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tv   Bloomberg Daybreak Americas  Bloomberg  May 22, 2017 7:00am-10:01am EDT

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successful visit to saudi arabia. ministry tellsy bloomberg that opec is ready to sign off on another round of output cuts. ford is dropping its ceo and promoting their head of self driving cars. mark fields is out. jim hackett is in. good morning. welcome to "bloomberg daybreak." i'm jonathan ferro. this monday morning, futures stable. marginally positive looking at the doubt and -- the dow and s&p 500. triesllor angela merkel to explain why there is a trading surplus in europe, and saying the euro is too weak. you cannot make sense of the sometimes.
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crude comfortable at $50.8 0. another $350 billion honest in hardware deals rummaged in the next three years. wilbur ross had high praise for the deals that got done. >> i cannot imagine another business day as good for the united states and the kingdom. kevin cirilli joins us now from jerusalem. let's talk about those deals. energy, andilitary, infrastructure deals done. how important are these for the president at this point? kevin: very important. coming on the heels of the administration raising questions about the potential collusion for russia. i asked secretary ross of
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whether or not these investigations would cloud over the trip, and he believed they would not. over $300 billion worth of new deals, as well as a $109 billion arms deal negotiated between the u.s. and saudi arabia. the folks i spoke with on the ground in riyadh from saudi arabia were impressed by the caliber of ceos in attendance. representatives and top executives from lockheed martin, boeing, blackrock, and the new york stock exchange. more than 50 ceos in attendance over the weekend, showing that clouds and investment -- clout and investment that is going to be made into saudi arabia. white house officials making the case that it will be good for workers back home by making that investment. president trump trying to turn
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the page from the controversy on his first international trip, saudi arabia, this is the heart of the arab world. he said the fight against terrorism is quote unquote good versus evil. this is a shift from the campaign trail. david: the residents of the ivlin areresident r waiting for president trump to arrive. set the stage here. we talked about saudi arabia, riyadh. take us to jerusalem. what do we expect? kevin: the president flying from saudi arabia to tel aviv and making his way to jerusalem. from there he will meet with the pope. he wants to highlight a unified religious front.
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what saudi arabia and israel have in common is their opposition to the iran deal. you will be hearing about that a lot as the president makes his remarks. he will be meeting with the israeli president, rivlin, then he will be meeting with prime minister benjamin netanyahu. he will make that historic walk, trying to highlight a unified front on religion. david: the present is walking in as we speak. we are seeing it now on the air. president donald trump with israeli president rivlin walking into the residence there. he is about to give some remarks. take us through the rest of this trip and the g-7 meeting. yes.: as we mentioned, when he leaves here, he will go to vatican
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city, then he will go to brussels to attend the nato summit. he has been aggressive in advocating for more countries to pay their fair share as he says in order for funding for nato. then it is off to sicily, where he will attend the g-7 meeting. treasury secretary mnuchin playing a key role in laying the groundwork for these meetings. we cannot stress this enough, the first part of this trip is focused on combating terrorism and trying to put on a united front. there are deep concerns within the arab community as well as amongst israelis about comments candidate trump made. this trip is designed to ease those concerns. alix: we see them getting ready to speak. for is the significance
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president trump going right from saudi arabia to tel aviv in the middle of all the conflict in the united -- middle east? kevin: it is his story it is the first time air force one has traveled directly from saudi arabia to israel. you white house -- the white house press corps airplane had to make a landing in cyprus because of prohibitions against direct flights between these two countries. part of the illustration of what this administration is trying to represent. the politics back home also making their way here. these investigations are ongoing. i have been told that steve bannon as well as chief of staff reince priebus have already departed from this trip to return to the white house. fbi directorb i --
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james comey will be testifying after memorial day. this white house is trying to keep the focus on this international trip with limited access for reporters. i asked secretary wilbur ross over the weekend if he thought this would cloud the trip at all. he said he believes it would not. jonathan: kevin cirilli from riyadh. alongside thep president of israel. if we look at jared kushner and his involvement in those trade deals. they were said to get in a room together in early may to hash out this deal and get on the phone with the ceo of lockheed martin to get the price of the radio system down. when kevin cirilli talks about
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how different things are with this administration, even behind the scenes it is different. david: $100 billion done right away. in the entire eight years of the obama administration, it was $116 billion. the infrastructure deal is also significant. levered.ion here to explain the importance of these deals is the eurasia group director for the middle east ayham kamel. explain how important this is from the saudi arabia point of view. ayham: the saudi's were looking forward to this charm offensive. the bar was pretty low. his tone was right. he was trying to ease concerns on the muslim fear, that he is a
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much more moderate leader. what is lacking is structure, structure of strategic partnership, structure of defense corporation. the defense agreements are a big lever for downtown. the saudi's take of them as one as one way toem push the united states closer to iran containment. it is investment in saudi and u.s. infrastructure. david: how much of this is positioning saudi arabia versus iran? how much does this shift the power? ayham: that is the message president trump is trying to send that the u.s. is back and is shifting away from the obama policy of retrenchment. the u.s. is now more committed to its alliance with the sunni gulf states.
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they will enhance the defense capabilities of these countries. the most problematic aspect of this is that it will increase geopolitical tensions. iran will feel that there is much more of an effort to contain its regional influence. on that level, they are correct. president trump is here to curtail iranian influence in the region. jonathan: there were some reservations about these defense deals in saudi arabia. i wonder whether those reservations no longer exist or this is putting the focus on business deals full stop before foreign policy? ayham: the u.s. is dropping any concern over the yemen operation. support fore more saudi arabia on the yemen operation, and part of it is more marshall relations with the u.s. president trump is not extremely
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concerned about dropping positions that are focused on human rights or how these countries governed. saudis a shift closer to arabia and away from iranian concerns. alix: what part of the deals we saw over the weekend has to do with saudi aramco's ipo next year? ayham: part of this is about the idea. -- ipo. part of the concern that the saudi's have is the jafta legislation that could shift the ipo to london. donald trump wants this in the u.s. that would be a big win. jonathan: prime minister theresa may also want to saudi arabia. she went with the chief executive of the london stock
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exchange. mr. trump arrived with the chief executive of the new york stock exchange. they are mixing politics and business with that saudi aramco ipo. david: everybody wants that ipo. tells about the crown prince. is this a big victory for him? ayham: absolutely. he has been establishing a close relationship with the trump administration. prince wants to become king one day. he is leveraging his relationship with the u.s. and his vision 2030, the reform plan to rebuild saudi arabia. so far he is doing well. this is saudi arabia, and things shipped overnight in this country. alix: thank you so much. we are waiting for president rivlin and president trump to speak. we will bring that to you live when they go.
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coming up an exclusive interview onh jamie dimon, his view the u.s. economy. this is bloomberg. ♪
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jonathan: from new york city, you're watching "bloomberg daybreak." let's go through the market action. futures positive, up 0.1%. up by two yields basis points. euro strength, dollar weakness. the story continues for your 1.1234., donald trump getting ready to speak alongside the present of israel. let's take a listen.
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president trump: we are very honored to have the two of you working so hard to try to bring about peace. i think you will be very successful. if not, you will get blamed because i just put it on record. [laughter] president trump: my staff has been fantastic. rex, secretary of state, has done a fantastic job. we just got back from the middle east, saudi arabia. we were treated incredibly well. it was tremendous, a good feeling toward israel. , you can callngs it outreach, but what has turnedd with iran has many other parts of the middle east toward israel. if there is a benefit, that would be the benefit. i have seen such a different feeling toward israel from
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countries that were not feeling so well about israel not so long ago. it has brought a lot of folks together. i think you have seen it and even mentioned it on many occasions. that is a real positive. we are happy about that. it is a challenge and an opportunity. you have the great opportunity right now. there is a great feeling for peace throughout the middle east. people have had enough. they have had enough of the bloodshed in the killing. ,hat we did over the weekend they say there has never been anything like it ever before. it was really a coming together. today being in israel is very special. we expect to have some their interesting talks. -- very interesting talks. >> we are pushing for peace. peace
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thank you. president trump: thank you very much. that was the president of the united states alongside the president of israel. his tour continues throughout the week, including later this week the g7. typically i don't pay much attention to the g7. this time, i think the g7 gets a whole lot more interesting. david: he has told them that he is not interested in playing with all of them. alix: what kind of credibility, also? does this help? does this boost his angels as a leader able to get things done? in the backdrop of all the deals that were struck between president trump and saudi arabia
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is oil prices. what we have seen in the last five days is a huge move up in oil prices. that comes from opec. behind the curtains at what was going on in the talks this weekend, with us is how beer blas. -- javier what was your most significant take away over the weekend? >> the saudi oil minister saying every minister he spoke to supported the production cap for another nine months. that would mean the cuts would stay with the market until march 2019. does that mean everyone agrees, and it will be interesting when we arrived to the meeting on thursday with iran and iraq. alix: was the market already pricing the same? what i have charted is the
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rallies we have seen in the last two months. the one at the end of september was when we first heard about a potential deal. in september, when we really got the deal, the prices up 18%. to the saudi's have to surprised that much more on thursday to get the market higher? >> probably. we will be in a classic situation on buy the rumor and sell the news. we will probably see that some people use that opportunity to take some profits. alix: the saudi minister said this weekend that we are not going to go it alone. who was he talking to? >> he was talking to iraq. it is a country that can increase production this year. i think he was sending a message
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to russia. russia took a long time to reduce production. productiona reduce almost immediately. russia has taken almost five months to reduce by 300,000 barrels a day. it is also a message to iraq. then saudisn't play, arabia will not go along. alix: it is interesting how he played down what he wants prices to be. the next six months, i'm not worried, i'm looking at the next three years. has toh of the saudi bet do with rising oil demand? what is the risk if that doesn't hold up? >> saudi arabia knows that shale is reacting to these prices and is going to take a lot of the incremental demand that we see over the next few years. in particular 2018 and 2019, the saudi's need higher demand to
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create additional production pressure. at some point they need to get out of this production cut. the exit strategy of the thoughts for saudi arabia seems to be increasing demand. alix: i want to get your take on what happened with the iranian election. is that good or bad for oil? donald trump talking strongly to iran could be bullish. >> president trump's comments on saudi arabia are bullish because you can see at some point sanctions coming back to iran. the victory of rouhani over the meansd varies because it iran will likely open their energy sector to foreigners. that means if production is
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coming from iran over the long-term, that needs more oil. have a little bit of both. alix: fascinating. this sounds familiar. do whatever it takes. exit strategy that gets tricky. have to continue to deliver stimulus. what does that remind you of? jonathan: central bankers. maybe they just changed the speeches and take out the euro, put oil in there. on friday, the g-7 summit in italy. ministers have met. we will have the leaders meeting in sicily. tomorrow we expect the presence budget -- president's budget proposal. big one for, the
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the market is the release of the fed minutes for the meeting from may. this is significant. you posed the question, why do you care? balance sheet. i want to know about balance sheet and the discussions they had about it and whether we are closer to getting relief. were they actively discussing that at that point? alix: they can edit the minutes. that will give a clue. last week, if you wind up having a balance sheet rollback, and you don't have the stimulus reduction, that could be a headwind for equities. jonathan: i think the jim bullard speech from last week. i think it is funny he has changed his mind already. i wonder whether the discussions about soccer data was unanimous and that they will try to dismiss it and bounceback in the new year.
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there was some nervousness from the fomc. time goes on, they have more to look through. alix: i am interested about the dollar. the dollar index. we have had great expectations move higher. the dollar did not. jonathan: that is telling me a lot about to currencies, the euro and the yen. we had that risk off bid. the dollar has failed to stabilize while the equity market has. fading the trump trade started with the dollar this year and it has continued to rip. david: go back to your discussion about the budget, whether that will increase the fed. we also have mr. coming out there saying he is going to testify. jonathan: despite all the nervousness, the amount of money
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spent on newspapers last week to try to understand what was happening, the s&p 500 was down 0.4% last week. that did not match the drama in washington. dimon, jpis jamie morgan chairman and ceo in riyadh. we got his take on the u.s. economy. we will bring you highlights from that and just a couple minutes. here is the state of the markets. features up. we are up almost a single point on the s&p 500. treasury yields higher. 1.12.ollar, this is bloomberg. ♪ >> welcome back to
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jonathan: from new york city, you're watching "bloomberg daybreak." let's get you started on the market action this monday morning. after two weeks of losses on the s&p 500, we are dead flat. marginally positive on the dow.
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my favorite trait of the morning 1.1180.dollar, trading trading the headline not the context. merkel says the euro is too weak. the context of the story is she is telling a group of students over in berlin why there is a trade surplus in germany and it is the euro is too weak because of the policies of the ecb and therefore german goods are cheaper. i am not sure it is a message for the ecb. alix: is not even the euro. you happy by market selloff. jonathan: that gives you a sense of the nervousness and financial markets. i'm not going to try to explain it. there is taylor riggs. taylor: president trump is in israel for the second leg of his
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trip. he was greeted in tel aviv by prime minister benjamin netanyahu. he spoke briefly about the prospect of peace. president trump: we have before us a rare opportunity to bring security and stability to this region and to its people, defeating terrorism and creating a future of harmony, prosperity, and peace. taylor: benjamin that president ismp -- president trump looking for significant progress on this trip. president trump wants to take an active antipoverty programs. he proposed a budget yesterday tot cuts $1.7 trillion programs for low-income americans. that is according to a document gathered by bloomberg news. north korea is ratcheting up
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tensions in asia again. kim jong un fired another elastic missile over the weekend. it landed over the sea of japan. the launch comes after north korea tested a rocket that they said could carry a nuclear warhead over long distances. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. david: the auto industry was rocked overnight with the news that mark fields is going to be stepping aside to be replaced by jim hackett, who has been running ford smart mobility unit. investing in what we call emerging opportunities, which is electric, autonomy, and mobility services. when you look at the cost for this year, we will have about $3
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billion of cost savings that will offset each other in things like commodities and that nature. increases ise cost around these investments we are making in our future. david: joining us from berlin is ughton.ller and keith no matt, let's start with you. who is coming in at why? matt: jim hackett is coming in. he is the head of their mobility solutions unit. that doesn't tell the whole story. he has lived in detroit his entire life. he has worked at an office furniture manufacturing company for decades and turned that around because he saw the coming of open office layouts rather than the cubicles of the 1980's and 1990's. he was the athletic director briefly at the university of michigan, helping that football around to a comeback. they still haven't been ohio
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state -- beaten ohio state. jonathan: that is going to be lost on everybody. david: i am glad you pointed that out. keith, as we played in the introduction, mark fields already have been moving in this direction. he was making substantial investments in mobility. he was cutting costs. was it too little, too late? >> there is the view that investments in the future he did a little more clarity, particularly in electric. approach was as little scattershot. gm seems to be getting ahead of them. iso in today's market, ford behind general motors. gm has a much larger share of the profitable suv market. compact pickup trucks.
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ford does not. i guess the view was mark fields was not moving fast enough. jonathan: was he moving fast enough on cost cuts? with the job cuts, what is the likelihood that those job cuts are going to get bigger? kett has a history of cutting jobs at the office furniture company he worked. he contact the staff. he closed down a lot of their manufacturing in the u.s.. that will be an interesting discussion to have with president trump. was on the way to cutting salary from their staff. job. a really long range being the ceo of an automaker takes five years from start to a new car.ut out if you look at the expedition,
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keith mentioned they are losing big-time to the tahoe and you gone. -- yukon. if you don't move quickly, you look really dated in that sector. david: where are they on electric? they had the volt. matt: gm is light years ahead of ford. they have a reputation for focusing on that area. the volt was ahead of its time. the bolt is a pretty amazing vehicle, and the kind of thing that tesla is aiming to make. gm is winning the game. theya couple of years ago, didn't know if it was going to be electric or hydrogen that is the winner. that is the mistake.
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they needed to invest early. if you invest now, you don't have results for five years. alix: what kind of our company does ford want to be? >> they want to be a leader in this new mobility they say they will have a self driving car in 2021. they want to go up against uber, lyft. they want to be part of the new transportation infrastructure. to get there they need to have strong profits and a strong lineup today to finance that feature. alix: it sounds like that is a technology company, not a car company. will the new ceo be able to deliver on that? >> hackett does have this history of thing able to do transformational turnarounds. office an old line furniture company to come up with solutions for how people work.
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he did a turnaround at the university of michigan despite not beating ohio state. he has this turnaround history he will bring to ford, a company that is still making decent money. it is not as if we are in 2009 when things were very bleak. they need to have a clearer and more consistent message on the future. alix: thank you. david, you were talking about how he also has technology relationships. he is not just a cost-cutting guide. a big company on the west coast. he had a relationship with them where he had a 24/7 line with the ceo that company trying to transform his company. trickan: a bit of a hat this morning. that whole conversation this morning, gm has done this, and they haven't, ford has done
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this, and they haven't. david: she is getting rid of places that are less profitable. jonathan: much more on that through the next couple of hours. coming up, the exclusive interview with jamie dimon, jpmorgan chairman and ceo. watchingyork, you are bloomberg. ♪
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taylor: this is "bloomberg daybreak." i am taylor riggs. coming up in the next hour, liontree advisors ceo. ♪ from riyadh to israel, we are
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waiting on remarks from president trump. of the will go on a tour church of the holy sepulcher. in a bloomberg exclusive, jamie dimon sat down with francine lacqua. >> the world is going to double in size in the next 12 or 15 years. there are plenty of opportunities. there are plenty of threads. we spend a lot of money in technology. we know what we're doing. we help companies go around the world. emerging markets are developing twice as fast as developed markets. francine: can you break down the units where you want to defend your market share and where you want to grow? >> i want to grow everywhere. we have a high market share. clients want multiple vendors and suppliers. that is understandable. investment banking in certain
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areas may be harder to gain shares, but that doesn't mean you cannot gain shares in this country or that part of the world. we know it is going to be a little harder. francine: what about fixed income? >> we have a good share there. it will be hard to gain. when you look at it, if you look at the numbered share, when you look at will we can do that a lot of it will go to technologies. we have to maintain our shares. competition is a good thing. i have never been worried about how petition. we want a competitive world. that is our goal. that's what we try to do. francine: we spoke in paris a couple months ago. at the time we talked about your situation. what is your mood now? are you confident in the future wall street? >> the trump administration wants to deregulate certain things. most of us in business feel that
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regulation has been holding back growth. not just jpmorgan, it is important that people understand this. all citizens of our country. after years of regulations, it makes sense. even my democratic friends understand that it makes sense to look at what was done and what can be done better and what can simple five the burdens on business and grow the economy -- simplify the burdens on business and grow the economy. look at it in the light of day and improve what we have done. francine: look at glass-steagall. there was talk about a modern glass-steagall. confusednvestors were about what that means. >> glass-steagall was not part of the problem. banksou regulate small differently from the bigger banks, that is understandable. let them sort that out. i don't think that is when to stop us from competing. francine: give us your view on
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the approach to foreign acquisitions. >> i would not take it off the table down the road. francine: is there a region you want to beef up or specific operation? >> the important part is there is no area we cannot grow. we can have more bankers in countries, investment bankers, private bankers. my first is organic. there may be acquisitions in technology and countries that make a lot of sense. they do have to make a lot of sense for us to do it. related,be syntax payment related, customer service. we have already announced we will have online self investing an online account opening. right now you can buy and sell. you can do a $400 million fx
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trade on your mobile phone. much do you think business will be transacted on that? >> a lot. a lot of the business side has moved to mobile. corporate, we have already seen fx, and you will see some equities. ipad,e say mobile, it is online, all the same to me. francine: how are the animal spirits in the united states and the world economy? >> pretty good. japan is growing like 15 years. europe is doing rather well. america is chugging along at 2%. that is pretty good. even the imf is now saying the world is going to grow little faster than expected. jonathan: that was francine lacqua speaking with jamie dimon.
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we are waiting on more remarks from donald trump in jerusalem alongside the president of israel, mr. rivlin. that will be coming up live. sneyd,ndon is michael bnp paribas macro strategist. it used to be easy, europe was going backwards, the u.s. was going forward. you would extrapolate what that means for monetary policy. lot has gotten a whole compensated over the last few months given the upside prices out of europe. you are saying goes short, why? >> the markets are being driven by sentiments. the indicator we had is morning saying now is a time to start to save this move on the dollar is moving away from our core models on where the markets should be trading based on what is happening in other markets.
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we are looking through some of that investor sentiment. you saw in april markets were pessimistic on the euro-dollar. that political sentiment has swung the other way with focus on the u.s.. we think that has gone too far. jonathan: talk to me about rate differentials and what they mean for the fx world? do you see rate differentials reconciling with what we are seeing in the fx market? >> we think the fed will continue to go, going again in the june meeting and continue to normalize the balance sheet. we are pricing that in. 35% odds they will go after that. ack u.s. market has pared b expectations on the fed as the market expects a lot less physical stimulus this year. jonathan: we had a paradigm shift earlier this year. the fed decided to leave the
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market. we are going to stop waiting for you to get ready and tell you to get ready. why has that happened? >> very good question. i think the market is still putting a lot of emphasis not on the central banks, which would like to talk about in our forecasts when we join you. the market has been focused on the terror risks. there is a lot of uncertainty around economic growth, will it be sustained, particularly with the softer data we had in q1? we also have risks around china. inflation has picked up in the u.s. the labor market is tight. wages are going to be rising. we think china is going to be able to continue to muddle through. that gives us a very good
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outlook for the second half of this year. biggest misss the price? is it treasury, spreads, dollar? >> we are largely pricing in our fed forecast for june. alix: how much is it going to spread? >> we think they should go twice, we are pricing in one hike and 30% odds of a second one. we think 10-year yields can move 2.25. to 2.75 from have the events in the last 10 days changed your view at all? >> not really. as an institution, we expected very little in the way of fiscal stimulus this year and next year. given the developments, this reduces the odds anything gets done this year and pushes it
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into next year. that is why we recently lowered our forecast, that and the inflation forecast. david: in the fx area, have your views changed at all in the last 10 days or so? fx, we have not changed our views. we have taken profits on a few of the long dollar trades we had, particularly the long dollar-yen. we think that is moving to the sidelines, and we are waiting to reassess the outlook. david: do you think the dollar to a hit? >> certainly. that is playing through with what is happening in the rates market. the rates market has really priced out expectations of the fed this year. some of that is because of disappointing data from the u.s. this could turn around quickly
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in the coming months. jonathan: we have talked about the spread, the narrowing spread between europe and the united states. let's talk about what it means for stocks. has the equity market gone too far? >> here is what is interesting, when you compare the positioning in different markets. if you compare it to work across methods, and you see that euro-dollar, that market is holding a long euro-dollar position. when you compare that to equities, the market seems to be holding a large overweight in u.s. stocks versus eurozone stocks. given the fundamental outlook for growth and valuations of eurozone stocks, these can still outperform. alix: a huge part of u.s. stocks has been in tech. they are relatively isolated
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from dollars spreads and geopolitical risks. is it that severe that you will see this across classes? >> there will be a model correlation. we are showing that it is difficult to trade fx and equities because not only do you have flows going through, but you have a lot of hedging behavior. a lot of people on the street think if european equities are going to outperform, that could be a catalyst for the euro to go higher. we don't agree with that. we think a lot of those inflows to go into euro will be hedged. jonathan: any second now the president of the united states will walk out and deliver some remarks with the president of israel. walk me through how difficult it is to set yourself up on any given day when you could be tape that comes
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from the present of the united states. how are you meant to distill this world of politics that has changed rapidly in the last 12 months? >> as a macro strategist, when i follow these events, when i paid more attention to is not what the actual politicians are saying, but how investor sentiment currently stands. that gives you the context in which these messages are going to be received on the market. now we have got to this point that u.s. investors, if we look at our ages of investment -- our investor sentiment, it has turned pessimistic. a lot of the political and uncertainty has been priced in. they have that risk on their radar. jpmorgan,jay barry of
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you. you.thank coming up we have donald trump and president rivlin of israel. i think we can listen in. >> first lady, i hope you enjoyed your coming. i appreciate the opportunity to learn about your thoughts and divisions. i believe that the unbreakable bond between us along with your determination will open up new possibilities for the state of israel and the entire region. mr. president, we are happy to see that america is back in the area. america is back again. isisarked the defeating of as one of your top missions. this is most important
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objective. israel will do everything in its power in order to assist you in this mission. appreciates america's leadership and your administration's actions in syria. in syria red lines that must never be crossed. there is a price that must be paid by those who violate the most basic values that make us human. further action must be considered in face of the horrors that is still taking place on the other side of our border. mr. president, the jewish people , we turn to the historic
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homeland after 2000 years of exile. miracle, aa technological miracle, a human miracle. we never gave up on our dream of living here in peace with our neighbors. we reached a peace agreement with our neighbors in jordan and air neighbors in egypt. we have not yet achieved our peace withliving in their neighbors the palestinian -- with our neighbors the palestinians. together.y is to live we must build trust and
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cooperation between us. in order to achieve this, we energyur gifts, your that will help us move forward together. here anave international center of region, jordan.n valley from we have to make sure we don't go to sleep with a dream and wake up with a nightmare, with iran, isis, and hamas in our borders. in order to drink, we need to be sure that iran is out of our borders, out of syria, out of lebanon. and i welcome your willingness to help us move forward.
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we want to move forward. mr. president, we want to move forward, and we must do it together together with america. thank you. president trump: thank you very much. and shalom. i am honored to be in the great state of israel, the homeland of the jewish people. i am awed by the beauty and majesty of this sacred and there land.ll-- very holy president rivlin, thank you so much. thank you for opening your wonderful home and welcoming melania and myself to your amazing country. what you have done is perhaps that virtually never been done before. overseas, itrip
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have come to this ancient land to reaffirm the enduring friendship between the united states and the state of israel. it will always endure. that is number one to me. we are not only longtime friends, but great allies and partners. we stand together always. this moment in history calls for us to strengthen our cooperation as both israel and america face, threats from isis and other terrorist groups, to countries terrorismthat sponsor and fund and foment terrible ,irus -- violence not only here but all over the world. together, we can work to end a scorch of violence that has taken so many lives here in and around the world.
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we can declare with one voice that iran must never be allowed to possess a nuclear weapon. never, ever. steadily funding, training, and equipping of and militias and must cease immediately. on those issues, there is a strong consensus among the nations of the world, including many in the muslim world. i was deeply encouraged by my conversations with muslim world arabia,in saudi -- who i spoke to at great length. king solomon feels very strongly and i can tell you he would love to see peace between israel and the palestinians. toy expressed the resolve help and terrorism and spread of
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radicalization. many muslim nations have taken steps to begin following through on this commitment. there is a growing realization they have common cause with you and the threat posed by iran. it is indeed a threat. no question. i thank you and the prime minister netanyahu for your to achieving peace between israelis and palestinians. i also look forward to discussing the peace process with the palestinian president. israeli and palestinian children deserve to grow up safely and live free from the violence that has destroyed so many lives. israel canstates and
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bring safety and greater prosperity to our people through stronger ties of trade and commerce. our two countries already do a great deal of business together. we have a strong foundation on which to build an even closer trading relationship that .enefits both of our countries i will try to narrow the trade deficit a little bit, is that ok? he doesn't mind. he wants to keep it the way it is. i understand. we have so many credible opportunities -- incredible opportunities before us and i hope we seize every single one of them. i am thrilled to be here on behalf of the american people. i know israel and america share the same goals and we have -- i have great confidence we will achieve tremendous assessed together. we can achieve all miracles together.
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i look forward to working with you and seeing more of this sacred land and getting to spend time with remarkable people of israel. thank you very much. thank you. jonathan: that was the president of the united states in jerusalem. those remarks and more throughout the hour. i warm welcome this monday, may 22. i am jonathan ferro alongside david westin and alix steel. a shocking week last week for equities. , treasury yields pushing higher and crude ahead of opec, all aboard for another extension. alix: i am pumped.
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checking the shale reaction. president trump has a lot to do in the next few days. will be very interesting conversation. he will unveil his proposal tuesday and wednesday. we will get minute meaning -- meetings. that opec meeting which you know is my favorite of the week. >> right now, we're in jerusalem. we heard extensive remarks from the president of israel. it struck me that the difference between a saudi arabian visit -- it is impressive to get that many deals done, and another thing to bring peace between the palestinians and israelis. tall order of business. why does the president think he can do that?
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>> he has called it the ultimate deal of deals brokering peace between the nations. this has been elusive for previous nations. something president trump had talked about during the campaign trail and now here in the middle east. senior administration officials point out there is no mistake that president trump decided to go to the arab nation in his first trip abroad as president in saudi arabia. it is no mistake he chose to go from saudi arabia to israel and of course here in jerusalem where he will meet later today and continue meeting later today and then tomorrow, private meetings with israeli prime minister benjamin netanyahu. old city located right behind me there, in the historic district of jerusalem.
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it comes as part of an effort for the president to reset relations with arab, jewett, and christian world. here ing his meetings israel, he will have a meeting later this week with the pope in vatican city. david: other presidents have tried to do this and we wish him well in his endeavors. it is not a quick hit or a quick win. in saudi arabia, i want to play for you what his secretary of commerce had to say. imagine, for the united states and the kingdom. david: good for the united states and the kingdom. describe it. >> to put it in president trump's very own words, huge. $300 billion worth of investment deals.
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that includes a $109 billion deal. when you take a step back, i interviewed executives over the weekend. they were impressed with the president's opposition with the ceo's'sl but also with and top executives that came to saudi arabia, including a female ceo. david: we will check back with you shortly during this historic visit. jonathan: vice president of global analysis. i am not sure the foreign -- they say they don't want peace between palestine and israel. the graveyard of foreign-policy initiatives, will this be any different? think the chances of this being different are very low. you have a divided palestinian
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landscape which israel benefits from to some degree and wants to between those divisions hamas. hamas has come out with a new charter and is trying to make itself publicly. there are deeply contentious issues on what these proposals will look like. proceeding this visit, a proposal was put out on web -- what that peace would look like. but i think this was mainly a andosal by saudi arabia peers to impress president trump and create a positive atmosphere to show that they are making a good-faith effort. a lot of positive gestures saying they are serious about peace. when you look at the reality of the conditions on the ground,
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that will be difficult. ,> when you find parallels lies that such a key part of the foreign policy this administration as we have heard over the last couple of days? there is a bit of a rebalancing. you have to look back to understand where we are now. george w. bush enabled iran's rise of the saddam hussein. the heart of the arab world. about, as we were so consumed with the wars, needed to recalibrate policy. focused on trying to remove the military conflict with iran ended that through the nuclear deal.
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now with the nuclear deal in place, trump has more room to maneuver and rebalance. that is what you see happening. it is knowledge trump can throw out the iran deal and risk structure in has place. that is why we're coming back and trying to counterbalance iran now that it received that iran has been shackled with the lifting of the sanctions. david: the president and his deputies have said they want take a hard look. it simply, donald trump as the president of the united states, chose the sunni side over the shia side, and what are the ramifications? >> it is not so black and white. is a review going on. i think you will still see the core of that in place.
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a very big accomplishment in terms of maintaining the deal. there is a lot we have to pay attention to, nuances. that is not essential to the nuclear deal. they kept it separate for a , knowing those violations would occur. i think you will see the u.s. maintain the nuclear deal. create thising to era of nato, get more sunni powers to shoulder more of the burden in the middle east and take more responsibility for the big conference including the islamic state. staying withll be us. coming up, the man at the center of every text deal matter, advisor and ceo will be with us. this is bloomberg.
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vienna oning in cassette to discuss a meeting with saudi arabia's minister. not spoken to or heard of any country against that extension. not achieved have our objective. >> oil getting an extra boost today. saying its oil production may stall out in the next couple of decades because of low investment. now,
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and the vice president of global analysis. what is the trade over the next three days? got to be you have long and a lot of the traders have taken this for granted. oil wet three bumps in each time we had a mini thisback into the 40's, time surprisingly they have not run into -- you don't want everyone long when the market starts to go forward and the start to move higher. drive itntinue to higher. i think they have taken the deal for granted. time weit is the last will see oil in the 40's. we won't see oil dip under 50 again. a tough position here that they have to keep cutting and
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maintaining the market and can never really any -- exit the cutting strategy? of the current juncture it makes perfect sense for the saudi's to force an extension among opec and non-opec producer deals. they are talking again about a longer extension, which is notable. what we have to pay attention to is as we get closer to a point as thosencing, and producers start to see, what right do for my exit strategy from the deal, that will be a big part of the talks thursday. russia is sending out signals that look, some sort of understanding ramping up production again, and though you have seen high compliance with the opec deal so far, once we get closer to the end of the year, you will start to see that come into play again. joe: focus and -- jonathan: focus in on the
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conversation we had minutes ago p are we talked about a situation where the saudi's and iran can agree on something when six or seven minutes ago, we were talking about iran being isolated in the region. >> it is the difference between market forces and geopolitics. the pressures on saudi arabia to extend these production cuts maintain a stable enough price of oil. it is still looking at an ipo in 2018 and preparing for that. it will have to do whatever it takes. iran has an exemption in the deal as it is ramping up its own production. that dialogue will become harder and harder on the opec front to uncover this. for now, market forces are in place. more questions will come into play on the geopolitical front. there are multiple fronts where they are battling each other.
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the iranians are up against a formidable front here with turkey as well. mentionedalix steel parallels. i just wondered, if i look at what the central bankers would do, they feed the media some suggestions as to what might happen at the meeting on thursday, as an mario draghi would come out with a rate cut. a nine-month extension -- >> i will set you up and go down to the end of the euro and then further. saudi's have always been transparent. they will tell you what they will do and then they will do it. five or six years ago, we stand around and laugh. time.heated all the
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we have now turned everything on its head. the opec members have all the discipline. get americans on board and they have the russians on board. they have had meetings with citibank and other hedge fund players. players who are trying to drive up production and grab every dime of profits. what you shouldn't take for granted right now, which we might have for four or five years, is the discipline that basically the saudi's are showing. don't take it for granted. i think the market will have some legs. >> at some point, there will be a reckoning. some point, you will have a battle for market share. what will slow down the market here, it is infrastructure.
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of buildup inot places where we have seen production stall here. infrastructure will not support the amount of production increases most of these guys are planning for for the next year or two or three. a million barrels of oil and the pipeline will not support it. oil by rail is a mess and inefficient and expensive. i think it slows down the ramp up of production that spoils the rebalancing that is here. a lot deeper going forward. >> you get lower prices and the permian oil is much lower. favorite play? one word. >> go simple. any of the san players will be good, maybe a merge. there is your play.
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thank you. the auto industry was rocked overnight with news that ceo mark seals will step aside. week, job cuts in the thousands around the world. be replaced by jim, running for the smart mobility unit. joining me is matt miller, a real car fan. not talked about stock price, matt. much is this because he could not get the stock price up? matt: a lot of it likely is due to that. the is a company owned by ford family. they get paid by the company depending on their dividend. they are not as sensitive to stock price changes as may be another company would be. since he tookop
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over. is still valued at a much higher valuation versus earnings than rivals like fiat chrysler, whereas ford is trading at 7.5 times earnings. strong.luation is progress not made any since 2014. >> take gm and ford. matt: ford has celebrated its 40th year in a row. kill it -- killer margins in the u.s. even when everyone was disappointed, they have 9% because of the truck sales. they sold 45. -- 45,000 in april. over $40,000 per unit.
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power,d strong pricing great strategy as far as the production of cars. mark fields got very conservative with production when he saw that sales may not continue to rise in the u.s. they have not made the move into mobility and have not made that move into the emerging investments as maybe bill ford would like to say. david: ford has not officially announced yet that there is a change. way,ing it plays out that is it a short-term decision or a long-term decision? are thinking 5, 10, 20 years down the road? i cannot have any inside knowledge into the ford family's thinking. -- hesay it tends to be tends to be a long-term thinker and is really concerned with
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more of what will happen in the future than with getting an immediate fix. i cannot imagine it is a short-term play by him. we will find out in an hour or 20 minutes or so if these , but i justtrue cannot see bill ford making a short-term moves like that here he is a long-term strategist. mary barro definitely looks like a superhero. she has tons so well compared to ford over the last couple -- several years. moves inking a lot of aboutof not worrying problem areas, focusing on big margin profit, making the company fiscally strong. gm had real foresight, focused on these really fantastic
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vehicles and produce really great vehicles especially into electric. ford has not quite done that. maybe they have to get there i more on the ball. whatare also focused on you will need and maybe not by in 10 to 20 years. up.d: coming the man of this -- at the center of almost every check deal that matters. he will give an exclusive interview to us. this is bloomberg. ♪
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private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. jonathan: this is how we set up this monday morning.
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a couple of weeks of losses despite the big drop down in d.c. last week. down about .4%. i thought that was fascinating given the magnitude of the drama in d.c.. >> it went down for a day and went back up again. >> oh my god, down 300. >> you know what he would say, keep calm and carry on. ok. us from the conference taking place in new york, he is being joined by a man behind every major tech and media deal coming along. jason. >> yes, i am here with the lines tree founder and ceo. you. to be with very much on the news in israel, the president is in jerusalem moment. this very
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from a dealmaker's perspective, what is the backdrop to the strip? tonothing like great timing bring together what is happening in the middle east and new york with respect to israel. obviously, trump does deal making more than anything else, very strongly 11-on-one with his counterparts. is an opportunity to get into negotiations with different counterparts in israel following other meetings later in the week. it is about not just what is happening overseas but what is happening here as well and the heartland of israel and and creating opportunities for people and dealmaking along the way. what is beingsly talked about here at this conference. a lot of deals came out of the
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saudi arabia trip over the weekend, are we going to see similar deals? >> conversations around political discourse but also dealmaking and the arms deal and opportunities to work together and trade deals. at things like repatriation and capital flows that can affect the market. what is happening in israel is peacest about middle east talks. it is about ways to look at partnerships with the u.s. and that will dictate capital flows that will have dealmaking in a new light. >> what sort of capital do you expect to go in? >> israel is a hotbed of innovation. probably along with silicon valley, one of the most innovative countries in the
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world for redevelopment of new technologies. it comes out of the fact that nothing is impossible. you have to really create things out of necessity. innovation in israel is always the heart -- the hallmark. the more represented in israel and nasdaq then come is like india and all combined. an astonishing statistic. it comes out of the fact they are treading an early stage with innovation and a flat structure. him --been a hallmark of immigration and new nationalities, 70 different nationalities in israel from a country of 8 million people. it is incredible to have a thinking about new ways to do it. increasing at almost 70%. a very nice time for israel and innovation all the way through.
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scene big companies like intel do business over there, is tech the most likely destination for inbound israel? have a political environment like you do in israel and across the middle east, and that is really overtaken by industry and development in next or it, technology is one of the best exported industries israel has to offer. that becomes what it is known for. --are celebrating this week very symbolic given trump is in jerusalem. it is about what can you produce and what can you create? the acquisition, the largest deal ever done from israeli company. there is a company where the data chance -- between different
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automobiles happened and it is a unique technology there. there is also cybersecurity and it is a very interesting company helping. all kinds of new issues arrive in the world to innovate and develop. matt: what you can see on television is president trump in jerusalem making an historic visit. part of what we are globally is the backdrop of geopolitics. how does that affect dealmaking, what you think about the ofsions and north korea, all the things in the front burner for the presidents overseas, is it slowing things down globally when looking at buying and selling? aryeh: it is the opposite.
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everyone is exhausted, whether it is your business or our business or politics in general. there is so much change happening. rethinking not only capital flows and trade deals are things like where the cash is coming from. when we come back, tax reform again. that will change the way we think about where it is coming from and how it dominates the market value globally especially in the u.s. amazon, facebook, google and we all the time. it is not just geopolitics because of new boundaries like brexit and what is going on with europe but also dealmaking. there is a real relationship between the geopolitical environment and trade deals. that affects a new global landscape that has to be interrelated.
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>> how confident are you we will see something this year with cap tax reform and what are the implications? aryeh: i do not have any more information than anyone else. there's a struggler -- a arounde, there is a lot changing the tax code. it is a complicated thing to tackle. we will hopefully wait for hanukkah gift this year. trips, whensting you're president, you can get something done a lot easier with the one-on-one negotiation then you can do with a complicated system like we have in congress. >> thank you for joining us. good luck. i will toss it to you in the studio. it is now official that
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ford is replacing mark fields hackett. he says mark fields will be retiring. mark turbulent be the vp of communications. david: he is promoted up from his old job. she was cio before. alice: we will have a news conference today and we will watch out for that as well. mark fields will officially be retiring. an update on what is making headlines, taylor? is on: president trump the second leg of his overseas
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trip. he was greeted by prime minister netanyahu who he will meet with later after the arrival ceremony. the president spoke with israel's president. president trump: what is happening with iran, many other parts of the middle east toward israel. benefit.d be the such a different feeling toward israel with countries not feeling so well about israel not so long ago. >> he does not expect any breakthroughs in the peace process. poor, care for the tomorrow he intends to promote a budget that will cut $1.7 trillion from entitlement programs and lower income americans. that is according to a republican congressional aide.
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democrats say the budget reveals president trump's true colors. primitive surgeries theresa may is backing down from one of the pledges of her campaign after polls show the labour party gaining and they plan to make elderly people pay for costs until a goes to $130,000. taxed." global news 24 hours a day howard by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. jonathan: rule number one of how to win an election, protect the voters, the elderly. we will try to get you more little later. coming up on this program, jpmorgan chairman and ceo jamie dimon. from new york, you are watching bloomberg. ♪
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taylor: this is bloomberg daybreak. on bloombergnoon, markets, new york times president and ceo. alix: in the media telecom space, an interesting year. a lot of m&a tie up as we go forward. any potential deals at&t and verizon are making, david gura is joining us now from boston. a special guest.
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you with us.ave thank you. you have this conference in three days in boston. what is the space coalescing around? >> i think volatility in the last few months has been the highest i've ever seen. there are a number of reasons. if you go back and look at the way the industry grew in the last few years, wireless or cable or satellite, we thought of those as separate industries. everybody realized two years ago that we are no longer in the wireless business or the voice communication business. everyone is in the consumer broadband business today. people bring different strengths and weaknesses to what is a larger industry canvas. we seeing the industry trying to step of providing a broader range of services across multiple different
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platforms and mediums for consumers to communicate and be mobile and watch video and be entertained. it is not quite clear how this will all work out at the final table. of it has created a lot interest in trading and volatility. >> there have been regulatory concerns about the political environment. are you optimistic? >> i think there will be a lot of volatility and a lot of speculation. have, we are we having thisom discussion for almost a year. those rules came off three weeks ago. investors were thinking there would be a flood of media activity. the reality is people have not even had a chance to communicate with each other for almost a year.
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the realization by investors that this may not be happening right now. when it does come it may be different than i thought. i am thinking about it differently than i was. i think it will continue through the rest of the year. if you count them up, which you willo, these companies define the future of broadband communications in the united states. you have got the cable companies, internet media companies. all of these companies are run by people who are fabulously successful launch the norse and many are controlled by shareholders. of the 16 companies are referred -- when you think about dealmaking and why it is so if you can tell me which of these fabulously successful ceo's and leaders in
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shareholders will find alignment and commonality with each other, and think about taking the industry in a different direction, because whatever the next deal is it will fundamentally change the trajectory, i cannot model that. what the regulatory environment wedding -- conclude about all this. >> do you know things where i hit -- where are -- do you know where things are headed? is positive from my sector because in the past, people who have deployed capital have not always been able to manage the networks the way we wanted to because the political environment has been intense. i think the direction the fcc is going has been positive for everybody. an open and free internet and more investment in creating different an alternative channels is a good thing. rate latoya environment that is harder to predict is the
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department of justice. who will be opining on transactions in the future? my industry, it is not new to have transactions with regulatory challenges. the acquisition a couple of years ago, they all rent into regulatory challenges. when you are talking about the consequences of trying to do a deal, and i mentioned this, $50 billion, these are career decisions p there are no do overs. it is make or break. you can get hung up for 12 or 15 months before you know whether you have a deal or not. these are all important businesses to run. those are important considerations for people to consider when they want to decide whether to push ahead or not. >> charter and comcast, why do you characterize the , --tionship >> i think what they did make
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sense for them. they're in the same dynamic environment -- environment trying to figure out where the world will be, they have great this us is franchises to bring to the system. i think by agreeing to operate somewhat in concert, they exert a little more control over how dealmaking might work out and what is in whose interest. it creates a little alignment, whether it is around wireless or their own negotiations for wireless services. it is probably intended to slow the view of activity, until they can be more thoughtful and control the dynamic. >> do you think other companies will pursue a similar arrangement? >> that is hard to say. the wireless companies have franchises.
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whether the introduction of amazon and dish represents -- this is all endlessly speculated about. but i do not think we will see andements like comcast other sectors. it is unique to the local cable franchise. if there were 100 million isseholds cable franchises, so xiao jie from regulatory perspective to put together a broadband solution that covers half the country, it has been blocked every time we tried. it makes it hard to require a national wireless carrier. it is $70 billion. just because it works very well in europe and wouldn't work very well in the united states, it does not mean we can rapidly get to a place where we have three
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competing service providers. much.nk you very back to you in new york, david westin. david: one of the issues with tax reform, the trump administration has been steadfast about moving forward on regulatory reform. jpmorgan ceo jamie dimon over the weekend, he says he remains confident some deregulation is on its way. >> when you talk about regulation, the trump administration wants to deregulate certain things. most of us in business think regulations have been holding that growth. all citizens of these countries. they are not jpmorgan. it is important to understand that. i am a to a secure will have some regulatory reform. after years of regulations, it makes sense. even my democratic friends, it makes sense to look at what has been done come what can be done better, what can help people
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expand the employment and grow the economy. wholesale flowing out of regulations, just looking, improvement was done. >> what do you make of which i think, investors were confused as to what that would mean. >> no one i know says that was part of the problem. they -- saying them you regulate smaller banks and bigger banks, that is understandable. let them sort it out. jonathan: that was francine lacqua. jamie dimon. joining me now for moore, head of policy analysis, i want to go back to our interview with the republican senate leader. we have not paid a lot of since i've been here, why is this week --
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this week's's budget is the third iteration. it is key because it is another expression of the president's priorities and largely the same as it was before. what the budget proposal is ramping up the spending by $54 billion and taking it out of domestic programs. to bew budget appears much more of the same. investors need to understand is not signed into law by the president. it is guard rails for congressional spending. it binds congress but nobody else. is acongress will want continuation of what has happened over the past four fiscal years. flat and stable spending and in this case, we think modest increases for defense and nondefense spending. there is no political appetite in congress for slashing
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domestic programs in the way the president is about to propose. >> reflect on the week we have had. was that d.c. was distracted and a white house was overwhelmed p are pre-much every contest and we have on the legislation, and getting the agenda through. is that something they can still do? >> i think so in many cases. it is important to understand, there is a difference. the difference is today, we will need substantial amounts of democrats in order to pass something, to put something in that bucket of infrastructure, immigration, which has not really started yet, financial services reform, those things. it will be hard to get things reasons anditical policy reasons. democrats and republicans have decided to diversion and really not cooperate. on the really big things investors care about, affordable care act reform, which is into
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there is not only the political will, but also, a designer by -- a desire by congressional republicans themselves to do these things. they've talked about growth before trump even decided to run for office and they would like to get something serious done. they can also use a special budget process. muchhose reasons, it is more likely than most other things. >> you sound almost sanguine about the possibility of guard rails put into effect. the resolution last time. the freedom caucus said wait until september. we will get back to you and get some cuts. mind onblicans of one how to approach the budget? >> today no. years, there has
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been dissension among republicans and democrats and the end result is we end up with a budget and we end up moving forward. jonathan: thank you. , we have this week guests -- that is the lineup through the week. a line up this morning, the market action is as follows this monday. futures on the margin up point 2%, and 1/10 on the s&p 500 after a couple of weeks of losses. through the other asset classes we go. treasury yields at the basis point of 224. the market reacts. from new york, you are watching bloomberg. ♪
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♪ >> president trump touches down
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in israel after his successful -- t to saudi arabia in ford has dropped a ceo and promoted the head of self driving cars. jim hackett is in. shaking the charts, stocks rebound after their biggest decline in eight months last week. are simply they dented. good morning. this is bloomberg daybreak. i am jonathan ferro alongside john -- alix steel. here are the scores. future scores up 1/10 of 1%, shaking up the drama in d.c. over the last two days. the euro is similar, up to 1.1245. opec can surprise us. you are up about 0.5%. david: president trump maybe traveling through the middle east but we continue in washington on his programs. the 2018 budget. joining us now from washington
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is bloomberg's -- how does this differ from the budget? how will it be similar? >> this budget we are expecting to see doubles down on the draft budget we saw a few weeks back. it will have more numbers and more specifics but the general theme remains the same which is very significant cuts on the domestic side, cuts to a number of different social safety net programs. a large number of cuts to the medicaid program and heavy spending on the military side, increasing the defense spending while cutting domestic spending is the theme. the overall goal of the administration is to balance the federal budget within 10 years so they take drastic steps to do that while continuing to spend. >> tell us why we should pay attention? the democrats were saying it was dead on arrival but we have mitch mcconnell saying, he doesn't believe that congress pays that much attention to the president's budget.
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why do we pay attention to it? done on arrival when you have democrats and republicans both saying they are going to do their own thing on the budget but it does give a sense of what the administration wants to do and some of the priorities when you look specifically at the $800 billion in medicaid cuts. those are dollars that were taken out in the house version of the health care bill so it shows that the administration is sticking to that plan even though it is going to start from scratch and do their own health care bill. it shows the administration still wants to keep those cuts in, something that is not going to be wrote -- well received in the senate. we have some hints at what the senate is planning to do by looking at numbers in the budget even though it is not going to most likely be becoming law. david: health care is on the agenda this week. we have a report out, right? >> the budget office is going to be putting out its report on the
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house obamacare repeal and replace bill that passed a few weeks back. it passed without a score so the lawmakers voted on it and the public were not necessarily aware of how many people would be covered, how much it would cost. now that the senate has the bill and it is looking to pass its own version of a health care bill they are going to have this as a standard. they are going to be able to know how much the health bill costs and how many people may lose their coverage under that proposal and they will be able to work with that number. that is a very important number. david: we learned over the weekend that former fbi director james comey will be testifying on the hill. when we expect that? likely not going to see him in public until after the holiday recess, the memorial day week at the end of this month. it may be june before the public but he issees him
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becoming more engaged with members of congress who are working him on a behind closed doors basis. a are trying to get a sense of what he knows and what he may have written down in the memo we read about last week, about his interaction with the president. we could see more in the papers before we actually see james comey testified in public but when we do see him in public it is likely to be a very big news event in washington. david: thank you so much for joining us. jonathan: joining us now to discuss what it means for the markets is the founder of colossae global strategies. with all the drama of last week, of 1%, down for tense shaking off the drama once again. why? >> we had the best earnings quarter we had in years. the equity's relatively buoyant but the bigger point is what does it mean for the u.s. relative to the rest of the world?
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here we have a five-point investment program to deal with trump travels -- trump troubles. they lead to policy inertia which leads to we growth, which leads to questionable earnings, poor risk award for u.s. equities which means a focus on the u.s. and the world. if you look globally, the u.s. has gone from leading global equity markets since the bottom of the great financial crisis of 2009 and now the u.s. is lagging the rest of the world and lagging significantly. the developed markets ask u.s. are up. the emerging markets are up 8%. the s&p is up six. if you are a global asset allocator, a multi-strategy and multi-asset portfolio, the question is not why the s&p has held up so well. the real question is, is the rest of the world starting to take the leadership away from u.s. equities? that is a big deal because these moves can last for years.
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3-5 years is the average when you have the handoff from the u.s. to the rest of the world. jonathan: we want to pick up on something you mentioned and we .ill strip back policy inertia. why is that a problem for u.s. equities? it hasn't been for the past seven years. >> but what we saw with president trump was a big move up. i don't believe that was on the trump trade. i was believed it was the republican sweep trade which means with republicans controlling all facets of government things could finally get done and we can get out of that. we have the federal reserve for the last seven or eight years, providing money into the system. we now have the fed stepping back so the risk in the u.s. is that you get policy inertia that growth doesn't come through but the fed has already started to move. you are likely to have at least one or two more hikes in the risk is that we have policy inertia raising rates, earnings
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don't come through, and you have a market that is now expensive. certainly fully valued on any measure, and the rest of the world moving ahead because it doesn't have the trump troubles. as the prior general and said, your d.c. person, we are going to have comey and mueller and these revelations for years. the average tenor of these special prosecutors is three years plus. this is the focus for the u.s. for the next couple of years. alix: what is the downside on that? >> you don't get any kind of fiscal stimulus. alix: is it a 10%? are we just going to see one and a half or 2% here and there? >> i think you have a situation where this is another point, to your first question, that active management is under tremendous is pressure -- business pressure to perform. the asset manager doesn't have the ability to sit back and say,
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i'm going to hold the 10% cash. they have to play. it suggests to me, if we do have a big mistake -- and the big mistake lies in the potential for the fed to raise rates and push the economy into recession -- i think you have to go more than 10% to get this market back to attractive valuation. that will be the key question for this move because it is ok with the u.s. up 6%. 10%, cane u.s. is down the rest of the world outperform or be positive? that is where you see the test to determine whether or not we have moved into a new regime where the rest of the world is going to outperform the u.s. alix: we saw that at the end of last week, europe stocks selling off quite a bit despite what we have seen and despite that. my question is about tech. you see the tech saw inflows.
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are there going to be sectors within the u.s. that you are going to want to buy to fight the rotation out? >> that is a great question. one, you have the trump trade and you take financials down 8%. jamie dimon talking about glass-steagall, brushing it off, it is a much bigger deal. small caps not performing well. they were supposed to be a big beneficiary of the trump trade so what has happened is we have corralled into tech. everybody is in tech so the rest of the market is close to its all-time highs but the breadth is pretty poor. everyone is buying bigger tech stocks and at some point tech is going to be a disappointment. that could lead the market to take a header. that could be a five to 10% peoplek that gets freaked out about potential recession in earnings collapsed. david: let's go back to where
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you started. it is all about earnings. so when you say what you said about the united states, is it because you think earnings won't continue? they have been good as you said. or is it because you think the earnings coming in now don't support the valuations? >> it is more the former and i think we have to remember that q1 2016 was horrible. it was a horrible quarter for energy, commodities, banks, everybody. up 14% year-over-year is what q1 was. up 14% year-over-year. it is quite good, but it is on an easy base. owing forward, we have a tougher base. there is the potential for the market to end up in q4 with no policy action, no tax reform, no health care reform, no infrastructure programs, with twice inikely to raise between the end of the year, and i think you look at 2018 and after the summer, markets are supposed to focus on the year ahead. you think, what is the upside if
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the fed is not going to support the economy? which meansterms, the policy won't get anything done and it is going to close, politically speaking. i would question whether it is open at all. that crack noses, -- that crack closes and now we are into midterms where we have the political risk in the united states. it has been in europe and it is gone and in europe, we now have the merkel and macron. it sounds good. team.inem you will have to get ready for ame of that for at least couple of years. we will be sticking with us. alix: here is a locket and winnersally, two big from the visit to the middle east. we will dig into the defense sector next. this is bloomberg. ♪
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alix: defense stocks getting a boost after the saudi ceo summits first big deal. andy martin, $28 billion, here is richard safran. buckingham defense. and under performing boeing. your biggest take away, the biggest winner over the weekend? >> it was clearly, lockheed martin but it was the defense industry overall. put this into perspective, that -- the deal was significant. saudi arabia amounted to about $70 billion for defense in total for all of our defense companies up until this.
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this was a significant deal from size and scope and the fact that it happened. second is saudi arabia had been looked at as a potential liability or risk to defense stocks. and the reason was you have an oil defendant -- oil dependent economy, there was going to be some shift away from defense and here we have 180 degrees on that. for this demonstrates is the defense sector in general and for the u.s., defense remains a very high priority, especially when the threat -- in the case of saudi arabia -- is in your backyard. alix: can you quantify what it does to earnings? how long until we see this trickle? >> let's take lockheed, for example. billion, i think lockheed will probably book about 4-6,000,000,000 dollars of that this year. is not like you can go to the
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stock room and full semester missiles off the shelf, it takes a while to work its way through. consequently, you probably won't see any upside to 2017 numbers. i don't think you will see lockheed martin change their guidance for the year. there is an upside to 2018 numbers. dollars,-6,000,000,000 maybe a hundred million to a billion dollars could be incremental, depending on what lucky does for next year. in the case of my assessment, that is maybe $.25 to each of next year's numbers. jonathan: a couple of things i find interesting, how much of it is actually new business? the former president, barack obama, did sign off on a lot of these contracts already. was this a signing ceremony and what percentage of it was a signing ceremony and what percentage of it was new business for lockheed martin? >> i think it is a little bit less than half was actually brand-new business.
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tanks withdeal for general dynamics. it has been in the works for a long period of time. they were going to be selling some helicopters to saudi arabia. thethe joint venture, with saudi's for one of 250 helicopters, that was brand-new. the interest in the missiles, that was relatively new. thereuently, good point, was a lot of that that was already in the works. i think some of it was maybe accelerated to have the signing of the agreement now but i would say less than half of it was probably what i would consider to be brand new business. jonathan: let's go with price. the story in the new york times is jared kushner was in the room at the beginning of this month trying to make this deal happy. he got on the phone to the ceo of lockheed martin and try to get the price down on the radar system. what is your read into what happened there and what are the margins like on these actual
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goods that are being sold? -- that is thet typical horse trading. you see it with these kinds of deals. you want to sell it equipment to somebody, so i think that is very common. i think that is a typical thing that you see in defense. now, the system, let's use that. if we are selling that to somebody like saudi arabia they are roughly $1 billion a battery. of them, and two saudi arabia could possibly order as many as six. typically, when you ask about your margin question, typically you have it in two buckets. foreign military sales and direct commercial sales. for military sales, you are looking at maybe 1011 or 12% even margin pending on whether or not there are changes made to the system. david: what does this do to the balance of power in the region? are their knockout effect where other people in the region like
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israel say saudi arabia is upgrading, i've got to upgrade too. >> that is exactly what you should expect. there is going to be a regional rearmament. first of all, you mentioned president obama. one of the things that he did was he did sign off on a lot of equipment deals last year but he also didn't sign off on a lot of equipment. there is a need for a lot of modernization and what you are seeing now is the start of a regional modernization effort. israel included. jonathan: to david's point, go back to the proxy war between saudi arabia and iran. there was concern about what these could be used for, great concern that lead some people in the united states to have reservations about these sales. have we put those foreign policy concerns to one side and put business and sales at the forefront of what happens in the middle east in the united states? ati am not a policy expert in my view, for example, i don't
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think we have completely thrown our human rights concerns or our policy concerns completely aside. i don't think we have done that. if we are talking about systems like sad, that is defensive. that is not offenses. to use that because you want stop the bad guys missiles from coming into your backyard. i don't think we have actually thrown away the book on policy. what i do think is that we need to support our allies in the region. that is critical. there are some that actors on the stage and i think it is crystal clear that not only do we need to show support but we need to show effective support and we need to show tangible evidence. david: thanks to richard safran of buckingham research. j polaski, you will stay with us. coming up on noon, we are dealing with new york times president and ceo, live from new york, this is bloomberg. ♪
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david: this is bloomberg. i am david westin. we are looking at a live shot of president trump at the western wall in the old city of jerusalem, one of the most sacred places in judaism and right next to one of the most sacred places in the muslim faith. you go up and you pray and you write out little prayers and stick them into the western wall. this was originally part of the foundation of the original synagogue. it is official now, moving onto ford. mark fields is stepping down and the head of smart mobility operations is going to be taking over. fields had already put in motion plans for new autonomous vehicle technology and just last week, job cuts in the thousands. ford will hold a news conference today at 9:45 a.m. eastern time. joining us from our detroit bureau is jamie butters. with us is jay velocity of
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polonsky global strategies. ?as this a surprise was this an indication that mark fields was on a short leash? >> there have been warning signs that something was coming. shareholders were dissatisfied, the board had scheduled extra time to probe mark fields on what his strategy was to turn things around, and most importantly to build some shareholder confidence in the fort story and where they were going. shortly after that, they had their annual shareholder meeting which was there virtual meeting, but as keith naughton noted, the build -- the board defended the company and their execution but they never mentioned field by name. that was a signal it was going to be mark. there was some sense that mark fields could make some changes and maybe fire a couple of people and regain the confidence of the board, give him another shot but it didn't happen that
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way. then they made this move. that was not a surprise but the surprise was the choice of packet. , one of the top executives in the industry that has a nice job. david: they gave him a bigger job. tell us about him. how long has he been with ford and how big a surprise was it? >> it has just been a few years and it just shows that -- bill ford is the executive chairman -- he really values that mobility, that strategy side of the business to be the most important things, to change the company and define where it is going. about autonomy, the nuts and bolts of it, it is trying to figure out what is the business. how do they fit in the value chain? david: will they take money off of mobility anytime soon? >> probably not. their plan under mark fields was to have fully autonomous, robust taxisavailable -- robot
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available by 2021 and that would give them the chance to start doing something. uber still loses a lot of money. it is not likely they would make money instantly, but it is about defining where they could go and tell a positive story. david: thanks so much to bloomberg jamie buttersdavid:. jonathan: thank you very much. the opening bell is coming up next on bloomberg daybreak. through the stores, three minutes and 35 seconds away. futures up about a quarter of 1% on the dow, causing three points on the s&p 500 after a couple of weeks of losses and the soft week last week as well. down for tenths of 1%. you are watching bloomberg. ♪
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jonathan: this is bloomberg daybreak. futures are up firmer. a positive three points on the s&p 500 and up about one/4%
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across the dow in the s&p 500. you can hear the opening bell ring in new york. of 1%llar is down by 2/10 with angela merkel in front of students saying the euro is too weak and that's why the german trade is positive. the kids get out their phones and start buying up the euro. i have that in my mind. happened but the real reacted. treasury yields are up about a basis point. crude oil 7 is up by/10 of 1%. opec is getting on board with another round of cuts in production. seconds into the open, the dow is up by 55 points and s&p
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500 is up by five and the nasdaq up by 15. oil gave up some of its earlier gains. watch of that space as the romanian president said a saudi gathering is a show without political value. interesting commentary. take a look at ford as they have a new ceo, jim hackett as well as high and clarion in a merger. it's worth almost $6 billion. market, we sawal movement last week. versus the dollar index. it's an historic correlation of 30 days. negative but much less negative than we have seen. that tells me that either we are seeing correlation start to pick up which means the macro environment is driving it or the dollar is moving on something different than stocks and how will that wind up playing out
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over the next few months. jonathan: let's bring in the chief market a technician at&m partners. our correlations making a comeback? >> it seems that way. it remains to be seen about how markets react. angle andhe political the whole policy angle and what's happening in europe in terms of the european recovery. earnings and growth are better in europe and elsewhere than the united states. jonathan: what about the dollar weakness story question mark friday we had a snapback, erasing everything we saw as far as losses tuesday. one thing we see consistently as dollar weakness. will that persist? >> we don't have the growth we talked about so i do. year thinkinghe we were going to get a lot done because we had a republican
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sweep and the fed was going to be more active in rates were going to be higher in the dollar would be stronger. all of that is unwinding and you see it in the stock market with financials and small caps not doing well. , youve seen it in yields have seen it with the yield curve collapsing. that's a sign that reflation is not in the mind of folks and you have seen the dollar weaken. investors are going elsewhere. they are going into europe which has a massive trade surplus. buyerou put that natural of euros together with the financial buyer of euros, you get a stronger euro and a weaker dollar. this has been very good news for emerging markets as well. jonathan: on the resilience of the bull market, what are the technicals and what do they tell you about that? >> we had the biggest one-day lost last wednesday since september. despite the fact that it was one day, we saw short-term measures
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that have been extreme as we have seen in the last three years. volatility index was up 125% which is the biggest ever. vix spikes to a level that was correlating with the lows. our bias is still to the upside. we have about 60% of the russell 3000 stocks above the 200 day moving average. if that were to weekend, that would be a concern. alix: you can see that so the breadth is still moving. how does that compare to the rest of the world? how is it wind up playing out versus the u.s.? >> if you go back to be election, there is a quick spike in most global markets including the u.s.
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but since december, the rest of the world is outperforming the u.s. we have had seven years of underperformance for the u.s. and that spread was likely to converge. a lot of global markets have gone nowhere for seven years. if you look at asia and europe and latin america, they have done nothing. i think they are just getting going relative to the u.s. and we think that's a trend that continues. trend as far as dollar weakness? we have had a huge move. i don't think europe is a great buy right this minute. it has had a big run with relative strength. alix: you spotted that before anyone. >> thank you. i think the big opportunity is in asia particularly in japan which has lagged in a starting to move. the best move in
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decades with earnings growing at 15%-20% and stocks are cheap. japan is interesting right now and i think china is very interesting. people talk about the reflation trade not working and commodities have been weak. what china is trying to do is cool off their financial sector and not really impact the real economy and there are ways to play china away from the state owned enterprise companies where you can do very well. chinese and strengths are hitting 52 week highs even though the market is very concerned about china. i think there are opportunities and yes, the euro strength and other currencies are moving. is far from being overvalued. i think we have to get towards $1.20 before people get freaked will stop strong euro the european economy. david: where is the gdp? >> you have had five quarters of growth.
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it's growing at roughly 2% year-over-year in this corridor which is well beyond the u.s. .7 %. japan quietly is actually growing in the demographic problem of not having enough workers is starting to percolate into higher wages which is trying to percolate into consumption which with exports and the other big thing japan has is the 2020 olympics. infrastructure spending starting to kick in now with tourism that is working. japan has become a huge tourist destination for the rest of asia. of the and out headlines, japan is starting to do some things right. jonathan: well greece had the olympics. but 2020 is a good part of the story. alix: taking a look at the u.s., where do you see the sectors
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making it? we talked about technology but where else is the value? >> tech is the leadership sector and there has been talk about how it is top-heavy. it's true there are big cap stops driving it. it's much more broad-based than a handful of stocks. there is a lot of good sectors in the u.s. a mad speaks to the ongoing internal rotation. consumer staples and utilities look to break out and home builders hit a new high last week. >> how about industrials question mark i think that's pretty interesting. thehen you think about trump trade, industrials, financials and to some extent materials and energies, a huge move up after november lows. it has lagged since mid-december. if you look at the percentage moves that posed sectors had, it was a crazy move after the november lows. they have kind of worked off
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their positions since then. our thought now is it is time for the industrials and financials to regain some leadership. if they start to roll over again, that would be more concerning but now, it's a consolidation of what we saw in november. alix: it's a value versus growth trade? could that work? >> i will defer to our technician. >> i think growth has been outperforming recently. we don't tend to look at it as much in that sense, more sector by sector on the stock level. most of the sectors in the u.s. are above the 200 day my thing -- 200 day moving average. alix: that means you don't have a call on growth versus value? >> not everybody looks at the market that way. i think the focus is much more
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sect oral. we had financials and small caps that were part of the trump trade and they rocked upwards 20% and now we have been either working them off or they are not performing. .echnology took the lead can technology sustain? to me, what else is coming around next. interesting and i think industrials are very interesting. there is a lot going on in the industrial sector to reinvigorate themselves and to me, that's a sector that looks interesting. david: thank you both. we have some news -- is associated press reporting the general michael flynn who was briefly national security adviser will declined to testify before the senate intelligence committee and will invoke the fifth amendment according to the associated press.
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more trouble i'm afraid for the trump administration. jonathan: 11 minutes into the session and you would not know that that would mean anything. we are up across the board. everything from last tuesday. from new york, you are watching bloomberg. ♪
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alix: this is bloomberg daybreak. oliver right, up, co-ceo of cif see. cifc. this is bloomberg.
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tomorrow, the of ministration will release its proposed budget for fiscal year 2018 and all signs point to increased military spending offset by substantial cuts including cutting the state department by as much as 1/3. wrotehan 200 companies secretary of state tillerson decrying the effect of foreign aid cuts. andrew tisch will take us through it. explain why this is important to companies. foreign aid ishy important to the country but why is it important to specific companies? a, one you think about out of five american jobs, 41 million jobs, are dependent either directly or indirectly on foreign trade. not having those jobs as easily lesssible because we have and less foreign aid is something that should be of concern to every business that does business domestically and overseas. david: what are the advantages?
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foreign aid is less than people think it is. less, the foreign affairs and foreign aid budget is less than 1% of the total budget. 3/10gn aid itself is about of 1% of the total you was budget. david: what would be the effect ?n business what would be the effect of it was in a limited it? >> the effect on business would be you would lose to foreign competition. china has increased their foreign aid by 780% since 2002. you know that more and more countries are spending more and more money in africa and south america and asia. they are trying to get the business that is otherwise coming to the united states. of the bigne
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headlines over the weekend was the amount of money spent on military contracts and saudi arabia. russialikes of china and tilde void, will these countries stop looking at these lows that could come from the united states and look elsewhere? >> i'm sure they would but they would also have to look at the technology they are buying and whether the technology the united states has to offer is more advanced than that of other countries. there is a major technological point of view that comes into play. so this administration knows they don't have to give the money away but they can create the loans. >> yes, but a lot of that money is not going to the top of the pyramid, it's going to the bottom, going to foreign aid, the agricultural level of some of these countries. a few years ago, i was in kenya
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and ethiopia and had the chance to see at the base of the pyramid where the money is going. i can tell you that the money is going to subsistence and survival and helping the lowest levels of society move up. when you do that, you have less -- fewer people who are feeling that they are underprivileged. jonathan: would it be wiser to look at the foreign aid project and level things to wear you think they should be focused and do the things this administration discusses when it comes to the military spending? >> there is no question we should look at where we are spending our money. i am not in the position to say exactly where but what we should 31%do is wholesale cut which is on the table now.
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retired generals and admirals agree with me. well.ators as there is enough of a hew and cry that warrants taking a close look at it. we are calling on secretary tillerson to work with business to come up with how we can best spend the money so that it projects the u.s. image as effectively as possible in many of these countries. foreign aid in what country is most important to you was a businessman? ande are in five businesses i would say that the most important would be for our diamond offshore people. otherwise, for the most part, we are in domestic businesses. demand, far as external you mentioned kenya and india. where will be the most demand
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coming from that you think foreign agent go to? >> i believe at the lowest levels. lever the taken amount of money we're spending for agriculture training, providing enriched wheat and ethiopia, providing at the lowest levels and getting the most leverage for that. i don't know what went on with secretary tillerson but i'd kate bit -- but i doubt he came in and set i want to cut my budget by 1/3. isn't donald trump the one making this decision? >> while the president is the final arbiter on that, secretary tillerson has to provide the president with a plan as to how to spend the money and what to spend it on. feel that secretary
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tillerson, as a business person, would probably be in a good and workto understand with american business on how to to most effectively pass that money along. jonathan: has the state department thought of -- change the way they've thought about soft power? they need to regroup here and see what soft power really means. we believe through the u.s. global leadership coalition that soft power is one of the most effective tools we have. , ourny of the generals advisory boards are mostly retired generals and they all softf you don't have
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power, give me ammunition instead week as we will have to have boots on the ground. the last thing that most of these people want his boots on the ground. david: thank you so much for being here on this important issue. as we speak, the ford news conference is taking place at their headquarters in dearborn, michigan. transitionacting a to jim hackett coming in. over 1.5% stock is up in early trading this morning. online and check out our charts and graphics. about ours anything conversations, you can watch it again. this is bloomberg. ♪
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city,an: from new york you are watching bloomberg daybreak and we are about 24 minutes into the session. we are of i about half of 1% on
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the dow. last week's big move to the downside has been shaken off largely. it's a resilient bull market. treasuries are on the margin and the yields are up one bases in an dollar weakness is the story on the back of the d.c. drama. this morning it's about a euro strength. solid but theen politics are playing in with angela merkel talking to students in germany. 4/10 of 1%.uro by alix: the ford press conference is taking place right now. the drama overnight, mark fields retiring and jim hackett who was , he willund specialist
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be taking over. a lot of shakeups in the board as well. it was a big shift for ford. bill ford is the chairman and he is speaking right now. he came back from australia years ago and took over and shook the place up. he was big about the environment and he said we will take a different path from the rest of the auto industry. he has done this before. alix: it takes along time to change what happens at a carmaker. two years is not enough and maybe three years is not enough. jonathan: here are the big events this week -- on tuesday, we will get president trump's budget proposal will stop wednesday, the federal reserve minutes and
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on thursday, opec meeting indiana and we wrap things up friday with a g-seven summit. david: people think the fed may make an action on the balance sheet this year. jonathan: the president of the new york fed told us that. be in houston thursday and i will talk with the shale players to get their response on oil. in and we26 minutes are up by 0.5%. you are watching bloomberg tv. ♪
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vonnie: the new ford ceo jim hackett is speaking out for the first time to address the public and the press since becoming ceo of ford. let's listen in.
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>> the sense of capitalism, the sense of people -- this is frankly the way i am wired. rolell play an important in a sounding board for me, a co-conspirator in thinking about strategy, i'm very comfortable with that. in our organizational design, i have asked him to take two things off my plate so that i can focus in certain areas. is really a source of optimism for both of us. is time the rubik's cube being turned around, you have just as much an advantage in that future is anyone. -- as anyone. have that won't be lost is this great business, the great vehicle business, the wonder -- the number one vehicle in the world is made here at ford motpa


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