tv Bloomberg Best Bloomberg March 23, 2019 12:00pm-1:00pm EDT
nejra: coming up on "bloomberg best," the stories that shaped the week in business around the world. the fed grows more dovish, saying it won't tighten in 2019. scott: i'm a little surprised. i think they're overreacting. andrew: the real question now, will we get through the end of the year with no rate cuts? nejra: with brexit d-day looming, the u.k. pleads for an extension. mr. barnier: we have done our best. we have done our best. david: there is not much
optimism this side of the channel. nejra: deutsche bank and others in talks. the outlook remains foggy for a u.s.-china trade deal. sarah: china is pushing back. it is not falling at the feet of the trump administration. nejra: and investors tell where and how they're finding value. marc: i think you have opportunities on the energy side. david: just taking futures trends and applying them to equities does not work at all. nejra: and in a time of political stress, german chancellor angela merkel speaks about stability. chancellor merkel: [speaking german] translator: we have to strike a compromise. nejra: that's all straight ahead on "bloomberg best." hello and welcome. i am nejra cehic. this is "bloomberg best." let's start with a day-by-day look at the top headlines. the week began with major news in european banking as deutsche bank and commerzbank officially
opened discussions on a possible merger. david: deutsche bank over the weekend confirmed it will enter into an agreement with talks with commerzbank. the combined entity would have over $2 trillion in assets and a market cap. give us your best argument for why this merger might make sense. matt: i have been talking to a number of analysts, a number of investors, not a lot think the merger does make sense, but they all say deutsche bank and commerzbank have to cut costs. one way would be to shut down branch they was in germany and fire a lot of the people that they have working with them, 30,000, maybe 40,000, maybe more. the problem is, a lot of the investors and stake holders outside of berlin don't think that this merger would make a lot of sense. a lot of people i have spoken to today don't think it's going to happen even though christian saving and martin selca have
been pushed into talks by thierman finance ministry. guy: the speaker of the house of commons blocked another vote on prime minister theresa may's brexit deal. speaker bercow: what the government cannot legitimately do is resubmit to the house the same proposition or substantially the same proposition as that of last week, which was rejected by 149 votes. flavia: he wants it to be different, how different is up to them, but he said you lost by 149 vote you cannot put the same vote again. so this really puts the pressure on her to either get something from the u.p., essentially from the e.u. saying listen, i know we've been down the red before but we need something more. francine: what is theresa may's thinking? we are 10 days away. what are her options, one, two, and three?
david: she is meeting with her cabinet to hash out where to go from here. stephen bar it is clay, cabinet secretary, has been doing the rounds he says we're in a constitutional crisis at this point and the choices are about a long delay, and a possibly very much soft every brexit or perhaps no brexit at all. >> u.s. officials are telling bloomberg they're concerned china is putting back and walking away on trade pledges. president trump responding saying talks are going well. sarah: we have heard a very happy, clappy message from the trump administration that talks are going well.
donald trump said things are progressing and moving along. the trump administration has indicated that sooner than later there's going to be a signing summit between president trump and his chinese counterpart, and i think what our story revealed today, it pulls back the covers a little bit on the talks and show, china is pushing back. it's not falling at the feet of the trump administration. the issue that's the core u.s. free advance, intellectual property theft of, is a hard issue for them to agree upon. guy: prime minister theresa may asked for an extension though brexit deadline. now it takes us to june 30. mr. tusk: i believe a short extension would be possible. but it will be conditional on a positive vote on the withdrawal agreement in the house of commons. guy: it does seem as if he has given theresa may one last chance to get her deal across the line. maria: he said something we heard in brussels throughout the morning. the extension the prime minister may have put on the table, june 30 mark has many, many legal problems when it comes to the e.u., will clash with european elections. they said the u.k. will have to run in the election if it's
still a member state. no emergency summit for the time being. obviously the dig will come down to e.u. leaders. this is no doubt a political decision they'll have to make tomorrow. scarlet: we are awaiting the second federate decision of 2019 physical load by a news conference with chairman powell. officials expected to hold rates steady, but they're looking at how much they downgrade. michael: it continues, no change in the fed's target rate, and they are done for the year. it calls for no rate increase in 2019 as nine members move their dot to zero, joining the two that were already there. chair powell: the data we're seeing are not currently sending a signal, which suggests moving in either direction for me. which is why we're being patient. scott: i'm a little surprised. i think they're overreacting. it's really amazing that in
three months, with what i think are fairly de minimus changes in the economic data, that we've gone from this reversal of, you know, we're going to have at least one rate increase and two more, to now at most we're getting one and not until next year. certainly the market is, you know, with the rally we're getting in treasuries, the market is starting to price unease. i don't think the environment
justifies that. andrew: fears that some fed officials had a year ago that the economy was bursting out of control and in danger of overheating have receded into the background. the question now is will we get to the end of the year with no rate cuts. rishaad: president donald trump said tariffs on chinese goods will stay in place until he's sure there's a trade deal. does this reduce the likelihood of a deal, because it sure seems like it would? tom: we have known for some time that the u.s. wants to have or use the possibility, have the optionality of using tariffs to enforce any deal. but by president trump coming out and saying that he isn't going to remove any of the tariffs of $250 billion worth of goods, is you do get a deal, that does change the stat thousands of negotiations. on the chinese side, they have been clear, they want to come back with a deal that doesn't look one-sided. they were hoping that the u.s. would show some flexibility on tariffs. it doesn't sound at this point like president trump is offering that flexibility. francine: e.u. leaders averted the threat of a no deal brexit, agreeing to give theresa may two weeks to figure out what to do. if they don't endorse the deal, she'll have until april 12 to decide whether to leave with no deal or extend further. pm may: i will make every effort to make sure we're able to leave with a deal and move our country forward.
mr. barnier: we have done our best. we have done our best. maria: i think there was a sense of frustration, today i think the sense is relief. david: we'll get another run at a vote in london, if it's allowed by the speaker tuesday of next week. the numbers are not looking good. there's not much optimism this side of the channel that that vote can be within this week. where does that leave her? they said she's either got to ask for a long extension or decide well, we're going to go for no deal. francine: if she had to choose between a no deal brexit or long extension of one or two years, do we have any idea what she would choose? >> i think the europeans strongly fear, and so do many british politicians, that actually theresa may given that choice would go for no deal. her obsession is torey party unity and that's a message she's got across very, very strongly to everybody around her. she thinking, i would argue perhaps wrongly, that the only way to keep the toreys together is to go ahead with no deal in that circumstance.
i think that is what is scaring europeans. that is what is scaring the market. if she's bluffing, she's blufing incredibly effectively. amber: the market is currently gripped by the fact that we seem to be getting a recession warning signal. this is when you look at the difference between the three-month yield and 10-year yield, which has inverted. brian: it's the big one. this is the yield curve that accurately predict the last seven recessions. this is the one investors are looking out for, it's the one that says something about the economy. the three-month bill yields more than the 10-year treasury. people are buying the 10-year protection, betting that the fed will have to cut rates soon.
some of the data out of europe confirms the rate is slowing. you saw the german bund fall below zero for the first time in years. i think it's a reflection of combination of the fed reacting to slow growth and the slow growth actually showing up in various data points, and the markets are sort of taking that and reacting dramatically. nejra: still ahead as we review the week on "bloomberg best," an exclusive conversation with german chancellor angela merkel. plus, the inside story of brookfield's blockbuster deal for a majority stake in oak tree capital. and up next, more of week's top business headlines. brazil's new president gets a warm reception at the white house. walter: president trump even hinted that brazil could become a full nato member. nejra: this is bloomberg. ♪
let's continue our global tour of the week's top stories. at a meeting of the opec alliance of oil-producing nations, the group said supply curves are in place, but there's strain between the most powerful members. guy: saudi arabia's minister said opec and its allies say there's much work ahead to balance the global markets. who is the most important voice to listen to at these meetings? is it the saudi oil minister or mr. novak from russia? annmarie: it is increasingly looking like the russians are the ones that are setting the agenda. they were talking about they have so much more to do in terms of cuts. inventories are building in the u.s.
they are surprised about the shale jut put and these cuts need to come. he did say we have to make a decision coming up, it was clear he said there's more work to be done to clear this. while this russian oil minister, alexander novak, says we need to wait and see. today, they said we're going to scrap this april meeting and there's only going to be one in june. it looks likely that they're listening and taking that cue from alexander novak, so that april meeting is off the table and then deciding on whether or not to extend these cuts the rest of the year, they'll make that decision in vienna in june. david: president bolsanoro of brazil arrives in washington today for talks with president trump. on a wide range of issues from expanded trade with the united states to brazil's membership in the oecd to cooperation on space launches. pres. trump: as i told president bolsanoro, i intend to designate brazil as a major non-nato ally, or maybe if you a start thinking about it, a nato ally. kevin: on the issue of venezuela, they are clearly on the same page, that really is the big takeaway here.
they said in terms of trade and business relationship, the u.s. and brazil would be able to forge a new path ahead. walter: president trump even hinted that brazil could become a full nato member in the future. and bolsonaro, when he was asked whether brazil would support u.s. troops in the border of venezuela, kind of said that this is up for discussion. so there's something going on there. joe: another ex-president arrested in brazil. michelle temer is now the second to be caught up in the carwash probe. the news sent shock waves across the country, the benchmark fell 2.6% today. julia: the concern is this will impact for pension reform which is what investors want to see. it looked like progress was
being made, and now we don't know how much of an impact this will have. guy: china's president is visiting italy to sign the first m.o.u., memorandum of understanding with a g-7 country for his one belt, one road initiative. there has been some concern both from washington and elsewhere in europe about what they're up to. john: it's a vague memorandum, doesn't have any specific business deals in it but does commit italy to volunteer far role in the one belt, one road initiative. separately, european allies are also worried, they italy going out on its own, negotiating this memorandum with china, as a breach of the united front that the european bloc is supposed to present. haidi: against a backdrop of global trade tensions, canada's trudeau government has delivered a budget that leaves the deficit track largely unchanged.
josh: how exposed is canada to trade tensions? minister morneau:trade tensions obviously impact the global economy. so there will be obviously a knock on impact for canada should the trade agreement with the united states and china be positive, and there'll obviously be challenges to the extent that it's extended. but i think what we have in canada is a situation where our economy is actually performing pretty well. we're getting through the oil price changes in last year, but underneath that is the lowest unemployment rates we have seen in 40 years. so it's generating strong returns for the government, it's generating strong returns for families, and our job now is to get the people that are working optimistic about training for the future and investing, so we can continue with an economy that's working for most canadians. anna: rates are on the rise, at least in norway. the norges bank hiked its key rate for the second time since september. and sees rates increasing again over the next six months. oystein: the background for this new policy rate path is that on one hand, internationally we
see, especially in europe, in our neighborhood, we see lower growth, still uncertainties of different kinds, but for the economy, the recent information is in the other direction. it underlines that growth in the norwegian economy is stronger, even stronger than we foresaw. then there's no need for the low rates that we still have. david: we have the bank of england decision. alix: so nothing. basically. nothing changed. that's a shocker. the rates stand at 75 basis points, it was unanimous. guy: the brexit fog is now so impenetrable that the bank of england doesn't have any choice but to wait and see exactly what is going to be happening here. it's interesting that the bank
is reiterating, it could move in either direction on a hard brexit. the market doesn't believe that it believes that the bank of england would err on the side of caution and likely loosen rates in the event of a no-deal brexit. the pound would be expected to move sharply to the downside. would the bank lean into that or against it is i think the question se market is asking. the suspicion is that the bank would not hike rates if you were to see an inflation shock generated by a pound move low. it would see it as a temporary factor. jonathan: president donald trump saying a deal with china is close ahead of a fresh round of talks in beijing next week. u.s. officials less optimistic about a quick deal. how close are we to a breakthrough? kevin: president trump says close, treasury secretary mnuchin and lighthizer headed to beijing to continue the trade talks. meanwhile, if you switch gears from the u.s.-china trade talks, the president, in an interview that aired on fox business network, says he fully intends to keep intact the 20% tariff on
light trucks in europe and saying the e.u. is treating the u.s. more unfairly than china is in some cases. scarlet: president trump announcing plans earlier today to nominate former campaign advisor steven moore to the federal reserve's board of governor. mr. moore is also a senior fellow at the heritage foundation and co-author of "trumponomics." michael: he suggested that chairman jay powell be fired and the rest of the federal reserve should be let go for monetary policy incompetence. you called the fed "the swamp in washington." are you going to be able to work with these people? mr. moore: you know, that was probably written in a time of anger. i think everyone would now acknowledge that what they did in december with the rate increase was a very substantial mistake, and the fed has, thank god, reversed that and changed
directions with respect to the rate increases. so, look, no. i have never actually met chairman powell. i look forward to working with him. i know he wants high growth. he can be a hero if we get our monetary policy right. at the same time, we have these very strong, you know, pro-growth measures on the fiscal side of the equation. so you know, i don't want to be disruptor, i want to be somebody who can realy help chairman powell and the others on that board to construct the best pro-growth, stable price system that we can for this country. ♪
>> that has always been the case. in the end, france and germany have always to see whether they can persuade all of the vienna -- the other european states. that is not something new. when you look at the euro, that is very much a case in point. the weighted germany and france argued has always been very
different there. france has always said or made a point for the stability pact not being so strictly adhered to or .trictly interpreted we have always said to be strict with a view to financial sector. we will do so woman look at the capital market union, look at the budget of the eu and all of 25, we will have to persuade them. >> i am always opening up for compromise and i have done a lot of compromise. for example, we have been criticized on the copyright laws.
toy much attached importance protect startups and their intellectual property rights. that has in a way brought us in conflict with our agreement. after eight or 10 years, we finally have a common andslation on copyright intellectual property. we have to make a compromise. i see a lot of young people out there demonstrating. that is very much multilateralism. merkel was angela speaking with bloomberg editor in chief. coming up, more of the week's top business news and more compelling conversation. says exportsetary could multiply when a trade pact is finally signed with china. executives discuss the deal that brought them together.
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>> this is bloomberg best. while the u.s. and china face up the ghost to a comprehensive trade agreement, progress has reportedly been made on some fronts, notably increasing chinese purchases of u.s. farm products. the u.s. agricultural secretary spoke with our bloomberg's shery ahn. >> there have been numbers discussed. it is not appropriate to talk about negotiations ongoing but it would be the easiest way for china to help produce quickly the trade deficit with united states. you see china importing
more role agricultural items such as grain or profit items as you mentioned, beef or pork? >> we hope they will do both. they have an aggressive and vibrant soybean processing facility so we think they would probably import raw soybeans but ddt wouldthanol and be processed in here. beef and poultry would be processed >> as well. with these purchases, as before the trade deal? >> it is part of the package. last year, we made a commitment of a faith offer of 10 million more metric tons. that was on top of the previous $20 million. that gives us two thirds of the way back -- of where we were back. >> when it comes to dollar value terms, we have the seeing china
produce $24 billion a year. for china, it is a small part of their purchases. they import more than $120 billion a year. can we see those purchases being topped? we arean easily see if able to come to a trade resolution of doubling or tripling that resolution over a period of 4-5 years. with the global growth slowing come investors around the world are adjusting strategies. some respected figures shared market insights with figures -- bloomberg this year -- week. >> there is a lot of stress in the market. last year the economy grew. today, where is it going to grow? it 2.5?.5 -- is
that is a 30% reduction in growth. what you really have is a slowdown. for us, a slowdown his grave. there i a lot of opportunities out there we can take advantage of today. >> let's dig down deeper. what sectors are you interested in? retail is something people keep saying may experience more stress or distress. what do you see? >> you have opportunities on the retail side. you have opportunities on the energy side. then you have a lot of idiosyncratic type of opportunities where the sigil have beenic situation able to come in so we will -- have been able to buy debt. bonds are due. in 2021.debt is due
those bonds are trading at 75. you are going to get paid off. we are going to go to bar in the stands. you have a lot of that in the u.s. you have much more in asia. for us, still lots of opportunities. >> what kinds of strategies are you employing? >> and equities, we are employing a lot of strategies having to do with organizational magic strategies and employing our traditional technical strategies, lots of global universe and customized and to trading in the top -- stock universe, just applying them and that is a graveyard of companies that do that.
there is some of our knowledge of how to trade in each of those that has been applicable. >> it is still systematic. >> everything is systematic though it is governed by people. i say this because people say cobra do you ever intervene? we write a program and we run the program. we did not put hoods over our heads and fit in the dark while the program runs. if the program miscalculated something we would do something. last week, brookfield asset management agreed to buy a 62% stake in oaktree capital. almost 500 billion dollars in asset management, this week the chairman howard marks talked about the deal and their plans
in an exclusive conversation. >> this is a sound transaction. it -- entering it in to we are entering into it at this time. >> no one should infer some sense of where we are in the credit cycle. >> this is a forever transaction. whether it was or wasn't ideally timed would not matter. >> you told me in december 2017 it was unlikely brookfield whatever by another asset manager. what changed? you always have to eat your words sometimes. i would say, it is not something we have ever ready -- really thought of too often. as our clients get bigger and ,he offerings need to be larger
the one area we were lacking to be able to deliver to them credit. this business is large enough that it can be delivered to our clients. many of the other things we could have looked at or even building ourselves, but it takes a long time and given the scale of our business and relationships we have, we needed something larger. there is room for many of us out there. this is a 30-40-50, going to $60 market. there is an enormous number of managers out there and we compete with lots of people every day. this was about us delivering for clients. you are both self-described
value investors. you have made a career. you permit -- you pride yourself on buying low and selling high. how did you people like that agree on the terms? >> this transaction was not primarily price oriented. we do not sell it because we thought we were getting away with something. they do not buy because they thought they were picking us off. it was a fundamental conversation. sethis case the price was by a special committee representing the shareholders. we were not actively involved and that is as it should be. ♪
let's resume our roundup. he you regulators crackdown on google with another significant find. european commissioner margaret ms. sayer announced a fine on google for uncompetitive practices involving advertising service in europe. we are bringing in the bind to get the company to $8 billion. >> it is quite a shock for the european that google left them. google is going to resolve issues going forward. now when you start up your android phone, you will get a call to get a different browser, a different search engines. this might give other companies to get into these markets that have been dominated by google. there are others -- other issues like shopping. there is a way of dealing with this for customers in europe at least. lyft hoping to raise $2.1
billion, almost $20 billion. that range will be the biggest from the tech startup since snape went public. how is lyft selling itself to investors? roadshow is getting underway and that is a topline focus story. we are growing the number of monthly active writers we have. we are making more money. revenue doubled from 2020 so it is focused on that. revenuet $2 billion of this year. that ensures how much rides contribute. we are not quite at the coming here is how we start making money rather than losing $991 million. has fixed the new york stock exchange for eminent ipo.
bloomberg learns it could take place in april and it could value the company as much as 128 $2080 >> what we have learned is a stock exchange, which is an unconventional pick for a new economy stock because we have google, microsoft, hasaq whereas u.s. regional-based. there is a sentimental value as to why they picked the new york stock exchange of the nasdaq because some child abuse to be an employee at new york stock exchange. also, they are trying to differentiate themselves from lyft, which is also racing to an ipo. estimates, beating seeing higher practice for its top two products say off --
staff when it comes to downturn. what were the major drivers we ended up getting the pretzel as a surprise. you know the market in general it down significantly in the fourth quarter from double-digit to low single-digit , continue to -- continue to decrease. 70%four q and asp rose and and not only that, but the new strategy in january that they -- is another way for them to pack the market, to have higher prices. if that goes well for the country -- company.
today, theessure chinese missing the mark of cross stability. it is having to spend more to topline growth. it is trying to pivot away from the gaming side of the business, generating so much of the prophet with a past. i wonder if it is at the shelf by this. >> we know in the middle of last year, china stopped improving new games of that is the biggest revenue drive. thehas to imagine there was decision at the top level to say we are two independent on games. they looked at things like been cap, alternative content. that money is going somewhere. they are reducing money on marketing but investing in new products. one hopes that will pay further down the line. crisis is expanding,
china excluding the max 737 jets on the list of america's of -- exports. is this not something u.s. negotiators might have expected? regulators around the world have put itself to these things flying as have airlines, u.s. airlines and others. >> yes, even sued -- still though it would throw a wrench in the talks. one issue that the u.s. and china has been able to agree upon broadly as these talks have been the chinese increasing its purposes of u.s. goods. reporting shows that china is considering canceling plans for those purchases, but also maybe different types of boeing aircraft. the company losing the first
phase of a trial revolving its roundup weedkiller which allegedly causes cancer. what happens next. >> it is a big blow for a buyer. you see that with the 10% share price drop. it is the second case like this that has gone against him. there were 11,200 more to go. this increases the pressure to reach a settlement with the plaintiffs pursuing these cases, which could be costly. by a gem, the shares are down more than 25%. the share market holds its late trials. >> this is one of the last big late stage studies in all summers. it is something our fire team put in the centerpiece of his pipeline. this was their big bed and his -- it is something they and a lot of investors should have
seen coming without this big upside. biggest -- is multiple sclerosis. their biggest pipeline drive is about the face competition to bank. >> shares that bmw taking something of a not today. the company warning earnings will drop to well below last year. thee need to be better on performance side. we would like to save money on the one side on the vehicles. .hey are to reduce complexity we would like to save money on the efficiency plan. bmw is caught up in a storm now. we have the tariffs. we have the major move of the electric engines. we have the concept of sharing cars and owning them.
this is something that is creating a big cloud over the entire industry. spinrd announced it would 900 $4 million to build electric and self driving cars. he is shutting eight sift -- shift of workers. but if it is adding workers to build next generational vehicles. what do we know what board is planning to build. >> they are going to continue to gain mustangs in this plant but at electric vehicles. you are no longer going to produce the vehicles as you said they would do. it will be electric cars and building a secondly, busy trade area over the next couple years.
built-in cars that are already built up and upset them with the software for the self writing technology. >> big announcement of general motors for the 300 people who will be employed. big announcement for the economy . why is it big for general motors? how does that fit into your strategy of electric vehicles? i could not be more excited to pocket up the new electric .ehicle we are filling here we are estimating $300 million and creating new jobs. it is a very exciting day and this is another step as we continue to work to grow the electric vehicles and cut to -- response to them. cbo is giving the most -- despite the vertical yet.
seen investors quote, not in line. --ind it to be an anagram to >> what was -- >> what was interesting was management businesses saw a similar pass. you know, staying on the sidelines. that led to two is much as a 25% incline, which is all to see you go down. that combined with mystifying. it cougar tookt his own life. he served as chair of the castle of economic advisers for
president obama before joining princeton as a professor of economic and public affairs. tell us about the legacy an impact he had on colleagues in government and media. >> there was something magnetic about him. charismatic. in bloomberg, he appeared regularly. of economists are taken with their own theories but he made it real world. one of his key legacies is the work at minimum wage. here the theorizing is naturally running its comments and we have to gather data and understand where the real world works and he was one of the leaders in bringing back that style of thinking to economics. ♪
>> these of the stocks today and you can find all that using the function vfb go. first, the fw following the most -- falling the most since 2004. the company -- will celebrate shoot sales. it plans to add nails salons. there are 30,000 functions on the bloomberg and we enjoyed showing you our favorites. maybe they will become your favorites as well. as you wrap up, this edition of bloomberg best will pay thespians in
thailand. he is afraid of what is at stake. thailand's current stretch of army rule is longest the 1970's. -- these powers after in 2014 after months of rises. putostponed elections and in place a constitution that opponents say will stifle elected politician. china has a hereditary monarch while the prime minister had the government. under the pm, that is a 250 strong sentence, the upper house. the house members voted and were both came to elect the leader, giving you the of beer -- upper house. side, molokai represents
the region's of the north and northeast. of supports the practice out -- on the opposing side is the democratic party drawing support from royalist elite and the south. another royalist party nominated desperate minister. disillusioned of a party that nominated the kings sister as its candidate with a chop -- top doubtsjob, there are whether the election will be free and fair. thailand's economic future hangs in the balance. bloomberg television. we will have special coverage after the results are announced. find more on this topic at bloomberg.com along with the latest visits. that will be all for bloomberg best.
they said you are in charge of greece. jean-paul: i proposed a job to everyone. creating boot -- beauty projects you make people happy. david: can you tell difference in the brands? jean-paul: not from far away. weeks ofu take four vacation. what is the secret to being a good business later? jean-paul: the most important thing to do is love what you do. i thought people would not recognize me if my tie was fixed.