tv Whatd You Miss Bloomberg December 14, 2017 3:30pm-5:00pm EST
pelosi remembered newtown. >> in their name, and the name of the 90 americans lose their lives to the nonviolence everyday. and the 120,000 americans who have been killed by guns since newtown. we will never stop fighting for common sense, gun violence prevention. mark: connect governor dan malloy ordered flags in the state be lowered to half staff. british prime minister theresa may joined other european union leaders in brussels at a summit on security. her visit came one day after members of the parliament, including some from her own party, voted to change her planned legislation so it guarantees parliament will get a vote on a final deal on brexit. the withdrawal bill is making good progress. we are on course to deliver on brexit. mark: last night's voting
comments raises questions on whether prime minister may can get enough backing of her vision of brexit. she says she can still get the bill on the withdrawal from the eu through parliament. john cornyn says arizona senator john mccain should be available on the senate floor for crucial votes to overhaul the u.s. tax system. mccain is receiving treatment at walter reed medical center for side effects of his ongoing cancer therapy. cornyn says the timing of the taxable is still unclear, as discussions continue on a range of topics including the child tax credit. the texas republicans also said he has confidence in robert mueller. the northeastern region are underwater. thousands of residents have fled for their lives following extensive flooding. authorities say it was caused when two rivers overran earth and dikes.
firefighters are using helicopters to conduct rescue operations. global news 24 hours a day powered by over 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. ♪ julia: live from bloomberg's world headquarters in new york, i'm julie chatterley. scarlet: i'm scarlet fu. joe: on joe weisenthal. julia: stocks nearing session lows as marquette -- small caps leading the losses. joe: the question is, what'd you miss? scarlet: internet service providers one today's tug-of-war. delivering a blow to content providers. michael beckerman, ceo of an industry group that represents netflix, google, and amazon joins us in the next hour. another shakeup in the media world coming from disney's
allocation of 21st century fox'ss. they gained the movie studio and a remarkable stake in sky. wo senators threaten to throw the gop tax overhaul into the lurch. susan collins and marco rubio worried it could break an agreement between republicans. julia: what'd you miss? in. retail sales rose more november, and the previous month was revised higher. that's according to figures received -- released today. boston playing of consumer demand as -- broad strengthening of consumer shopping. neil, great us is to have you with us. >> things are good. joe: thank you for coming. [applause] -- from new york, this is bloomberg. --
julia: would you like to say some things or talk about productivity? >> the consumer took the rubber band off of the casserole last month -- the cash role last month. with interesting is they are spending, accelerating in areas sensitive to the housing market. particularly things like furniture, and building material stores. at this point, it is getting hard to argue that this is a rebound from hurricane damage. i believe there is something more fundamental to it. our support in stronger consumer spending, you can argue the growth is overstated relative to income. at the end of the day, the labor markets are healthy, that will support consumer spending. at the same time, if you look at the inflation data, apparel prices plunged in the last month. despite that, these retail sales
number are reported in nominal terms, they reported growth of 0.7% month over month. that means the volume of clothing retailers was quite strong. i think the consumer is healthy, this has been a year where we have seen broader growth, business investing has been quite strong. there is still room for inventories to accumulate. i think the economy is heading into the year with a strong economy. scarlet: with her janet yellen and the fed raising their forecast for 2018 gdp to 2.5%, saying that economy will get a short-term boost. nothing that will last beyond that. what does that mean for retail sales? how much more heat could we get in retail sales? >> more reasonable consumer spending estimates for the next year is probably around 2.5-3 percent. say nominal income growth, wages are growing about 3%, for
around 2% and then you have inflation, 2.5 to 3% is reasonable. joe: one of the most consensus ideas going into 2018, if i had to summarize, things are good but watch out for inflation. -- could we see some upside on inflation that people are not anticipating? >> i am not an inflation nest -- inflationist, i think we will do stronger with growth. the notion that inflation will take off, it doesn't take off. expectations are anchored. process,lation is a especially outside of commodities. if you look at service sector inflation, it is moving slowly. i think you can see a couple of quarters were core inflation is surprising on the upside, but it's nothing to wring your hands over. i think we have a firming of
inflation, but i don't think it will get out of control. scarlet: any upturn we get will be well telegraphed, something we will know ahead of time as it moves higher? >> inflation is a process. to me, where is it going to come from? expectations are anchored, wages are moving up slowly. at the same time, productivity is picking up. productivity rising is at the margin, that's good for real growth. its disinflationary. julia: we are seeing a number of economists reiterate that concern about the lack of productivity growth. you are saying there's some optimism,easons for one is the rotation into productive industries like manufacturing, in particular. >> i think productivity pessimists are fighting the last war. productivity has been very weak, that's no guarantee for future
results. that doesn't mean anything about what will happen forward. there are a number of reasons to be optimistic. when you mentioned about manufacturing is another example. you have had a rotation of workers into the manufacturing and goods producing industry. they tend to be more capital intensive and more productive. we saw pmi reporting very strong employment growth. look at the data. october,es fell in despite the surge in manufacturing output. that tells you that we are not building inventories enough. joe: to clarify this long productivity slowdown, it's a composition story. have seenhe growth we in the economy is in sectors where you don't tend to see if much productivity gains because their services can be replaced. >> that's part of it. if you think about it in a more fundamental basis, it comes down to capital deepening.
that's a huge driver for productivity growth. investment relative to hours worked. we had a strong jobs recovery, not a strong investment recovery. that is changing because we are at full employment. look at what the atlanta fed is setting for growth, 50%. that's after a quarter in q3. , thate strong momentums should boost the capital's stock and imply capital deepening, which means stronger productivity. julia: at one point can companies start raging -- raising wages as opposed to having prices to combat that? >> they can raise prices without having to raise inflation, they are offsetting -- they are getting upset from the bottom line. julia: 2018? joe i think it's happening. >> the rebound story is no longer a forecast. it's happening now. 1.5%, that's not what we saw in the 90's.
it's certainly double the rate we saw in the last five years. i think productivity is picking up, that means recovery has more room to run them people appreciate. scarlet: productivity gearing up and getting in their. thank you so much. coming up, trips in the final sprint -- trip in the final sprint. the republicans that could derail the president's tax plan for christmas. rubio and collins. this is bloomberg. ♪
he complained gop leaders found the money to lower the rate, but can't find more to help parents raise their children. president trump was not so convinced. >> he has been a great guy, supportive, senator rubio will be there. we are doing very well on the tax front. we have tremendous support. scarlet: here with the latest developments is sahil kapur on capitol hill. marco rubio could be the spoiler. we thought everyone was keeping their eye on susan collins, but he is taking his heels and. >> he is certainly emerging as a last-minute obstacle to pass this bill days before the senate and house hope to get a final conference report wrap up. he has spent weeks, probably months insisting on a larger child tax credit. 2000 bute amount of to what he told me, was he wants the refundable portion of the child tax credit to rise from
the 1100. he didn't specify an amount, but he is going to vote against this bill unless that happens. i spoke to senator hatch, he was unclear as to whether those demands can be met. senator rubio looking at the potential novo. we have senator corker -- no vote. nothing has changed for senator corker. he says those will be difficult to overcome, but he will look at the final bill before making his thoughts known. republicans cannot lose any more members if they vote no. scarlet: is there anyone else senator rubio may be speaking on behalf of? >> he is working with senator mike lee of you talk to expand the child tax credit. they have worked together on this. i contacted senator lee's office, he is not making the same threat as rubio. what his office told me is that he is undecided and is working to make the child tax credit more generous.
apart from him keep your eyes on senator collins, she is also undecided. she has made a number of demands related and unrelated to taxes that may or may not be met. joe: as soon as this headline crossed that rubio is threatening to vote no, you can rolling,ybody's eye's saying no he will get rolled in the end. is that too cynical? is that groupthink conventional wisdom is dangerous and lazy here? >> you are correct that is, the general consensus that he will come around in the end. and won't ultimately play spoiler. knowing that, i asked him specifically isn't it going to be a tough position for you if you are the deciding vote? his response " not tough at all, all." he is clearly willing to die on this hill.
as you mentioned president trump doesn't buy it, how it shakes out in the end i don't know. he is taking -- digging his heels more than anybody would expect. julia: not credible when he voted last time with the same complaints. what about susan collins? on made her yes contingent further stabilization measures, particular for obamacare, given the individual mandate reveal. where does she stand? will she be another one to vote for promises that she doesn't follow through? >> she is in the difficult position of casting a vote before she will probably know whether congress will adopt those health care stabilization bills she has demanded. that will be a difficult decision for her. i don't think it will be clear whether the house is going to pass the bill by the time the tax bill comes around next monday or tuesday. apart from that, she has asked for other things, some of which have been met, including
lowerin the income thresholdg for expensed eduction. she has also objected to rate cuts for people making $1 million and above. 36 -- it goes down to 37%. who knows, that may be an issue for her. joe: julia noted he voted for the original version that hadn't expanded the tax credit. was it the fact that they bumped up the corporate rate to 21% and brought in the tax break for millionaires that emboldened rubio to feel like he can ask for more? >> that's exactly right. the the priorities and changes to the bill that upset him. he said republican leaders managed to find more money to lower the top rates for the highest earners. but couldn't find more money to help parents raising children. that seems to be the crux of his problem. he voted for the initial bill,
he has not in the past been a republican senator who has killed major pieces of legislation, as some others have been. that's why i think there has been so much skepticism. scarlet: he can usually be counted on. sahil kapur joining us from capitol hill. let's go to stock of the hour. retailers are trading lower, stock of the hour is an exception. a diamond in the rough. tiffany's is at its highest level in three years. julie hyman has more. joe: are they getting into crypto mining? are the for sure was they were doing a the currency. julie: tiffany, joe thinks you should get into crypto -- cryptocurrency benefit. it may be an acquisition.
fundamentally he likes, where the company is going at this point. we could see an increasing tailwind from currency. we could also see earnings for sure lift with tax reform. he is talking about tiffany maybe an attractive acquisition target. city analysts are talking about strength in some of the european luxury and jewelry companies, and they may be considering acquisitions. companies like lvmh, swatch, if you connect the dots, you can see perhaps there is some speculation that tiffany could be attractive. you can see what these companies have done today, their currencies have gotten richer. julia: julie hyman, speaking there. up next, policymakers are doing the utmost for rate decision, but do they have to be? we have the charts you can't miss. from new york, this is
♪ it's time for the bloomberg business flash, a look at some of the biggest business stories in the news right now. tom and this is said to be planning to step down when his term ends in 2019. earlier, there were reports that the chief officer could step down as soon as february. in october, they warned employees that serious consequences from a probe on corruption. downal reef is stepping from the supervisory board. the company has been rocked. an accounting scandal that they are plunging. a raise more than $11 billion amid values. earnings for this and last year would have to be re-spaces. facebook plans on testing six
second as starting next year. according to the wall street journal, which will have people briefed on the strategy. it will appear before videos begin playing. facebook is also learning how to pay publishers to insert it midway through a video. that's your bloomberg business flash. scarlet: that would be annoying. what'd you miss? central banks and their meetings this week. what was a common thing? it was cautious optimism. whether it was janet yellen, mario draghi, or more holly -- mark carney. we're looking at the citigroup economics of price index. it is higher. this line doesn't indicate growth, the -- it's the extent to which data is coming in better than expectations. we are at above 56 well above, the average of the last nine years. this index is a high list --
highest since 2010. plenty of worries about it. mark carney said worries -- economic growth has been softer than expected. the gdp forecast was rate, but not inflation. mario draghi says europe's economy is not strong enough to take it off of qe. yellen says considerable time addressing the flat yield curve and talking about what an inverted curve might mean. joe: it's such a beautiful chart. all the talk about why don't people care about a little reds and white markets never selloff? but look how good things are. the fastest rate in years. the simple answers, isn't it? let's talk about stocks and whether they are in a bubble. everyone can find their data points, you can find and say it's a bubble, find another and say it's normal. here's one for the normal argument. the pe onio of russell 1000 growth companies versus the spread to russell
1000 value companies. you can see during the true bubble, 1999 the premium people, were paying for growth which is absolutely extraordinary. 50.e then, the spread under you can see that's exactly where we are right now. you could make the argument that people are not paying out the nose or anything. you can also make the argument that people are paying for everything, which is why these -- this difference isn't that big. in this measure, it looks nothing like 2000. julia: qe little boats, it's all relative in this case. what about europe banks? scarlet mentioned some of the headlines we got from mario draghi think growth estimates increasing. inflation is still a worry. we have those 2020 forecasts, still nowhere near target.
look at this. we have seen an improvement in jobs being added in europe. i am looking at what's going on as far as youth unemployment is concerned. for most. year area companies, it's incredibly high. you have the european union average which is the yellow line,, over 18.5%. look at the purple line, italy, over 34.5% youth unemployment. greece, 40%. 6.6%.y, you get a sense of the greater levels of satisfaction in germany. imagine if we could get these guys back to work and what that would mean for growth, and the suppressant that we see as far as wages are concerned. scarlet: this is a great snapshot of the two speed europe. julia: all the enthusiasm about europe, there's still a long way to go. scarlet: we have read on the
the nasdaq turning low, after the net neutrality rule. i'm julie chatterley. scarlet: i'm scarlet fu. joe: i'm joe weisenthal. we want to welcome you to the closing coverage every weekday from 4:00-5:00 p.m. eastern. scarlet: we begin with our market minute. a lot to go around for the three major indexes. the rollbackack -- of the net neutrality by the fcc as the reason why the nasdaq finished lower. the s&p 500 lost ground after marco rubio's spokesperson said he will vote know if he doesn't get what he wants when it comes to the larger child tax credit. joe: not huge, this text debate is getting interesting. scarlet: is certainly is -- this text debate is getting interesting. scarlet: it certainly is. we're seeing highs for the s&p and dow. small caps leading the way, but let's lead with big names.
disney and 21st century fox were the highlight because disney agreed to a $52 billion deal to buy some of the assets, including a movie production house, and a lot of pay-tv channels that include fx and national geographic. is about $29.54 a share. , pharmaceutical is getting more than 10%. the drugmaker is ready to pull all the stops. he has plans to cut 25% of the workforce. dividends -- suspend dividends, and forgo employee bonuses. investors are rewarding him. pier 1 imports down almost 30%. a disappointing earnings forecast and a slow start to the holiday season. we have seen a shot for the retailers, but not all of them. joe: government bond markets, let's look at the two and 10.
we had fireworks yesterday, pretty big rally in government bonds across the board. quieter today, but the backend -- the short and rates backing up. we have the strong data out in the morning reconfirming the solid path of the u.s. imperials up to 1.81. . is not a buzz much. much.ennials not up as julia: the ecb raising significantly. more or about the inflation target here. the first look at the inflation for 2020, 1.7%. they have a goal of at or just below 2%. they are still struggling after all this time to get inflation up. that doesn't mean the euro didn't have a great year in 2017. it's the best-performing inrency versus the dollar
2017. all of the g10, take a quick dive into the bloomberg. you can see some forecasts. saying they think the euro could rally to 1.30 by the end of 2018. that prediction in the blue, one dollar 30 not much optimism, if you look at one. 21. interesting uncertainty if you look across what analysts are saying about the prospects for the euro next year. we saw a session high for sterling. bank of england holding back on rates. we did see some stronger retails from the bend over. quick look at what's going on in the australian dollar. the canadian currency there, as well. stronger, weighing on the dollar. joe: on the commodity front, not a huge day. crude of under 1% over $57 a
barrel. stuck in that range lately. gold hardly doing anything. lumber having a nice day, up 2%. a lot of bullishness around housing, lumber has had a nice run gaining over 2%. those are today's market minutes. scarlet: let's get you some breaking news from oracle, the business software maker. beating on the revenue line and. the bottom line, as well. revenue coming in at $9.6 billion, higher than expected. adjusted quarter adjusted eps of $.70. the highest the mentalist's estimates that we got -- the highest of analyst's estimates we got. oracle increasing its stock buybacks. when you look at the performance, it's all 1%. we are going today in more, topline and bottom line, oracle did top analyst estimates. according to piper jaffray,
investors were looking for incremental m&a or buybacks to drive earnings growth, we got that from the shared by back announcement. julia: we will talk about that later. what'd you miss? fed chair janet yellen answered questions at yesterday's press briefing about low-inflation and easing policy. draghi hadnt mario to address questions on high inflation and tightening policy. are both these narratives are retreat? let's bring in -- arbitrary? let's bring in cameron price. the ecb's inflation target would be perfectly fine. >> as you alluded to, you would have thought by the generalist question it was the fact that still had qe going. and it was the ecb putting in rates up. while there were questions focusing on the 2020 inflation
forecast of 1.7%. whether in constituted meeting the inflation target, it has not occurred to me that core inflation, core cpi in the u.s. is 1.7%. headline inflation is 2.2%. for most of the rest of the world, they target 2% cpi. this whole narrative about inflation being low, the shortfall, it wouldn't exist at all if the fed had the same inflation target as everybody else. it suggests there's on arbitrary nature to it. scarlet: i feel like we talked who was it was said the bank of new zealand was the one that started with a 2% inflation target? and it is being so arbitrary. >> it is not zero, we are not in deflation, it was lower than it has been historically in a while. joe: i want to ask you about what you wrote yesterday. i think it was one of janet
yellen's last questions about the yield curve. she said it wasn't providing a lot of signal in her view. and then you didn't like her reasoning having something to do with the declining term premium, was disappointed you. what didn't you like about her answer? >> the term premium models, which are so beloved of economists and the connotations, are pretty flawed in the sense tot there are two components a bond yield. one is the expected short-term rate over the tenure of the bond, and the residual is the term premium. economists. tend to think the term premium dominates bond yields pricing these days. the reality is the implicit expected short-term interest rate is phony baloney. example, market
participants can bet on the expected short-term interest rate over the life of the bond. if in the u.s., the tenure ois swap is over 2%. the termalent of premium model says the expected short-term interest rate is 2.97%. which is it? the one people can actually trade is saying 2%. of the economists are saying 3%. who you believe -- who do you believe? that economists got it right, they betrayed us. julia: quickly moving on. why didn't the market react to retail sales today? we had a conversation about the underlying strength. scoop.ght have a i have a friend that runs high-frequency trading strategies. he said the data seeds were broken. none of the algorithms, who normally trade on the back of
this could get the data. it was locked up and they had to drag it from the website. what do they do? they turn the machines off. joe: does this have to do with the net neutrality vote? >> i don't think so. i haven't verified it with the news providers. julia: lack of reaction. >> it was crickets, which isn't what you normally get. hft algorithms are about speed and getting the data one microsecond after its official release. if they can get that, they lose the edge, of course you turn the machines of. all the discretionary guys were listening to mario draghi rather than reacting to retail sales. there's almost never an edge in a guy who pushes a button because of what he sees in the screen beating the algorithms. normally you don't try to do
that, which would explain the lack of immediate followthrough. julia: cameron christ, bloomberg's strategist. you can read his work on the bloomberg. withberg real yield jonathan ferro will cover all of the bank decisions and how they effect the fixed income market at 12:00 p.m. new york time. this week the show will be on the road at j.p. morgan asset management in new york. scarlet: let's go back to oracle and the earnings that crossed moments ago. it be on the bottom and top lines. joining us is bloomberg editor at-large cory johnson. really they are all about the cloud, right now, that's their main business. >> when people look at what they are doing, they want to see how they compare to the new way software is being purchased. that dramatic shift of buying a pack of software with a c license has changed into turning it and using it when you wanted to.
oracle wants to show they are competing well against salesforce. these numbers show they are off after our, but the number they put up, 1.5 billion in the quarter is extraordinary. a number given where they came from in this business. julia: the good news is just in the price? >> i think the expectation is what we are getting from them. they are really focused on where the growth is happening. 55% growth in cloud is fantastic for them on the year-over-year basis. it's a very big business growing get a very fast pace. as we have seen across the board, oracle is right up there with them, and they came from far behind. they can -- they said they can win the cloud wars versus amazon, can you give us a compare and contrast? istheir cloud service
specific, they are hosting stuff and letting companies run the business. it is much smaller than amazon is. it's an interesting challenge. the business of providing services and hosting stuff is a low margin thing. what we have seen is the growth is so big, even companies like amazon don't seem to care much about price. the great leaders in that business have been amazon and microsoft, and everybody else. oracle is still in the everybody else, competing with google and ibm. h amazon isreadt offering is amazing, almost weekly from these guys. scarlet: a reading that piper jeffrey said that sentiment for oracle stock remains neutral. some investors are expecting incremental m&a's. . it looks like oracle has not made a purchase since april. radio,eard on bloomberg
i convinced him to come into the radio booth. i said what about m&a? what they said in the last call, marker repeated it, a lot of the best deals are gone and they don't think there are a lot of things for them to acquire. a seller will have to convince them. julia: bloomberg editor at large cory johnson. thank you for joining us. coming up, president trump says the tax plan is best for him and all his friends in new york. how are the wealthiest earners repairing for the overhaul? that's next. this is bloomberg. ♪
first word news. u.n. ambassador nikki haley today presented what the u.s. thatis undeniable evidence iran is violating international law by providing missiles for rebels in yemen. a military base in washington, ambassador haley said missile parts bearing markings from tehran our justification for washington's new year on policy. >> the nuclear deal has done nothing to moderate the regime's conduct in other areas. aid from iran' revolutionary guards to dangerous militias in paragraphs. is increasing. its ballistic missiles and advanced weapons are turning up in war zones across the region. it is hard to find a conflict or a terrorist group in the middle east that does not have iran's fingerprints all over it. will nowassador haley rally other nations to push back on the wrong behavior -- on i run's behavior.
vice president pence claims to delay his weekend of march or from the middle east as congress nears completion of a tax overhaul. officials say the vice president now plans to leave for each of on tuesday so he can preside over the senate during a vote on the gop tax package. president trump and republican lawmakers are hoping for a vote early next week. the white house says the president and house speaker paul ryan spoke by phone about reports that ryan won't stay in congress has to 2018. >> the president did speak to the speaker not too long ago and make sure the speaker knew very clearly. the speaker assured the president that those were not accurate reports. they look forward to working together for a long time. mark: ryan's spokeswoman called speculation.pears
brazilian president michelle tanner will remain hospitalized ,n south hall until tomorrow after what doctors described as a preventative surgery procedure. minister.the new president tanner was hospitalized at the same time the government decided to give up pushing for a vote on pension reform. global news 24 hours a day powered by over 2700 journalists and analysts in over 120 countries. i'm mark crumpton, this is bloomberg. julia: what'd you miss? tax cuts are on everyone's christmas list. congressional republicans have reached a deal on the final bill. the policy details have begun to leak out, the specifics are still undecided. how can tax plans life after the overhaul? we are joined by the mentioning -- managing director at abbott
down. we heard marco rubio is upset about his tax credit, so there's the horseplay that is going to continue. talk to us about what you are hearing from clients? how often are you hearing that they are not sure what to do in this stage? >> things are changing. i got a text that the rules around the tax lot are out. by the time we know, there will be much time left to plan. scarlet: are any of your clients making moves right now, are they sitting tight waiting to hear the final version? >> they are making moves because there won't be enough time at the end of the year. scarlet: one of they going? >> a couple of things. people are protecting those tax losses that they may not be able to take if the rules goal in place. we are seeing people go ahead with the jirga contributions
thatcher were confident -- one of the things that came up since it went into conference is that although the salt reduction, which affected a lot of people around here, looks like it won't be cap at 10k. the high rate for the individual site is going to come down a little bit. how big of a deal is that in terms of mitigating some of the other hits? >> i always say they are two sides to the coin, rates and tax income. rates went down from 39.6 to 39.7. someone goes into the top rate, it is going higher. they are losing a lot of their production. while a lot of people say this is a great tax bill for the wealthy, i don't see it that way. julia: is it a softening of the blow? is that a fair assessment. the gop are going to get a lot
of pushback on the point that this is a tax cut for the rich. the wealthy people that you speak to say i see they are trying to offset the loss of deductions, particularly at the state and local tax reductions? >> it just came at the end of the day yesterday. about someone who is planning on making some big decisions but doesn't know where to go. if you're considering buying a second home, what would you advise? paying cash, a mortgage below 750,000, how do you proceed? >> there are so many intertwined parts. one of the big things is do i itemize or do a standard deduction? the state and local tax is $10,000, if you don't have itemized inductions over that, you will take a standard deduction of $24,000. for most wealthy individuals who are giving to charity, they will probably be about $24,000.
they have to talk to the cpa. joe: i have been curious about the effect this will have on equity markets. we have seen this incredible market.market -- bull supposedly tax reform is a part of it. you look at certainly -- certain textures. the people who invest, many of them are going to be anxious. on one hand you have company profitability maybe improved. the people who have to make allocations may feel like i am not making much money. do you sense going into next year they will not feel willing to throw money around? >> i don't get that sense. i feel like there is still enough opportunity that people are going to stay in. julia: what if people go as a result of the loss of deductions, things like state and local taxes, i will have to move. whether it's education costs,
this for them is them having to move. >> this has been a longtime issue. and so you have seen it a lot -- i'm sure you have seen it a lot. many are contemplating a large income event, changing their status to one of the state that doesn't have an income tax. evenmakes the income tax worse when you can deduct it. scarlet: this may seem like a basic question. for different states, or people in different circumstances, what constitutes middle-class anymore? middle-class in a red state is different than middle-class in the hornet or new york. the president and congressman that we speak to say this is a tax cut for america, middle-class. it is different anywhere you look. >> you can see what is middle-class across america it is much different,. julia: the cost of living is also higher.
♪ scarlet: let's get you to the bloomberg business flash, a look at some of the biggest business stories in the news right now. founder mischa barton has stepped down from sure a categorical -- capital -- sherpa capital. last week, the venture capitalist announced he was taking a leave of absence. he has denied all allegations of
inappropriate behavior. protests could have put sales of chicken wings. sanderson farms says some customers believe that and in protests halted a banner year. one government measure shows prices are down 14% from the year-earlier. earlier this year, papa john's blamed the player demonstrations for weaker sales. unilever is buying smith's natural -- snitch schmitz natural. diet --r, the consumer giant. terms of the deal were not disclosed. that is your business flash update. julia: leaving scarlet on her toes. we speak with the internet association president michael beckham and his thoughts on the fcc vote to undo sweeping obama era net neutrality rules. from new york, this is bloomberg. ♪
♪ mark: i'm mark crumpton with first word news. spoke about the tax bill currently working through congress, saying he comets marco rubio will around. pres. trump: i think he will be there. he has been a great guy. very some order. senator rubio will be there. we are doing very well on the tax front. we have tremendous support. we have tremendous -- mark: congressional leaders are scrambling to compromise. the federal communications commission today officially
repealed net neutrality rules from during the obama administration. commissioner, i. to the staff for your terrific work on this item. >> the move dismantles fcc prohibitions for demanding payment for faster passage. the changes will not take place for three months. coming up in a few moments we will be joined from washington. a texas congressman won't run for reelection next year after being accused of sexual harassment. blake farenthold is said to have told the party he is withdrawing from the ballot. the house has launched an ethics investigation into those claims. british prime minister theresa may and senior members of the royal family joined survivors
fireamily of the london memorial. 71 people were killed. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton, this is bloomberg. scarlet: let's get a recap of today's market action. can see the nasdaq down by a pretense of 1%. the s&p 500 off by 11 points. joe: a little bit of a selloff on some tax anxiety. important to keep in perspective how minor it is. julia: what'd you miss? were provided from blocking web traffic.
the move sends the future of net neutrality onto a lightly court challenge. joining us now from washington dc is eckel beckelman. president and ceo of the internet investigation. michael, great to have you with us. coming into this decision, 83% of americans were against this repeal. three quarters of republicans. do you see this as the president deregulating for deregulation sake? a good waynk that is to put it. i'm surprised it's not a hundred percent. people want to have control of the internet. no one wants or trusts the internet service provider to control their tv or sites they visit. joe: they rolled back things to 2015. the internet was pretty fine at that time. why are people making such a big deal about it? michael: the rules of an into
were followed on to rules that were struck down. the fact of the matter is, service providers want to be able to charge pay part is asian. they want to turn it in to a cable tv model. it is not good for consumers or for the startup ecosystem. scarlet: what is the worst case scenario here? how will it affect the consumer? michael: hopefully in five years time, or in such a shorter. we will have the rules back. it will be slow at first. very gradual. if the service providers have their way, and we are not victorious in congress or the courts, you will have a completely different online experience than you have today. the power will be with service providers who are not subject to a lot of competition. it is hard for people to switch their broadband provider. basict: can you be person
-- can you be more specific? how does it affect the people specifically? michael: for one, it will be much harder for new companies or startups to get a foothold because they will have to have a high barrier of entry to pay the service provider to be able to access customers. right now that is not an issue. anyone can start a company out of their dorm room or garage. forher thing will be individuals who may not be able to access all of the internet. might not let you switch and if you want to watch video, they decide what sites you can watch video. cable tv package. you do not have a choice of getting every single show on every single network that is available in the world. you only have what you're provider is offering you. that is the real problem. isps are saying trust us here.
we can handle this. in certain cases, they are saying this could benefit the consumer because there is no financial incentive for them to raise rises are penalized apps and services. in certain cases, if you have higher speeds that could then offend the consumer. what do you say to that? are the onesumers that really lost here. why would the isps have fought and spent some of money and time over the last few years to roll rules back if they didn't have the intention of changing the way the market works or have the intention of doing the things that the rules prevented. if you're not planning on blocking, throttling, or changing the way the internet works, what is the point in rolling them back in the first place? there's not a lot of competition. the checks and balances that typically exist in the market, you can normally go to another one. if you're not happy with what you're using on one website or
app coming you can switch card with a service provider, 87% of americans in rural areas have no choice in who provides there broadband. we just flashed a screen of some of the companies in the internet association. they are the most powerful companies in the world right now. amazon, facebook, google, -- my point is that do we really need policies that in toward amazon? michael: if people don't want to use those sites, they can easily click a way. there is a lot of competition. the rules are not cut to protect our members, they are to protect individual consumers who want to have choice on the internet.
michael, we heard from that theyey general are going to sue and fight this. confident that this overturn can be overturned? michael: we are weighing legal options at this point. a key part of this is when you look at what has changed since 2015. can't be arbitrary or capricious and their changing. there has not been a decline in investment networks. up, spending is up for all the isps since the rules when into effect. i think the argument for the fcc to make to say why they are changing these rules and a way that is not arbitrary is going to be difficult. we will have to see how it shakes out. be: ultimately, should there a legislative solution on this so that the rules of how the internet works don't change every time there is a new president?
michael: that would be nice. i feel like were talking about this issue every few years. we are open to anything that will allow for sustainable rules that are legitimately protecting consumers. we are happy to work with republicans and democrats in congress or the fcc or anywhere to ensure that net neutrality rules are into effect. scarlet: president and ceo of the internet association. coming up we will have highlights of our conversation with bob iger about the company's $52 billion acquisition of some of fox's assets. this is bloomberg. ♪
called the defining legacy deal for bob iger. walt disney will buy most of 21st century box for 52.4 alien dollars. billion. i spoke with jon ferro who asked what kind of potential to yield has for disney's distributional. numberre excited about a of things. the content, offering in more compelling ways. this gives us a dark greater global footprint. 21st century fox has done a great job growing its businesses. in europe they have 23 million subscribers. in star in india, they have hundreds of millions of viewers per month. this gives us far greater international reach than we ever have before. and, in ability to reach consumers directly.
the other thing quite compelling is the talent that comes with it . not just on the creative side, the creative talent that fox has been in business with, but management talent as well. we look very carefully at the talent there. we know them well, we have competed with them hard over the years and we are looking forward to them becoming colleagues of ours. >> you will be inheriting a lot of talent. when we talk about synergy, and often it's a latin for job cuts. >> there are synergies. we will take a look at the overlap between businesses that are similar and look for efficiencies there, but the synergies and the efficiencies will come from multiple directions. ultimately we believe we will create a lot of opportunities for a number of people within the fox organization. planning therd to
integration of both companies and getting to work to grow the company that will exist for the shareholders and create long-term value. >> what can you extract out of sky? you want to dodo with the asset, bob? have. first of all, 21st century fox will continue to pursue its acquisition of all of sky. we are hopeful they will be successful in doing so. sky is just an amazing platform. not only does it provide consumers with a great consumer experience in terms of access to programming, but it creates a lot of great programming from boards to news to all forms of entertainment. we have distributed a lot of our programming on scott garrett. we are extremely impressed with their user interface, their ability to attract and retain customers, the value proposition to their consumers, and that obviously is a crown jewel in
the assets of 21st century fox. we certainly would be looking forward to having the opportunity to have sky be part of our company. scarlet: that was bob iger, disney's chairman and ceo. here with analysis of the deal and the ripple effects is our los angeles chief, crystal mary. we heard the president say that could berdoch that the good for jobs. >> disney is talking about saving $2 billion annually in cost. you don't get to that without some severe job cuts. we have talked to the people at fox here. they are pretty nervous. two studios combining. it is a rare event, but you can imagine there is a lot of overlap there.
fox's keeping the actual lot here very close to us in century city. its future is up in the air. julia: it illustrates the power of disney here. the fact that they have the financial heft and prestige. talk to us about what the deal means for viewing. for consumers viewing content going forward. ris: bob iger's position is about the future of tv and the way people view. he has always been a guy who relied the value of content. buying star wars, and exar, pixar and marvel. getting all of the thousands of shows and movies that fox has created over the years. he is launching what will be three online services in the u.s.. hulu, he will take majority
control of that. then innline arm, and 20 this disney branded service. he has something for kids, something for sports van, and something for adults. joe: what are people saying about the whole antitrust picture? is one detail in the numbers today that was first surprising. foxey would have to pay $2.5 billion as a kill fee if the deal falls apart. that is a big bet by bob iger that he is going to get this through. this is an environment with the justice department challenging at&t and time warner. trump'sook at president comments today, a little different than his reaction to the time warner deal. julia: isn't that interesting, chris westmark were talking about a horizontal deal that
they seem confident they will be able to get through. warnerthe at&t/time deal. something strange they are to me, do you agree? chris: there is that argument that at&t is a distributor and time warner is a content company and it could prevent others from getting the time warner content. conspiracy theorist , the president is unhappy with intent ofssibly the whatever fox news once to do. julia: i absolutely don't believe in conspiracies. scarlet: of course not, not here. a lot of people decided hulu was critical to getting this deal done. what can disney do with hulu now? stake. still has a 30%
chris: that was the problem with hulu all along. you had for owners. 60%, bobdisney owning iger will be calling the shots there. he indicated he will increase production and the shows available on hulu quite a lot. a lot of stuff from fox. julia: great to talk to you, thank you so much. avoid being it kind regulated? we have talked a lot about regulation in this show. scarlet: who would they regulate? julia: we shall ask the question. from new york, this is bloomberg. ♪
julia: what'd you miss? bitcoin is readying for a fight. the senate is considering regulating bitcoin. histories haven't shown much effect of regulating cryptocurrencies. camilla, great to have you on the show. the lure of bitcoin is that it is anonymous. how do you crackdown on that? >> what regulation is looking to do is get these exchanges on the decline businesses to share information on specific -- on suspicious activity. it is to prevent anything bad from happening.
but, the anonymity of exchanging going itself is still there. joe: so you can't regulate the transaction, but the entities that people use to convert fiat money into cryptocurrency. currencybitcoin have -- who does bitcoin have lobbying for them? >> a couple others. we are seeing now 30 are trying to include digital assets in an anti-money-laundering law. they are saying this is unnecessary because there was a 2013 secrecy act which already included these groups. are alreadyges recording these things the new law would force them to do once more. these advocacy groups are saying it is redundant to add these. scarlet: what we have right now is sufficient in terms of
oversight. how do other countries deal with this? are there any best practices we can look for from the way taiwan, or south korea deals with this? answer hard to give one of how other countries are dealing with this because it is such a new market. countries are dealing with it in very particular ways. hard -- very legislation from south korea. a story out today says that that doesn't do anything to stop volume. people just go peer-to-peer websites to trade. because of the nature of cryptocurrencies, it is hard to regulated. it's on a cloud, so you can do anything. joe: are people in the industry worried that this crash is 90% next week and that has happened
before. are they worried it will be so big politicians will come out and say you misled people and you admit ran mothers -- you had grandmothers who opened up accounts. they worry about the fallout that happens? definitely. that is what we are seeing with the fcc coming out and saying the careful -- saying to be careful. a put out hase been very cautious, saying investors look out. read everything carefully. make sure these companies are legit. julia: camilla, great to get your insights. the bitcoin foundation on this very interesting. the innovation needs time to develop. otherwise you will suppress innovation. joe: worth noting. eastern district, a long island laundered over
he spoke about the tax bill currently working through congress. he expects marco rubio to come around. pres. trump: i think he will be there. he has been a great guy. i think he has been very supportive. he will be there. we have tremendous support. cornynsenator john predicts they will pass the legislation on tuesday. disaster related aid will be included in a short-term government measure. get votescrambling to for floor votes next year -- next week. plans to leave for egypt on tuesday so that he can preside over the senate during that tax vote. five years ago today a gunman shot