Transcripts For BLOOMBERG Whatd You Miss 20180125

Fuel extremism. Its a move likely to irritate china. A u. S. Naval aircraft or it visit vietnam in march, the first such port call since the vietnam war ended more than four decades ago. Defense secretary jim mattis and his vietnamese counterpart discussed the matter during mattis trip to hanoi. In the philippines experts warn that a volcano that has been directing for almost two weeks still appears to be swelling with magma under the surface. Thousands of people are staying in emergency shelters of the volcano continues to release streams of lava as high as 1500 feet. Officials are worried the eruption may last months, affecting the education, health him and livelihoods of people in the region. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. Im Mark Crumpton. This is bloomberg. This is bloomberg. Scarlet live from bloomberg World Headquarters in new york julie live from bloomberg World Headquarters in new york, im julie hyman. Scarlet im scarlet fu. Joe the question isbloomberg markets. Whatd you miss . The question iswhatd you miss . Whatd you miss . President trumps remarks on the currency contradict his treasury secretarys comments on a weaker greenback. And ahead of intels fourthquarter results, investors will be watching for the aftermath of bloomberg. Trump broughtnt his America First message to davos, trying to explain to World Leaders that a stronger United States will benefit them as well. He started with Prime Minister theresa may of great britain, drawing on the east oracle relationship between the two countries. Where he are liking each other a lot. There is a little bit of a false rumor out there. I just want to correct it. We have Great Respect for everything you do. Later on he held a dinner with Global Business leaders including the leaders of adidas and netflix. So how well is he selling the american first message. Lets ask bloombergs chief content officer marty shanker. How is this going to be received in davos . Marty if you saw the video of the european leaders, scarlet the ceos . The ceos introduced themselves and told donald trump what they did for the did for a living and emphasized a many employees they havent enough states and donald trump loved it. Joe he is a big star. His wattage is probably like 10 times bill clinton or bono. That theyt the sense all want to be seen with this president . And the ones warrant there are wishing they were. Julie at the same time we heard from george soros, giving a speech and he said donald trump is a danger to the world. Are thererent different factions there, or is it just that people are not going to say that to trump . , weot actually being there in manhattan, its hard to tell. But there are people who are never trump people and george soros, being a funder of Hillary Clinton and the democratic process, he is not shy about telling the world what he thinks. He not only went after donald trump, he went after facebook and google, saying they needed more regulation. Scarlet there is an inherent tension between free traders and globalists, and trump and his entourage coming in with the american first mandate there. Will thextent president change his stripes a little bit when he is in the scrotum globalists . Because he does tend to tell people what they want to hear . He knows how to be a good guy at the party . At it ank if you look different way, he wants to be a part of that club that never would have had him before he was president of the United States. So he may very well say, yes America First but thats good for the world that hes really globalist. Its a little difficult to follow that reasoning but he may well do that. Joe i think one of the big surprise themes of dots s is the focus on the u. S. Dollar and what all that means. Scarlet the comments. The comments. Yesterday we had treasury secretary Steve Mnuchin surprised some people by saying the weak dollar may have some merit. Today, quotes up from donald trump, no want a strong dollar. How do you interpret this, is the white house trying to refine a message or they just talking and saying whatever . They are just talking and saying whatever. I absolutely do not think this is part of a well thought out, concerted strategy of how women if you late the currency to where we want it. I think they were answering and responding to questions and they were spontaneous. Why do markets move on every utterance from the treasury secretary of the president if they are just talking off the cuff . Because i dont think the markets yet understand that issues of strategic financial strategy, involving the dollar and things like that, they really dont have a lot of intellectual power behind it. What are we to understand about how the administration is making policy, if you are getting these conflicting comments . Which one do we pick . If you are trader or anyone trying to game out what you do next . Ohn arele like gary c trying to school this of ministration the words matter when it comes to these bilevel financial issues. And they are learning as they go. This is only a when youre Old Administration and they are a bunch of outsiders and it will take time for them to get the discipline. Joe we have a speech tomorrow. . Ny ideas what this be what the theme is going to be scarlet what the theme is going to be . Scarlet America First. Credits going to take for the surging stock market, tax reform, that is getting animals birds not just in the notice states but around the world. He is going to say i am the best thing that happened to you and dont you forget it. Joe and those ceos at the dinner, they were really laying it on. Tax reform and deregulation we are going to invest more in america and everythings great. Its fair for him to take credit but all the ceos are talking about the same thing. Being there. Es he loves to have the spotlight so i dont think he is going to say anything that is going to actually become commercial actually be controversial because he wants to come back next year. He would bedid say more than happy to sit down with bob mueller when the special counsel brings him in for questioning. Reading between the lines, how does that actually work . Visits to straightforward to say i would be happy to sit down with him when up to this point he has been careful to promise anything. He threw in a sideline there. It has to go to the lawyers. He was stating a personal view. He obviously thinks he has nothing to hide but his attorneys may have a different view. So i dont consider that an ironclad, i will sit down with bob mueller. Scarlet he can always say my lawyer told me not to. But he does seem to be moving on, while the investigation is ongoing it doesnt seem to be plaguing him quite as much as it has a different point. One thing we have known about donald trump is that he thought this investigation was winding up, and lost patience when he thought it was dragging out. We have reporting that said this theing that we think that interference with justice part is winding up but there may be more to this story, so we will just have to wait and see. We might still be in the third inning. Yes its possible. Encker, ourrty chief technology officer, thank you. A stronger front on cybersecurity, as we hear from john king tom king next. This is bloomberg. Julie we had headlines crossing the bloomberg right now and are watching shares at cbs and viacoms writers reports the ceos of the two companies are said to have discussed a merger. This is not necessarily new. We have been talking about this for several weeks. Or have been reports surfacing for years, and this was an that was not successful. Shares are spiking about 1. 8 but it is not a larger move likely because this has been a topic of conversation. Little bit of deja vu here. With the russia investigation swirling there are concerns about the ability of the u. S. To keep elections safe from outside influence, and that includes improving Cyber Security defensive cybersecurity defenses. I think the president has a very clear America First message and that message helps me lead the way online. Cyberspace is a medium and what we need to do is establish rules of the road that benefit stability, benefit companies that are good, companies that want to do business around the world. U. S. E leak that the leadership presence on cyberspace is no different here than the u. S. Leadership role on the economy. It is old news but i think it has really been covered, what has not been covered is the immediacy of cyber issues and Fair Elections in america. Do you have confidence of an action plan to make 2018 not like 2016 . Tom i do. I do is not going to cut it. What is the path to a better election . Tom i do. The path to better election is understanding what they did last time. And not a meet see any evidence that people were duped. They voted for President Trump because they saw his message and voted very clearly. The bad guys are going to be there the next time around and intrude in the process . The first things President Trump did in office was to personally reestablish and reinforce the sanctions against of the russians for their meddling in our system. There is no appetite in the , for president or trump all the way down, to north korea, iran, russia hacking into our system. A bipartisanget effort to make 2018, critically 2020, a more confident democratic process . Tom i think there is a solid democratic process in effect today. We have to take quick measures to increase our defenses, people ever that for some time. We are doing that with bipartisan support. Opposition. Ad any we also have the Holding Accountable those hackers who for disrupting our system, whether it is elections, banks, or electric grids. A guy like you shows up, suit and tie, you have a great affinity for president bush and President Trump and the other guys have people like tom plosser. A guy with 30 Years Experience battling bad people, what is going to happen in the next 12 to 24 months to the team of americans that are in the trenches of battling cyber ill will . Tom i tried to surround myself with people smarter than me and people who have experiences i dont have. My deputy is also the nations of cyber coordinator and he helps me make good policy without misunderstanding the technological issues. Is it talking to companies, is a getting more equipment, what is that factor . Factor that you are going to move forward so we have better confidence in our cybersecurity until november 2018 . Presence here has been dominated by bilateral negotiations. Can you give me some names . I need to make some news here before i go home. Tom i have met with Prime Ministers and Foreign Ministers throughout the middle east. We have been meeting with two or 300 people on a regular basis and you are going to see a cybersecurity effort that has no opposition. Companies can no longer work in a world where Foreign Government Foreign Governments are cheating to gain a benefit for their companies. The president is going to hold them accountable. Bossert that was tom speaking with julie bloomberg. Is cutting up to 500 jobs at its headquarters this week. The companys latest efforts to streamline amid competition with amazon. Onmart reports its earnings february 20. Airbnb is adding American Express is express can gin American Express ken chenault to its board. Airbnb has struggled against accusations that it is unwelcoming to africanamerican travelers. The new year has seen 164 billion with of deals, the most since 2000. Bank of america and Deutsche Bank expect the trend to continue. Ipos tok also expects increase in 2018. And that is your Bloomberg Business flash. Its time for our stock of the hour. The biggest drag is apple, on pace for its worst day of the year and down for a second straight day. Abigail doolittle has more, up by almost 2 . Abigail this is interesting, especially the leg lower over the past hour and a half. Because it really has to deal with President Trumps comments that it wants that he wants to see the dollar stronger. Apple is down about one and a half percent. Its really one of the Biggest Multinational Companies out there but only 42 of its revenue comes from the americas. The rest is international, split evenly between asia and europe are in so the weak dollar is a tailwind, to such a degree that this is surprising for me. Lets hop into the bloomberg and look at the chart. We have apple over the last year, climbing, climbing, climbing. In blue we have the dollar falling, falling, falling. Is that the reason apple is falling . No but there certainly seems to be a tailwind and there is question about whether demand is going to remain it as strong in china for the iphone. And if you have any strengthening and of the dollar. Joe this is the second day in a row of nasdaq under poor firm nasdaq underperforming, which is kind of weird. In general, does there seem to be cooling off in tech right now . Abigail i think some of what we saw yesterday, the chip sector, the stocks were especially week on Texas Instruments although ironically texas and omits is not on the nasdaq. But with apple this is the stocks second down day in a row and yesterday there was a lot of commentary that the march disappointing. Theres a big question out there about iphone demand. They do report next thursday and it could be interesting in terms of what they actually report but in terms of the march quarter, up we look at the model in the bloomberg, this is the second excuse mee year this is the First Quarter here but in any case we are looking , im going to go back to the Second Quarter here, 60 64. 5 million iphone units expected to be sold. I think it will be closer to 52 f that isnits, and i the case it could be disappointment for investors. Julie getting back to the dollar idea, are we seeing this with other big multinationals are just apple . Abigail there were a few other companies that took a small legs lower after those comments by President Trump including cocacola, Procter Gamble and exxon mobil so it does seem like there is a little bit of a trend there, trading legs lower. Scarlet we will certainly keep an eye on those names and apple is on our radar with the nasdaq lower. Abigail, thank you. Coming up, speaking of weakness intel earnings or do after the bell. We have the chart you cant miss after its earnings release. This is bloomberg. Julie whatd you miss . Caterpillar, caterpillar equipment used for metals in the mining industry. We are looking at the Companies Machine sales which have been languishing for several years and have seen a dramatic uptick this year. Earnings are out today and the forecast for the year is ahead of estimates. And then you are looking at the shares versus the s p 500 worried if you look at the shares by themselves you can see the stellar performance, the secondbest performer in the dow last year, up some 70 and continuing to record levels this year. But even versus the s p 500, which we know had a big year as well, we see the stock continuing its run here. So caterpillar shares, continuing even as Machinery Sales are up. Scarlet moving in the other numeral numeral the stock lost 42 the second half of last year. It is changing its strategy. To build itsoking empire products kind of Like Unilever but now it is talking about selling off several brands. This is a aboutface and investors are disappointed. The top line is what is happening today. You can see there is 71 million itshares changing hands and is set to close with about 80 million shares changing hands are on average there is about 5 million shares changing hands so this is about 16 times the average. And what is fascinating about this is that there was a scare over crockpot fires. Ell owns crockpots. Joe this was the weirdest thing because when i heard there was a tv show with a crockpot fire i heard was an investigative news show. Scarlet no. Fictional drama. Drama with anal exploding crockpot. I read that three times because i couldnt believe it was real. And the company says its not possible. There are a kinds of safeguards but people are concerned. After the bell we are going to get earnings from intel and for many, in focus reasons. Its a big bluechip tech company, Semiconductor Stocks have been on a tear for the last year, Semiconductor Stocks have been a little week this week in the face of Texas Instruments. Ata lot going into the look intels performance. You can look at the blueline and it has really underperformed over the past year going back to early 2017, nearly up about 20 now so not that bad. But when you compare it to , or thet in yellow partnership duopoly as a somewhat college, or the other chip stocks, the ones that are focused on more exciting tech, it has underperformed. It is still doing well but there are a lot of reasons to pay close attention, all the bullish things. Julie and you have the recent revelation about Cyber Security vulnerability in the intel chips, so we will see if we get any more commentary around that issue with the earnings report. Joe a very good reminder. Another reason to care. Scarlet the market closes next and we have been talking about tech stocks under pressure and there you see them on the nasdaq, off by 1 10 of 1 . Is that, the dow another record high. The s p 500, little changed. The president s comments on the u. S. Dollar, creating, how should we put it, confusion in the markets. This is bloomberg. Scarlet whatd you miss . The dollar bouncing all over the place. Joe if you are tuning in live on twitter, we want to welcome you to closing bell coverage. We begin with our market minute. The s p with little change, the nasdaq with little change, and the dow making another record high. Thebig mover today was dollar, and equities took 13 from the gyrations of the dollar. Cue from the gyrations of the dollar. Overshadowing everything. Energy stocks were the worst performers because you had the cascade effect from the movement of the dollar shery. It is interesting as we have to mixed picture overall, it is a steep hill to climb. They lost ground to the nsf, for a third year. Decrease its 2id but its growth rate was smaller from the nsf. Its stock at the lowest in 12 years, and that has a four billion dollar plus deal, now the company is saying they are going to keep production flat for the next five years. They are going to focus in the appalachians instead. And br with their numbers out as well, and he reported fourthquarter revenues. And finally, you will brands, a lot of layers to the story. Is an interesting reaction, because recently when we seek companies talk about dividing themselves, typically there is a more positive reaction. But investors see their value is derived from its brands, so shares are down. And then there is the crock pot element as well. Related to a fictional tv program. Joe everything is weird these days. Lets look at the Government Bond market. U. S. , ther in the twoyear was at 2. 1 this morning, that was at its highest level since september of 2008. Havent really moved in a while, but german yields ticking higher , that is in the wake of the ecb press conference, and you see the german yields carving out at the bottom. More optimistic about the country hitting its inflation goals. There wasnt a ton of interest in the ecb today because there was no expectation of policy, but interesting action there. Scarlet lets mention the bloomberg dollar index racing its decline, after President Trump said he supports a strong u. S. Currency, adding confusion of what the u. S. Really wants to the previous day, Steve Mnuchin said it was an u. S. Trade interests to have a weak dollar so there you see the driver for the changes of the prices we saw today. We have breaking earnings news. Revenue was higher than anticipated analysts are 16. 4 billion dollars. Intel boosting dividends as well , the stock is moving higher after trading, and in terms of outlook, it expecting 15 billion in this quarter, give or take 500 million. We are in line with the consensus estimates, and shares analysts looking at . 73, in that range that people have anticipated. The stock added to its advance right now up by 2. 2 . Intel was down at trading before these results. Lets dive in to fourthquarter numbers. A lot of the reason why people were right heading into this report was because of Texas Instruments is disappointing numbers. Are they dead barometer for chips . Are they the barometer for chips . Thatu have to remember from a share price perspective that 120 is0 off of it toty yet to take expectations. Expectations may have gone ahead of themselves. Number two is that we never know from an in demand perspective how things shake out. It is a better barometer than an isolated areas such as intel or qualcomm for wireless or pcs, so again, when you put all of them together, when three or four Large Companies tell you something is a mess, then you start to worry, but then the stocks respond well. Julie but it doesnt appear anything is amiss at first glance here. Revenue and 14 looks ok, but next quarter, perhaps there is like consensus estimates of 15 billion versus 15. 4 billion. One of the things that has been happening is, actually, expectations may have been too low from a pc perspective. The pc market has been improving, but from a mixed eps will probably have to be a touch lower. Julie i want to go through the numbers of divisions. It looks at the pc business down 2 to 9 billion. Of things group, up 21 , 879 million. A smaller part of the business, but the Programmable Solutions season increase of 35 . Nonvolatile memory solutions, looking at the acronyms here, up to 800 and 89 million. How did those divisions meet with what you were looking for . The Data Center Group is perhaps the most important, with revenue up. Your, good numbers. A lot of it is expected. I think the modest difference will come in the tune of management and is a and d gaining share . Are you seeing any movement in that question mark is qualcomm doing better than expected . And of course, the elephant in the room is the flaws in the cpus and how they are dealing with that. Semiconductors are seen as a highly cyclical business in light of the economy , supply expansion and decline. Of late, the argument has been there has been a secular shift and a demand for chips with everything being connected to the internet. That we can push off that cycle for a while, taken in total of what you have seen so far, does it look like a big circular bull run is intact . Yes, but on one hand we have seen cycles compress and get smaller. This on ag relative basis, it has already occurred. Where we sit now, are we seeing are we at the top of a meanie peak, and the answer is that we dont know yet. There is reason enough to be nervous. Thank you for joining us to break down those intel earnings. Coming from starbucks. It is lower in afterhours trades, and the big number that starbucks missed on was comparable sales. The extra tax benefit was a penny higher than what analysts were looking at. Analysts were looking at an increase of 3 . Any release, the ceo talked about starbucks being too powerful independent engines fired if you look at comparable sales for those regions, sales in the u. S. Up 2 . Analysts were looking for a 3. 3 gain in in the pacific, up 1 . Europe,ay, down 1 for middle east, and africa. Could see starbucks getting they are downas by better than 3 . Julie people are hoping for a recovery in the americas. It doesnt seem to be materializing to the extent that investors might have wanted. Coming up where going to talk to Stephen Englund there about Steven Mnuchins recent comments about the dollar and then President Trumps comments on the dollar as well. Maybe they were a little contradictory. This is bloomberg. Mark i am Mark Crumpton with first world news. Rocky Prime Minister says that the Iran Nuclear Agreement should remain in place. By minister made his comments in an interview and dollhouse. It means there will be some friction somewhere, and you rock l not you iraq. It is outside of. Mark he said the something of tensions could open cracks in the region and feel extremism. Are callingomats for international proliferation. Committeebefore a were Henry Kissinger and george so much along with former deputy secretary richard armitage. President reagan thought Nuclear Weapons were immoral, and we were trying to get them reduced, and we had quite a bit of success. In those days, people have been appreciation of would be the result of a Nuclear Weapon if ever used. I fear people have lost that since then. Mark this jersey at that north koreas the faience and its pursuit of Nuclear Weapons are laying out a path for other countries to feel that this is the way for achieving an international prominence. Areheast asian leaders celebrating ties with india as new delhi is looking to strengthen bonds with eastern neighbors as chinas influence grows. The leaders of associations of southeast asians met in new delhi to observe 25 years of ties between india and the 10 nation bloc. The Prime Minister said that world basedd a order for the oceans and seas, and respect for international law. Muslimst yet safe with living in refugee camps living in bangladesh to begin returning unicef saidm are that the security situation inside must be improved before people had back. More than 680,000 people have fled the country since august to escape escalating violence. Global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. I am Mark Crumpton. This is bloomberg. The dollar erased its losses after President Trumps remarks that he ultimately wants a strong u. S. Currency. That after Steve Mnuchins comments that a weak dollar is good for trade. Ross, mnuchin, and wilbur were almost certainly planned and they were in fact sparked by china. Steven englander is the head of research, explain what you mean by that. The idea that the administration is going to put andffs on solar panels washing machines, that has been the buzz for the last couple of weeks. Lastly, china drops the story with bloomberg that we are worried about our treasuries, and the next day they go off and deny it. And then they say fake news, we want act responsibly. But then you have mnuchin basically saying, what is really the u. S. Dollar policy, whether it is democrats or republicans, it is not a strong dollar, it is our currency problem. Basically saying on the trade side, if you do something on treasuries, will hit you back, and well see who is left standing. It then wilbur ross pose back, but Steven Mnuchin is not a mountain man who doesnt know what he is saying. Joe what is the transmission mechanism that anyone should listen to Steve Mnuchin or donald trump on what they say about the dollar . They dont have mechanical levers to pull, that is all at the fed, theoretically. We arent like japan like a sovereign fund, why does it matter . Are a tourif you nation, debtor anything you say to buy your assets is material to the dollar. The key thing, and one of the things i am looking for is who ends up as the vice chair in the fed. He is the one who represents the u. S. And international forums, and the question will be, the question for the fed when this inflation goes to 2 , does it say we are, question mark does it allow inflation to creep up and allow the dollar to weaken, or is 2 just 2 , and what difference does it make if the trump if what trump says. Scarlet why is it for the fed chair . And international matters, he is the one who goes to these meetings, so of course, if jay powell wants to speak on it, he can. But we have stan fischer and others before him in that role. Julie we have a u. S. Dollar policy . Yet the president filing it back almost entirely is there, does it matter that there is not a clear message . To me, the clear message is abundantly clear and this is like a wrestling match where the guys are making faces to each other before a match. Say, dont mess around too much because we can do damage to you. But how will they do damage . On the trade side . The dollars fall has been much more of a factor to other Central Banks as opposed to the administration doing anything particular. I think it was on your program a couple of weeks ago were Interest Rates are a good indicator of what the dollar is doing, and european Interest Rates have moved relative to u. S. Interest rates, and it corresponds with the dollar move. If you change the complexion of the fads, you have people who will say u. S. Trade policy is that they want a weaker dollar. If we are part of this, were going to kwok rate, and inflation is not a big deal. Youre going to get a much weaker dollar. Visavislked about with china, but what about europe and the predicament . And dealtough luck, with it. Europes problem is that they have adovish, they dont policy for a weaker dollar. Theyre not going to cut another 40 basis points on rates or extent qe for another six months, they are so set on pulling it back that they have almost no response, and that is why the comments in the morning led to the euro running up. It is like a surrender flag. Are going to ask you to hang on. Were going to take a break, and he is going to be staying with us as we talk more about the trade situation, and also why President Trump claims to have cap all of his Campaign Promises so far. This is bloomberg. Scarlet we are going to keep chatting about the weakening dollar. We are with Steven Englander from rethinking capital. As we talk about the dollar and the trade back and forth, what does this mean for the u. S. Dollar . It sounds like it makes is going to continue the trend it is on. From a u. S. Perspective, it would like a couple of countries exportingt instead of to you, we want to put a packed ofthe midwest, hire a bunch americans, do what the japanese did with autos the 1980s and 1990s area. And that is what the u. S. Wants china to do, and i think the answer is, as china takes a hartline and other countries take a hard line and say no way, you are messing up the International Trading system, we are not going to respond at all, this is a show that they have ammunition. Joe can there be a response to trump that satisfies him . Trade is complicated. We know the benefits of free trade, but say your minimum wage is too high, theres interference in the market free trade can damage your country. Those guys may be paid to much, and they cant work anymore. Is thatis trying to do it looks and there is a bunch of people sitting in the couch, working in factories, he made election promises to them, and he is trying to follow up. He knows that the guys and davos are not going to be voting come for him, he wants guys in michigan voting for him. This is a followup on his promise. Scarlet thats a opens factories and employs some of his voters in michigan, and china decides not to play along, and then there is this trade war china, and u. S. And you start to see stocks not rally anymore. What happens then . Iss is a president who linked to record highs in equities. China is exposed in a trade war. Treasuries n of they have the problem. If the u. S. Panics, then china will win. Joe speaking of domestic politics, trump doesnt need the ,ote from the people in davos he needs the votes from the people in michigan in 2020. Contrary to what others have said, he may be able to say he hasately that fulfilled his Campaign Promises. In my put them in a stronger position. People can say he tried. They try to do things in the tax reform to weaken obamacare, they are looking to do stuff on immigration, and now he is stepping up on trade. In 2018, he will say, check all of these boxes, we are the only ones who try to fulfill all of our Campaign Promises, we dont lie to you. Do withhat does he that . Does that the two success in the midterms . That is hard to tell, but it is something that is appealing. We know the cynicism that we approach with Campaign Promises, but he can say we tried so hard in the first time around, give us a Second Chance to finish the job. Message and this is the she be imparting in davos, the state capital. Up, the coming conversation with Goldman Sachs ceo, and what yes has to say about tax cuts in the u. S. This is bloomberg. Mark i am Mark Crumpton with first wrote news. House Speaker Paul Ryan says that mornings begun to confront. Ran his and the united emirates where he led a congressional delegation addressing the Diplomatic Academy today. Speaker ryan said the u. S. Wants to challenge irans ability to threaten the region with Ballistic Missiles and stop its expansion in the middle east. Vulcan senators emerging from talks of an immigration plan say they like what they have heard so far. Majority whip of texas said that this is about border security. It is about fixing some of the holes in our immigration system that allow criminals and others to take advantage of it, but it is also a compassionate solution for the daca recipients, and we are committed to seeing it through. Mark the plan being discussed cut into this a pathway for citizenship for hundreds of thousands of young people who were brought to the country as children and are now here illegally. Yesterday President Trump said that he is open to such a plan. Secretary believes that the return of oil markets to balance this year is a foregone conclusion and the cartel is looking ahead. He spoke exclusively to bloomberg tv and davos. Fullest et is the sometime this year it will return to balance, but, the next step would be how are we going to continue this partnership between opec and nonopec. Mark he had a bit of a challenge convincing nonopec nations like russia to extend cuts. China is planning to take action against u. S. Companies if it evidence that they illegally helped north korea. They also cautioned against imposing or and laws on chinese citizens. The Trump Administration announced sanctions on north korea Business Networks in china and russia that is a push to cut off revenues for the Nations Nuclear program. Global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. I am Mark Crumpton. This is bloomberg. Get a recap of todays market action. Did a record high with 140 points, and nasdaq saw a little bit of a weakness before intel reported results, but as onturned out, intel came up its bottom line and topline. It is the highest estimates, 17. 0 5 billion, and in analysts were looking at 13. 5 billion. The outlook for sales also holding up as well, so the stock up for the half percent. Julie in contrast, starbucks not doing well. Comparable sales came up, they ,ctually rose 2 last quarter and the u. S. They were up 2 as well, but of those numbers were lower than analysts had been estimating. Traderse the numbers trade off of. The earnings per share coming in and had of estimates, and starbucks has lacked. Scarlet lets continue our coverage from the World Economic forum. We caught up with Goldman Sachs chairman and ceo, and began the conversation about the impact of tax cuts in the u. S. It has benefits for our industry. We are a relatively high taxpaying industry, and we have converged with other countries. We have moved deductions and have a rate that is a common rate for everybody, and equalized the consequences of keeping money overseas versus bring it home. And has made the system more sensible, so to that extent, we like operating in a sensible system. With Economic Growth slightly more normalized, and you regulation on the way, what will it look back over the next couple of years . Higher. By how much . As much as we can make it. In an opportunity sacked, so it depends where you are in the cycle. Noher than they are now one will have that leverage. What about 15 . Highly possible. We want even agree on the past, so we want to agree on the future. You have been peppered about goldmans fixed income business, and they had a tough year and the toughest Fourth Quarter since the financial crisis. What is the problem . This is a poor part of the cycle, people could quibble about how much of it is a cycle and how much is a permanent change. We wouldnt extrapolate if it was and were not going to extrapolate from a fixed income when you have a. Of time where you have a flat yield curve of no volatility and virtually zero Interest Rates around the world. This is not the best opportunity set, but we have underperformed a bit even in the opportunity set that we have. The strategic one is how much you are investing in fixed income opportunity and how well did you executed. I think we could execute better. Investmentis opportunity, the market has helped us reduced the is somethingand it like 20 of our revenue, and that is something we try to achieve, and the market whats is to reduce it. We reduced it by really driving growth in other businesses and had directed years almost across the border in other segments. Notwithstanding a very difficult opportunity set and a difficult year which historically has been where our business has identified with. Our revenues and outperformed other segments that we compensated for the fixed income quarter, and i dont think necessarily stays that way. We get accountable for a running the business throughout cycles, and at any given moment, we are given a lot of advice that we take into account. Our business and our commodity business is a jewel, but lets face it, if oil is going to stay at a plus or minus a few dollars per year, it is not going to be the golden age of commodity trading. Execution is a factor, strategy is a factor. Accounts is a factor too. Will there be a Management Change . You have the right people in place . Nor their we have somebody where we could find somebody better, but i would say that people have said a lot of things about Goldman Sachs. I have never heard that we lacked talent. That is fair. Goldman is indexed to a certain market, what you mean by that . Im much or how he is that before, but there is a certain opportunity set. Is it with the clients . Oil stays thee of same or energy stays the same, how much are you going to spend to hedge your energy risk if you think tomorrow you are going to wake up and the price is going to be the same . Less. Volatility, of people do less business. Scarlet that was Goldman Sachs ceo interviewed earlier today from davos. Coming up, rippled wants to help banks move cash from point a to point b faster using blockchain technology, but white major banks are balking at that new tech. Joe you can get involved in the conversation. Ask ae a tweet and question that you want to hear. I will check it out. This is bloomberg. Scarlet whopping 76 billion in payments ripple is a tech company in San Francisco that wants to help banks move that money faster and cheaply, but rippled wants to do that by utilizing a digital token called x rp. Joining us from los angeles is met lysing, who authored a businessweek piece on this. Explain what ripple is, but banks are not buying into its proposition. That is right, we spoke to executives of the seven largest ask in the world who are at the heart of the corresponding Banking System where you move money from the United States to africa or asia or corporations it to make payments around the world. None of the executives want to , they dont want to get involved with cryptocurrencies, and moreover, customers that they serve, the caterpillars of the world, the big corporations, and dont have an appetite for it either. Lets be clear about ripples role on this, this token x rp was worth less than a penny. Earlier this year it take over three dollars, a gain that lows that going out of the water, but what you are reporting is showing that while the banks that work with ripple are interested in some of the ripple software, the currency, they dont have any interest in. Correct, it is interesting that in 2018 in the cryptocurrency world, this is where we are. A private company that controls this digital token that they created years ago can value that token in the market and it is worth more than 80 billion, it is like a company has found a way of creating its own money. In ise are interested that we understand the value of that digital money is based on the fact that banks and Payment Companies will use this Digital Currency to move money around the world, and yet that is not happening. What is through the gap of perceptions in your reporting and what the company said. How much emphasis is the company putting strategically on the success and adoption of x rp as a common token of Currency Exchange . They put a huge amount of and the ceoxrp, told us it is actually at the core of their strategy. They also say that on expect the largest banks in the world to jump first, it is going to be a marathon. They believe Smaller Banks around the world and corridors were and were not trading the u. S. Dollars at the euro, it might be a bolivian currency. That is how it is going to catch on and grow and grow. It has been six years, and it has not. The one company that we found using is a mexicanu. S. Company, and they have done 10 to did 15 transactions since october averaging up to 5,000. That is the only company that we could find using this digital token for the stated purpose that ripple puts out on twitter. That is what they are saying now they have a different product that banks use to move fiat currencies from bank to bank, and yet the ceo would only give us the name of one bank doing that, and it is a swedish bank. In that case, they say they are not allowed to release the names because the banks dont want the names released, but it seems like from our reporting, the vast majority of what is going on in the ripple universe is testing, and people in pilot programs rather than realworld transactions. Julie what happens to all of this xrp . The valueonto it and falls false to nothing as things dont materialize . What is the next that here . That is a great question, that is one possibility, and is that it takes off and banks are using it, and the value is tied. 100 billion x rp were created in 2012, ripple put 55 billion of that in escrow a few months ago, and there slowly ,eleasing some of that to sell to exchanges, and to sell to Market Makers as a way to make out there andxrp people want to use it. We want to address is the concern that this has got into public markets, and retail and a lotcan buy xrp, of people we spoke to said it does not make a lot of sense because it is meant to be used in an internal system between banks around the world. Scarlet we have a chart on bloomberg that shows ripple did very well at the end of the year and the beginning of this year. They are outperforming everyone else, including bitcoin. Joe finally, it seems like community,crypto people have various coins and factions, but a lot of people dislike ripple and think it is a fake crypto. Reporting, what were nonripple people saying about xrp . We had a hard time finding people could understand and give us a good reason of why the gone up xrp has significantly in the last three months. Ripple is not pitching itself as the next visa or the next bitcoin where you can go out and use x rp to buy something at the store, or coffee, or whatever. It is focused on the financial world, and so the idea that people are out there on twitter and other social media pumping buy in. Ng people to it is troubling for a lot of people, and people who spoke to me said that it is not just ripple i am concerned about with x rp, it is a bit pronounced. At 1300 hasalue got a lot of value, where for many years they did not have attention on them. Scarlet thank you so much for joining us. Have breaking news crossing over to bloomberg right now. Tesla has responded in an email statement that it has problems with battery production in its factory in nevada and it is worse than the company acknowledged. They need to make some of the batteries by hand, and what tesla says is manual production is not having an impact on battery safety and is reiterating projections earlier this month that they are on track with production to boost model three production rates. The concern was battery production would cause further delays and perhaps quality issues for the new model three. And the shares are rising after they fell 2 . Up next, theresa may under exit from brexit has been rocky, but she is confident she can negotiate a deal with the u. S. From new york, this is bloomberg. Scarlet porsche is that there with President Trump, ukip Prime Minister theresa may said than with bloomberg editor and discussed brexit and the looming impact on the u. K. Financial Services Industry right here is some of that authorization. London is hugely important for the u. K. , but is also important for the Global Financial center for the European Union and around the rest of the world, and i am positive about the future for the city of london. Attractivedon is an place, the city has developed over the number of years, and people use it as a ecosystem to support the financial Services Industry around the United Kingdom. Would you be prepared to do what macron said, which is withdraw red lines like the jurisdiction of european courts in order to get more access to . We reached ar successful negotiation on our first phase of brexit talks in the eu. I am looking for is the implementation. That will allow businesses to adjust after win best into the European Union, and i am very clear we want to develop a special ownership, a comprehensive free trade agreement. We recognize the importance of Financial Services, and we want to ensure that we continue to see those Financial Services, ensuring the city of london retains its role as a Global Financial center. The last few weeks, have been talking to Financial Services businesses and they are positive about the attitudes the u. K. Has. I want to build on that to make the u. K. A more financial place for Financial Services to be. Would you consider paying for access, pay a bit more and get more access for Financial Services . One of the things we agreed and discussed in negotiations and came to an agreement in september was the financial settlement of the uks withdrawal from the European Union. Where are now in the second phase, which is about the bases of which were going to trade on goods and services and Security Partnership with the European Union. , i am these areas positive will be able to get a good arrangement for the future, and arrangement edges a comprehensive trade agreement for the United Kingdom with the European Union. The reason i believe what come to that the arrangement is because what i see from talking to other leaders is a sense that where pragmatic about this, and it is for the benefit of the eu and the u. K. That we had that good arrangement for the future. Part of thesavory london, we have the president s club dinner. Now the city of london issue of assment, male entitlement you have worked in the city, what does it take this misogyny to change . I was appalled when i read the report on the president s club. Theattitude, the object justification of women sally, what it shows that there is a lot more work for us to do, and that will continue to work, and i have done my time in politics to work to a point where we can say that women are respected, and accepted and treated as equals. That was ukip Prime Minister theresa may speaking to u. K. Chief editor. For what you need to know to mars trading day. This is bloomberg. Scarlet the dalton to record highs, and the dollars turbulent there is the president made some remarks. His what to make some more remarks, as the president gives a keynote speech in the final day of the Economic Forum and davos. That is at 8 00 eastern, and will bring you live coverage. Joe and Economic Data of the u. S. Gdp, we are for a 3 handle, so perhaps, a stick of 3 plus quarters. Fore maybe some a trail the president as well, and dont miss this, honeywell will report their fourthquarter earnings. That does it for would you miss, have a great eveni alisa im a Alisa Parenti in washington, and youre watching bloomberg technology. President trump will cut off funding to the palestinians unless they agree to peace talks. Speaking with the israeli Prime Minister in davos, President Trump said palestinian leaders disrespected the United States by refusing to meet with Vice President pence. President trump also denies he and theresa may dont get along. He met with the u. K. Prime minister today. Trump says the u. K. And u. S. Share similar ideals. The British Government also confirmed President Trump will visit the u. K. This year, but did not provide a specific date. Committee judiciary chair plans to release transcripts from closeddoor interviews with donald trump jr. And other members of the Trump Campaign team that attended a meeting with russians in trump tower in june 2016. In southern california, authorities are allowing some residents to return home two weeks after mudslides killed at least 21 people