Transcripts For BLOOMBERG Bloomberg Surveillance 20170501

Fed. You will be in washington for the fed. Big day, though not much is expected to happen. Negotiators still have to vote on a deal. Trump gets none of his priorities. It will be interesting to see if he would veto it. An ordinary president , you would say no. Mike pence said yesterday they might not pass obamacare, the repeal, until the end of 2017. Francine we will have marty sheckler with us. By now, lets get our first word news. Reporter more on the spending bill in washington. House and Senate Negotiations have reached a budget deal that rejects most of President Trumps ideas. Republican leaders bowed to democratic commenced to limit hundreds of policy restrictions. The measure does not include money to Start Building a wall along the border with mexico. The u. S. Is considering a range of options regarding north koreas military operations. Over the weekend, kim jong uns regime tested another ballistic missile. That was in open defiance of the International Community and lucky to already. But the u. S. And the allies are considering expanded sanctions. In the u. K. , Prime Minister theresa may is not backing away from her position on brexit talks, insisting that britain should be able to line up a free trade deal with the European Union as it negotiates its exit. Over the weekend, leader suggested that the upcoming talks were realistic. Hope francis has called a negotiated frances for the crisis in venezuela. Progress francis has called for a negotiation in the crisis in venezuela. Is National Assembly controlled by nicholas mikula. Global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries around the world. This is bloomberg. Francine thank you. Equities, bonds, lets get right to it. Theres up 3 , turning of euro, and a flattening of the yield curve. Oil cannot find a bid. Next screen, please. We will go right through this. The dow, just below 21,000. The eurocanada, still weaker. I cannot find any markets to talk about today. Asia, japan stocks rose, weakening on the u. S. Budget deal, emerging market shares were higher as the dollar is gaining a little bit. British markets are a little bit low. 3, down 3 . Y is this a sign of the economy slowing down, or is it just the trump reflation trade losing some air . Tom last week i looked quickly at the copper charge. Up the bloomberg right now. His is Michael Mckee he survived the white house Correspondents Dinner. It was a very different dinner. Here is the inflation. The and,re pce, 2008, the crisis. This is topline pce with the oil distortion. Goods are down here, mike. Service sector, up here. Why do we all feel this, but we do not feel this where chair yellen is, and we dont feel the advantage of inflation down here. Michael at this point, people tend to overstate inflation. It is a psychological target for the fed as well as an actual target. Inflation at citations have been going down. Tom very good. What do you have for us . Michael this one really took me by surprise. If i did not put a name on this chart, which they told me i had to do, you would not know the white line is greece. The bottom line is the msci. It is outperforming compared to world stocks. When would you think we would ever see that . The optimism and the markets above the idea of getting a deal. Tom it is the ultimate winner chart to see greece better than good in the equity markets. It is made day and we tried to look back at somebody with anglosaxon pagan history. Dealo, may day is a big worldwide. It started in 1890 with different. Expense, expense, expense, control and, labor does not have a chance foward . Now, the wage gains are starting to come through. We end up with labor doing better. And we do have the possibility that the economy will get better globally and there will be more jobs. But people who were in jobs right now are Getting Better deals. Tom they all matter. It is in porton, but i think the fed meeting it is important, but i think the fed meeting is not all that important. Michael that is an interesting question. The fed has a press conference every other meeting. Themarkets skipping o nonpress covers meetings. Is that good for you . Yes, there is a lot of babel speakers. Of the fed overall, it has been negative for the last couple years, this transparency by the fed. Michael what the markets seem to be looking for is clarity on the idea of shrinking the ballot sheet. I have had people tell me the day they make that announcement about how they will do it, is a trade people will to be moving on that. Is that the case, or will it be a small and of change in the Balance Sheet at the beginning that you do not have to move . The way you just described it, that would be Janet Yellens nondisruptive to the market. I think she can probably accomplish that. Back to your earlier point, i think the markets held its breath on everywhere the fed speakers say, to give some kind of indication where they might take rates. It turned out to be a lot of nothingness and confusingness. At the end of the process , it was a ba it was a bad idea. Tom i want to go to the Michael Holland view on equities. Is psychologically a singledigit equity they are not really a great world. 15 the last 12 months. Can we sustain this double digit surprise wherever because the Corporate Management actions . Forever, sure. [laughter] the answer is no. 15 is not tenable. Tom what about 9 or 10 or 11 . The upside, the sober professionals would tell you 5 to 8 would be a good range. Michael we have heard a lot about whether stocks are overvalued, and the one phrase they keep coming up is, well they are high, but nothing like they wear when we had the last couple of collapses. How far are we from a correction as far as you are concerned . To the latter, i dont know how far. Nobody knows. I learned that nobody can predict when the next correction will be. On the other hand, the premise you described is true. We are nowhere near where we were during the dotcom time, when we had a huge correction. We had 51 of the marketplace now, only 51 . We dont have people saying this could go down 15 . People would laugh if we got something approaching that. It might happen. Because we have more growth in the world. 12 earnings gains in his quarter, just finishing up. This is the first time in five years. So, the direction is going the vector is going the right direction. Tom we have seen ceos building of the margins down the income statement. Lets come back to Michael Holland and we will do apple in a bit. We will get your monday started strong. Later today, this afternoon from the Milken Institute global conference in los angeles, a timely discussion at the 2 00 hour here on Bloomberg Television. With Michael Mckee, im tom keene. Stay with us. This is bloomberg. This is bloomberg surveillance. 24 century fox and blackstone are teaming up to make an offer to tribune media. Blackstone would fund the all cash bid and fox would contribute the tv stations to be joint venture. Japan, shares of sony jumped to the highest and 22 months. A bullish Earnings Report led to analyst productions that sony could have record earnings this year. And the last couple years, the company has put more emphasis on gaming and finance. The stock has doubled since 2013. Casinos are on a hot streak, with revenue increasing in april for the ninth month in a row. The Gaming Industries are recovering from a two year slump that kept high stake players away. Now they are trying to attract families and casual gamblers. That is the Bloomberg Business flash. It is time for our morning mustread. It is may day and people are taking off all over europe, except for macron and le pen. As the election continues and friends, we look at the question as to whether there is a case for le pen. Times is theork overarching critique of the euro is correct. The french will presumably vote against her, nonetheless, and choose macron, with the partysity that the repor standard might be right. Tom it will come back to charlotte here. This is the reaction from the white house. This is what happens. To talkingtening about france and i am reading the wrong one. This is Charlotte Mcdonald gibson. Raisedgest winners who liberal proeuropean values with the same passion and emotion of the populace. Meanwhile, the mainstream parties that have responded by shifting their own rhetoric to the right have fared less well. So, it is still possible for the populist to win. It is still possible. Continue,e populism continue, continue and guys like you just ignore it. You ignore it at your peril, tom. That populismubt is with us and it is not going to go away until we get much better Economic Growth. You yeah, but, mike do jump in here. We are going to get back to a. 3 . Europe is actually doing pretty well. Do you buy this idea of the volatility of gdp, and we jump back to a better number . Probably not and if you listen to the corporate leaders, the answer is no, but that is the direction we are going. But not without volatility. Tom do you like this line of gdp number, with all of your experience . Closer to the in final number than the other predictors out there. Remember, these numbers are as of the day. Snapshot,ike polls, a as opposed to taking everything into account because the Commerce Department does estimate things. In france, a trade at this point, or is there so much belief that macron is going to win, and even if it is not the political parties, as Charlotte Mcdonald gibson talks about, it is still the center that holds. I think in those elections, you want to step back. You could have a surprise in either direction. Much more from macron i think it is not a trade. I think it is a gamble. It is a crapshoot, in terms of the surprise element there. Smart betting the will become a we will not get is a prize and marcron will take in that is what the markets are saying as well. Tom david has a lot of enthusiasm for global stocks. Is this an opportunity to buy . Ig in europe question rick they are still attractive. If you look at the numbers from the s p, 51 coming from the u. S. , those earnings grew 19 . Things are better in europe. They have been better yearoveryear and that is imported because lester was not very good. The valuations in europe are still attractive. Tom we will continue with Michael Holland, and look at the French Election here on this may day. Coming up on Bloomberg Television radio, this is wednesday. The conversation with the former Federal Reserve assistant chairman, denve ben. Inhael mckee and myself, washington. This is bloomberg. Tom it is the perfect image for the discussion on the use of cash. In your city, that is what you do out there, is surely if you have especially if you have children out there. Good morning, everyone. In new york and also in new york, Michael Mckee with me. With us, Michael Holland at this early hour. I want to talk about easy cash. We do a lot of joking here, but bring up the chart, if you would. This is apple. You need courage back here, in 2003, back in the middle of the chart. Michael holland has had the courage and it comes in use with use of cash. What do we mean when we say use of cash . Companies like apple, and there are too many, despite the fact it does not have a premium valuation, are gushers of cash. How they use it is how they survive and prosper. In the case of apple, they are actually fairly frugal with the cash. Moree is a little profitable with the catch. Apple invests in things like the new iphone that is coming up. Every time they get a new launch, and they have done their work, they use it smartly. Tom megan of the London School of economics has a lifetime study of the word profitability. Are we profitable now, versus 10 years ago, 30 years ago . I believe we are more profitable. Those are numbers. It is backed up by facts. Yeah, we have people who do dumb things, but overall, it is as good as it has been. You mentioned google and apple. Google has a lot of cash and they buy all these Different Companies and are involved in all these different from self driving cars, etc. Apple has all this cash and they spend it on their current products. They tried to develop things, but they are in a vertical silo. Which corporate model is better for investor . Michael, i would say i own because i own both there is no single way to havess and both of them been successful, continue to be successful. I like apples way better, but i think google i like the fact that google will say, we made a mistake, we will not do it anymore, or whatever. I like both of them, but i like apple better. Michael why do you like apple better because one year ago, the idea and the market was, apple is dead. They cannot get enough incremental improvement that people will go out and rush out and buy one million iphones a year again. Why do you like apple if they have this cap on what they can do . Because they dont have the cap. They are a multiphoenix. They have been declared dead many times over and they keep doing great things and sometimes it takes years before they did them. Tom lets look at the antiapple right now. Jason, get your camera over. This is really hard to read. It is impossible. Here is 10 billion in revenue and Michael Holland, there is no profitability. There is no profitability at the ebit line. There is a loss at the net income line. Maybe there are some hopes and dreams out here as well. How do you avoid the nonprofitable companies . What is the skill set to do t hat . Is not particularly skillful. You just look at it, and i dont want to own the company. As an owner of a private business, the answer is no, i dont want to on this. Michael holland is staying with us here, the coming up later today, live from the Milken Institute conference, a conversation with steve mnuchin, the treasury secretary. Will companies be able to keep more cash . We will ask him. This is bloomberg. Economics, finance, investment, politics, international relations, a little bit of hockey. Michael mckee with me this morning and for francine lacqua. May day around much of the world. We are working, working america. Michael holland with us. Right now on your monday, first world news briefing. Emma Republican Congressional leaders who want to focus on healthcare and tax overhauls have given into democrats on a spending bill. House and Senate Negotiations have agreed on a 1. 1 trillion budget magic measure. It rejects most of President Trumps priorities, including money to Start Building a wall along the border with mexico. In asia, the u. S. Will pay for a new generation missiledefense system deploying and south korea. President trump and said he wanted the South Koreans to pay for the defense system. National security adviser h. R. Mcmaster told south korea the president s remarks were made in a general context. In china, the official measure of factory activity has fallen from an almost fiveyear high. The Service Industry index fell to a sixmonth low signaling chinese growth is likely to slow down in the second quarter. The economy unexpectedly rose with an and all rate of 6. 9 in the first three months. In france, the two president ial candidates have kicked off the final week of the campaign. Polls show independent macron is a doubledigit lead over arena le pen. Marine le pen. Haveays the french should two currencies, one for daily use and another for international trade. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Thank you. Over the weekend, significant out for in the sunday over the conversation the president of the United States had with the leader of the philippines. He is usually controversial. The uproar about whether mr. Deterred they should visit the white house. I heard one pundit say simply if he wasnt the leader of the philippines, this guy could not get a visa into america. Im not saying that is right or wrong, but that is the level of heat. We have a headline that mr. , torte said to mr. Trump withhold his firepower against north korea. We need perspective. We get that now from manila and bloomberg tv, one of our partners in the philippines. Robbie, wonderful to have you with us. That mr. He likelihood will visit america. Invitation came as sort of a surprise. I think people in the administration were expecting a pro forma poll after the summit. This certainly was welcome news for them. They do not need to say too much. They know how people will read into this. This change of the headlines for the president , president duterte that is, in the days prior to this human rights record and reputation was front and center once again. First, when the university considered giving him an Honorary Degree in law. Huge outcry that forced duterte to decline the invitation. Afterwards, just last week, a complaint filed before the International Criminal court accusing president duterte of crimes against humanity, particularly of his war on drugs. This invitation from President Trump changes the headlines for him. Tom roby, the constant theme is the outrage of the western media and western officials. The brutal fact is, every signal filipino i speak with strongly supports mr. Dutertes action to diminish crime in the philippines. Does that support has that support waiver at all . Still at bottom a very, very popular president. We had a couple of the two most credible surveys come out just a couple of weeks ago. His Approval Rating is still at the mid to high 70 . So there is still very, very high support for him. And despite that, both surveys also show that 80 to 90 of the people are afraid that they or their relatives might fall victim to this. It is sort of schizophrenic. But the fact is, people do have a support for his objectives will stop if there is any concern, it is with a corrupt and Abusive Police force that people feel the president is not disciplining. And worse, maybe abetting. He isl we know that popular in the philippines, but how will duterte go over in the United States . Was inesident obama office, the relationship between the two leaders did not seem very good, to put it mildly. There was not even any chance for any kind of relationship. Immediately after this was heading into the elections last year in the United States, and president duterte had very choice words for president obama on the eve on what would have been there first and only bilateral meeting. But that certainly got off on the wrong foot as far as the philippines and the u. S. Was concerned. But immediately upon the election of president donald wasp, the relationship totally upended. He called donald trump a very smart man, very prudent in his moves. Betweenest conversation him and President Trump certainly is more signal that this is something this is in a administration that he is willing to work with. Michael what can donald trump do for the philippines . What will president duterte one out of this meeting want out of this meeting . The discussion about north korea on the one hand offers a convenient platform for president duterte. He had been playing the United States against china, obviously, when it comes to trade and security. But now that he is trying to warm up to washington, the discussion about north korea gives him the platform where he can simultaneously address beijing as well as washington on a constructive point. What can he get out of the Trump Administration . Certainly, just as he was wanting what he wishes is for the United States, as he says, to respect the sovereignty of the philippines. Inically, not get involved his more controversial policies. Tom let me bring up a picture of the philippines currency, which really shows the philippine miracle that was seen through 2013. That green line going down is a strong, strong, strong philippine peso. There has been a reversal. Can mr. Duterte have it both ways . Can he of the government he desires and at the same time, can he get back to a strong philippine peso . Peso has sortine of been it has been up and down and hard to predict. On the one hand, on some days, the media would say and observers would say this is the worstperforming currency in asia. The next week, it is the bestperforming currency. External factors. A lot of things happening in the United States. It is for us economic direction is concerned, if you look at the surveys, one thing that is very there is a slight erosion in his Popular Support in the lower segment of the income brackets will stop at the same time, there is an uptick in the abc crowd, the upper to middle income class, investors and entrepreneurs. A lot of that is contributed to the fact the businessman in her together seem to be getting consortium both how this Government Works comfortable with how this Government Works. The economic managers are pretty much given their own platforms to address the business humidity. The budget secretary, finance secretary, and economic planning secretary, for example, have practically taken over the in thepress conference palace. That is a forum now that is practically dedicated to just trying to sparse out and give a coherent message on the direction of this administration economically. And they hammer home two points. Infrastructure building and a program to fund everything. Tom thank you for their briefing, roby. Up this afternoon, we go to chicago. Kim griffith no, we will go to chicago. At the Milken Institute, ken griffith in l. A. That is at the 2 00 hour. Stay with us. This is bloomberg. 100 days on, we begin 101 i think what hundred two days here for the festivities of 100 days, including white house Correspondents Dinner and in attendance in harrisburg, pennsylvania, by the president. We stagger into this week. Always good to stagger in with already shanker, single joins us for quick thoughts this morning. Is this a president with momentum . Yes. The question is, what direction is that momentum . This budget deal over the weekend is quite significant. To me, it will be fascinating to see how donald trump reacts to that publicly today. Michael some fascinating stuff from both members of the administration. The president and Vice President over the weekend. Face trump told cbs on the nation the Health Care Plan is moving forward and it is going to cover preexisting conditions, which does not seem to be the understanding that the Freedom Caucus had. Then mike pence says, we might get a by the end of the year. If you wait until the in of the year to do obamacare repeal, you cant do tax reform. Thats right. Everyone agrees well, within the Trump Administration, that you have to do repeal and replace before you can tackle tax reform. That said, we have a budget to the basically it towards all of the Donald Trumps initiatives with the idea that they want to go ahead and do tax reform and repeal. There are many voices. This is the kind of situation we have gotten used to here in bc, where various ministration officials contradict each other. Congress goes on its own way. It should be a very interesting morning today. To 1986,you go back the tax deal put together by president reagan and the folks on the hill took a year. It loved and lived, died, backandforth. Is there any sign at tax reform is alive . Are there meetings among the principals . What should we be looking for . Know, there are no signs theres anybody putting a pen to paper on going on the computer and coming up with legislative language. There are no hearings scheduled. All tax bills have to originate from the house. Paul ryan has said nothing about it. I think everything is on hold until this president and his administration decides what are their legislative priorities. Tom the New York Post there is a twopage spread of the wonderful book shattered on all of the gossip around clinton. We dont ask this enough, how are the democrats doing in regrouping . I do not think theyre doing very well at all. My personal opinion, obviously. They especially with the Supreme Court nominee gorsuch. I think obstructions in the rules change a generated is not the approach they need to take. They need a positive message. Fromt see one emanating the democratic party. So, no, and my view they are not gotten their act together. They had better do that if they want to defeat this president four years from now. Tom thank you, marty. We continue with Michael Holland. I manila, on washington. How about on retirement plans . What is the enthusiasm for bonds right now given the great distortion we are living . The enthusiasm is zero, but people who have to invest in ok atontinue to say it is 2 to 3 range. But i think the smart money now, people who have to be there, i think theyre looking at highgrade corporates. Treasuries offer nothing will stop junk has been stratospheric in terms of its performance. Tom all of this stocks and bonds linked into the politics. You have the bill bradley morning mustread. Went to bring that up . Michael weekend. He wasadley talked involved in creating the 1986 tax bill. He talked about what you need to get it done. He said that bills success Michael Holland, if that is the case, why is everybody trading stocks higher on the idea of a tax reform package that people in washington are saying may not happen . I think the markets are not doing that. I think the markets presume what you heard marty talked about and bill bradley talked about, there is little chance of any of this occurring. Therefore, if any of this did occur, for all of the reasons you talk about, people are saying it cant happen, the market still believe it can happen. If it did happen, simply a corporate reduction, and some people who know more about it than i do say, even that is a possibility. If you get anything, it would be a positive surprise. Help your people in the markets dont think anything tom the bond market. Stocks, bonds, politics. Of it is a jumbled. How do investors ignore the noise and just focus i want to make 9 , 10 , 15 year . Thehe markets, including computers with the algorithms, but also the portfolio managers, theyre looking at Global Growth which is occurring for the first time in five years and the second thing is continued could yes and inflation. That is good for the bond market. You lookicians at the real world, which is corporate profitability and inflation. Both of those are left looking pretty good right now. That is why the markets are going up. If you had anything with the tailwind from washington, things would be doing even better. Tom Michael Holland with this, more on equity markets. Tv , if you have a terminal, is the greatest thing since sliced bread. You bring it up and you have Michael Holland in realtime. Wilbur ross this afternoon. On the rights, i can click on whatever was in the past and bring up that block. This is on manila. I can look at the chart of the philippines peso. Even better, i can steal it from bloomberg surveillance and bring it over to my desk. Michael mckee and tom keene, this is bloomberg. Lets get to the Bloomberg Business flash. The u. K. , facebook, google, and twitter to monitor hate speech. A panel of lawmakers once to consider making the hate content a crime. The panels report says the companies are shamefully far from doing enough to deal with illegal and dangerous material. Facebook agrees it could be doing more and says it is working with partners to solve the problem. In south korea, exports rose in april for the sixth month in a row that led to the biggest trade surplus in decades. Overseas shipments were up 24 from year ago. Should exports doubled. Ash ship exports doubled. Top of the box office for the third week in a row. In more than 19 billion in the u. S. And canada over the weekend. In just three weeks, fate of the furious has sold almost 1 billion worth of tickets around the globe. That is the Bloomberg Business flash. Michael thank you. Lets discuss china. Markets are closed, but we did update over the weekend that came in weaker than forecast. Jpmorgan said of emerging markets, asia. Joining us on the phone from singapore, the former head of the imfs china division. Im looking at all kinds of this mayalysts saying be a sign of bad things to come in china. We may have seen the peak activity in china in the First Quarter, and now we have slowed down. Do you think one indicator like this really tells us that . Not really. There is a slowdown that we have anticipated coming in. If you look at First Quarter where every analyst underestimated chinas growth, there were three major areas where it happened. One was in consumption. Particularly auto sales, where what had expected auto sales to slow down more than what happened because of the removal of tax incentives. The other was in the export front. I think the one that really makes headlines was the fact that housing market, which one had thought would slowed and much more because of all of the measures that were taken in the fourth quarter, that did not happen. Our sense is that youre going to get a slowdown in the coming quarters. But that is unlikely to bring down growth anywhere below 6. 5 , which is the authorities target. You will probably get growth considerably higher than 6. 5 come even with a slowdown in the coming quarters. We have been waiting and waiting and waiting for a hard landing. Bring up the chart, anthony. This is china gdp. It migrates down to 6 , maybe 7 . Level. Er near the 3 we have never got down to this doom and gloom. Is that a managed number, or do you trust a 6 china gdp . Look, i mean, there has been lots of questions on chinas gdp numbers. I remember when i used to be in the imf where people would say that china is purposefully lowering its growth rate. The opposite is true right now. But our senses, look, there might be some smoothing in the data. The buyer large, if you look at the indicator, microlevel data, more or less, that substantiates the story that china is at a 6 , 6. 5 . Maybe it is off slightly here and there. Cyclically perhaps one quarter of, one down. By and large, it feels like an economy which is at that 6 , 6. 5 . Tom jahangir aziz, thank you so much, in singapore. Michael holland, thank you so much in a particularly a discussion on staying in the market. There is an opinion on that. A certain number of doom and gloom notes with a we can. European banking. What a good time to speak to william rhodes, formerly with citibank. Thise most odd thing of 2007, european banks. Trying to catch up with American Bank exceptionalism. Michael mckee and tom keene in new york. Stay with us. This is bloomberg. Tom it is may day. Well, candidates, campaign in france. Macron slips in the polls, yet he is still way, way ahead. May day. The Republican Congress passed a solid bill. Smiles are had by all. Well, maybe not the president. There is no money for this wall, that wall, or his wall. We consider American Banking exceptionalism. The liberty, the quality, the fraternity of what jamie dimon has brought. Good morning, this is bloomberg surveillance. We are live from new york. Im tom keene. In for francine lacqua. All of london close today. You came back on the surveillance gulfstream from the white house correspondents different dinner. It was a reporters dinner about reporting. Crowe bornstein, bob woodward, great remarks about the importance of keeping added, doing your best for the public interest. Tom with all of the pressure, i thought jeff mason of reuters did a great job. Completely different dinner. Ovation got a standing for the line we are not the enemies. Tom a great photo. There it is again. Look at those two. Michael you know what . Both of us are wearing bow ties that we tied ourselves. We are so proud. Om that video i did here is him a. Emma in washington, house and Senate Negotiators have reached into that would reject most of President Trumps wish list. The 1. 120 agreement will keep the government in operation through september. Republican leaders vowed policy. O eliminate it does not include money to Start Building a wall along the border with mexico. The u. S. Has been considering a range of options regarding north korea, including military operations. Over the weekend, kim jonguns regime released another ballistic missile. H. R. Mcmaster says that was in defiance and will not be tolerated. He said the u. S. And allies are considering expanded sections and would not allow a military option. In u. K. , Prime Minister may is not backing way from her position on brexit talks. I am very clear the end of the negotiations, we need to be clear not just about the brexit arrangement, how we withdraw, but what our future relationship is going to be. These negotiations are going to be tough. Emma over the weekend, you leaders say the ambitions are unrealistic. Pope francis has called for a negotiated settlement to the crisis in venezuela. The pope had violent protests have exhausted the people. He demonstrations ramped up global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Tom thank you. May day, many markets closed worldwide, the exception there are some asian markets in the u. S. Oil in a bit. Bout the next screen. Dollar have a candida continues dollarcanada continues weaker. Emergingmarket shares higher on the were there is a possible budget deal in the u. S. British markets are closed. Currencies always trade. Concern about the british break that deal. Copper. It peaked in february, now down about 3 . Is it a sign of the weakening economy or just air going out of a trump reflation . Pres. Trump mike and i will be at the fed meeting. Is rather tom mike and i will be at the fed meeting. This is the disinflation, mike. Goods inflation down. Service sectors inflation. This is what the fed looks at. It has the vector higher. Michael speaking of heading in the right direction, if i did not put the name of this chart, would you say that the top line, which we dont have a get we will in a moment. I think. There it is. Is greece. Ine the blue line is the rest of the world. Would you have said that greece would be performing like this, one of the bestperforming markets in the world, given all we have gone through with the greeks . The optimism is flowing into even greece. Right now we need to go to washington. The last one standing at the dinner this weekend, kevins a kevins a really. We spoke to Bloomberg Television. We had a great conversation on the up for sunday over duterte. Iat i noticed about it, and believe this came from the New York Times, no one knew about this is all of our executive policy being run out of the oval office . How can it be possible that other parts of the executive offer cant know of an for the controversial president of the philippines to travel to the white house . Good point. I think it did catch some Top Administration officials off guard. However, this is something that send athink could set signal not allege other south american leaders, but also to mexico leaders. Clearly, theyre trying to send a message. Michael what im wondering, over the weekend, we heard basically the death rattle for the obamacare repeal. Mike pence saying it may not happen until the in of the year, which is there china do those things, would affect taxes. Is this may be an effort to change the subject . That is a great point will stop i think in terms of domestic policy, they had several setbacks in the first 100 days. I think they are reassessing. I think the Vice President caught several folks offguard over the weekend. It did provide some cover, simply because the aides and lawmakers i was speaking with as late as friday has signaled there were hoping to get some type of Health Care Deal in the next three weeks. Tom kevin, as we begin this week, there seems to be a flip from day 100 out today 102. It all comes back, congressman come back, covers women come back after listening to their constituents. What do they hear . Kevin frustration. For republicans, why did you campaign on all of these promises and not be able to fulfill them . For democrats, theyre looking to unite. I spoke to some top democratic aides on friday who were suggesting they are still organizing. Their election for dnc leaders were after rnc officials, but they have to look at how best to intoforward as they head 2018. Republicans are going to have to find something to get through they can show to congress. Tom kevin, thank you for getting our week started. This is a pleasure. William rhodes is with us. For years at citibank i still call it citibank. Chief executive officer and a great benefactor to his brown university. And Christopher Varona with us. I want to talk to both of you about the things out there. All of a sudden on sunday, bill, asia comes up again. Theres nothing more asian now than our relationship with north korea and not enough talk recently about south korea. You have had decades of experience. Do you see a change in how we will speak to south korea . I think south korea is going through very difficult period. As you know, President Park was forced out of office and they have elections coming up may 9. The leading candidate, moon, has question whether or not the thaad Missile System actually should be there because he is afraid of alienating china. We have not helped because we have said out of the white house we want them to pay for it. The original arrangement was they would provide the land and infrastructure and we would pay for it. Tom has the capitalism changed . They are the shining light of inricanlike exceptionalism asia. Do you see a change in the sense of capitalism in south korea . I think it is still strong, although, there had scandals. Was samsung. Ately this election is crucial. Moon is somebody i got to know over the years. He was chief of staff when he korea free trade deal whats started. Proamerican, but he believes in starting the sunshine policy again with north korea. Although, instead of kim jongil, you have kim jongun. They are very different people. The truth is, youve a lot of problems within south korea. You add on kim jongun and her own situation as to how were going to respond to what he is doing. There is no doubt in my mind will continue to do tests and to a nuclear test come also. Michael the relationship on an economic basis, the free trade deal come over the weekend, the president saying he has a lot of competition for the worst trade deals ever done. Ps but this back on the list. Is it a really ideal for the u. S. And are the South Koreans going to be willing to walk away from this . It got started under president bush junior and finalized under president obama. It was used as the best trade deal we have ever done. I think as far as the administration is going, they have to start with nafta. I dont think they will get around to this in a while. Youre sowo of you, different, chris, on korea, frankly, something i havent talked about in asia, the tigers. Bring up the chart. Korea is going nowhere for seven years when you look at we think it is about to break out. Itfor your to date, cost me, makes you wonder, what does the cost be know that the rest of us i know that the rest of us dont . Samsung, hyundai. Tom mike mentioned copper earlier. We say dr. Copper and we also say dr. Dax and dr. Cospi. What is it that makes them the smart guidepost . I think they are bellwethers for the world. Dax at a new high. I think it is safe to say a lot of the global bellwethers are still setting a fairly positive tone. Tom Chris Verrone back with this, lots to talk about. I really want to talk to bill rhodes about this odd transatlantic banking will you millieu. All, infin considered. A. Tim griffin in l. A. Look for that conversation. This is bloomberg. Emma lets get to the business flash. Rupert murdochs 21st century fox and Blackstone Group are teaming up to make an offer for a tv station owner tribune media. According to people familiar with the situation, blackstone would fund the allcash bid. Fox would contribute its tv stations to the joint venture. In japan, shares of sony jumped to the highest in 22 months. A bullish Earnings Report budget analyst predictions that sony could have record earnings this year. In the last couple of years, the company is that more emphasis on gaming, chips, and finance. Sonys stock has doubled since 2013. As he knows in macau are on a hot streak, revenue increase increase for the night ninth month in a row. Recovering from a twoyear slump. Casinos are now joined to attract families and casual gamblers. That is the Bloomberg Business flash. Tom exceptionally busy two weeks for bloomberg surveillance. We will be in paris a week from today and then on to london for a week with our team over there as we watch our new offices built. All of that begins wednesday. Michael mckee and i will be in washington. Francine will be in london. My conversation with ben bernanke. We will not talk about present fed policy. That is part of the rules of the game. But there will be a fed meeting. One of the linkages is chairman bernanke and a press conference. He is the first 1 michael the first one who did press conferences. We dont have a press conference this time. It is as if there was a meeting that really do not happen. Tom draghi aixa a lot of people have push for a press conference every time because they say the markets should be paying attention to it. Havechael a lot of people push for a press conference every time because they say the markets should be thing attention to it. Tom we are frille thrilled to g you Chris Verrone. We could talk trend based on the. Elles wilder, bring up the chart. Up we go. This is from the depression, back to the beginning of the last century. That is the trend, particularly big stocks, s p and big stocks. You like the small caps now. Why . When we look at the last several weeks, theres been a number of positives that have started to unfold. Small caps, after deteriorating, start to turn. Last week, we get all must have the russell 2000 making a onemonth high. We of the momentum spark that argues for the trend. Look to industrials as well. Regional banks. The spark is there. These groups are ready to react celebrate. Tom you can say the reason for that spark is m a activity echo minimal gdp and the urge to merge is there because you cannot find the growth anywhere else . When you look at what small caps have done over the last 6, 7, 8 weeks, as people got negative on the prospects for tax reform, small caps sold off to start the year. I think theyre pricing and little upside. When we look at how the street is, the street has gotten short russell 2000. I think at this point, we want to be more this say, this looks washed out. We see momentum. We see leadership. It is time to get small. Michael what about getting large . There was a big industrials trade going into the year because everybody thought it was going to do infrastructure spending. That seems to be off the board right now. Industrials just traded flat. You look at the last several weeks as earnings have gotten underway, the industrials have responded well. Cat last week was a good example. Machinery, capital goods. These are stocks that started to work last july. They paused the last two or three months. We think the time for them to re the machinery names are very reflective of a group that wants to work here. Michael we will continue to follow that. Tom he went to the white house dinner as well. Michael we are all frozen. We will thaw him out. Coming up later today, a man who was not at the white house Correspondents Dinner, will be at the mill in global conference, milken global conference, steven mnuchin. This is bloomberg. I am Michael Mckee with tom keene. Markets are closed across europe, but the campaigning continues in france. Time for our morning mustread. This one comes from the new ork times it is a very interesting article. You do not see a lot of people making the case for marine le pen. I guess you can see her campaign. The point of view the euro is a bad thing for france and that le pen is right to try to pull the country out of it. Tom you have seen eight flavors of left socialist, and is an and france over a lifetime. Would you explain to me how someone on the left is going to vote for 39yearold rothschild banker . Marineink that is what le pen is hoping for, that she will get the votes from the extreme left and extreme right fail in hisron will campaigning. So far, he is not done such a very good job. She seems to be right on the ball. But all of the forecasting ive seen still has him winning, but she may get a larger percentage of the vote than anyone realizes. Michael if either one of them wins come is much going to change . Neither one of them has a political party. When we get to the legislative elections, theyre not likely to gain a lot of seats and create any kind of majority where they can push through a program. People tend to forget that. You still have to go through their parliaments, their congress. Whoever wins, either one of them, does not have will not have the majority. Tom bonds, a huge success. Are they example of a bank that is successful because not so much what they did, but what they didnt do . They didnt do this, they didnt do that, they were not dashing around london doing deals, etc. Is that the secret to the french Banking System . Both of the major banks have done very well. Even the banks that have problems earlier on Credit Agricole has bounced back. A different situation in germany. Of course, italy, yet the biggest problem of all. Tom we will touch on this in a moment ill stop bill rhodes with us and Chris Verrone. Lets do a data check. Please, bring up the data, anthony, if you would. Not much of data in europe. The asian markets open. Gets my attention. The milken global institute, timothy sloan, an interesting wells fargo, the new chief executive officer president. That could be a twohour interview. Somehow i think it will be seven minutes. Tim sloan, the Milken Institute at 11 30 this morning. This is bloomberg. Did you know slow internet can actually hold your business back . Say goodbye to slow downloads, slow backups, slow everything. Comcast business offers blazing fast and reliable internet thats over 6 times faster than slow internet from the phone company. Say hello to internet speeds up to 250 mbps. And add phone and tv for only 34. 90 more a month. Call today. Comcast business. Built for business. Hey youve gotta see this. Cno. N. Alright, see you down there. Mmm, fine. Okay, what do we got . Okay, watch this. Do the thing we talked about. What do we say . Its going to be great. Watch. Remember what we were just saying . Go irish see that . Yes im gonna just go back to doing what i was doing. Find your awesome with the xfinity x1 voice remote. Tom may you have a good may day. Do we have snow in new york . Markets are closed around much of the world. News, news, news. In washington, Republican Congressional leaders who want to focus on healthcare and tax overhauls have given into democrats on a spending bill. House and Senate Negotiations have agreed on a 1. 1 trillion budget measure to keep the government in operations through september, rejecting most of President Trumps priorities, including money to Start Building a wall along the border with mexico. Philip brings president duterte has caution President Trump against using against north korea telling mr. Trump he does not think he can scare north korean dictator kim jongil and with firepower. President trump has been criticized for inviting duterte to the what else. To the white house. In china, factor activity has fallen from almost fiveyear high. The Service Industry index fell to a sixmonth low, signaling chinese growth is likely to slow down in the second quarter. The economy unexpectedly rose two and a rate of six point 9 in the first three months. In france, the two president ial candidates have kicked off a final week of the campaign. Whole show that independent macron has a doubledigit lead over marine le pen. Headtohead debate is on wednesday. Le pen has been pushing france should leave the zero. She says the french should have to currencies, one for daily use and another for international trade. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Tom thank you. 100 days are over. I believe it is 102. Unsure if the president s golfing today, to mark him next weekend. What is sure is greg valliere, blistering, sharp notes on all that is going on in washington. 102. Sets for day what about 200 . What are we going to accomplish over the next 100 days . I thinkme crazy, but the budget deal last night was really quite constructive. Democrats got some things they wanted, republicans got some things they wanted. No government shutdown. At the very least, shows the two parties can work with each other. Tom where are the moderate republicans . I understand the conservatives are coming around. What about the republicans somewhat in the middle . Susan collins and rob portman and bob corker, there are a lot of republicans look to deal first rather than dig in their heels. I am not optimistic about getting a health bill. All of this about maybe the house will do it this week. That ignores the fact the senate would never pass a bill as radioactive as this one. I do think the deal last night bodes well for eventually, maybe this winter, getting a tax bill. Michael you have to do one step before the other, greg. Vice president pence said yesterday that maybe they can do repeal in replace by the in of 2017. If they dont do that first, they cannot move on to taxes. Do they really intend to go ahead with this healthcare effort . I think it is futile. What is it, tilting of windmills would be the saying . Think it is radioactive i think a lot of republicans want to move on. A lot of their constituents are starting to say, we like obamacare. I think health care goes to the back burner. But that does not preclude the beginnings of some progress on taxes. Michael once upon a time, after you played basketball, bill bradley would to the senate. The New York Times about the 1986 tax reform bill he was heavily involved in writing. He said that builds success relied on a clear set of principles, a committed president , effective treasury secretary, bipartisan support, and Congressional Committee chairman willing to put the reputations on the line. Few of those pieces seem and place today. Do why are you so optimistic about this . I think there a premise both parties agree on. Even nancy pelosi, of all people, yesterday in one of the talk shows, said, yeah, corporate taxes are too high. Lets meet in the middle. I think there is a premise that taxes are too burdensome, both individual and corporate. If you start with that premise, i think theres a chance we will have to do some things on state and local tax exemptions. There will be some changes. I think theres a chance we get this. Maybe it does not come until the end of the winter. Michael you and other people have noted would be actually better for trump and republicans because you have an Election Year and all of a sudden, youve a tax cut hitting. Frolicked the people and say ofs is terrible, for all the people that say this is terrible, i dont think the white house would mine. If you want to get some rocket fuel into a soso economy by next year, that means you had into the midterm elections with a little steam out of the economy. Tom does mr. Trump need the democrats . Does mr. Ryan need the democrats . Raisen need democrats to the debt ceiling this summer. That will be a fascinating fight. The Freedom Caucus is not going to raise the debt ceiling. You will have ryan go to nancy pelosi, as john did. John boehner is in retirement now. I think it is a real risk, a big risk for ryan. He needs democrats. Trump could use some, too, and he got some last that in the budget deal. The i know you said at hotel bar in washington. That wethe back story need to watch over the next 5, 10, 20 days at the white house . Increasingly, this is becoming a centerright government. They kicked out another band and supporter or are about to. This is a golden Goldman Sachs probusiness centerright government in many respects. That is not a bad story for the markets. Michael a lot of people say it is not a centerright government, it is a government by Goldman Sachs. You have a Goldman Sachs person in line to be the next chair of the fed, even. Yes, gary cohn is on the shortlist to go to the fed. Maybe tired of it trumps based may tire of it, but i think the fact this is such a probusiness administration is a good story. Tom greg valliere, thank you for the briefing. We will catch up with you soon in washington. We will continue right now with bill rhodes and Chris Verrone. Lets come back. Chris verrone with us as well. Were going to come back. Michael mckee and tom keene in new york. We want to talk to bill rhodes about the european banks and Chris Verrone about where the value is in the market. Can griffin this afternoon. Ken griffin this afternoon. This is bloomberg. The bloombergt to business flash. The u. K. Has warned facebook, google, and twitter to improve the monitoring of hate speech. A panel of lawmakers has urged the secretary to consider making the hate content a crime. The panels report says the companies are shamefully far from doing enough to deal with illegal and dangerous material. Facebook agrees a committed and more and says it is working with partners to solve the problem. In south korea, experts rose for the six month in a row that led to the biggest trade surplus in decades. Overseas shipments were up 24 from a year ago. Ship exports doubled semiconductors were up 57 . Universal state fate and the furious was tough at the box office for the third week and then row. Than 19 million in the u. S. And canada over the weekend. In just three weeks, fate of the furious is sold nearly one billion dollars worth of tickets. That is a Bloomberg Business flash. Tom thank you. Coming up, bloomberg dav daybreak. Pimco. Ill be talking to the big move for me was the last month, the range on 10 years treasuries. Also the start of a new program the cable. What are you going to do . The only reason im here. When we talk about 60 minutes transatlantic action, the markets in europe largely closed today. A lot to discuss. ,rime minister may and the eu listen to this, saying after a twohour meeting with the Prime Minister, he is 10 times more skeptical than before and that may is living and another galaxy. The spokesperson saying he is not familiar with that account of that particular dinner. Certainly, things are starting to stir up. Michael i guess he does not read fac, the german paper. It does look like things are going to be more difficult for investors who are trying to figure out how brexit is going to go. Jonathan as soon as his continues, things have begun to stir. Tom thank you. Look for the cable tonight on london radio. Will roads is with us. Es with us. D i am fascinated by the oil chart. It is the simple, ugliest range found chart ive ever seen. This is brent crude. I rarely use the 200 moving day average. There it is. It is an elegant chart sitting like a lead brick. 70 , doubles off the low, now has frustrated longs and shorts for a year. That sounds familiar. 1985, 1986. Time and time and time to repair structural damage. Tom were in the same camp on a theory basis. You have to wait to see a breakout of a range before you predict it. That is a good way to lose money. When do you know youre out of a range . You have to look to crude and 62, 63. Im not willing to commit capital without a breakthrough. I think structurally, we have to think about how energy reminds us that tech in 2000 or banks in 2007. When these things break, it can take a decade to repair. We are only 12 months into this process with crude. We too early to look at it as a leadership stock were tom it is a commodity that is going to drive the broader commodity indexes. In general, what are we seeing with commodities . The world is getting a little bit better in terms of growth. We should be getting a little bit of a tailwind. I think the spot is ag. We start to see it with corn and wheat. I think that is tactically a bit more interesting. I think gold and silver are rolling over. They are crowded longs. They are not acted well despite a defensive tone over the last several months. I would be inclined to pare back exposure to those tech groups. Michael one of the big questions, are you trading at all on the possibility of el nino . I know people dismiss that, but it has a huge impact on things like coffee and cocoa and other commodities. Is no. Simple answer these are big declines and a lot of those softs weve seen the last several years that of started to show some signs of bottoming. Market a pronounced bear for 7, 8 years, that is starting to put in some kind of a low. Tom what do you do with the juggernaut like amazon, apple . I get there is a trend, but is their support to that trend that you could gauge, judge, and figure out a vector . I think all of the stocks are lessened in trend following. Is interesting about amazon and facebook and apple, you are still getting paid relative their peers. Until they deteriorate on a relative basis, im not willing to back off of them yet. When you look down the cap scale in tech, this is still very broad. This is not just the big names working. That leads me to and up more 4nd were satisfied. It is still broad. Up tom Chris Verrone, thank you for joining us. Technical analysis. We will continue with mr. Rhodes. Et me take about tv there it is, live right now with my tilted bow tie. You can see the delay. We come on the right side, you can go back and you can look at a previous section, including a chart. You against deal that chart. You can take the charts were used not all of them, but almost all of them, and bring them over to your bloomberg. We spent years on this. Thrilled with tv , and you should be as well. On may day, this is bloomberg. Feels like it never closes come the Foreign Exchange market. With much of the world a celebration of labor, going back to 1890 france, a couple of other dates from that signal may day as being important. The Foreign Exchange market is open. Up dollar at the bottom, 1. 3657. Still trying to find any kind of canadian strength. Dont forget our interview on friday. We say good morning to you. Michael mckee and tom keene in for francine lacqua. She is off in london. How about a single best chart in a thoughtful conversation with william rhodes, for decades at citigroup, and this, of course, on this august thing, european banking. Thing come european banking. Jpmorgan struggling. Everybody struggled in 2008 and 2009. And up we go, American Banking recovers. Lets look back first. Why did this happen . Why did america clear its banking markets and europe could not get it done . As a beginner with tarp and the action of the treasury in the fed, the American Banks were forced to write off bad loans, recapitalize themselves going forward. This was accomplished basically in 2009, 2010. Where as a european banks struggle because you did not have an effective supervisor. Now under the banking union, it falls under the European Central bank. They lost, i would say, four to five years on getting themselves recapitalized and write off their bad loans. Tom what does it signal to you when you see to be disparate too big to fail banks diluting shares . You see that with Deutsche Bank and other banks as well. What does that signal . You have seen it with Deutsche Bank and credit suisse. Cryanhe bank, john inherited a difficult situation and may have to raise more capital. That was the case with credit suisse. They will do it. They will get there, but it is not going to be easy. They have problems, even commerzbank, with a portfolio and shipping. If you want to go to the u. K. , the government still owns and controls royal bank of scotland. We paid off tarp a long time ago. Iny have moved very slowly europe. I think theyre finally coming around now. Except italy. Michael banks tend to move to the lowest common denominator when following the regulations as they try to compete. If the United States backs off doddfrank, does that affect the rest of the world . Does the rest of the world have Better Regulation than the u. S. Because they have headed in that direction, or do they back off as well . That is the key question. The europeans, just having come back from europe, are very concerned as to what the new administration is going to do. I think you will have a new banking supervisor. Dan cirillo is gone. Whoever comes in there, and there are a lot of names being floated around, but i think you will see a more moderate stance on enforcement of these. Particularly in the small and mediumsized banks. I dont see that doddfrank is going to be overturned, but it is a concern because europeans want to make sure that we dont go one way and they go another on regulation. Michael they are going one way and another in different countries. You mentioned italy. Italy would love to deal with its bad thing problem by setting up a bad bank against European Union rules. Are they going to be up to do something that meets the rules, but also their problems . Theyre going to have to. You have regulation is working. Resolution is still an open book because each country is looking at resolution a little bit differently. Look at the case of portugal with the sale of the banks. Youre going to have to have more symmetry in resolution. In the banking union, there were three legs to the stool. The other was insurance, deposit insurance. Theyve not even gotten around to talking about that and still trying to decide what theyre going to do on resolution, which is part of the problem with the italian Banking System. Tom wilbur ross, very visible, i believe you will be with bloomberg in the next day or two. Bill rhodes, are these people friends of big banking in america . Is the president a supporter of big banks . He went through the difficult period, and i give him credit for it. I was involved in his restructuring and 1990, 1991. You never want to under emphasize what this president can do. But as far as wilbur ross goes, hes used to working with banks. I think wilbur ross will have a positive effect in the negotiation of nafta. He realizes that we have got to renegotiate nafta. That will be the first, i think, trade arrangement that will be renegotiated. Program we started the talking about korea. All of these trade negotiations the president was to redo korea. Are we going to have trade wars or is the rest of the world willing to talk about renegotiating and bring the temperature down . Hopefully, the latter. Nafta, trudeau and pena nieto are willing to do it. Their frustration as we have to start working with them. You have to give that 90 day period to congress before we can start working on nafta. You have elections coming up in mexico next year. Pena nieto needs to get this done during the course of this year because we are already starting to get in the Electoral Campaign for president and congress in mexico. Tom is jamie dimon banker of the world . Is he the new bill rhodes . I think jamie dimon has done an incredible job at j. P. Morgan chase. I got to know him when we did the merger. He is a firstrate he is a firstrate credit person also. If you want to look at a bank or around the world who has accomplished what he set out, jamie dimon is a good example. Tom bill rhodes, thank you for joining us. Were going to continue our discussion across all of bloomberg surveillance radio coming up. This afternoon, Milken Institute global conference in los angeles. We have a full team out there. Among others, ken griffin from citadel, the founder and chief executive officer, ken griffin will be in conversation with us in the 2 00 hour as well. Let me go to the data on a monday. There is a headline, oil simply cant find a bid. , France Macron and Le Pen Campaign today. This is bloomberg. Congress that the deal, but that would whose expense . , it coulde tax reform budget, but Economic Growth could offset that. From new york city, good morning. Im jonathan ferro, alongside david west. Largely close, futures firm, up to 10 sub 1 . Up. Suries personal income and spending, plus data for the month of march. Then, market u. S