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tv   Bloomberg Best  Bloomberg  October 13, 2018 7:00am-8:00am EDT

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matt: coming up on "bloomberg best," the stories that shaped the week in business around the world. a sharp selloff in equities has everyone wondering how to react and who to blame. >> is this the low point? i don't know. >> there has been a lack of contagion to other assets, particularly in fx and rates. >> the fed has gone crazy. matt: signs of trade war stress start to show in china's policy.
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enda: we see the stock market going south. we see the yuan heading towards a key psychological level. matt: the imf warns that global growth is about to get slower. google unveils new gadgets and admits a security breach. earnings season kicks off with the results from some big banks. >> the highlights were solid quarters on the margin, a bit better than expected. matt: investors remain anxious about rising interest rates. a fed president says the dot plot should not be set in stone. >> we don't have to project planned rate hikes at this point. matt: volatility in commodities prices is a concern. industry leaders share insight into what is ahead for oil and metals. >> the trade war has been no impact whatsoever in our business. >> to my mind, we don't really have a supply squeeze at all. >> it looks like expensive energy is back. matt: plus, microsoft's ceo satya nadella speaks frankly about doing business in a climate of protectionism.
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>> our responsibility as a multinational company is to say, what are we contributing to each country? matt: it is all straight ahead on "bloomberg best." ♪ matt: hello and welcome. i am matt miller. this is "bloomberg best," your weekly review of the most important business news, analysis and interviews from bloomberg television around the world. as the week began, markets were reopening in china following the golden week holiday. there was plenty of information for investors to absorb. haidi: china cutting its bank reserve requirements for the fourth time this year. policymakers in beijing trying to shore up a faltering economy that has been weighed down by this escalating trade war. this move doesn't come as a surprise, but given that it is the second rrr cut in three months, it underscores
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the pressure and urgency in beijing. tom: it does. you listen to the likes of hao hong from bocom international saying that this signals here that the economy is very bad. other economists echoing those lines. if you look at the data, whether it is retail sales or fixed asset investment, look at the bond defaults and of course, the overshadow of the u.s.-china trade war, then again it does underscore the need, as many see it, for policymakers to have taken this step. david: chinese markets had the week off for golden week. they came back monday and it is fair to say they are down 4.3%. two stock markets over there, what is causing this, is it pent up demand over a week of bad news? enda: there is the practical effect of the week off for china's markets, but more broadly, we feel as though we have had a slew of negative news on china's economy and there is no sign of a near-term circuit breaker. you have domestic slowdown for
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their own internal reasons largely you have the broad trade , dispute with the u.s. that shows no sign of easing. you have deepening political tensions with the u.s. over everything from taiwan to the south china sea. you take it all together, that is what we saw today. we see the stock market going south. we see the yuan heading toward a key psychological level. it feels like the mood has become darker for the outlooks for china's economy and markets as we head to the year end. jonathan: the imf cutting its global growth forecast, saying "risks to the global outlook have risen in the last three months, threats include a further inflaming of the trade war between the united states and countries including china, and a sharper-than-expected rise in interest rates, which accelerate capital flight from emerging markets." michael: if you go to bali, you should be in a pretty good mood, but it seems to be a gloomy imf meeting getting underway today as they see trade wars contributing to global growth along with the
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length of the expansion so far. the decline in global growth, you see that in this chart. the blue line is the forecast for the world growth and how it has been brought down by about 2/10 from 3.9% to 3.7%. this is the advanced economies, the u.s. getting its growth forecast cut by 2/10. it will be 2.9% this year, that is baked in but we fall to 2.5% the year after. eurozone gets 2% growth this year, 1.9% the following year and china, because of the trade wars, loses 2/10 of a percent down to 6.2%. david: one week before the e.u. summit was supposed bring brexit talks to a head, there are reports that parties are coming closer to a deal. it is a complicated deal that centers in large part on how to handle the border with northern ireland. >> there does seem to be a compromise, a proposal for a compromise which would basically mean the whole of the
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u.k. would remain in the e.u. customs area. the bet the gamble is that the , northern irish party that is so keen on remaining totally within the e.u. with no separation between northern ireland and great britain,the idea is -- the idea is they might find it easier to stomach, a few checks on the quality of goods or animal health or meat between northern ireland and great britain. they might find it easier to stomach than a customs border. that is the kind of thing that happens between countries. that is basically where we are. >> agreement is within reach. if we have the negotiations on the 17th of october at the next council meeting, that is why we are interested in maximizing an orderly withdrawal and minimizing the cost of withdrawal. guy: michel barnier speaking in brussels, addressing the issue of brexit. the pound moving higher as he spoke. david: the mood is more positive
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on both sides. we have a big european council meeting towards the the end of next week, there is a possibility we may have a draft of this agreement that has been so difficult to get to, at that stage. it is not for certain by any means, and remember that after the agreement that is hatched between the two sides, that has still got to be approved by the british parliament and the european parliament. there will be a huge fight in london. at the moment, a lot more optimism than we have seen for many weeks in this process. scarlet: there you have the closing bell, the s&p 500 falling the most since february. this is a genuine selloff. declines of 3% in the s&p, the nasdaq off by 4.1%. you're looking at losses in the different industry groups. jonathan: is this the low point? i don't know. would i be buying now? yes. without new news, if it was down now with another 2%, i would be buying more of this. the only thing we are talking about is the price of the market.
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there is no discussion on was there new information that made the stock market less valuable? >> i think the fed is making a mistake. they are so tight. the fed has gone crazy. francine: the biggest selloff since february rolled through to the u.s. through asia and europe, benchmarks seeing declines of 3%. the shanghai composite closed near a four-year low, china equities looking to fall into a bear market. mark there has been contagion to : other assets, particularly fx and rates a little bit today as the equity rout is extended, but no big panic. it is very concentrated in one asset class, but the pain is really intense across equities. >> all the sectors in europe are down today and it shows how broad this rout is, because you see the bond proxies, the insurers, the financial services down and that makes sense given the rise in bond yields, but you also have cyclical sectors like technology also
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down following the global selloff in tech. there is no sign of safe harbor at least in european equities. >> the s&p 500 falling for a sixth day, the longest losing presidency. trump's dow jones off by two percentage points. every industry group in the red, but tech did somewhat outperform. we saw the nasdaq close by 1.25%. the u.s. consumer price index fell short of expectations for september, held back by falling used car costs and housing rents. you would have thought the fact that inflation lagged slightly, everyone would go, ok, it is fine. the fed won't hike quite as much. nothing seems to have changed. >> the underlying growth trend has not slowed down that much so that is what we're dealing with. the fed has said that in the absence of inflation, they have sort of given up on the concept of r star and other artifacts that they had created. they are saying they may go with tightening, even if they go beyond neutral.
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at the end of the day, they will back away from that but that is what the markets are dealing with today. vonnie: bank earnings begin, jpmorgan citigroup and wells fargo report positive third-quarter earnings before the opening bell today in the u.s. this just days after the biggest selloff in global stocks since february. alison: the highlights were on very solid quarters on the margin, a bit better than expected, especially on the bottom line at jpmorgan, that was a big help. i think it was better than expected credit. there were some help from reserve releases from provision sales, but in general, credit just continues to be stronger for both jpmorgan , and citi. the credit card business coming in very well. that's the key positive. a year ago, people are -- were really concerned about that business. the companies have guided to higher losses versus previous expectations, but the numbers are coming in well this quarter importantly the revenue margin,
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, the net credit margin coming in especially better for citigroup. the jpmorgan those numbers have , been improving for a while due to the nature of their book. matt: still ahead, as we review the week on "bloomberg best," an exclusive conversation with microsoft's chief executive satya nadella. what political volatility is doing to prices and up next, more of the week's top business headlines. italy's government insists it will stick with its spending plan no matter what happens to bond spreads. >> slovenia is talking about having the spread for breakfast and he has been taunting the gentleman of the spread. matt: this is bloomberg. ♪
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♪ matt: this is "bloomberg best." i am matt miller. let's continue our global tour of this week's top business stories in brazil, where a populist outsider showed surprising strength in the first round of a presidential election. >> jair bolsonaro is closing in on brazil's presidency after dominating the first round of voting. he wound up with 46% of the vote, just short of the majority he needed to win outright. he will face the workers party candidate fernando haddad in a runoff on october 28. this was a strong showing from mr. bolsonaro. we expected him to do well. are people surprised he did this well? >> they are. the last few polls were saturday evening and they showed bolsonaro below 40%. 46% is the first numbers that came out had him at 49%, with about half of the vote counted. it was much stronger than
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expected and not just bolsonaro but the candidates he backed. his son had a high vote count, a record for a lawmaker. also a lot of candidates voted -- both for governor and federal and state lawmakers that he backed did very well. we have been hearing from analysts that this is basically his to lose. he would need to make a big mistake in the second part of the campaign to lose the runoff. vonnie: italy's populist government was on the attack against the european union today. deputy prime minister matteo salvini calling jean-claude juncker and brussels bureaucrats the real enemies of europe. >> the enemies of the happiness of the european people are the junckers and moscovicis, who have brought uncertainty and fear to europe, and refuse to leave their cushy posts. vonnie: salvini says citizens look beyond spreads when they vote. right now, the 10-year spread to german bunds is above 300 basis points. for how long will citizens ignore spreads?
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has been talking about having the spread for breakfast and has been taunting the gentlemen of the spread. i was with him this morning when he was looking beyond the european commission, the people who are in power now. they are looking to the time in a few months where the commissioners' mandate will have ended and , they're looking to the european parliament elections. they say they want to take power then, then try to change the rules. jonathan the italian deputy : prime minister saying, he is sure the spreads between italian and german bond yields will not reach 400 basis points. saying an interview on italian tv, should i change my policies on the basis of what some speculators decide in the morning? no. has this been taken in italy? dan so far, these comments from : the italian treasury minister
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who testified again in parliament, urging people to lower the level of political rhetoric and tone. they're willing to discuss with the e.u. the numbers that have been put forward. this is a classic case of the two pillars of the coalition , if you will, being pretty heavy on the rhetoric and some attempts to walk that back by the italian finance minister. the message the government is saying is that these numbers for right now -- and the program, are not going to change substantially. francine: can a new finance minister fix south africa? the finance minister appointed a former governor as finance minister.
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he takes over two weeks before a budget update and faces tough challenges ahead, including convincing the government -- but the government canned -- >> with him coming in, you have people who are involved in framing the macro economic architecture of the democratic south africa and not only that, when he was at the central bank, -- at at the inflation the forefront of the inflation targeting in south africa. >> as central bank chief, do you have any concern that the finance minister would -- you assume that he, too, is a firm supporter of central bank independence in south africa? >> i did not have to make that assumption. he is an advocate of central bank independence. david justice brett kavanaugh : will hear his first case in the united states supreme court today. give us a sense of what we should expect. what would be different, as
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-- because certainly, justice kavanagh got here in a different way. greg very much so. : the saying is that every time you have a new justice, you get a new court. that is even more so this time. a bitter divide over his nomination. we saw it last night when the justices went to the white house and listened to donald trump talk about how brett kavanaugh had been wronged. everybody is going to have a lot of relationship-building to do. brett kavanaugh is going to have to earn the trust of his colleagues and they will have to learn how to deal with him. chief justice john roberts will have to decide in the middle of the court, how quickly he wants to move it to the right. vonnie nikki haley making a : surprise announcement earlier this morning, the u.s. ambassador to the united nations announcing alongside president trump that she would leave her post by the end of the year. why she is stepping down remains in question, but she was quick to rule out at least one theory. ms. haley: for all of you that a going
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to ask about 2020, at no i am , not running for 2020. i can promise you i will be campaigning for this one so i look forward to supporting the president in the next election. kevin she will stay on : board the administration until the end of the year. that takes her out of campaigning during the election cycle. she says she is not running for 2020, but i spoke with a lot of consultants who say her political future is still bright. the president says he will roll out a senate confirmed seat in the next two to three weeks. we will see what that means. a contentious fight, no doubt, for whomever the president nominates, particularly after the contentious justice kavanagh fight. anna a bloomberg exclusive, : saudi arabia's crown prince insisted the planned sale of the oil giant will go ahead. mohammad bin salman made these remarks in an interview with bloomberg. he promised an ipo by 2021 and stuck to his ambitious view that the state run company is worth $2 trillion or more.
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>> a lot to people will be asking themselves, in this new -- is this new target of 2021 -- he even said as early as 2020 -- is that realistic or will we see a buildup of questioning of whether it should be delayed further? i think the questions won't stop. not least on the valuation. he did say that the markets will decide at the time, but his expectation, he is sticking to the $2 trillion, even more than $2 trillion, but this time after the merger. >> hurricane michael making landfall on the florida panhandle with some of the highest wind speeds in history. the strongest storm to hit the continental u.s. since 2004. >> it is affecting infrastructure, property, so we will see insurance losses. as the storm approached, we saw rigs in the gulf be evacuated, that is pretty normal. the interesting thing is how it
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threaded the needle. it did not hit any major population centers in florida. it skirted to the east of most of the gulf oil and gas production. while we have seen 40% of oil shut in, the market is guessing -- basically betting that it will not last long and will have people back out on rigs shortly. guy turkey has convicted andrew : brunson but released him on time served. is this the compromise that maybe the turks were looking for , to find a way out of this difficult situation? >> it is a welcome development for both countries. turkey has what it wanted and now the u.s. has what it wanted. washington has said that if he is not released, they will impose further sanctions on turkey. back in august, president trump was furious that he had not been released and had doubled steel tariffs on turkey and slapped sanctions on two turkish officials, and warned that more
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would be to come. this would be a bad development for turkey as it is already startling with a economy that is overheating. it is welcome for both countries. ♪
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matt: welcome back to "bloomberg best." i am matt miller. this week, caroline hyde set down for an exclusive conversation with microsoft ceo socgen a dela. satya nan a dela -- della. like many business leaders, he is concerned about global trade tensions and he says multinational countries must work to empower consumers around the world and gain their trust. satya: i think about people and the institutions people build to outlast them. those of the things we think about when we say empowerment. being an american company, i always say that we are a
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multinational company that is an american company. we are fundamentally dependent on an proud of the american values and trust in american institutions and values that the world has. clearly, the has served us well and today, it serves as well. -- it serves us well. our form of government, our form of democracy, with all of the debate we have, our ability to be able to set an example for what is a place where a lot of people of diverse backgrounds can come together, have a debate , and move and make progress i think is what makes america unique and us being born in that culture is what gives us our credibility. of course, we can't take any of this for granted either as a nation or a company. we have to earn it every day. somebody described trust as a formula which is about having values that are consistently applied every day or over time
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and that is what engenders trust. caroline: are the trade tensions affecting your business? satya: i think we are going to a -- through a phase where everybody has recognized, let's call it the phase of globalization has not created equitable growth in all parts of the world or in any country through all parts of society. every country needs to be looking at what are the things around trade that help them thrive? that is the key. every country will put their country's interests first and look at what makes sense. what is our responsibility as a multinational company? to say, how are we making public sector more efficient or multinationals in that country more competitive? if we do that, we're good. if we don't, we have a challenge, because stability for us comes from the ability to create more surplus and more opportunity outside of what we do.
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matt: google was another tech giant in the news this week rolling out new , products while dealing with the fallout from a security breach. those stories still ahead and coming up, more of the week's compelling conversations with the ceo of the world bank bracing for the next financial downturn. >> let us remember what goes up , comes down. matt: this is bloomberg. ♪
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matt: this is "bloomberg best." i am matt miller. london was the epicenter of the commodities sector this week, with industry leaders gathering for london, metals week as well as the annual oil and money conference. many companies that it is an official stopped to talk with
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bloomberg tv. let's begin with fathi birol, who told francine lacqua he's worried about falling oil surprised and rising prices. fathi: i think what we have been seeing since march, a tightening of the oil markets toward the ent of this year -- end of this year is not materializing. this is not good news for the global economy. not only oil, but coal and natural gas prices are going up, and i can tell you it looks like expensive energy is back. expensive energy is back at a bad time again, when the global economic is losing momentum, currency crashes in major emerging countries, and trade disputes among major economies. so high oil prices are not good news for the global economy, both for importers, consumers -- but also for exporters.
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if not today, maybe tomorrow. francine: are you satisfied in how saudi arabia and its allies are responding to this? should they be putting more oil on the market to make up for lost production? fathi: we are losing big-time. iran exports are going down but we really need more oil. what saudi arabia did is an excellent move to come to market, especially in the fourth quarter this year. francine: why are they not putting more oil in? does saudi arabia not have enough? there is always a time lag. it's not like you switch it on and suddenly you are producing more. fathi: i have all the confidence that saudi arabia and other producers see the situation. fourth quarter is very critical and they will make everything they can do to increase production. otherwise, it is bad news for consumers and also bad news for
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them. annmarie: yesterday here at the conference, fathi birol told us the markets were entering a red zone. house severe of a supply squeeze are we headed for? ian: well, physically, we don't have a supply squeeze. there's plenty of oil around. physical oil is available. i think it's right, what the saudis say. we have enough oil to supply anybody who wants it. what we have is a little bit more of a fear factor, which is obviously severe. there will not be any iranian crude oil, probably, or very little. so to my mind, we do not have a supply squeeze at all. annmarie: we heard from a lot of your competitors about price reductions brent hovering , around $85 per barrel. where do you see brent, january 1, 2019? ian: it is hard to see us
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getting over this fear factor in the next three months. i wouldn't be surprised if it's five dollars, $10 lower by then. ivan: the outlook for copper is possible. on the demand side, emerging markets continue to drive a lot of physical demand. china's demand for copper is expected to grow this year above 4%, and also in other parts of the world like the u.s. and europe, physical demand is quite strong. on the supply side, copper is in shortage. generally, you have declining grades, and therefore it's a commodity which is supply constrained. i think the outlook for price, therefore, is positive, is favorable. i think we have seen prices come down as of june or july, but that's likely the result of macroeconomic uncertainty around trade wars. but beyond that noise, which may prevail in the short-term, i think midterm, the outlook is very positive and prices are bound to increase. anna: is it just noise, the trade tension, or do you see evidence of it in demand? ivan: we have not really seen
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evidence in demand. physical demand is actually quite strong. one of the reasons being that most of the copper that goes into emerging markets, if you take the case of china, stays there. 80% of the copper that's exported into china goes into that market, stays there in the form of infrastructure and consumables, and therefore does not get reexported. the direct impact of a potential trade war on copper consumption in emerging markets we see as moderate or limited. >> yes, the chinese economy is slowing down, and we know that. at the same time, it is clear that the chinese government has decided to put more stimulation in the system. especially at a provincial level. today, we are concerned about -- we are not concerned about china. it has been no impact whatsoever, and you saw integration between canada and the u.s. into nafta. anna: so no impact. i heard from the ceo who was saying the same, no impact from the trade war.
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what worries the boss of a big mining business at the start of lme week? >> we have a lot of worries every day. we just need to make sure that we push our agenda to the next level. we provide technology. matt: the international monetary fund held its annual meeting in bali, where it delivered a downbeat forecast for global growth. bloomberg's haslinda amin caught up with world bank ceo at the conference for an exclusive interview. they discussed the threat the stronger dollar poses to emerging-market economies. >> we are watching it, and we are concerned about countries that have a high level of dollar-denominated debt. what we are seeing today are debt levels we had in the 1980's. at that time, we had the debt crisis to deal with. the key questions are two -- one, are countries that are experiencing high level of debt
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taking the necessary measures of prudent debt management now or are they praying that somehow this is all going to go away? our advice is act now. two, are there other factors that may undermine investor confidence? and of course, trade uncertainty is a factor. haslinda: we have been talking talking about rising financial phone her ability. could the next crisis be the next crisis? how would you rate the chances of that happening? >> let's remember, what goes up comes down. we are likely towards the end of the upswing of the economic cycle, so slowdown is happening.
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the question is, would it be a relatively smooth decline that is not going to throw the world economy into a tailspin? for now, we think that the global fundamentals are relatively good. matt: to monetary policy now, a federal reserve official thinks rate are fine just where they are. the st. louis fed president james bullard joined bloomberg "daybreak australia" to explain why he is not advocating for further hikes. mr. bullard: we are close to neutral today. when i look at inflation expectations from the tips market, it looks like they are about at 2% on a personal consumption expenditures inflation basis, or somewhat below 2% even, over the next five years or 10 years. as of right now, the market doesn't really think we will hit our inflation target on our
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preferred measure over that kind of time horizon. so that suggests to me that we have got about the right level of rates today, and then we should react to incoming data, see if it surprises to the upside or downside. we haven't had a long run during 2017 and 2018, a pretty good news on the u.s. economy. it may not always be that way. one day we may get some bad news and have to adjust the other way. i think we have to be prepared that the news isn't always going to be good. shery: and the good news seems to have helped fomc members to be more in line when it comes to their dots expectations. this year, the consensus seems to be about four rate hikes this year. the problem is what happens when , it comes to 2019, and the dots go on the bloomberg, showing how divided fed members seem to be. what are your expectations?
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mr. bullard: my main point is that we are at a good level of rates today for our environment today. we don't have to be projecting planned rate hikes at this point. we can react to data as it comes in, we can feel our way, see where we want to go. but i don't think it's a situation where we need to get a lot higher with policy rate in order to contain inflation, because there just isn't that much inflation pressure in the u.s. economy. phillips curve effects are very weak today compared to what they were in the past. ♪
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♪ matt: you are watching "bloomberg best." i am matt miller. let's resume our round up of the week's most important business
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stories with the bloomberg scoop involving regulatory changes in china. we got some interesting news on china, and that is the country is planning a major expansion of its too big to fail rule. bloomberg sources say beijing will increase the number of companies deemed systemically important to financial institutions. the concern is, if a country is doing this, are they girding for possibly some sort of financial or economic downturn? what is china trying to achieve here? sam: it is really part of their ongoing effort to de-risk the financial system. i'm sure you've read a lot of stories of how the debt parlor is growing, how there are worries, systemic issues in the country, the trade war with the u.s. is raging and it doesn't seem to be slowing down at all. the regulators have really been focusing on the shadow banking sector primarily, but this is a sign that they are looking at the more traditional financial sector, the banks, the insurance companies, the brokerages.
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right now, our understanding is they don't have a public list of these systemically important financial institutions, but there are about 20, we believe. what they are doing is they are drawing up a short list of at least 50 that they will look at and judge from those institutions to see which one should be designated as sifi's. ♪ >> treasury secretary steve mnuchin is said to have been advised by department staff that china is not manipulating the yuan, as the trump administration is preparing to issue a closely watched report on foreign currency. given that it is something of an anchor currency, there could be ramifications for the market. katherine: absolutely. because the yuan does act as that anchor, you would see the first-order effects come through in emerging-market currencies. if you saw steven mnuchin name china manipulator, emerging-market assets could be in for more pain. emily: google is shutting down
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its google plus platform for consumers after discovering a bug in one of the apis that could potentially have exposed the private data of hundreds of thousands of users. despite discovering the bug months ago, google chose not to disclose the issue until now. google plus is essentially defunct. how exactly did this happen? gerrit: what happened is the profiles of hundreds of thousands of people are still on google plus, and this specific api allowed the developer to request of view of certain pieces of user information. this would have included your name, your email address. there wasn't private messages sent between users. that is not exposed, but some of that basic identifying information was just sort of out there and open to any developers, who had access to this api and figured out to request it. vonnie: google has announced a fresh
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lineup of gadgets including , the first ever connected your -- earbuds google is going all , out when it comes to integrated software and the integration of hardware. why is this the strategy instead of partnering with other companies? rishi: we believe that the next evolution of where hardware will go is that it's not about hardware, it's about how ai, hardware, and software come together. this is where google shines, and can showcase a new experiences we by having abefore fully integrated device. today, we launched things like the pixel three, the google home hub in the pixel slate, all these products are designed end-to-end to google, where we can bring the ai in addition to the hardware. we think that is where the trend will go, going forward. >> bill ackman has revealed a $900 million position in starbucks. shares saw a a spike -- shares -- but paredn the
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some of those gains. ed: piece mostly very nice about starbucks, says it is a great company with great products. he's also complementary of the new management. he says they are doing a good job and he's pleased with the initiative. one interesting thing is that chairman of starbucks was the chairman of jcpenney when ackman jumped in there. that was probably his most acrimonious fight. he got rid of him and brought someone in who subsequently destroyed much of that company. from just talking to people before i came on air, they have much in the way of love for that man. he hates his guts. it will be interesting to see how they gel with that nice guy activist. >> "the wall street journal" says softbank is in talks to take a majority stake in we work with an , investment between $15 billion to $20 billion. yvonne: the japanese conglomerate has already invested around $5 billion in the company since last year. talk to me more about what we know so far. >> he has been an outspoken
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supporter of we work ever since they made their original investment last year. he has encouraged portfolio companies to use co-working space. he encouraged moving softbank headquarters. besides the humongous amount that softbank is preparing to invest is the fact that it will take a majority stake, which would be a departure from vision fund's typical operating procedure, something that he calls the cluster of number one strategy, which is taking minority stakes and encouraging companies to cooperate to produce synergy. having a majority controlling stake in it would be very interesting. >> the escalating trade war hasn't stopped bmw from accelerating plans for china. the german automaker is pay more than $4 million to boot its -- boost its stake in a joint venture with brilliant automotive. this brings its share to 75%,
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making it the first foreign carmaker to take control of its chinese enterprise. >> there has been a trusted partnership for many years and , today we said we are expanding it to capacity another , 5000 trucks after 2020. this is depending on the trust and the development of the market. we did see further growth. >> tesla's biggest outside shareholder has taken a sizable stake in a potential chinese rival. shares soared to $515 million as of monday's close. >> i don't think elon musk has anything to worry about. this is one of his biggest investors is now backing nio. when you look at how much, $550
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million is a big number, 11% is a big number, but if you look at those funds in yuan and that's 140 billion, that's .4%. i wouldn't say it is some sort of glowing endorsement, more of a diversification play. at best if the china hedge, hedgebest it is a china because tesla, while it is , expected to go into china, isn't making cars in china yet. francine: lvmh shares fell this morning despite posting results in one with expectations. chinese demand for high-end products like handbags and makeup remains strong. >> luxury stocks have had a stellar run for the past year and a half, two years and that , has been driven by china, rapid growth coming from chinese consumers accounting for about two thirds of the growth in the business. so while investors were expecting a q and they did get it from lvmh they didn't get the , kind of strong signal they would need to reassure them that some of
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these factors we've been talking about, like a trade war in china and weakness and the stock market won't take a toll. shery: another company on our radar today, sears. the struggling retailer is repairing for a bankruptcy filing as soon as this weekend. the owner, eddie lampert has , been pushing a debt restructuring that could avoid a chapter 11 filing. what's the story? >> sources are telling us that the company is pivoting, and could be preparing to file for bankruptcy as soon as this weekend. the company has been reaching out to banks in preparation of preparing for debtor in possession financing, which would be used in a bankruptcy setting. this is pivoting from the previous proposals that they had put out to lender's and to the board basically asking for a , restructuring, but out-of-court. this would be looking at now a bankruptcy proceeding in court. ♪
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♪ hurr go maps out the different storms coming onshore, and what we have here is michael, a pretty long tail. it is not a direct hit, fortunately, to the oil rigs in the gulf of mexico, moving away from that. matt: tracking severe weather in real-time is one of thousands of functions you can access through the bloomberg. keep watching bloomberg television for more tips. here's another function you'll
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find useful, quic go. quick takes, where you can get important context and fast insight into timely topics. here's a quick take from this week. >> income and wealth inequality. >> income inequality. >> it's a very disturbing trend, recognizing income inequality. >> income inequality. >> income inequality is the phrase of the moment. over the last decade, every region in the world has seen the income gap grow, which has fueled populist political movements in places like italy, mexico, in the u.s. and while wider income inequality is generally seen as a bad thing, there is debate about whether equalizing income actually helps the poor. this is your bloomberg quick take on income inequality. income inequality is often incorrectly used as a catchall ofcription for related ills poverty or class division, but the issues are undoubtedly intertwined. it simply measures the gap between rich and poor.
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after the great depression, the share of national wealth held by the richest citizens in many developed nations fell, but since the 1970's, it has been growing. take the u.s., for example. the average yearly income for the poorest households grew only 12%, about $12,000, from 2007 to 2016. meanwhile, the wealthiest 5% saw average income increased 31%, to $375,000 80 -- $375,088 per year. the u.s. ranks 39's most unequal among 167 nations. china has an even wider gap, ranking in number 29. president xi jingping has dedicated billions of dollars to tackling the disparity, the wit -- though it continues to because by the rapid urbanization. chinese aren't just a third of their counterparts in cities. >> researchers have been able to link rising inequality to negative outcomes. greater political instability, low productivity gains, reduced investment. >> it has even been thought to create longer commutes and
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higher divorce rates. but narrowing the gap does not necessarily help the poor. >> one thing we point out is that inequality isn't a zero-sum game. for example, after the 2009 recession, that shrunk the stock portfolios of wealthy americans, and that briefly reduced inequality. but in that time period, the poor did not get richer. which -- >> which is why some say inequality is in the best measure of well-being. >> some say, where are the worries about rising inequality are overblown and they argue that inequality can act as an incentive for people to innovate, take risks, produce and create wealth. >> there is cause for optimism. despite widening inequality, more than one billion people have been lifted out of extreme poverty. matt: you can find many more quick takes on the bloomberg, and you can also find them at, along with all the latest business news and analysis 24 hours a day. that will be all for "bloomberg
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best" this week. thanks for watching. i'm matt miller. this is bloomberg. ♪
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♪ taylor: welcome to "bloomberg businessweek." i'm taylor riggs. jason: i'm jason kelly. we are joining you from bloomberg headquarters in new york. taylor: in this week's issue, the death of cash. how technology is changing the most basic component of business and finance. that is money itself. jason: cannabis used to be illegal. now it is investable. taylor: first, we have a bloomberg exclusive. donald


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