has theman answers in terms of futures. has been through some pretty tight times. let's get going in these markets. the ftse 100 was down 5% at one juncture. bounced? we bounced from the lows of the day in london, but we are still down negative territory. the dax is down given the hard data that anna has just given to you. still, these markets are in turmoil. of course, the s&p wiped out this 2018 gain. stage. dropped at one the most in over 1500 points. you are looking at the debate in markets. the current market temperament feels like japan in 1989. the united states in 1999. versus bridgwater, who says this is minor corrections and real money will come in from the sidelines. we a

you're better spent on wages and cap capex. >> when i send a text message to someone and it's not blue- >> what world are we living in what phone are you on? doesn't everybody has an iphone? >> apple is gaining share against those phones >> they are. >> it comes back green are you living in the '70s >> you have totally -- there's no way out for you >> i'm heading up to the ces show andrew is at the super bowl. i'm at the ces >> i'd watch that. >> you can buy things online what's the last thing you need to tell us about apple anything you have to get off your chest with this >> this quarter is important in terms of basically changing it from the potential growth story to much more of an annuity story. this is the break. the super cycle is dead, long live the installed base growth >> all right thank you. that was dramatic. >> i tried >> you told us a chronology, a story. i will watch it again when i go home thank you. andrew, what's coming up >> okay. when we return, the big business of football. on and off the field, seattle seahawks quarterback and we should say entrepreneur russell wi

so that is a good story, but ultimately -- capex.that is a good story, but ultimately i think the dollar will stay on the weaker side. david: ok. you will stay with us. command, a take on how reason volatility is affecting the trading business. that'll be coming up next. live from new york, this is bloomberg. ♪ alix: this is "bloomberg daybreak." until 8:30 a.m., we have a risk on the rally and we are up triple digits for dow futures. european stocks coming in higher. stronger growth in germany because of net exports, helping the dax move higher. the one currency pair that is puzzling, dollar-yen come off of the lows of the session but still down for tenths of a percent, at one point hitting its lowest level in 15 months. there are the g10 currencies that are rallying against the dollar, just not the yen and it is a puzzling circumstance. in the u.s., yields go nowhere and we are waiting for the 8:30 a.m. number, the spread is lower and i have 10 basis points, coming in at 72 basis points, crude oil continuing to roll over. now updat

because of capex.oney on the capital base since the late 90's, so some of these will be pushed along, but that is the natural course of growing. we as a company come as a country, have been holding down costs for so long, cut, cut, cut -- it is like pushing a beach ball down when you are playing in the pool. when you release it, it will explode. that is growth. people are not prepared for that. that is why we are hesitant and that is why we think earnings for the second half of 2018 and 2019 could be stronger than people think. great to seean, you. coming up, tax reform and infrastructure spending. we will discuss what they could mean for building companies. in ceo of u s concrete will join us. and as you commute today, you can tune into our colleagues, tom keene and jonathan ferro, from 7:00 to 9:00, and pimm fox joins the conversation -- the conversation at 9:00. this is bloomberg. ♪ >> this is "bloomberg daybreak." coming up in the next hour, jim biancago -- bianca, research founder and president. n

long-term capital investment and exxon mobil is a major presence in louisiana and announced 35 billion in capex investment that will increase competition for workers driving up their wages. that is the way to reduce income inequality. the tax cut and jobs act bill has been good in our state and thank you for your role in it and i am proud to participate. >> the request, if you will, the -- one of the provisions in the tax bill was to provide fair treatment for taxpayers in a loss position upon deemed repatriation under section 965 and free repatriation losses and a potential question has arisen in regard to losses in 2017. so i just ask that your department will work with us and we have an amendment to address that, but we want to make sure that we can address that. >> we look forward to working with you. thank you. >> let me now go to something that the white house raised, the financial crimes enforcement network, you have a strategic plan through 2022 to analyze the system and the analytical capabilities to better collect and act upon financial data and intelligence. in my office we're lookin

long-term capital investment, exxonmobil with a major presence in louisiana announced $35 billion in capex investment. that's going to increase competition for workers driving up their wages. that is the way to reduce income inequality. the tax cut and jobs act bill has been good for our state, and thank you for your role in it. i'm proud to have participated. now a request, if you will. now a request, if you will. one of the provisions in the tax bill was to provide fair treatment for taxpayers in a loss position upon deemed repatriation under section 965. the intent's clear. free repatriation losses are ring fenced. but a potential question has as regards 2017. we want to address that and make sure that we can address that. >> we look forward to working with you. thank you. >> let me now go to something that the white house raised. the fence-in, the financial crimes enforcement next work, network. you'll have a strategic plan for 2018 through 2022 to modernize the system, the analytical capabilities, to better collect, assess, disseminate, and act upon financial data and intelligence. in

capex guidance trying to sculpt our cash burn near term and over time hopefully to understand a littleere the roic is coming, whether they'll shift investment to other products like the semitruck, the model y, or maybe some other businesses like energy storage. >> okay, so when you say all that the maers is the mod e mate three what are the trigger points >> i think the big issue is that there was a big demand question going back a year or two years ago that 400,000 reservations for the model three i think answered for a lot of folks. the question is can they build the machine that builds the machine as elon's talked about so the complexities around that, the delays they've already had, the update around the trajectory to more of a critical mass from a production standpoint in filling that demand goes a long way to answering bull and bear concerns and this is another opportunity for management to give us an update and to kind of put a mark in the ground and know where we are. >> all right, well, jamie, you and everybody else watching these numbers afterhours, i'll be in for melissa ton

capex is still very tight. what would it take to shift into growth mode?s to know when you feel the pressure is off and you need to push ahead, rather than taking that strong cost focus. >> if you look at the cop at all we have been spending, -- capital we have been spending, we are in a growth mode. we are trying to balance debt, the gulf of mexico obligation. the company is operating and firing on all cylinders, so growth is part of what we do. we do not see oilfield inflation yet around the world. you see it in the permian cruz -- but broadly, >> when you look ahead, are you thinking that kind of inflation has been pushed low for a period of time. are the companies do a bounce back in their pricing story? the oilnot know any of companies that are off to the races and spending. we learned a valuable lesson with that last week. -- peak. i don't see it yet. other than the u.s., where there is a lot of activity chased by , and you, -- crews will see some inflation. francine: that was the chief executive of bp. , stocksollowing tumbling, treasuries dropping.

still looks healthy and the corporate are telling you, perhaps aided by the shale pick up, and the capexver the next six months looks positive. francine: is there anything we can take from the volatility in the markets? funds, that would then spread to equities question mark is that a word of warning? force that part of the normal market from now on? it's possible we get more volatility. over the last year or two, we enjoyed the period when the business surveys went from around 50 to extremely higher levels. now, that makes it more difficult for investors. they have to distinguish between, are we going from a great economic outlook to one that is just ok? or are we going from great to good to a much worse outcome. over the next year, i think we will go from great to just good. will actually be printing something more like 2.5%. once we get into 2019 it becomes a much more tricky question. francine: are you expecting more volatility in 2019, or does it spread to credit? mark: we have seen a mini-selloff. and there is a degree of complacency in the system. i think there is likely to be an

. >> across the board, capex going to drive performance. >> opening purse strings after sitting on cashl hill controversial mem highly classified document allegations beautician of power top of fbi, could be released as early as today interview yesterday with fox news brian kilmeade white house chief general john kelly hiptsdz we will see that explosive memo could see it soon fbi pushing back first stonewalling not giving the documents that congress is asking for, but right after, it became clear may see this moechl today fbi issued a statement in part, we have grave concerns, about the material omissions of fact that fundamentally impact the contrast, house intel committee mep schiff accusing chairman nunes of altering memo before accepteding to white house join is from republican national committee chairman former mississippi governor bgrgroup understood going partner haley barbour thanks for joining us. >> thank you for having me. >> reduction to this latest back-and-forth on fisa foem. >> any time security, we are talking about -- the government spying or taking information, that is

but to do that, you must be clear signs that the capex is picking up, that it is leading to productivitye are the two aspects of the u.s. economy that have been quite weak for some time. it is not clear to us that that is happening as of yet. there is an overshoot relative to trend growth right now and by 2020, we might see some give back of this kind of growth because the fiscal stimulus could be temporary. jean: this is the big question, and i agree, the markets have not caught up with the implication. we are putting out a note this week, trying to squeeze out more on the potential outlook for growth. there is a good case that investment will be key. we have got to see that coming. we have seen some pickup in 2017, but there is another important dynamic. we have been through this very long cycle, the duration of which has been much longer than usual. there's a risk that we have been attribute in more of this permanent growth to a structural force, as opposed to the cyclical swing that was a bit longer. if that is the case, the risks for potential reassessment of growth might be higher.

those areas particularly and particularly to what's going on fiscally now, now you're talking about capex, business cycle, amortization and accelerated. those kinds of productivity enhancing areas will do well. >> i want to show everybody back to your screen what's happening here in the after market hours caterpillar, for example, down 1% and that's after everything that's happened today. as soon as we closed things up here at 4:00 p.m., the selling pressure didn't let up it kind of kept going. you can see a lot of the components of the dow and s&p are moving to the down side. we've heard pressure over seas and not unusual that that's going to happen. i'm wondering, we're hearing names everybody is looking to buy. when are we going to kind of see that rubber hit the road >> well, there clearly was selling pent up into the close and the volatility markets have not calmed down. it's the indexes that are still kind of jerking around after hours. so that seems to be what's pressuring things. don't know how long that lasts i will say, you know, the dow has been the under performer in this move

so you know, i guess what i keep coming back to is what is going to drive this 3% growth forecast, capexnding is there to meet you know, increase the demand for the products the compensate -- >> even with extra money satisfied after tax plan. >> your poll asked what are they going to do with tax cuts 61% going to pay bills or save it, i think 8% said actually going to spend tax cuts your poll speaking wildly to the situation households are in don't have as much discretionary spending to throw around. >> i want to point out headlined getting right now qualcomm rejecting broadcom's latest offer 82 dollars a share qualcomm broadcom talking about a keel is that one place you think companies spend money on deals, given the fact we are seeing savings. >> we have seen on the of deal activity i think you know when you you this can about broad inflation picture that is a that is really setting the can i beedling for major inflation problem down the road, because you are setting up oligopoly, amazon for for example can say we are going to raise at whole foods we own to whole market now so we can d

we think that continues to happen they roll out capex and not -- >> why don't you have a sell on this stock you laid the thesis out for that >> we downgraded on the solarcity acquisition, we felt that was an irresponsible move on management's part but i think they are innovating in the automotive space. it's exciting. they have taken a challenging route with autonomous vehicles and are not owning um to the fact they have serious problems. other than that, we've been bullish on the stock until the solarcity acquisition. >>> coming up, countdown to the sh shutdown the clock is ticking for congress to reach an agreement in washington. as we head to break, look at yesterday's s&p 500 winners and losers my experience with usaa has been excellent. they always refer to me as master sergeant. they really appreciate the military family, and it really shows. we've got auto insurance, homeowners insurance. had an accident with a vehicle, i actually called usaa before we called the police. usaa was there hands-on very quick very prompt. i feel like we're being handled as people that actually have

we don't expense capex but we did benefit from a lower tax rate the net effect of that, now i'm speakingpany is going to be a wee bit different, but we will be able to reduce rates, we believe, in about the 5 to 7% range and do the things necessary to restore our financial integrity, our credit metrics. >> your stock doesn't have a huge range, but it is near the lows a lot of it has to do with these two projects that are seemed to be suffering from some delays and some cost overruns could you go into that what two are they? and is that something that takes up a lot of your time trying to figure out how to get these things done? >> well, sure. >> yeah. >> yeah. one project, it's really one project now, it's our nuclear project going forward. first of all, our stock has declined, but along with the industry just because of rising interest rates. >> yeah. >> we have a dividend yield of about 5.2% right now so it's -- it looks like an awfully good value in terms of our nuclear plant, the big story last year was toshiba's subsidiary westing house was building our plant for us, westing house d

stimulus coming at a time we believe the economy is at full employment, we think we're going to get a capext's partly related to the tax cut we don't think the supply side is going to respond to the demand side. we think the economy is starting to move into overheating. >> it's weird because you guys are never happy, economists. you get -- you get the 3% gdp and then you say, you know what, we're at full employment if we get to 3% gdp wages could start going up that's everything we wanted. we wanted 3% we wanted wages to start going up and so you get all of that and then you're like, you know, we've got to start worrying now because wages are going up and we're at full -- i don't get it. i want you to be happy it's like you're a dismal science for a reason you're dismal people. >> maybe we are, and i don't actually want to complain about wages going up or even inflation going up they've been low and moving up is a constructive thing. i think what we do believe is there are some constraints on how far we can run with that, and i think importantly in the near term and looking at what markets

with major investment into jobs and capex and equipment here. and they're just one of many companies that is going to be doing that. >> a lot of good news. next question would be, i'm certain that our colleagues from the other side of the aisle will highlight the recent volatility. we've heard that today in the market in aarn attempt to sound the alarm about the state of the market. they are viewing the markets in terms of single day performance and not on the long term performance. if they were to do so they'd concede the last 15 months, you talked about this earlier, the market recorded 84 record highs. both the dow and the s&p are still up by double digits during that period. mr. secretary, from both your time in the private sector -- i'm a private sector guy -- and now as the head of the treasury department, do you believe there to be any cause for alarm? >> i do not. >> okay. thank you for being here. and i'd yield my time back to the chairman. >> i thank the gentleman for yielding. mr. chairman -- i'm sorry, mr. secretary. one of the thing

and another 30% plan to increase capex, productivity as well as distribute more earnings. i view these things as positive for our economy. i want to follow up on the exchange you had about the vulker rule acres bill i've introduced to harmonize oversight. you noted in previous testimony president dudley has, even mr. tirillo has about the complex of this rule that we're not getting it done or doing a good job of enforcing the rule. on this harmonization bill i've had some difficulty in getting members to understand that giving relief to banks under $10 billion, safe and sound banking practices. and i would like you to respond to what i've told them. community banks are not subject to the vulker rule but that doesn't mean they're not responsible for safe banking practices. if they were doing something that you deemed unsafe and unsound related to vulker type activities that they could be disciplined for that under the existing banking rules? >> yes, sir. it is absolutely true that we don't need vulker to go in and find unsafe and unsound practices, in addition. certainly in