Transcripts For BLOOMBERG Whatd You Miss 20170405

By. We are looking at mildly bearish estimates. This is a bit of a reversal. We have the averages all higher earlier. The nasdaq had carved out a new intraday high. Now look at this declines. The nasdaq down nearly. 5 . All this after those fomc minutes came out at 2 00 p. M. , so investors having a bearish take away from that meeting, not ready for rate hikes or the idea they can unwind the Balance Sheet. Lower, down about. 5 percent. Bearish action once again for stocks. Of course, out of those fomc minutes, one of the big locus is wasne of the big focuses the Balance Sheet. This is a longerterm chart from 2007. In yellow, we have the dead Balance Sheet. Extraordinary accommodation that helps save the financial market. While that accommodation was coming on, not surprising that we had rates go to alltime lows. A real reversal. What idea is if the fed does look at its Balance Sheet, perhaps we are seeing some idea that investors are not they, but its worth noting 10year could still go lower. The Balance Sheet could stay even and there may not be in unwind any time soon, as had been true for the last several years. Scarlet thank you so much. Argentinas Largest Union gearing up for a oneday general strike tomorrow, retching up pressure on the centerright government just six months before midterm congressional elections. Here with the latest is Erik Schatzker with an exclusive interview with the president. Erik thank you very much. Nice to see you again. Mr. Macri im very happy that you came back to argentina. Erik thank you for having me back and thank you for having me to the president ial residence. What begin by asking you we will see tomorrow. The country will be paralyzed in some respects by a National Strike. As you know, the rest of the thought that you were leading argentina out of its populist path. This looks very much like populism. What happened . We are leaning toward being toward a countryble and reliable , but in the process of a , we still have minorities thinking that in the past things were better. The important thing is what saturday. N people have gathered around their homes to express that they really believe in what we are doing. They want to modernize the country. They want to be part of the world. Have an intelligent approach to be part of the conversation, so we are feeling great support from the citizens and looking around at what is going on, not only in the. Egion, but the whole world i think that we are quite a because we are doing enormous transformations, and, still, we are having a very big supporter in the citizens. That shows that what were doing is not our decision. It is a decision of the majority of the citizens of argentina. They have decided to capitalize all the learnings that we have in the last decades of failures. K as we both know, the support will be tested six months from now when you have elections. In the meantime, these strikes pose practical obstacles. How do you accelerate growth . How do you effect reform . In did you add Seats Congress if labor unions can bring the government to a standstill and hurt the economy . Me tell youcri let that they are doing this National Strike tomorrow, but in the meantime, we have in working together in many sectors to create new not only neighbor, but new Regulatory Framework together. Had tremendous success in strategic matters like energy. To in fivellow us years recover our local and relieve us from importing huge amounts of gas, and wely in winter will be a Big Worldwide player in energy matters, together with do we have launched, a couple of sectors have been very successful, and we are aroundng investments of 5 billion. We are going to increase that maybe four times more. The same way with the unions in the automobile industry, we are going to create more than 5000 jobs. We are doing this same agreement in mining. Agreementng the same and construction. We are working in communication, a typicaluite situation of a moment of big change in a country. There are others trying to stick to the past. Erik people are naturally impatient, are they not . President macri and every part of the world, especially when we have access to such a huge amount of information. Many times, that drives you crazy, drives a society crazy, but still, we have been taking i have beenns, and painting myself taking this decisions, so as to create a with for new investment our energy. Cannotmple, a country grow, and still, citizens understand that this is a path, andrney to the future changes cannot be done from one to to the next, from today tomorrow, so we need to be patient. We need to work. We need to understand that this is a process and we are improving day by day. We have a long way to run, but we are improving day by day. The you are worried about longterm, and perhaps you should be, but lets talk about the short term for a moment. You promised your fellow countrymen growth, and growth has materialized, but not as fast as they would like to see and you would like to see. If the economy does not accelerate starting in the second half of this year, what his plan b . Workingt macri we are on plan a. ,rgentina, after five years seeing growth, creation of new employment. We have been creating new jobs, and we are starting to grow. I understand what you are saying because erik people want to see results. I need to seei results because i care about what happens with my citizens. Care about what happens with all of argentina, and i know that the growth is affecting certain regions of the country, certain sectors of the economy, but not on the whole because this is a process. The good news is we are already theing, so we changed tendency. Now argentina is growing after five years, but still, it is not enough. We need to accelerate this growth, and we need to keep growing for a couple of decades really make a result in terms of reducing poverty. Erik of course. Is there anything you can do to accelerate growth in the shortterm . Do you have any tools you can use beyond what you have already done . President macri it is what were doing, creating trust erik so there is no plan b, really . Is noent macri no, there plan b. We have to create trust in everything we do, every decision we make, with the country, the whole society. We have to keep discussing, with having status of dialogue with different sectors to create better tools, better Regulatory Frameworks in which we can develop in a better way those activities bringing in new investments, and that is what we are doing every day. You cannot change 15 years in 15 months. Were working. The government together with a majority of the citizens of argentina working together building the country that we serve. Know, has a, as you direct impact on the budget. You have already had to raise the primary deficit target. Is that a number investors can take to the bank or is there a risk if growth does not accelerate that you will have to raise the target again . No, i thinkcri were in a good process and ready to achieve all the growth we have committed with great confidence in what were doing. Speak of 2018. People seem comfortable with the path youre on for 2017. This year and last year, you use used revenue you from the tax amnesty to help finance that budget shortfall. Next year, you will not have it. How do you close that gap . President macri you are raising a good point. We need to create dialogue spaces in society. We shut down the politics, the business community, the provinces, and find out how we are going to cut the deficit. That is a challenge we have. So youre talking about cutting potentially government jobs president macri im talking about how we are going to create a budget in which we will show what we have committed in terms deficit on an annual basis. This is what was going to be reduced. Erik how do you do it . How do you cut those costs . President macri thats why im waiting to have a deeper discussion with all those different sectors in which we ,re waiting to find out accelerating growth but also reducing state costs, we will achieve the fiscal deficit that we have committed. Of what about the pace the pace of the peso . The strength of it is having a depressing effect on the economy. Cheap imports discourage local production. Would it help if you had a weaker currency . We arent macri financing the fiscal deficit, bringing in dollars. Obviously, in a flotation youange market, the more borrow, the more dollars come price. Lower the local thats why we need to reduce the fiscal deficit. Erik in a perfect world, you would have less inflation, lower ,nterest rates, a weaker peso and stronger growth, but you cannot have them all at the same time. What is more important stimulating growth or fighting inflation . President macri you have to do both at the same time. There is no other way. With lower inflation, we have bigger chances to grow, and you are defending the salary value of the workers. Reducing inflation will because hegrowth will get more certainty. But what about that six months between now and october when everybody has to make a . Cision about how they feel how rich do they feel . Their wages are going to rise with the new negotiations and together with a reduction in inflation that were going to have in the rest of the year, they will feel or and see thatume they will have more capability of purchasing goods, and that will be very good for everybody, and that will affect their humor. These midterm elections were talking about in october will undoubtedly be a referendum on your government. That is how these things work. Obviously, you want your Political Alliance to win as many seats as possible. I think that goes without saying, but i would like to know how many seats, what percentage of the congress do you need to have for you to call that election a win . President macri im quite confident that were going to win the election erik win a majority . President macri we will be the first minority, but even if we have a great, great result lets say the majority that will not be enough to have a majority of the congress because we are starting with a very low situation. We are going to improve. We are going to have maybe 20 . Ore seats those figures will not be enough to have the majority of the congress. But we continue creating dialogue spaces. That is something very great for our future because we need to understand that confrontation is not the way to solve the problems in argentina. Win less than 20 more, is that a disappointment . Is that a failure . President macri if we dont win, the election will be a failure. Erik your predecessor, as you know, remains a very polarizing figure in this country. Many people think she should be in prison. Others would like to see her run for elected office in october. What would you prefer . Whatever sheri prefers. I dont care. If she wants to be a candidate, she can be a candidate. Erik here is how i look at it if she is prosecuted and incarcerated, that demonstrates that this country is serious about fighting corruption. Thats good for you. However, if she runs and continues to be a divisive figure and divides your opponents, that is also good for you, but one has to be better than the other. Which is it . Better that she be in prison . President macri both situations do not depend on me. Erik i know that. Working onacri im creating or helping to consolidate and have stronger institutions in argentina. Erik of course. President macri so i want an independent justice. You mentioned before if we show an independent and actionable justice, that would be good for argentina. The same time, you want to win the election, and if she divides your opponents, that helps. President macri what we are doing does not depend on what cristina does or what any politician does. I need to continue working and serving the people and prove that this is the way to the future. Believe argentina has a great if we find a role in a globalist scenario and keep creating clear rules, stable, reliable, that will create a future for our people, and with jobs, we will reduce poverty. Erik lets talk about that bigger picture. Theres a growing sense that democracy in let in america is fragile. Look at what is happening in paraguay, venezuela, even brazil. Is there a bigger role for you and argentina to play as a stabilizing role in this region . The world hasi always been waiting for argentina, and this is the time to show what we can do, what we are capable of creating, and a way to the future based on the values we have been discussing respecting the laws, the institutions, democracy, and real democracy, not what we have in venezuela. That is not a democracy. Erik what is it . A dictatorship . President macri it is a dictatorship that does not respect the rights of the people. Nicolas maduro is a dictator . What do you do about that . I know you care for venezuela. We had a great advance last weekend. We have a communication in which we are demanding for elections to release political prisoners, to respect the independence of , so istice and congress think that we are pushing in the right direction for the first. Ime in a very clear Way Organization of american states has issued a communication erik but these are just words. They are not actions yet. President macri what else can we do . Erik you could kick them out. President macri they are already suspended. Erik so that is enough . President macri it is never enough as long as venezuelans are suffering the consequences of this disaster. You will be traveling to washington to meet President Trump april to g7. You will see him at the white house . What is on the agenda . President macri discussing future relations of both countries. He believes what we have started with the Obama Administration is and we have to find mutual ways of benefiting our countries. K he is a protectionist. You are a free trader. Not sayt macri i would i am a free trader. We believe in globalization and that we can find ways of increasing relations a lot because we have very weak relations. Where does argentina fit in and America First Foreign Policy . We have to talk first. So you need to have a united front . President macri we are members, so we have to work together, and i expect we will find a way to improve and increase our togetherl relations with any other spaces of cooperation. For example, against drug trafficking. Ofinst the region, in favor peace. There are many ways in which we can cooperate. Ink there are many ways which you can compete as well. America wants some of the same export markets you want. President macri that happens always. We have to focus on which areas we can be complementary, and we compete over time. You againnt to thank for having us here in argentina to your president ial residence. It is a pleasure to see you again. President macri my pleasure. Perhaps you have time to go around the city or visit another part of argentina. So. i hope scarlet, the president of argentina, mauricio macri. You very much reporting from buenos aires. The market close is next. Open, coulde at the not hold onto the gains, and are now set to close the day with losses. From new york, this is bloomberg. Attention homeowners age sixtytwo and older. One reverse mortgage has a great way for you to live a better retirement. Its called a reverse mortgage. Call rfree information kityour with no obligation. It answers questions like. How a reverse mortgage works, how much you qualify for, the ways to receive your money and more. Plus, when you call now, youll get this magnifier with led light absolutely free when you call the experts at one reverse mortgage today youll learn the benefits of a governmentinsured reverse mortgage. It will eliminate your monthly mortgage payments and give you taxfree cash from the equity in your home. And heres the best part. You still own yohome. Call now take control of your retirement today scarlet we are moments away from the closing bell. Whatd you miss . Opening higher, then erasing gains after fed minutes. I am scarlet fu. I am joe weisenthal. Whatd you miss . We begin with market minutes. I was going to tell you it was the dows best day since march, but it isnt. Dow swung 247 points on an ,ntraday basis, peak to trough ending down 42 points. The fed minutes was the pivotal event. If you look at sector groups, three out of 11 finished higher, actually two, utilities up by up. Reits declines led by financials come off 5. 7 , the hawkish tone hitting the financials, talk comes down. 4 as well. Names,s of individual. Anera at a record high under armour a big gainer. Jeffrey saying now is the time to live this stock. High, itso at a record won the rights to broadcast 10 nfl games thursday night this season. I know joe is excited about that. Valeant pharmaceuticals declining for a fifth straight again a single digit stock after the austrian said it wasiew selling its Pharmaceuticals Distribution unit. Walgreens down 1. 6 . Look at the u. S. Government on market on the day we got the fed minutes, yields lower on the short end and long 2. 33, lower,yields then higher, then lower. Thesek about this range 10 year yields cant seem to break out of. If we look at a longer term inrt, you can see starting december how we oscillate 2. 6 range. Two we keep going back and forth in this narrow space. The dollar rising against the yen, but that faded and the dollar lost ground, 110 point 62, the dollar weaker and erasing gains after the release of the fed minutes. There was a french president ial debate, not much effect at all on the currency. The South African rand, again in the dollar versus the rand. It did take a breather yesterday, but extending resuming its decline and now weaker for seventh time in eight days. Look at the commodities front, oil and gold, a little selloff. Actually, gold flat and oil down the little but quite. Scarlet those are todays market minutes. Dive into theeep liv bloomberg. With President Trump and president xi jinping sizing each other up, let size up each countrys banks. In white, citigroup, j. P. Morgan, wells fargo, bank of america. The blue line is the four biggest chinese banks. Two years ago, you can see the blue line was above the white line, which means chinese banks were bigger than u. S. Lenders. Since the crossover, they moved in a similar pattern, the turning point was the u. S. Election as investors bet on the loosening of regulations and donald trump progrowth agenda. Chinese banks moving higher, but not like what they were before. At very interesting ahead the meeting. I want to take a quick look at gold. It is kind of like treasuries in this narrow range, the technical analysts find gold has tightening and has not broken in one direction or another. 200as recently touched its day moving average. There seems to be a theme of tight ranges and not much volatility, so gold, which had a nice come back is not doing much lately, but we will see which way it breaks. Scarlet stalling out there. Joe whatd you miss . From the march meeting show the fed favors plans to shrink the Balance Sheet later this year. The minutes indicate the general attitude on rate hikes in 2017, stating most participants anticipate the gradual increase in the federal funds rate would continue and judge it change the committees reinvestment policy and would be appropriate later this year. Lets bring in chief u. S. Economist for Bloomberg Matt boesler. Nd matt basel ar matt looking for unwind q4 or early next year, that minutes by that guidance as pushed into 2017, the fed is sticking to three rate hikes. Hawkish, maybe too much push from the fed. You see the reaction in equities and treasury yields. Scarlet you brought us a chart as always, the fed breakdown. 7518, talk us through which assets the fed would likely target first. Carl there is lots of uncertainty over what the Balance Sheet unwind would look like and whether they would mbs and securities differently. Policymakers want to move on both. They it looks to me like are looking at what i call and modulated unwind at the Balance Sheet, so they dont want to pull the record and say whatever matures or gets redeemed rolls off the Balance Sheet, because that makes for a choppy unwind of the Balance Sheet, meaning a choppy tightening of monetary policy. They want this to be smooth, passive, well telegraphed, and operating in the mack background. Joe you made a chart you called the deadly trade. We have the chart right up here. What does it tell you . Matt this is the amount of fed tightening priced for 2018. About a week ago when we had built dudley on bloomberg television, it starts to collapse, and the reason is because he said that when they start this process of unwinding the Balance Sheet, they might take a pause on rate hikes because they want to see how that is going. Come inter the minutes the amount of fed tightening priced for 2018 continues to collapse, probably because that Balance Sheet discussion reinforced the view that this is probably means fewer rate hikes in 2018 as a result, so thats what we are looking at here. As we focused on the shrinkage of the Balance Sheet and the first time we got any indication of how fed officials are thinking on this, i we going to get as much transparency as we did in that process . The good analog would be when they started to taper the actual purchases that they were , from december 2013 to september 2014. They taper the amount of purchases they were doing by 10 billion a month. This is similar to what carl was saying. They want this to be a predictable, gradual, and drawn out process probably not done at once because they want to manage it and make adjustments along the way if necessary. Scarlet does that mean it is preset . Matt i think they will provide even more guidance than they did at the start of Interest Rate increases because this is a scarier tool. Carl they can convey where the Interest Rates are going. Sheetaction to balance policy, policy makers arent sure what that would look like, so it is not as simple as throwing qe into reverse. They dont know what the implication will be. Id say they will provide more clarity. What i think based on the guidance in the minutes, i think it would make sense it looks like the policy discussion is advancing swiftly here. There are details to be hashed out, but they are forming a general framework. I think we will see this come together by the june fomc meeting, which gives chair her mid july semiannual testimony before congress and potentially an appearance at the jackson hole conference as well to lay out the details and clarify any market misperceptions. Thisi want to go back to question of whether the move to unwind the Balance Sheet could cause a delay in rate hikes, which is something deadly floated in your chart talks about. Was there anything in the minutes today that suggests others are on the same page and see the timing that way, or is this dudley on his own and he will have his work cut out for him to convince other members of the fomc that that is the appropriate path . When you read the minutes, there was no mention of this, so it would seem this discussion was not had at the march fomc meeting. Matt the Market Reaction is with theistent opposite, so it seems though it was missing from the minutes, this is being taken as affirmation of dudleys comments probably because he is the new york fed president and close to janet yellen, and so they tend to get their way on these things. York festivals the tone here. A lot of other regional president s and governors follow along with the inclination of the new york fed. Thank you very much. Coming up, wall streets bet, is retail the next big short . Bed, bath and beyond out in moments. This is bloomberg. For first word news. President trump conten condemnee chemical attack in syria. It costs a lot of lives for me. When you kill innocent children, innocent babies, babies, little babies with a chemical gas that is so lethal that people were shocked to hear what guess it many, manyrosses lines, beyond a redline, many lines. The u. S. Ambassador to the United Nations Nikki Haley Says the u. S. Has put the United Nations on notice on syria. When the United Nations consistently fails and its duty to act collectively, there are times in the life of states that we are compelled to take our own action. Victims, i hope the rest of the council is finally willing to do the same. Was Ambassador Haley speaking about that suspected chemical weapons attack and said that it bears the hallmarks of the Bashar Alassad government. On cyberracking down attacks, launching a new military unit dedicated to preventing attacks and responding if necessary. It will bring together Information Technology experts from other branches of the military and include new specialists. In a story first reported by bloomberg, President Trump has removed steve bannon from National Security council, reversing an earlier decision to give Stephen Bannon access to the highlevel meeting. That is according to a person familiar with the situation and the federal register. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Joe staying on the story, President Trump removing Stephen Bannon from the National Security council. Here now with the latest is our White House Reporter from washington. What is the official story here from the white house, and what is the real story . Potentially tog bring different stories. The white house is saying this is a natural progression, that steve bannon was put on this Principals Committee of the National Security council to ,onitor general Michael Flynn who was fired by trump about 25 days into his term. Now that he is gone and trump has appointed a new National Security advisor, the White Stephen saying that bannon is no longer needed to play that role. That does raise questions about why trump would appoint someone as his National Security adviser if he needed to have someone watching over his shoulder, but that is the line we are getting from the white house, not a big change, just a natural progression. In terms of what Stephen Bannon has access to, does he still have the security grants of someone who sits on the council . He does still have security clearance and can attend some of these meetings as he pleases. He is just not a permanent member and some expected to be a part of these meetings, but he does have that security access and does have access to high levels of classified information , and if he pleases, he can be at the president s aside as he is taking on these important decisions with his National Security council, so he does have access in the white house is not a it demotion and a sign that Stephen Bannon is losing influence, just a minor change according to the white house. Has lets talk about who influence and who is in the inner circle right now. There is always this discussion kushnerether the jared and ivanka trump wing are influential. Earseems to have trumped these days . It does seem trump likes to have a number of different voices, sometimes competing voices, in his inner circle. If you are looking at the decisions about expanding the portfolio of Jared Kushner, everything from the middle east Peace Process to spending time in iraq dealing with the counterterrorism fight there. You will also be spending time this weekend with donald trump as he meets with president xi jinping, so his profile is rising and his portfolio is expanding, so we are expecting Jared Kushner to play an even more Important Role in the white house to come. The latest on steve bannon, thank you very much. Scarlet some breaking news, Bed Bath Beyond reporting fourthquarter results, eps better than expected, but comparable sales missed consensus estimates, up. 4 versus expected. 5 . The stock price rising, boosting its Quarterly Dividend to . 15 per share. Plunged inbeyond had intraday trading before bouncing off its lows in the last minute. If you look at the average volume at the time for the stock during the intraday trading, there is a big spike in for him in the final half hour of trading, so perhaps someone new something about the results before they came out. It is not clear, but generally once you have this pattern set you dont see that much deviation from it. The white line is what is expected and the blue line is what happened. Joe that was an 80 stock in 2014. Scarlet we want to stay on the topic, declining foot traffic one big concern for the company, along with retailer struggling with negative sentiment, including the president s proposed order tax. Lets bring in our bloomberg gadfly, last. Gadfly columnist. Who wants to buy these retailers decide private equity that can take them out of the public eye, change things around, perhaps at debt and rely on that cash flow. Interesting. Een we have seen a number of retail deals. There has been a lot of activity, but not private equity. U. S. People if you could see a strategic acquire for these retailers, and they would say the huge integration issue would never work, and now they are looking at these deals realizing they have too much store space and probably expanded and there are too many retailers out there and it is time to think about consolidation. Joe panera bread being purchased by a private equity company. Well, done phenomenally and not all restaurants have. What is it about their profile that made them the market love the stock, but made it an attractive acquisition for investors. , think its going on 17 years straight up, so they have found the magic formula where they are not just banking on expanding stores, and a lot of that has been their digital investments, making this a priority having one of the higher penetration rates, and that is attractive to jab. They also have a lot of restaurants ready. They bought krispy kreme, einstein brothers bagels, so there are synergy potentials and taking paneras digital expertise and stretching that out across other properties. Has come upng that as the fact investors are betting against retailers. I see that is the next big short because these trends have persisted for so long, foot traffic declining come a but some analysts are pushing back against that. What are hearing when you talk to people in the market . I understand the impetus, but if youre betting against retailers, you are probably doing well now. If you look at how badly hit some companies have been, it seems like retailers cant catch a break. The other that has been on mall operators and whether you was among malltcies operators because of retailer shutting down and pulling out. Betting on the retailers to struggle is a better bet because the mall operators have been crafty about finding people to fill the space, broadening restaurants and Grocery Stores to fill that tenant space, so maybe that is what is shifting the conversation to say may be retailers are the ones we should focus on. Joe brooke sutherland, gadfly columnist from new york. This is bloomberg. Scarlet i am scarlet fu. Whatd you miss . South africa may be in a political crisis, but investors hungry for its debt. This is a measure of demand, and the big spike at the end of highest assents the far back as our data goes. There was an auction today. There it is. Coverird highest bid to ratio even after s p downgraded south africa to junk status, but moodys and fitch have south africa at investment grade. Joe speaking of politics, i want to talk about the french election, which we talk about all the time. 11 candidatesally in the race, including the debate last night. This guy is a far leftwing wing candidate. His poll numbers are rising and people say he won the debate. He is 4 in the polls, but it was 1 two days ago, far left wing, backed by the communist party of france, so a fourth name you should be watching and that french election. Joe a dark force. Marine le pen this worried now. Coming up, is wall street losing faith in Donald Trumps doddfrank efforts. More on the future of the sec next. This is bloomberg. Mark parents and children crossing the border illegally according together, to the department of Homeland Security and a partial reversal of its earlier stance. Secretary kelly said families would not be separated unless the situation at the time requires it. Or drug a sick mother addiction as a potential scenario. The agency had previously considered separation as a deterrent. For merkley held the floor 15 hours to highlight his partys opposition to supreme ,ourt nominee neil gorsuch accusing judge gorsuch of siding with corporations over people, but the Senate Majority leader Mitch Mcconnell says he has the votes to change senate rules and blocked the democratic filibuster. As showdown could come tomorrow. In russia, six people arrested on suspicion of recruiting terrorists. There is no word if the arrests are linked to the subway bombing in st. Petersburg that killed 14 people, but those arrested come from Central Asian countries once part of the soviet union. The suicide bomber responsible for mondays attack was from the Central Asian nation of care to stand. John glenn will be laid to rest tomorrow at Arlington National cemetery. His family and invited guests will pay respects at a private service followed by a marine corps flyover and taps. The First American to orbit the earth died in december and 95. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Scarlet some breaking news, yum earnings, epsg . 44, beating consensus estimate . 38. Gaining,e sales firstquarter revenue higher than the consensus estimate come up 13 in afterhours trade. Whatd you miss . President trumps push to reform doddfrank held up by his inability to fill seats. Democrat at each regulator has the unusual power to block policy moves they disagree with. Want to bring in benjamin thank you for joining us. There has been a lot made about the fact that there are Unfilled Positions and washington, d. C. Because this white house has been slow nominating people to fill them. What is the story . How much of an impediment is this when it comes to deregulation . They will have to get our ground to doing them because if trump and his colleagues want to make good on the pledge to do a big number on the doddfrank law that came after the financial crisis or give it a major haircut, they will need the help from these independent agencies. These are the main regulators for wall street, equities and swaps markets. Republicans who were optimistic they might get some legislative law andugh, rewrite the congress and get it passed, we. Re seeing a logjam if you will they spent a lot of time on health care, so now the financial regular stuff gets pushed further down the road, and the Trump Administration itself, a top official last month said a lot of this work could be done it regulatory agencies. What we are seeing though is you have a democrat on each of those panels because they are down three commissioners and they can basically block anything they dont like. Have we seen the white house do so far . Order was necessary to begin that review to start with, right . For thee still waiting results of that view, an industry is as well, as is everyone in the political world in washington to see what comes out of that, but there has been some big pronouncements from the administration, but in terms of what we have seen, we have not seen it happen yet at the agency level because we have been waiting to see who will be in charge of those agencies, so trump has nominated someone to , 540 4 trillion swaps market, and the sec, but neither candidate has made it through their Senate Confirmation process, so we are in this position everyone is waiting to see how the balance of power will shape up, but for now, it is slow in terms of rollback. Will be watching to see when those nominations finally happened. Thank you very much. Scarlet whatd you miss . One of the most anticipated visits begins tomorrow when chinese president she asian paying visits maralago in florida. The leaders are expected to discuss trade and north korea. With the latest is bloombergs leader for National Security from washington. We can expect a lot of stylistic differences because you have unscripted, unpredictable donald trump. You have a much more formal chinese leader. Does thatof contrast contrast will result in some interesting outcomes in a but we dont know if they will hold a news conference, do we . A right, we do not have detailed agenda about what these two leaders will discuss. We know from trumps comments, trade, north koreas Weapons Program will be high on the agenda. At this point, we might have an hour by hour breakdown. We dont have anything like that right now. The chinese are known for the focus on protocol and perceived slights, and this is an administration not known for sticking with protocol, so it will be an adjusting couple of days at maralago. Joe we also dont know what they will do or how they will connect. Donald trump likes to golf. Xi jinping does not golf. What is the story there . What would they do when they hang out . Maybe go fishing . They could go to the beach together, walk the golf course grounds. Xi jinping is not a golfer, and golf at aying to billionaires resort might not look that great given the corruption drive in china last few years. Joe what is donald trump looking for to claim victory in the summit . Well, he has criticized china very hard, not just for what he thinks is there an action bringing in north korea, but for their trade deficit. So for him a victory would be getting any kind of commitment to investment in the United States, to buying products from a u. S. Manufacturer. Those of the kinds of things he would look for. A lot of people would be happy if these two leaders just get off to a good start in a relationship that really has the biggest impact of any on the global economy. Scarlet we will be checking in with you in the days ahead. Coming up, more about the meeting from the perspective of the Korean Peninsula as south korea gears up for a president ial election in the spring. Plus, the exclusive interview with the jack lew since he left the post of treasury secretary. 1 00 p. M. Ursday at eastern, six clark amlin in time. This is bloomberg. Scarlet whatd you miss . Know the another missile test. The Korean Peninsula finds itself in a historic position. South korea is poised to elect their first liberal president in decades who wants to improve ties with the north. Joining us now is our guest. Set the scene for us. The leading contender for the election was once the main opponent of president park. Is he likely to win because he is her opponent or his specific policy, such as appeasing the north. He is likely to win at this aint because he represents progressive after to bring conservative president s. Toworked for the precursor president park, so his agenda is moving towards china and north korea, and we will see because it will have implications for the United States, and if there korea, it in north will have an effect. Joe how big of an issue is korean security. It is one issue among many. However, with the north Korean Missile tests and nuclear tests, it has risen more on the south korean agenda. Had you read that north Korean Missile test . To redirect attention as xi jinping and donald trump meat. You are right. It does do that and reminds them we are here and a threat, and this happened when shinzo abe visited. So it is in that light, and this is the second display of the new Missile Technology that came in 2015. It will force china and the United States and their differences to the table. Joe one thing that got a lot of peoples attention was the statement, or maybe we should sate nonstatement, they said we are done talking about north korean rocket launches. They are done in many ways with the policy of strategic patience. They want to move away from that come in exhibit patience, but also strength. It appears that with the latest review of policy that they are moving towards a harder line. ,hether that is sanctions they have also said the military is on the table. Scarlet he has a record of appeasing north korea. What does reengagement with the regime look like . With that a line with what the u. S. Is pursuing . Might not online. However, the reality is that they were only be able to do so much because the North Koreans are testing. That is a threat and would not be popular to reengage. China has been hitting south korea very hard with economic measures, so while there may be a reengagement towards china and a management of the relationship in a positive way, by no means will that be easy or popular. Joe what kind of economic measures has china been pursuing against south korea . They have cut heavily against the Tourism Industry and cut against aviation. They have discouraged investment whichinesses like lotte, leased the land for the deployment of the antimissile system. Scarlet you can see the favorability rating has gone down in recent months as well as that chargers showed. To theto go back election and north koreas efforts to be disruptive. Will north korea look to interfere in the way russia has been alleged to interfere in the u. S. Election . Probably not, but who is to say because the cyber threat is real. We saw that was sony, attacks on south korean banks and businesses, and certainly there are measures being taken, but expect them to fire more missiles. What they probably dont want to do in their own interest is becauseo much confusion it would support a conservative agenda and the North Koreans would like to see a progressive administration. Joe we have this meeting coming up. When it comes to north korea, where is the biggest gap, and what prospects are there to narrow it and get on the same page . Longterm strategically, it is an enormous gap. Maynearterm almond there be common ground, and the chinese privately expressed concerns. We will see, but it will be one of the big takeaways. Joe senior director at the korea society, thank you very much. Up next, our emerging markets a safer bet and developed countries question we will hear from ceo of Goldman Sachs Asset Management international. This is bloomberg. Joe whatd you miss . Global market sending mixed messages, equities higher, yet the gold and yen have performed strongly. How confident are investors . Earlier we spoke with the ceo of Goldman Sachs Asset Management international. Global markets and investors are looking at the underpinnings and feeling good. Notwithstanding geopolitical influences, kleins are voting with their feet and middle east, europe, and asia. Clients have said i am very confident in Global Growth and feel better than i ever have about the u. S. Recovery, the burgeoning returns in europe, and definitely about yen. They look at what is going on in theh korea and say i hope politicians can square it away. I hope they dont mess it up. How can president xi jinping and President Trump not mess it up over the next 48 hours . It is not helpful if we come out of the meeting with declared its and two statements of animosity from both. If we come out of the meeting feeling like they have a dialogue, people will feel good. One of the reasons people are going into this meeting with confidence is people are still hanging on president xi jinpings constructive statement at davos. It feels like emerging markets are more stable than developed markets. Are you hearing that from investors . Of investors say in emerging markets feel more stable than developed markets. They are looking for the pickup and yields. Its not about how much china trades with the u. S. India isabout what doing anywhere else. Peoplealso why you see investing in the msci etf, but then redeploying that money once they are comfortable into more active strategies. They are very backward looking, financials, telecoms, steelmakers. In emerging markets, the growth is in internet and banking come things with forwardlooking growth. Does it move to specific regions, specific companies, sectors . We see clients looking at sontry specific allocations, if they are in broad emergingmarket allocations such as msci, they are looking at countries where they are cautiously optimistic. I have seen more clients saying they are on a trip to latin america and the next month or two over the last two weeks that i have heard in two years. Scarlet why . I think the situation and brazil seems to have stabilized. They feel better about countries like chile. You see there is some good returns to be had, stable government, stable cash flows, and better yields. Scarlet we have seen huge flows into u. S. Equities work at of rotation can we expect . Over all, people are underweight equities after any years tilted towards fixed income. You can see people shifting u. S. Positions into broadbased it is about but a broadbased reallocation equities over all. Versusst is passive is everywhere. Byis about where is quality having an active story. Scarlet correlation versus noncorrelation. It is also about new tools that people did not have before. Quantitative investing with quantitative overlays is a big story. New insightes you into these companies, so we see quantitative investing as a hot topic. Scarlet do you need that money to come out of u. S. Equities or fixed income . Those bond bears have not been able to get that return. I think it depends on where the investors sit. If you look at u. S. Investors, have been retail, we talking about how underweight investors are to the rest of the u. S. World. When u. S. Retail investors put money into equities, it is u. S. Equities, which is understandable. If you look at those who have had good exposure, they have outperformed their peers. When you shift to the international side, europe, middle east, africa. In theirmore balanced allocation, have some powder dry come and see the moving cash and allocations that may have been too underperforming markets towards e. M. Joe that was the ceo of Goldman Sachs international Asset Management. Scarlet it is time for the Bloomberg Business flash. The biggest gain in 16 months after the saks 5th avenue owner said it may take real estate assets public, unlocking value for the canadian retailer as samestore sales to climb for hudsons bay. Deutsche bank will receive the 8. 5most all billion of stock on offer for investors according to people from a with the matter. They say investors pledged to buy 95 of the stock on sale and the offer, which ins tomorrow. Havef existing investors decided to participate in the capital increase, with some opting to boost exposure and new investors buying the respite yum china gaining after beating revenue and earnings estimates and comparable sales in the first quarter. We saw an unexpected gain at when analysts were looking for little change. At kfc, again of 1 when analysts were looking for a drop of 2. 4 . That is your Bloomberg Business flash update. You need toup, what know to cure for tomorrows trading day. This is bloomberg. Scarlet whatd you miss . U. S. Stocks erasing gains after the fed minutes reveal a hawkish tone. In terms of what is coming up, the caixin pmi coming out and 9 00 p. M. Joe President Trump hosting president xi jinping at maralago. Stay tuned to bloomberg for nonstop, special coverage. Scarlet except that xi jinping does not golf. The masters Golf Tournament begins in agosta georgia tomorrow. Joe you dont want to miss this, an exclusive interview with jack lew, his first since he left that post, talking to bloombergs david gura. Catch that thursday, 1 00 p. M. Eastern, 6 00 p. M. London time. Scarlet that does it for whatd you miss . Thank you for watching. Joe this is bloomberg. Im alisa parenti, and you are watching bloomberg technology. U. S. Ambassador to the u. N. Nikki haley says if the world body wont act on syria, the u. S. Will. She spoke today. Her comments came as the investigation into the attack continues and World Leaders grapple for a response. President trump today condemned the chemical weapons attack calling it, quote an affront to humanity. President trump i will tell you that its already happened, that my attitude toward syria and assad has changed very much. If you look back over the last few weeks, there were other attacks using gas. Alisa President Trump has removed chief strategist steve bannon from the National Security council, according to the federal register. Bannons elevation to the council drew criticism from congress and washingtons Foreign Policy establishment. Astronaut and former u. S. Senator john glenn will be laid to rest tomorrow at Arlington National cemetery