a pick up in terms of capex. all of this stuff is coming on the back of the tax cuts the real question is how sustainable will it be next year and to the question about capex, do we break it down between maintenance capex which is necessary to keep the lights on? or something that's going to be productivity enhancing over the long-term? >> we think the nasdaq's frothy? is it getting uncomfortably so or is this the way it's going to be >> depending which part you're looking at i would look at apple and would not say it's frothy or too expensive. i would and people can take shots at me say something like a netflix is too frothy. and to the earlier point if i've got a choice of netflix at $90 and a peg ratio of two or caterpillar at 11 times earnings, i am going to take cat. hang on. i may not be right. >> what are the cues up year to date >> i don't know the number they're up a lot but the question is is it frothy i'm saying taking a look at a broad market index whether it's the dow or the nasdaq, you got to look a

next week, we could see a major capex announcement plan.could start popping up capacity again among these key players. that way the oil curve does not become anchored to sanctions. alix: they anchor the back of the curve at one price but don't say the price and at the front end, capex will do the vacillating. >> that is a great way to put it. i think they are going to look at term structure and volatility and other metrics, and inventory, to get a complete picture of the market. opec has been focused on getting back to a five-year average, but in our view, based on the amount of forward coverage, it is a much better metric. importantly, they're going to look at absolute price levels but we think they should look at structure, it is a cleaner way to look at whether the market is balanced. alix: how contentious will this be? if you take a look at fiscal breakevens across opec, they range in different directions, and saudi arabia is in the $87 range according to the imf. how do you deal with that if you are saudi or kuwait? quatar?e >> this is

next week, we could see a major capex announcement plan. it could start popping up capacity again among these key players. that way the oil curve does not become anchored to sanctions. alix: they anchor the back of the curve at one price but don't say the price and at the front end, capex will do the vacillating. >> that is a great way to put it. i think they are going to look at term structure and volatility and other metrics, and inventory, to get a complete picture of the market. opec has been focused on getting back to a five-year average, but in our view, based on the amount of forward coverage, it is a much better metric. importantly, they're going to look at absolute price levels but we think they should look at structure, it is a cleaner way to look at whether the market is balanced. alix: how contentious will this be? if you take a look at fiscal breakevens across opec, they range in different directions, and saudi arabia is in the $87 range according to the imf. how do you deal with that if you are saudi or kuwait? or you're quata

it looks to increase its capex.e prices, heavy oil prices in canada are trading lower than u.s. prices. canada cannot get the oil to the pacific and loses about $15 billion a year. it is hard to build infrastructure. canadian m&a for these companies did a paltry 19 deals this year. can these acquisitions turn the tide or is it one off value play in a struggling industry? i recently caught up with anthony marino to ask him about the acquisitions. anthony: we found on this m&a investment, we could make a high rate of concern -- high rate of return. using the commodities to evaluate, we found very high returns on the transaction of the level we were able to do it. alix: a lot of investors are companies have wanted to get out of canada and the conversation about it not being the best place to be. what gave you the confidence to go forward? anthony: i could address that a couple of ways. the first, looking at the profitability of canadian light oil in general, we have gotten way lower differentials that in the permian, w

it looks to increase its capex.prices, heavy oil prices in canada are trading lower than u.s. prices. canada cannot get the oil to the pacific and loses about $15 billion a year. it is hard to build infrastructure. canadian m&a for these companies did a paltry 19 deals this year. can these acquisitions turn the tide or is it one off value play in a struggling industry? i recently caught up with anthony marino to ask him about the acquisitions. anthony: we found on this m&a investment, we could make a high rate of concern -- high rate of return. using the commodities to evaluate, we found very high returns on the transaction of the level we were able to do it. alix: a lot of investors are companies have wanted to get out of canada and the conversation about it not being the best place to be. what gave you the confidence to go forward? anthony: i could address that a couple of ways. the first, looking at the profitability of canadian light oil in geral, we have gotten way lower differentials that in the permian, where

cap --unlikely to see ex capex anytime soon. in terms of growth investor, you want to start looking into higher volatility. the only problem we have is those are in key companies in the u.s. -- we just upgraded ox he earlier this week. they did a little bit larger market cap. it has from transportation to the gulf coast. we are seeing that is a good play on the oil price. matt: to get back to opec, jason, how do you think the saudi's are feeling? not about their soccer loss but about the ipo that they are prepping for? around $80.ted oil you expect them to have it around their? is everything going to go's move with that ipo? jason: fillon prices supportive. the ipo is one of the more complex ones that the market has seen. a market tofinding list on is an issue. disclosure is an issue. the macro environment, the outlook for revenues are going to be fantastic. guy: is there a portfolio affect around that? jason: potentially there is. it is a reservoir for integrated oil stocks that there are sourced funds for investors want to buy

we are going to hire 20,000 people and spend $30 billion in capex in the next several years.esting a ton in this country. we are also going to buy some of our stock because we view our stock has a good value. david: did your parents live to see your success? threey mother passed away years ago, but my father is still alive. to seeyour mother lived you be ceo? tim: she did. i ways knew you would berereat successful, and can you help me with my iphone? [laughter] tim: i did get both of them on ipad. i convinced my father to start using iphone. me like, they treat they did 20 years ago. david: does he call you with tips about what to do or tell you how to do things? tim: if i do something he does not think is good, he tells you about it. i saw you on that show. you weren't very good. [laughter] tim: i hope you edit this well. david: you are a public figure. you were not before. did you ever think you could run for president of the united states, because -- [applause] you have seen the president up close. tim: i am not political, right? i love focusingn the policy the dysfunction

the other element is whether there is continued spending on capex or increased spe capex, and that couldd this cycle and you're starting to see more and more evidence that that capex spending is picking up it's not anemojis making us more efficient, but other aspects of this technology that is disruptive and increasing productivity. >> important point if we're going to continue this cycle, we have to get productivity growth up so, as much as an investor and money manager, i'm delig to hanies buying back stock, but i would much prefer that people put money into productive investments that can extend this growth cycle and bull market. >> agreed. >> i've been a technology analyst for a little more than 20 years and one of the things that gets me most excited today is really the breadth of dd that's going on. the last five, ten years, we've kind of been sitting on a one-legged stool called smartphones. now that we see the breadth broadening out, in your areas like data center, the capex that's going on, significant amazon big increases even apple's capex is up a lot maybe this is u.s. tax re

we are going to hire 20,000 people and we are going to spend $30 billion in in the next capex in the several years. we are investing a ton in this country. yes, we are also going to buy some of our stock because our stock is a good value. from a shareholder point of view, if we can buy stock from t think it is worth less than we do, that is good for the company and good for the economy as well. people sell stock, they pay taxes on their games. -- on their gains. vonnie: you can watch the full interview in the new season of the david runstein show tonight at 9:00 p.m. on bloomberg teln. time for our global battle of kicking things off in the united states, abigail doolittle. abigail: today is fed day. we are looking for the fed to put out its policy decision that 2:00 p.m. let's take a look at a long-term chart of the 10 year yield. there are futures and options traders big on the idea that bonds could rally. there have been $75 million of 10 year futures bought, suggesting yields could go lower. here is the big bull marin bonds. the 10 year yield popped above 3%, it appeared it would

capex. people will stop spending money. they will get more cautious about the top line.'t think it's being discounted, i don't personally think ill get that far. either side will step back. there is too much vested interest on both sides for it to not actually have a negotiation. you saw overnight beijing was talking about softening. i suspect we do negotiate our way through it and people concentrate on earnings. >> you spoke about value opportunities. valueo you see as opportunities now or wait for a bit? question another good because i have that slightly wrong. i got the oil shares right. when i was last here we talked about value stocks over growth stocks. perform.ocks will over that is why the value stocks and come back a bit. as a firm bear we like the financials in that value bucket because if you look at the financials they will buy back about 6% of their stock this year. you have seen the stress tests overnight. they are going to increase some of their dividends by 3%. you are getting a total return of 9% on stocks that are trading just overbook and trading 10 or

see a little uptick in growth i don't see global inventory overhanging the key is corporate sector capexg in trade sensations creates uncertainty in a business community, and if it accelerates corporate might not build up capex to degree sensations i this i the global very solid footing. >> a survey from national association of business economics shows many worried about a recession, by 2020 your take on that report? again, we're american nine years into this expansion. that would be that would be -- a recession by 2020 would be expansion of 12 years what is your take again to introduce the worry of tariffs what that will do to busines younow prices, and business activity here in the u.s. >> right, so i don't think expansion has to die of old age, the one characteristic as you pointed out long prey slow expansion, so it is not strong but it is long. but you are right, there is risk from on the trade standpoint, clearly, if this sclai escalates into trade war brings the next recession if i am right about capex kind of coming to the forefront -- and inflation not getting out of hand, becau

is there something coming from the trade issue, and overhang of uncertainty that will hold back capexiring. alix: central-bank convergence come than central bank eurosions, and -dollar. >> it is at the widest level in decades. it tells you the diversions has opened up here at it is coming from synchronized global growth. it is the u.s. going it alone. we better not have any negative consequences of the trade your because the u.s. will flatten out and we will have a different discussion. alix: with the trade wars in the background, where we have convergence but not in a hawkish way? essentially we are still hoping the expansion continues and we can get to the exit. may be trade issues are going to push the exit further away. either greater support from the fed or ecb, and for that matter the boj and boe, pushing out before we see more rate hikes. david: does this mean the fed statement last week about raising rates is no longer operative? say we will hike three times this year, three times this yea and now they say they will hike four times this year. that was hawkish. they must be loo

companies largely going ahead with capex plans? should they act business as usual?ames: that is very clearly the case when you look at the capex numbers, the business confidence level, consumer confidence level, consumer sentiment about the economy. people are assuming that we are really going to extend this economic run, and we are breaking out of that pattern of 2% growth towards 3% or higher. putting businesses are their money where their mouths are and growing here. when you look at what the market is doing, the market's main focus has been repricing asset valuations to correspond to the policy. we are rolling out of of qe environment, coming into a more normal pricing environment for the fed. we have had two price hikes so far. we may have another two rate hikes. investors are wondering how much more the fed is going to hike, how fast they will hike, what is the fed thinking? that is dominating u.s. financial markets right now. trade is a headline issue. , not whatfterthought you was investors are primarily focused on. frankly, if you look at where the movement

we see that the father, that means companies could start to fall back on spending and projects -- capex spending and projects postponed. caroline: when reading your reports, wells fargo warns that for the second half of the year, volatility could be a key issue to watch. this is even inverted at the moment. concerny just shows the about near-term risks. where do we go in terms of volatility and asset allocation when you're in volatility? tracie: we have seen volatility pick up this year. we anticipated that. last year, markets were focused on tax cuts. this year, the focus has been more on tax increase in the form of tffs. don't forget, we have midterm elections at the end of this year. volatility could persist, but the good news is that the economy is still chugging along at a decent clip, about 2.9% this year. that should lead to higher markets at the end of the year. vonnie: coming up, some breaking news. the trump traveled in has been upheld -- travel ban has been upheld by the u.s. supreme court. more thaninitely bars 150 million people from entering the country. the latest version

capex was relatively strong. household spending has been firm. by all mea the u.s.conomy is on sound footing and investors appreciated the fed will be gradual in raising rates. ramy: off of that there have been people saying there are four by fours for this year and next year in terms of rate hikes. you are three by three, is that right? >> three more this year. ramy: explain that. >> sure. the fed is in a difficult situation having to think about the extent to which they should accommodate fiscal stimulus. if they raise rates aggressively to counter fiscal stimulus, they risk throwing the economy into recession in a couple of years. if they accommodate too much the fiscal stimulus, inflation could rise ad. they are trying to square the circle. they are continuing to raise rates gradually and get to neutral policy by the end of this year. , three moret 2.5% rate hikes come and take policy into restrictive territory. ramy: you are more hawkish than bullard, who was saying they are already and neutral there. i want to bring up this chart about where business leaders s

we think the capex story will be more focused on technology.he technology is going to head up this year and next year. outside of the u.s., we have fundamental changes going on in europe and in japan where debt levels of been reduced greatly. balance sheets are cleaner and there are trading at big discounts for political reasons. longer-term investments might have bigger opportunities outside the u.s. we are story go more in the u.s. and more outside. caroline: i'm going to pick you up with the technology. you say the outperformance -- it is phenomenal over the five years. you see the chart that shows how much they have distanced themselves in performance versus the s&p 500. where in technology are you looking if it is not facebook, amazon, or alphabet? christ: it is a soft what -- chris: it is a software story. often add-on modules and those modules increase productivity. what it is not is a brand-new capital expenditure cycle. it is about business productivity. it is a good thing for profit margins to remain high over a long period of time bu

what are they going to do about the debt they still have a relative amount of capex.ing different. analysts are tough people to deal with. but think about talent think about individuals that -- how do you deal with tom cruise? so they're going to have a learning curve >> so you think that's going to be a learning culture for at&t >> that's a good word. >> in terms of growing the hbo business, for example, to compete with a netflix or the like, how much money more do you think they're going to be able to invest in some of these businesses to try to be competitive at a time when you're talking about the debt and the dividend and these other issues that backs to the culture issue. >> that's part of it from the point of view of what happened with directv, there were changes all the time in the distribution habits. this was a good deal for at&t. the wild cards are what is verizon going to do. how do they put money into and green light what they want to show and can they do it cost effectively? and you've had companies in the movie business forever coming up with $200 milli

listen in, especially if you're an oil trader, this man has billions of dollars of capex to spend, and he doesn't know whether it's going to be 50 bucks or 100 bucks, but also making the point that a small amount of change has large ramifications in the market. i think this is fascinating. >> you cannot keep the politics out of oil and gas this is our job, but it's not only a supply and demand exercise opec does not decide the price it's not true. opec is just an organization which can control one part of the market, not all the market it represents 30% of the market. with 24 countries, 50% but they do not decide the price. it's not true. if they try to make figures, supply demand, in the end the market takes over. the market anticipates what is the situation of the world economy. will the world economy be lower because of trade wars? this is very important what is the impact of the relationship with russia, sanctions. if one country puts sanctions on, you have an impact i think they try to say it's not political. everyone knows you have some politics the middle east, consumer countrie

investing capital expenditure and technology can help companies boost bottom lines >> data applied to capex cycles can take costs out if you were a producer of 3 million barrels of oil a day, you take a dollar out of a barrel, that's about a billion dollars that flows through to the bottom line. you can do that using digital technology >> autos are also in the spotlight. volkswagen shares are lower after the carmaker was fined 1 billion euros over its diesel emissions scandal. prosecutors found vw sold over 10 million cars with a cheating software that understated diesel emissions. volkswagen accepted the verdict. this is one of the highest ever fines imposed by german authorities on a company >>> renault's chief executive, carlos ghosn will step down before his term ends in 2022 he said he would step down but stay chairman and chief executive of the renault/nissan/mitsubishi alliance. >>> and rolls royce is trading higher as they plan to slash 4,6 00 jobs to streamline the business the company says the cuts, which represent about 9% of the work force, will help the enginemaker meet its fre

the piece that has not been talked about enough that is by far the most important is the increase in capexin business investment. m & a can happen for a lot of different reasons, sometimes they can be good reasons. i think dan is completely right. it can also happen becau people hav access to cheap money and are doing some bad deals. it isn't like all m & a and our american corporate history has worked out very well, but really , what we want to follow e great sign of this ecomy is the capex. i think it's great business investment. neil: if you don't mind my veering into politics, gentlemen i do have a method to my madness this victory for this 28 year old woman who took down a house giant in the democratic congressional district, she has said, alexander cortez, that it's a system a self-proclaimed socialistic, loved bernie sanders, said this isn't very fair to average workers. she gets to washington she's going to change that, indicated that companies should be paying more taxes, rich people should be paying more taxes. your thoughts on that then because you've got these two visions here

item 16 and 17, the m.o.u.s between the city and municipal capex tiffs association, fire and police, effective both for july 1, 2018 through june 30, 2021. item 18, compensation for employees of the city, subject to provisions of charter section a8.409 in job codes not represented by an employee organization and establishing working schedules and other terms and conditions of employment and methods of payment effective july 1, 2018. for items 19 and 20, an ordinance to adopt and implement number two to the 2015 through 2018m.o.u. between the city and union of american physicians and dentists. unit 17 and 18 to update certain terms and conditions of employment and to extend the terms for both m.o.o. uz through june 30, 2019. for item 21, adopts and implements amendment number six through the 2007-2018 for the city and m.o.u. local 2021 for h-1 fire rescue par ed manyics to update the language and extend the term of the m.o.u. through june 30, 2020. for items 22 and 23, adopting and implementing amendment number one to both the 2014 through 2019m.o.u. between the city and the transport

rates between now an then you have repatriated earnings which will drive m&a activity and you have capexpending which should be picking up and that requires finan financing. it benefits all the banks. go to where the puck is going. >> not all financials have been dogs when we talk about the xlf, we're talking about five giant banks. when you look at credit card companies, look at the broker dealer index those stocks have been on fire anything related to wealth mang. a lot of areas of asset management, schwabs, e-trades. it's been importantto not just own financials that are wholly beholden to the yield curve but to look at where things are getting better on the earnings front. those stocks have been huge winners. >> i own mastercard and visa as consumer plays >> so let's add another voice to the conversation ed yargeni is with us. welcome back >> thank you very much >> you heard some of the conversation here. >> i agree with everybody, by the way. >> you're a good way to start out. >> you have to come back >> what's going on with this swoon? >> just a little swoon i have never recalled o

technologies the key thing to think about is that in the tech industry, there's been a massive investment in capex over the last four to five years. it's built out the infrastructure so, much of this is being enabled actually by the cloud services the cloud infrastructure that means that for us as a user, we just see these seamless experiences on the internet, on cloud, on our devices, and that infrastructure's enabling massive advances in technology improvements. >> are we seeing a subtle shift now whe any of the big players are really going to benefit? i mean, apple's conquered so many different parts of the spear. ir, also big data where it's now given you the ability to go through all of your photos and bring together themes, so effectively, the customer's big data can be tapped i wonder whether these big companies have moved so aggressively now that there's not much left for some of the start-up entrepreneurs >> i think there's always still a vc and start-up culture that exists within the tech industry, and they're always looking for new-improved ways of doing things clearly, the big companie

with 5g is connected to ai, they have three stayed on companies that can push the capex to own that spacethink there are worries about china taking the lead over the u.s., and the answer is we have to have better public-private partnerships and be more involved with government as well as the corporate to maintain our technological edge. one thing i will say regionally is we are a little fearful in seeing a hugeare advantage over europe. scarlet: how much space to these silly con valleys -- silicon valley ceos have what the government? katie: i think we need to do more of. are dependent on proving out the business case of this, because we want the private capital to come to market, and it will take us a little bit longer. it will take people a little longer to buy into the business, where as in china, the government can just get behind it. julia: what this administration has done is provide reforms, fiscal stimulus in particular. i want to tie it back to what we are seeing in markets. theier, you were seeing hair back in the risk of the larger caps. talk about the wrist in the smaller cap

when you look at capex spending plans, they're off their highs in terms of what they expect to do inhe coming six months. still at elevated levels something like that you might say, okay, there may be a bit more caution, more of a wait and see attitude i think in terms of hard data, the weather in the last couple of months in terms of some of the disappointing versus the expected numbers may have played a role things like that >> you don't think the labor market is -- >> i do -- >> you do think? >> i do think it's tight, but i'm surprised as everybody else that we're not seeing more -- >> 0.2% you're looking for >> exactly again, we were speaking before that the truth is that -- >> you are raising your hand >> i'm blinded >> it's so hot they pretend they're fixing it, they sneak it up again you have to watch them like hawks. >> i can't see >> you look fine i guess. do you agree basically >> broadly, yes. i take the over on payrolls today. i have 220 on payrolls >> what? >> first four months of the year, 200 now a month, which is better than 182 last year. we have not hit the wall in

into second quarter earnings, we'll start to hear whether or not people are pulling back at all on capexnd your suspicion is that they will. >> i think you're going to hear a little bit of that, but you don't just stop plans on a week-to-week basis with what's going on right now you have three, four, five-year outlooks we expect capex to be moving forward and probably in the the economy and fundamentals and all that is not necessarily dented by what we've seen recently >> correct. >> what do you think correct? >> correct at the oend end of the day, the main question we receive is how do we combat this? right? how do we combat this volatility and week by week, day by day, we continue to come back to high quality investments. the bottom line to that is the most high quality investment in the world are u.s. equities. period because of the stability in earnings, because of where the operating performance is, and cash flow. this day-to-day binary action type of investments is not the way to run money now, from a quarterly perspective, earnings continue to go up i think the main thing people a

, where you can write down your capex.heory is earnings growth will slow until next year. have you the one-time hit from the cash right? now they have a boat load of cash what are they going to do? i think they will protect their earnings by virtue of making investments the point is the earnings growth will be protected. because now they have another accounting tool in their basket that will allow them to basically get the benefit by writing that down all at once. so focus on the operating profit >> sure. that's a good way. i will say, jamie has criticized the media in the past saying we shouldn't be reporting on cnbc and other outlets. he said here's what they earned this year versus last year >> i agree with that >> how do you align the investor class with the company, management class, if you will, in terms of the time rise? and the other piece, we were talking about this off air warren and jamie are talking about, absolutely works if you are a big investor right. in large part because you will be in it for a long time

david: to correlate with capex. we will get core pce and spending numbers for the month of may. the university of michigan will be out with its index of consumer sentiment. sunday, mexico will be electing its next president. it is time for the bloomberg first take, joined by cameron .rise and brooke sullivan our first topic is the halftime review, because we are coming up to the halftime. we want to spin a minute -- spend a minute on this axial's report. -- axios report. cameron: the dominant narrative for the first half of the year with the president and his trade policies. as you rightly said, it was a question of shoot first and ask questions later. and sayot be a cynic that reading the entire 555 words or however it long -- however long it was, was a bridge too far. he has been talking about this for a while and it would require an act of congress because u.s. membership in wto is essentially a treaty. when the u.s. joined, part of the congressional law that allowed for that said, if we are going to pull out week, congress will have to pass a law to pull out. that makes it a

look at what happened --2015, we saw half of that it is going to go back into dividends, not into capexis aircraft orders like boeing received almost half the orders they did from april. nonetheless, you have to wonder how much is trade. how much of the uncertainty is filtering through. david: because of business sentiment. thingsere were two other that happened. the previous 18 months bond yields have gone up from one and a half toward three. that squeezes economic activity. think about gas prices. gas prices have been 50% up over the last 18 months, that is squeezing consumer confidence and retail activity. reportthey was a stock buybacks were way up because one of the questions we had with tax cuts is where the money would go to and we were told it would be capital investments. ian: i don't think they were and that is why we see the dollar going up and the banks under pressure because we saw a rate of$633 billion -- profits $633 billion. a lot of the money came out of the market and the question is is it going to cap ex or buybacks? and it looks like it's buybacks. alix: what makes y

look out at 2019, one of the things that's going to help and continue to drive things will be the capextaking place this year. so we do have a boost this year. i think the rate of change will be slower next year but i still expect the trend to be positive. >> i agree with this point that the yield curve, i think the flattening of the curve is giving us a head fake. the short end is an indication of our strength. the long end is being held down by europe and japan which is a signal of how much weaker they are than us. and the result is that the curve flattens but if you look at loan performance and credit spreads, that really gives you a sense of how healthy the economic environment is. >> that's an optimistic take you're still 3,000 for the s&p at the end of the year >> has to be what? >> 9% more >> jonathan, thank you and thomas, nice to see you as well thanks for joining us. >> thank you >>> athenathenahealth's ceo is stepping down today amid a scandal. let's goet to bertha coombs with more >> it follows recent revelations of athena's co-founder having physically assaulted his wife mo

fact that all this trade talk is perhaps making businesses put off some plans for expansion, for more capext we are seeing a lot of capital expenditures, we're seeing companies going out there and spending more that's going to increase productivity, and that's good for sustained economic growth. it just takes a little bit of time to work through the system. >> omar, give me a good idea for investing right now. >> well, i think that the biggest component right now is for people to continue to look at their long-term objectives. if anything else, you know, this is the opportunity for people to go back and look at their holdings and rebalance their portfolio. if anything else, you know, this is a perfect opportunity to go back into equities, given the solid backdrop we have on economic, you know, front as well as on the earnings front. i would actually say that the only thing that i have seen changing in the last two weeks, potentially in the next week, is the sentiment factors. you know, people are starting to get more anxious about what these may come into fruition we have midterm elections

tick up ing a activity in 2018, but buybacks, some investment plans and capex intentions. everyone's a concern supply chain will get hit, we will see a retrenching and a desire to hold cash levels high. tom: thank you. this is a joy. coming up, travis lightner joins us. than an acquaintance with the justice kennedy. personal attention to the retiring justice from him. from new york, this is bloomberg. ♪ ♪ taylor: let's get the bloomberg business flash. biggesto buy the electric vehicle charging company for an undisclosed amount. bp estimates there will be 12 million electric vehicles on the road. andits missed estimates expectations, and inventory levels increase further as the swedish retailer suffered from logistics issues that hurt shipments. pretax profits are up 22%. h&m have been struggling to adapt to the digital landscape. that is your bloomberg business flash. francine: thank you. , steven mnuchin and said to favor a less aggressive china strategy. larry kudlow says the president is not softening his stance. guest thatnow is our are our guest. thank you for stayin

. -- capex in america's rising. animal spirits are high.we need more animal spirits and more politicians to lean in and encourage economic growth rather than create economic uncertainty with all different courses of economic action. francine: where are you seeing the animal spirits? are certain industry groups being impacted the most? beijing orou go to london or san francisco and walk around the university's, everybody wants to be jack ma, steve jobs. it is very easy to set up businesses. startups are popping up all over the place. we don't need to pay ceos more. moreed to pay young people by getting people working in growth is this is and not -- not dying adnd industries. francine: you heard that. pay young people more. we have a great conversation coming up with the u.k. chancellor of the exchequer. that is at 4:00 p.m. u.k. time. this is bloomberg. ♪ is bloomberg. ♪ francine: this is "bloomberg surveillance." for kind of combination bloomberg surveillance. tom is in new york. we have a lot of news. you look at the new governments in spa

will trickle in third, fourth quarter the tax cuts came through but not instan containous wait for capex happen for that for numbers to take effect not going to show up needle you see third and fourth quarter. >> we will see if it is the increase is really as substantial as the s&p numbers, my you know again when you go back in history we've had tax cuts before where you have not had this kind of gap, between the two measures, also, you know i don't look at markets as last word on what is happening the markets are fallible markets were hitting all-time highs obviously 2000 as economy going into recession so you know i wouldn't point to the small cap performance, as evidence that small businesses are doing much better, it is market expectations that they are going to see, the benefits. but the other side of this that really i think is big story the biggest risk to stock market is credit side we're seeing now departure of stock market from what is happening in the credit markets, where the fed has been obviously raising rates tightening credit conditions draining reserves from banking syst

you're running a big multinational and you're thinking about inventory build and what you can do on capexwould data fall off so quickly? maybe you pause. there's no doubt u.s. growth is different than the rest of the world and will continue to be so >> we don't need a flat yield curve. i don't get that either. so the rest of the world is giving us a flat yield curve or something? >> the pension fund demand for the long end of the curve is extraordinary. the bid for the back end that comes from pensions, that'll be there. it'll go away somewhat after september. but that'll be there. >> so every time we see yields pick up, it just -- >> it's incredible but there's something important. when yields move shigher, the long end tends to sag. but if the fed stops, then the curve is going to start to steepen out. one of those things you think about the yield curve is if it's bear flattening. you'll have a dynamic where interest rates move higher but it'll go the exact opposite way in the dynamic where the fed stops or growth slows. >> are you a believer -- and we've had this debate about sort of t

i think productivity will increase capex the people told us we were at peak earnings are looking foolishfew look at the stills out of s&p for the 3rd, 4th quarters, into next year, i think people are way under investing. >> we got 40% from november 9th on i mean, a lot of good news already reflected. 25, 3 again? what is it on the dow? somewhere around there what does it mean from here? haven't we gotten most of the bang for the buck? recalibrate snit >> no, i don't think so. i think estimates for next year, bottom up operator, you are pushing up 174, i think is the number i see. you can run the multiples on that we ought to have higher historic multiples anyway a lot of things going on with the economy and corporate america. i was just in washington, d.c. there's actually some good things going on in d.c a lot of the regulations that have been pulled off the books and the ones that are on the books, some of them are not being enforced >> some of the people that listened yesterday thought the fed might be more inclined to move more and maybe more quickly. is that a part of your reason fo

. >> you hadn't thought about the lack of capex being part of the reason >> it's a huge issue but ifng economic growth, we're going to be using the resources of the economy. >> that's what we were holding out for. >> it's what you got >> you just said -- did you say possibly 4%? is th did that come out of your mouth? you said it. >> yeah. 3%, 4% 4% is a good number. who'd you have on yesterday that was talking about 4% >> howard shultz >> yeah. anyway, those are difficult. but i do want to talk about this other thing, joe the government reported yesterday there are now more job openings in the united states than there are workers to fill the jobs throughout the company, job openings remain unfilled and employers looking to hire say workers lack the necessary skills a program in louisville, kentucky, attempting to address the problem. and address it in high school. it may seem strange and a little out of the box, but a card board boat race in louisville, kentucky, is seen as part of the solution to a national worker shortage problem it all looks like fun and games, but behind it are s

comprehensive tax reform not only impacts small businesses entrepreneurs start-ups mid sized companies with capexts health benefits for employees matching 401(k) plans promoting from within, so it is a great, great return for the taxpayers who have been waiting for decades. >> in fact where did you travel tell us about your travels reception you received. we traveled all over the place we have been this pence, maine senator collins. >> trying to sell this plan to the american people, to make them understand the impacts. >> correct, and articulating explaining in full detail took a tax code enormously complicated greatly simplified also want to talk about elements we believed in so strongly we believed the corporate side the cuts to corporate taxes will enable us to be competitive, we believe that investing in american families american working families is good return on investment, to the point that is why so passionate about the child tax credit recognizing the fact that 47% workforce is now women you have single largest cost in roughly half american households cost of child care unsustainable e

there is some decline to investing in capex.illyou looking at which to you which way this is headed? >> sentiment, orders, and outlays. sentiment is the early question. orders, they do the they are making a commitment and could still cancel. then there are the outlays when they are putting money on the table. that transition from sentiment to outlays is what we are looking at. david: there is a piece today saying donald trump is winning this because he thinks he will hurt china more than here. at the same time, how badly could china get hurt if this keeps going? been on the has trade flows, exports and imports. if we look at those trade flows and gross terms, then yes, the u.s. imports more from china than vice versa. and there your metric is more stuff on the table that could be taken away, but that is not the only way to look at this. the businesses that produce in china, sell and china, un-american brand, and that is the nationalist approach which can be galvanized in china, we saw in the case of japanese and korean products,