tv Bloomberg Markets Americas Bloomberg December 20, 2019 1:30pm-2:00pm EST
speaker pelosi says the invitation comes in the spirit of respecting our constitution. this comes as pelosi and mitch mcconnell remain at an impasse over impeachment. pelosi says she will not transmit the articles of impeachment until the senate lays out procedures for the president's trial. mcconnell says the house cannot dictate terms. the carnival cruise ships collided in mexico leaving one passenger injured. the cruise line says it was preparing to dock when it crashed into legend already docked. carnival says the damage does not impact the seaworthiness of the ships. boris johnson's brexit deal cleared its first hurdle in parliament today. m.p.'s voted to proceed to the next stage. the prime minister opened the debate by declaring his
legislation offers no possibility for further delay. the bill would take the u.k. out of the european union by january 31. china may consider legalizing same-sex marriage. "global times" says the top legislative body has been advised to make gay marriage legal when it updates its code. china decriminalized homosexuality in 1997 and removed it from an official list of mental disorders in 2001. but there are no laws protecting the lgbtq community from discrimination. global news 24 hours a day on air powered by more than 2700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. ♪
vonnie: live from bloomberg's world headquarters in new york, i am vonnie quinn. amanda: here are the top stories we are following around the world. out with the old, in with the same. bailey will be the 121st governor of the central bank. he succeeds mark carney stepping in in march shepherding the u.k. through brexit. said it will idle major operations at factories near detroit laying off more than 1500 workers and slashing dividends. apple explores the final frontier. bloomberg has learned the tech giant has a secret team working satellites that could beam data directly to devices. vonnie: it is friday.
we got a raft of data a little disappointing. thanve the s&p 500 up more .5%. we made it to the 3200 level and continued on without problems. the 10-year yield is 1.92. the dollar index higher as well. wtiave around round-trip on almost as far as 62 and are now down 1.5%. chart to point to this which shows the index rebounding spurring volatility. amanda: it is a good one because we have holiday trading. interesting things going on. i want to drill into a chart that speaks to valuations in the market.
as we hit new highs, is it borne out by fundamentals? credit suisse put this together. top line is earnings per share growth. the bottom line is the change by sector. overall, s&p 500 over two years up 24%. profit growth 24%. although energy is undervalued and techs are undervalued -- overvalued, you are seeing fundamentals bearing out the gains in the markets. for those worried about where we stand, it is reassuring. profit growth is behind the market gains if you look at the fundamentals. the bank of england insider andrew bailey is set to replace mark carney. the transition comes as the u.k. enters uncertainty as it makes plans to leave the european union at the end of january. john authers is with us now. we are saying insider, he is a deputy governor, obviously
well-known to mark carney and many players. how important is that level of stability? >> very important given the immense instability the country is going to inflict on itself over the next year by trying to where the.u. relationship between the financial sector and the rest of the e.u. is up for grabs. i don't think they will be inclined to take great risks or like theyn outsider did a years ago ago bringing in mark carney from canada. that is understandable. i think that if there is a complaint about this appointment, it is that andrew bailey's most recent record has been marred by one or two embarrassing scandals by important fund management groups. it looks as though positions on
brexit itself may have had something to do with the appointment. rival candidates who had been critical of brexit might have been ruled out for that reason. vonnie: extremely unpalatable in some sense because it is the first time we have seen a bleed over a politics into the central banking world. sensehas never been the the monetary policy committee in the u.s. has been anything but walled off. this does not strike me as absolute. >> it is not absolute. at this point, brexit has contaminated everything in british political life. appear thet, it did itnt runner, who is female, is unusual you see a well-positioned woman being
ruled out in favor of a man. at the current moment, that would have been a strong and pleasant gesture if the bank of england had its first ever female government. but i guess at this point, in the minds of the people running the cabinet, there is nothing more important than brexit and not rocking the brexit vote. amanda: perhaps one of the important pieces of continuity might be that mark carney was clear about his view about a no-deal brexit. policyassume the bank's direction remains the same? >> i think we can definitely assume that. toy don't necessarily want have this ultimate goalkeeper to the financial sector spring to do something stupid, but they have no choice in the matter. if we have serious negative turns in brexit negotiations,
you can assume the bank of takes inill do what it the form of cutting interest rates to tide us through. it is not something they will welcome. but it is something they will do. it is important to point out mark carney went strongly on the record he did not like no-deal brexit as a possibility. that seems almost certainly not to happen at this point. no-deal has been ruled out. there are plenty of arguments about the long-term future of trade and so on, whether this is a good idea for the british economy. but the risks of a sudden stop do now appear to be over. vonnie: thank you for all of your opinion pieces. much appreciated. let's turn back to the u.s. where investors are dressing
fresh data. joining us is stephen stanley. i characterized the data as a little weak. there was a lot of strength. where were the weaknesses? >> the data were mostly as expected. the one thing i took out was november consumer spending was slightly better than expected. there were some concerns about the consumer which does not make a lot of sense. underlying fundamentals are good. everything we hear from the retail sector is christmas eve will be awesome. consumer data have been soft. it was reassuring to get a nice game in spending in november. amanda: what is your expectation for the fourth quarter? 2.5% whichttle above puts me above the consensus. i think the consumer is steady. the thing that will push growth in the fourth quarter is
improvement in the trade situation. a lot of reports were accelerated to get ahead of threatened tariffs. data suggests we could have a significant improvement on the trade front. vonnie: would it make a difference to gdp and where? >> trade has been extremely volatile the last couple of years, in large part because of the trade negotiations. people are accelerating, delaying shipments based on what they think is the next you -- shoot to drop in terms of tariffs. we have seen a lot of noise in the numbers. i think we will continue to see that. the consumer continues to underpin growth and put the floor under how bad it can get. amanda: what is the big risk? you talked a lot about the fear the consumer does not pick up the baton. based on the savings rate,
feeling the recession is behind us for now, what would the consumer disappear at the stage? >> fundamentals are as good as i can remember. you look at household income, wage and sour income, up over 5%. balance sheets are clean. situation employment it generates rapidly, i think the consumer should be fine as we head into 2020. vonnie: what would be the biggest upside risk? is there a danger the economy overheats? >> in 2019, the big negative was on the business side. we talked about the consumer being strong. the business investment piece has been quite weak. in my view, there is a risk that perks up in the first part of the year now that we have a trade deal behind us. a little of the uncertainty goes away. i think as the year wears on, uncertainty around the election
will replace the trade uncertainty as the thing that drives them to the sideline. the first half could be solid. the second half could be slower, which is similar to the pattern we saw this year. amanda: do you expect there to be any other kind of fiscal input? maybe that comes off the table since we are less concerned about recession in the western world. monetary policy has done what it can. now we look to fiscal. >> certainly not in the u.s. in an election year, we are talking major gridlock in d.c. perhaps in europe, that has been the talk. i think they're very hesitant to engage in major fiscal stimulus. if the economy were to head downhill, they certainly have room to do so. vonnie: do we see the european central bank start normalization next year? what will it do to the u.s.? >> if you look at the economic
situation, you would think probably not because growth projections are sluggish over there. it seems there is this growing sentiment in the last few months that negative rates are not all they were cracked up to be. i think there is a little dissatisfaction with qe. we saw the reichsbank back to zero. it is possible. if we get that, i think it is more of a tactical issue than it is a major change on the economic front. the e.c.b. perhaps saying we tact takenattack -- before and we want to do something different. amanda: appreciate it, stephen stanley. next, we talked about the bad news for u.s. steel. its stock is plunging 11%. it is warning of losses and layoffs. we will explore ahead.
vonnie: this is "bloomberg markets." i am vonnie quinn in new york. amanda: u.s. steel is plunging down more than 10% on a barrage of bad news. the company is warning of a coming loss in the fourth quarter. it is announcing layoffs and slashing dividends. joe deaux is with us with the story. this has been reeling from one thing to another. this is not out of the blue. u.s. steel is trying to reassure investors it is working on operational efficiency. what are we making of this sudden turn and disclosure of the plan? joe: like you said, not
unexpected to people paying close attention to the company, investors, the union. even management has been saying our court assets are the new mini mill and a couple of other mills. some were left out of the core names of the company. the announcement they are idling this plant may be a surprise to people who do not follow this. but in general, pretty expected. the reaction we are seeing is in terms of whether they can execute the way they are going to change around where they are producing the metal and help the rest of the market is reacting to less supply in the markets. amanda: there is the route -- vonnie: there is the raw material and processed material. since march, down 75%. joe: this is brutal. when you talk about u.s. steel,
you have to pull it away from the other steelmakers. it is a laggard even in the steel world. it is because of the troubles they face. they run a lot of older, theficient mills versus ones that use newer technology and use less power so it costs less to make steel. shawn donnan and i broke the story two days ago about this very thing, that u.s. steel faces. we focus on granite city. later, it is not granite cdc cuts, it is great lakes. it is because of the inefficiencies the company faces and is trying to cut down on to survive. amanda: some of the analysis from bloomberg suggests the savings from the layoffs will warrant theh to cash costs associated with them. are we worried about liquidity? joe: richard burr made an
interesting point in the note today. it is an issue. it is a question u.s. steel has gotten on every earnings call this quarter from analysts. they have been saying you have this revitalization plan trying to put cap backs into revitalizing these old plants. you're also trying to put more investments in a new mini mill. a october, they announced $700 million investment in a millnote the not -- mini they do not own. money, demand is not good. this does not look good. this will continue to be a question on the calls going into 2020. vonnie: joe deaux, thank you. coming up, apple is reaching for the stars revealing a secret team to explore satellites and
amanda: this is "bloomberg markets." vonnie: let's get to a developing story on apple. the iphone maker has a secret team working on satellite technology trying to find ways to beam data directly to apple devices. that is according to people familiar with the work. we welcome mark gurman who covers apple. he joins us from san francisco. tell us about this secret team. what exactly are they doing? >> apple is investigating satellite related wireless technology to build devices for either aerospace purposes were on the ground equipment which would allow apple to beam data like internet and related content to devices directly.
in a way, bypassing the carrier for some of the wi-fi terrestrial networks we use today. amanda: where would we place this? apple spends a lot on r&d. the budget has been going up. we know this is early stage based on reporting. do we have any idea of what kind of spending might be involved? >> it depends on what they end up doing. if they are just making on the ground equipment, that is much less expensive than building a full satellite constellation. that could be tens of billions of dollars. at this point, it is still early. they do not know how much they will end up spending. clearly, their r&d budget is increasing at a consistent rate. vonnie: how long what a task like this take? >> right now, they are eyeing a three to five-year timeline for the end result which is satellite-related equipment.
that is an aggressive timeline. these things can take forever. they formed the team two years ago. now they are ramping up and developing an initiative after doing lots of early research the past two years. it is quite a ways away. amanda: it would have to get further down the road. could it be seen as a distraction for apple, something investors would not want them to do? >> not at all. apple is developing all sorts of ways to bring technology in-house. developing satellites is right up that alley as a way to get internet directly to devices by casting caret -- bypassing carriers. this is what investors want apple to be doing so you are not reliant on anyone else. when you rely on other companies , that puts you at risk. you have seen some macs be
outdated at launch because of the reliance on intel processors. they want to do it all in house. that is the way you make the most money as possible, make the best product, and please investors. amanda: this is bad news for the carriers if this should come to pass? >> potentially. getting rid of carriers is not something that will happen overnight or even in five to 10 years. this is a very long-term thing. i don't see any carriers going away anytime soon. amanda: mark gurman, thanks so much. there was more bad news for boeing today. apple not the only one making news in space. the 100 star liner in a crisis of its own. it was on its way to rendezvous with the international space station. erroneous timer
met it did not make its target. bad news in that it was on a path to deploying capsules that would carry human beings in about a year. not the kind of news boeing wants and a setback for the i.s.s. as well. manned,if it had been maybe the mission would have been a success. part of the problem was it was an autonomously driving mission. it is too soon to know. it is space travel. you can catch all of our interviews on bloomberg on tv . this is bloomberg. ♪
president xi jinping about the agreement. he said china has begun making large-scale purchases of american agricultural products. mr. trump said that to you also discussed north korea and hong kong. the u.s. is closely watching north korea for signs of a possible psy launch or nuclear test in the -- missile launch or nuclear test in the coming days that officials are referring to as a christmas surprise. a significant launch or test would mean the end of north korea's self-imposed moratorium and raise tensions in the region. pyongyang warned of a possible christmas gift in early december, saying that trump a ministration was running out of time to salvage nuclear negotiations. we were reporting moments ago that boeings star liner capsule went off course after lunch today and will not dock with the international space station (iss) on its first test flight. the blast off from cape cana