tv Bloomberg Daybreak Americas Bloomberg April 29, 2019 7:00am-9:00am EDT
target in the fed gets ready to discuss what can be done about it. earnings extravaganza. 500 report the s&p their earnings this week. so far, not so bad. and spanish prime minister pedro sanchez wins the election, but still needs a few more votes to form a majority. can spain finally form a stable government? welcome to "bloomberg daybreak" on this monday, april 29. here with lisa abramovitz. the big story is "avengers." i didn't make it. i talked to my son who watched it. everyone elsely made it because it absolutely smashed box office, $1.3 billion. it reached this more than $1 billion threshold in record
time. really shocking. doubled thelmost last record, which was also a disney "avengers" record. they really nailed it. meanwhile, we have a constructive field to markets. as a be futures had been setting up for a prolonged game after the record close on friday. a little bit coming off of that. crude continuing its slide after president trump said oil prices are too high, opec needs to lower them. 10 year yields dropping a little bit after that election. the euro gaining a little bit against the dollar. david: it is time now for the morning brief, where we look at the entire week ahead. today we get u.s. core pce data from the u.s. as boeing shareholders meet in the midst of the 737 max crisis. tomorrow, trade representative lighthizer and secondary
treasury -- and treasury secretary mnuchin meet. getay is jobs day as we more news on the u.s. economy, and all week long we will be getting earnings reports, including alphabet today. there was big news about the china negotiations. it is not clear if it is going well or not going well. lisa: xi jinping did seem to say that things were moving forward, and the u.s. kind of backing off. i want to mention that anadarko is intending to resume talks with occidental, and the board reaffirms the recommendation of the chevron deal reported by "the financial times," saying that anadarko leadership was leaning toward the occidental deal just because it was bigger than what chevron had offered.
definitely anadarko saying the chevron merger packed remains in effect, saying that in general, a chevron/anadarko kayak makes more sense for me financial standpoint -- chevron/anadarko tie up makes more sense from a financial standpoint. david: can you spell bidding war? [laughter] lisa: one beneficiary here, anadarko. david: it is nice to have two horses in the race. it is time for the bloomberg first take. we are joined by michael mckee and gina martin adams. let's start with what is going on with the economy. let's put the president on a gdpt from friday, "real 3.2% at an annual rate. this is far above expectations. importantly, inflation is very low. make america great again." he does deserve a bit of a victory lap, doesn't he?
david: what is the fed -- michael: what is the fed going to do? does going to do what it when there is low inflation. in this case, because of the tax bill, this president probably did have a lot to do with the numbers, but the numbers are kind of interesting. what we will be looking at this week, this is a case of the commerce department knowing something we don't know. you know how your kids do that? we did not get the spending numbers for february, and march wouldn't have been out yet, but they have it, and that is incorporated into the gdp numbers. when we saw the consumer spending, we have to consider that february was also week, so we may not get great numbers today on the spending side. what does that mean for inflation going forward in the fed? lisa: we do have a chart here of that pce index, core pce in
particular, which is what we will get numbers for at 8:30 today. it has been falling below the average. gina, i'm just wondering, this is not necessarily bad for companies, right? from an equity perspective, this is goldilocks. gina: it is. it is just slow enough growth that it is not worrisome. it is also slow enough impatient -- slow enough inflation pressure that it is not affecting margins significant we. expectations are only moving higher. companies are passing prices through. when you have an earnings season where 80% of companies are beating expectations, and earnings are coming down less than 2%, that is what the market is predominately focused on. some of these things, if consumption is weak enough, it could catch up to the earnings stream, but for now we are in this time where earnings matter most. lisa: we are getting more of
them today after the bell, which brings us to our second topic. a slew of earnings starting with google parent alphabet after the bell today. i have to wonder, talking about big tech and how that has been a resurgence, how important is it that they continue to deliver for the entire equity markets to rally in the u.s.? gina: it is very important because big tech was one of the reasons stocks fell last year. apple is an incredibly important earnings report. it is still one of the largest companies on the index. we saw microsoft last week be expectations. microsoft come surprisingly, is the only big tech stock trading at new highs. amazon,lphabet, netflix, have all failed to recover back to new highs. you have to see momentum in these names to really get the tech story on more solid footing going forward. it has been a much broader rally in general that many people recognize. it is not just about tech.
it's been about microsoft for sure, and contributions from the rest of these stories, but we knew t -- but we do need to see economics stabilize. we have a situation where earnings growth has been negative, as gina said, but revenue growth has been positive. as an economist, you are looking for revenue growth because earnings can always be managed, but you want to think people buy more and more stuff, which is good news going forward. david: the question is what they are going to do in spain? that is our third story going forward. they had a vote yesterday that the incumbent prime minister won, but doesn't have quite enough votes to have a majority. he will have to put together some coalition. michael: you look at pedro , betoz and think, him o'rourke, separated at birth? biggers got a little bit representation in parliament,
but not enough. the question is, with whom does he ally? does he go with the center-right, which were better opponents during the campaign? his party doesn't really one him to do that. does he try to rally with people on the farther left? what spain seems to be showing is that the divides are getting wider everywhere. in have the centers still control in most countries in europe, but the parties on the far right and far left doing better. that makes politics even harder. lisa: i have to wonder from an equity's standpoint, coming from the u.s. point of view, does turmoil or a lack of confidence in europe matter for u.s. companies? that seems to be what timothy geithner are, the former treasury -- what timothy geithner, the former treasury secretary, was saying. reason u.s. growth is as slow as it is is because of what is happening overseas. gina: it is part of the earnings
stream as well, and certainly members of the s&p 500 are some of the most multinational companies with exposure to europe and china. those were the slow down stories of last year, but domestic companies are largely beating expectations. they are very stable, producing very stable growth, but you've got stories like 3m and intel, even exxon, as examples of companies that missed expectations. they also happen to be very big, multinational organizations. how much does erupt really matter for the s&p 500? it is less than 10% of overall sales. david: thank you both very much for being here. you can find all the charts we just used and more by running g tv on your terminal. you can even save the charts if you want. coming up, a quarter of the companies on the s&p set to report this week. we will look at what's on deck
♪ viviana: this is "bloomberg daybreak." spotify has become the first music service to reach 100 million paid customers. the company added more subscribers than expected in the last quarter. that boosted confidence spotify has lots of room to grow. shares are higher in premarket trading. anadarko reportedly will begin talks with occidental about its $38 billion takeover offer. that is a move that threatens the previously agreed deal with chevron. according to reuters and "the
financial times," they decided the stock and cash offer could lead to a better deal than chevron. a surprise revelation about the boeing 737 max 8 from the airline, the biggest operator of the plane. thatg telling southwest the key alert linked to the southwest thought the warning light was standard. the airlines were told the warning only worked if carriers paid an extra fee. that is your bloomberg business flash. david: thanks so much. boy, that is not a good story. lisa: no. beid: they are going to having a shareholders meeting today, trying to explain this thing. they will be protesting outside of the meeting. lisa: having a light that warns u.s. there is a problem, unless
there is an explicit tell to companies, this seems like crucial information that shouldn't have to be paid for. david: i'm certainly not technical enough to know how this works, but how to they regain the confidence of air carriers, regulators, the public at large? they've just lost credibility. lisa: until now, the airline carriers in the united states have largely stayed behind boeing. it will be interesting to see what the responses to this. david: in the meantime, we are all watching earnings and what is going on with the markets. over 25% of s&p companies are reporting earnings this week, with results so far exceeding expectations, but the revenue beat not nearly as great. nuveenome bob doll, chief equity strategist. what is your earnings call right now? expectations,an but when you consider
expectations, not so good. david: earnings can be susceptible to things like share buybacks as opposed to revenues. bob: cash flow is what we really look at. not that revenues and earnings aren't important. they are very important. we know that both of them are coming in ok. know better than that, no worse than that. this has been a pe driven market, not an earnings driven market. lisa: one thing investors have been focusing on his margins, especially given that salaries have been going up, the cost of input, commodities have been going up. some companies are able to pass along the cost, but from a margin perspective, what is the story from this earnings season? bob: better than i would've guessed given how slow revenue growth has become. i am worried about cost pressures and labor, transportation, raw materials. they complain they can't find workers. when they do, they have to pay up. but so far not affecting margins
like we would have thought. david: pe is about at the historic norm. we saw it well above in well below. boringly neutral guy in these times looking at the market. lisa: oh, come on. [laughter] bob: i know. that's kind of where we are. you got to tell me earnings are going to be a lot better to be more excited. lisa: maybe boring when it comes to overall averages. not when it comes to specific stocks. in general, it is not just tech leading the charge. this is a really multifaceted market. so far, what we heard from earnings, what do you like and what don't you like? bob: i like companies that get more of their business here than overseas. companies that are generating free cash flow and using it to reinvest in their business for
share, much less than buybacks and dividend increases. we want companies that have something special going on. can they raise prices? do they have new distribution, new product? you can't just ride the beta wave. you have to look for the individual action in the company. david: how much of this solid but not spectacular performance, and stability, is just because central banks led by the fed are saying we will keep liquidity in the market place? bob: that is a lot of it, no doubt about it. now they are saying we may never raise rates again. in fact, we might lower them. the pivot has been extraordinary. lisa: people have been talking about the melt out. i am just wondering, not a lot of volatility. there are record bets now on volatility. from your perspective, do you think we will continue this for a long time, or is this
beginning of the end? bob: i think we are going to pause for a while. i don't see big downside either. up on a bit of a melt earnings that have been, compared to expectations, pretty mediocre. ed has all been pe, and that is associated with people going from scared to feeling confident. we got to watch this carefully. david: what does it all add up to? bob: it is an alpha market. first quarter was beta. now we are in alpha, and my view. you've got to look at it company by company. david: not even sector by sector? too, but it is more about these common factors. we have sectors that we prefer. i think health care is way oversold on politics. financials continue to improve, although they have some technical issues. we could go through every sector
that way. lisa: you are buying in health care now? bob: yep. lisa: bob, you will be sticking with us. coming up, the latest development in what has been adding up to a bidding war for anadarko. there's a little bit of extra talks just moments ago. we've got all of that coming up. this is bloomberg. ♪
david: big news in big oil this morning. the anadarko board has decided it will have a conversation with occidental about their bid. they still have a deal with chevron, but they think this be more attractive, so they will look at it. we're joined by ruth in london. what is going on? reporter: i think the breakup fee they are talking about with chevron might also be affecting them. it is interesting to keep in mind the occidental ceo said
they made three offers in the past which anadarko said no to. it seems like they feel they would be a better fit with this offer, even though financially and in terms of the cash, the occidental offer is definitely superior. lisa: this is what i'm struggling with. occidental is offering more money, but coming from a much weaker financial stance. i am wondering what the risk is for anadarko to ok the occidental bid that will not give them the value going forward. ruth: i think they are also concerned about whether occidental has the financing to go ahead with this deal, even though on paper, as you said, it seems like it is more appealing. just keep in mind the anadarko shares have been trading higher than the chevron offer since it was made. investors are calling for a full-fledged process. if they open it up, it does seem shale assets are really
attractive, which is why occidental seems so bent on doing this deal even after being rejected all these times. lisa: thank you so much, bruce david. r bloomberg -- ruth david. r bloomberg reporter coming to us from london. still with us is bob doll of nuveen. one thing people have talked about is that energy stocks have not kept up with a huge resurgence we have seen in oil prices up until a couple of days ago. what is your take on this? bob: i think if oil had done better before, that is part of the story. i think investors may not necessarily believe that oil is going to stay where it is. i think some of the companies have reported disappointing earnings. we saw that in exxon last week. people are saying just because oil is up, do i really need to buy these energy stocks? david: you mentioned that for
health, political concerns are overblown. what about oil? president trump is calling right now to get your prices down. how much of that is casting a pall over the industry? bob: he's had success over the past several months in keeping the price of oil down, so let's see if opec listens to them again in some way, shape or form. lisa: honestly, i'm wondering, are you buying in energy right now given the fact that energy stocks haven't kept up with the oil rally? maybe president trump won't be successful, or may be oil prices will stay in this range, but even so, they have been caught up -- they haven't caught up to stocks. bob: they haven't. they got hit very hard in the fourth quarter, but off of the bottom got a huge rise for the price of oil started going up. that is what makes me cautious. i do not have to jump in and chase the stoxx just because the commodity is up. david: when you look at something like the chevron deal,
could it make a stock more attractive as they consolidate, for example, on the permian? as you said, it is an alpha market. bob: without question. this play is very interesting. the stock is shelling above the chevron offer. we are not done with this saga. chevron is probably going to have to step up and pay a little more to get the deal done. lisa: you think we are going to stay in this range? we did a story on the bloomberg talking about what oil prices over $100 a barrel would mean for the global economy. do you think we are stuck here? bob: i think we are. i don't think we are going to that level. global gdp just isn't strong enough to sustain that, in my view. i think we will bounce around with us towards the higher end. for the u.s., oil price is not negative like it used to be. it used to be negative for the consumer, positive for nothing. now since we are a net exporter, it is much more neutral on the price and oil being up and down.
lisa: economists surveyed by bloomberg said only oil prices above $100 a barrel for a sustained time would have a material impact on global gdp. david: and particularly gas prices in the united states. $3.24.d my car, it was $2.84 not one ago. i'm paying attention, as is the president of the united states. [laughter] david: coming up, we will discuss what to watch from vanguard's data with global rates and fx strategist. live from new york, this is bloomberg. ♪ so with xfinity mobile
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you can see a little bit of weakness across the board. the most significant move is in the ibex after the spanish elections. even though the incumbent socialist democrat did win, we have some uncertainty about how much the separatists have to play in this. across assets, oil weakening yet again after president trump said he would like to see lower crude prices. the dollar gaining a little bit against again. 10 year yield tipping up a little bit. interesting, emerging-market currencies getting a bid because the dollar is weakening versus the euro and some other major currencies. david: thank you. now it is time to find out what is going out outside the business world with viviana hurtado, who is here with first word news. viviana: spanish president pedro chavez is on its way to returning as president. for the past 10 months, he has been the head of a minority government. when he failed to pass his
budget, he was forced to call an election. significant issues need to be resolved when the u.s. and china resumed trade talks this week in beijing, according to a senior trump administration official. last week the administration criticizing china for failing to protect intellectual property. still, both sides are indicating they are close to a deal. president donald trump is hoping a trade deal with japan can be signed by the time he visits the country next month. on friday, the president met with japan's prime minister shinzo abe. the president urged abe to end tariffs on u.s. farm products. japan raising the issue of existing tariffs on cars and the growing number of jobs created in the u.s. by japanese companies. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. david: the lesson there is golf doesn't fix everything. lisa: that sounds trite, but it is actually not.
there's a real question here, things that seem simple when it came to trade negotiations just aren't that clear. david: there's a photo of the two of them over the weekend playing golf. president trump tweeted off we had a really great round of golf. he thought he was going to be able to deliver on the agricultural issue, and it seems not so much. lisa: there is a story on the front page of "the wall street journal" about how the usmca is being held up, so even that isn't necessarily going to get signed off. some of these trade negotiations we been hearing so much about, we really just have not seen come to fruition. nuveen is doll of still with us. on the spanish election, and also about growth, i will put up chart that shows inflation and gdp growth. europe?going on in
bob: it is sloppy and sluggish, and doesn't seem to be able to get out of its own way. if you look at the world as a three legged stool, the u.s. is doing ok, china is improving, but that third leg keeps the stool from being set straight. lisa: we do seem to have more constructive rhetoric between the u.s. and china over a trade deal. a lot of people have said the reason germany is slowing down is because they are not getting the exports from china. you are not seeing the confidence or a pickup. what is going on? bob: the internals in germany, some manufacturing issues, some consumer numbers are main sluggish and weak. productivity is an issue for most countries in europe, including germany. you get this sluggish 0.5% on a bad day, 1% on a good day, which doesn't satisfy anybody. david: we are going to bring in anne mathias, vanguard global
rates and fx strategist. welcome. here in the united states, the notes are turning down on pce and core pce. what is going on here? anne: that is the $64 trillion question right now. inflation? central banks around the world have been looking under every rock and in every nook and cranny for it. i think it is really important for us to realize they have changed the way they think about their response to the economy because of the lack of follow-through in inflation. i was at the imf spring meeting, and that was a very hot topic of conversation. lisa: catherine hassett, chief big -- kevin hassett, the chief economic advisor to president trump, was talking about why inflation has remained solo. take a look at what he had that remained so low. owcket -- has remained so lw
-- so low. listen to what he had to say. >> the u.s.'s growing much faster than europe, and there is a risk we might be importing inflation into the u.s., and it is something we have to pay attention to. lisa: is this your take as well, that basically the issue is with europe, with the rest of the world, and that the u.s. is just fine and would be accelerating if it weren't for everybody else? anne: i don't necessarily agree with that. there's been a lot of discussion among economists here at vanguard about the productivity puzzle. maybe we are just not measuring productivity effectively. can lead toctivity lower deflation. you have more people working, more things being produced, but price levels fairly muted. from an active manager perspective, that environment is allowing that, plus the central bank's reaction to this, is allowing this goldilocks period
for risk assets to continue. lisa: we got the fed meeting -- david: we got the fed meeting this week. the markets right now think they are going to cut in response to the numbers we saw, inflation falling before their target. bob: i think not. i think they will defer until the next meeting. right,s got it productivity is increasing and keeping inflation down. lisa: a lot of economists have been talking about perhaps the market has been getting ahead of themselves, but the market has been more accurate then economists have been about the federal reserve. do you think the next move is going to be a rate cut? do you think it will happen within the next 12 months? anne: 12 months is a long time in fed watching. i actually don't think we are going to see a rate cut in the near term. i think what we are going to see
is the fed continuing to evolve in the way they communicate about what they are doing. we had this mantra, don't bet against the fed. as active investors, we got to realize maybe the game the fed is playing has changed. you're going into sort of a new paradigm. it takes time for the fed to be able to effectively communicate that, and time to figure out what the fed is saying. i think that in that environment with the economy where it is now, unless we shift into this deflationary type of spiral, which i doubt, i think the fed will stay on path for the period. david: is this a new paradigm, or is there something out of kilter between the stock market on the one hand and real projections of growth? wrote is, "what are stock prices doing at record
highs, and what does that mean stability?"inancial that suggests maybe the stock market will have to come down. bob: we are in improving productivity. we have not been there for a long time. that changes the calculus somewhat. the second thing is i am still of the view that the next move on the fed is to raise rates. we still have issues about wage rates moving up. eventually the economy is going to use up capacity to the extent we are able to grow, although again, productivity keeps a lid on that. i don't think the fed cycle is over. lisa: anne, what is your take on the stock market rising in tandem with persistently low inflation? anne: i think that is actually a very natural relationship, that the stock market would be rising with low inflation. inflation sort of eats into earnings. i do think in this low inflation environment, from an active
manager perspective, this is actually a great time. you can really focus on security selection and equities were fixed income, and i think the fed has given us more runway. comingwanted to add that off of the imf spring meetings, i heard this tone from all of the central bank representatives who were there that basically the slow inflation environment is something they are going to counter by being dovish for quite some time, all the way across the board, and even finally canada came around. i don't think there is one hawk left. david: we should have bob and anne around more often. everything is coming up roses. [laughter] lisa: you can't lose. both of you, thank you so much for being with us. talks fail with commerzbank, and deutsche bank expresses optimism -- expresses on growth.
viviana: i'm viviana hurtado. coming up in the next hour, lead grogan, estimize founder and ceo. ♪ viviana: this is "bloomberg daybreak." nissan and government of japan reportedly spurned efforts by french partner renault to engage in merger talks. according to "the financial times," relations between the two companies have hit a new low. they were already tense because of the arrest of former alliance leader carlos ghosn. warren buffett is minting a bet
on dubai, opening an office there as it expands into the middle east. dubai's property market is extending a slump since hitting a peak more than four years ago. how do i begin this next bulletin? a record, or just the headline? dame" setting a box office record by raking in $1.2 billion worldwide. it beat the previous opening weekend record by almost $100 million. that is your bluebird business flash. david: thanks so much. we turn now to wall street beach, will recover three things wall street is buzzing about this morning -- wall street beat, where we cover three things wall street is buzzing about this morning. first up, deutsche bank's president expresses optimism in
the banking unit. 2019 global conference in beverly hills, we tell you what to expect when it comes to the davos of the west. lisa: a lot of questions remain right now about whether or not deutsche bank is going to be able to revive itself, who could potential emerge with. joining us is peggy collins. she leads bloomberg's investment coverage. there were a number of stories over the weekend, first of all, the ceo express and confidence they can turn around investment and consumer banking unit, even though the you've seen declining revenues. what are people saying about that? it is interesting. one of the key points in the deal collapsing with
commerzbank, we are learning from reporting that they felt like there was too much backlash from corporate clients, particularly private middle-market companies who said if you both merge, we will go from two creditors to one, and that will be too risky for us. a lot of angst around the deal was from workers who thought they would lose their jobs. that was a key point, but it is emerging that deutsche bank knew its corporate clients were not happy with the idea of the deal for that reason. david: he's not just the ceo, but -- it is not just the ceo, but the chairman out later saying they will stick with investment, although he did say we could change course if we need to. peggy: the fact that he has not presented any alternative, that there was that shareholder meeting, there were times when he could have presented it, he hasn't done it. so what is the plan other than things will get better? as you say, they need a plan b.
it looks like there are other people in the market looking at them as a potential merger, but if you are deutsche bank, you need to come up with a plan b and articulate it to shareholders. david: it is just not a big secret that they are going to open an office in dubai at a time when the real estate market is suppressed. peggy: it is so interesting to me, this story. for a long time, berkshire was rebranded into the path of a lot of different companies at berkshire. one of the things also interesting is berkshire has been looking for deals around the globe. they are open to be deals abroad, but haven't been able to do it. this is one of the ways they are getting more expansion. lisa: the s&p has come out and said they expect the dubai housing market to continue to decline, so it seems like
somewhat of a contrarian bet, which is where he's more comfortable right now. hi lisa:. low, cell but he is diving -- david: buy low, sell high. lisa: really interesting to see that. meanwhile, we will get the views of a whole host of luminaries out of california. the milken conference is going on. we have a number of big guests coming on. david: i love that photo. it looks like a hotel. [laughter] lisa: that is not the conference. we will just give you a sense of what the roster is this week. solomon, the head of citadel. i am curious about how businesses are planning around the fact you are getting a slow
down, but seem to be in this goldilocks scenario, still with trade tensions and the lack of confidence from businesses. i am wondering how they are positioning themselves. peggy: this is really an interesting conference. what our colleagues wrote on the bloomberg about how, for a lot of people, davos is an intellectual event. for many dealmakers, milken is the competence -- is the conference where they are speaking to move ahead on deals. that will be interesting if we see people continue along that path. david: but also an emphasis this year on women and their place in financial markets, and business, and things like that. they specifically went after the women initiative. peggy: there are certainly a number more women on panels and speaking this year than in years past. lisa: that's fantastic. it will be interesting to see what social views they pick up on. right now it is a fraught.
of time where you don't want to delve too much into social issues, but investors are holding ceos accountable if they don't. david: a lot of things to watch coming out of that. thank you so much, bloomberg's peggy collins joining us. coming up, more on what i am s.tching with morgan stanley' this is bloomberg -- on morgan vice chairman. this is bloomberg. ♪ ♪
david: the morgan stanley innovation lab, later today announcing the third round of minority and women lead startups in its program to get investment to an underserved part of the investment community. we welcome carla harris, morgan stanley vice chairman and executive director. welcome here. as i say, it is the third round now. explain exactly what this program does. guest: this is an innovation lab where we are giving content, as well as cash, as well as our
connections to help et cetera the growth of companies founded by multicultural entrepreneurs and women. one of the reasons i am so excited is the marketplace generally says the reason you don't see more multicultural and female founders as some of the accelerators is because they can't find any. this is the third year, and it is not a supply issue. if there is any message we want to get to the market, we had no problem finding companies. lisa: one thing this study really looks at is the perception people have about lack of funding to some of these businesses are misconceived. what are people getting wrong here? carla: there's a perception of outsized risk because investors don't have enough experience investing with multicultural and women entrepreneurs. every time we've gone up with an application to apply, we seen hundreds of applications. if you don't have experience investing in a specter, you tend to shy away --in a sector,
you tend to shy away from it. it has been an amazing opportunity for us. david: you see that shying away an -- shying away in dollars and cents. disparity in the median amount of investment made. carla: absolutely. in the application, we asked them about the investment, and there was a misconception that companiesminority led deserve.ing what they they have performed quite well, , twogive you an anecdote of our five programs have already been sold. another graduated to a very prestigious accelerator.
another one did a successful ipo when that market was available. david: you are trying to fix this one company at a time, or a few at a time. what is the larger solution here? you did a survey and asked minute women about whether this is a priority for them. the difference was -- men and women about whether this was a priority for them. the difference was quite striking. carla: we are trying to raise the visibility of these companies and raise a conversation on the fact that there are real opportunities and outsized market opportunities, but it has not been a priority, as the charts will show. lisa: one things that -- one thing that strikes me is this is considerably subsector. at what point do we move from being a subsector to being businesses? carla: the more we can amplify this conversation and put points on the board, capital will start to flow in this direction. the reason we are able to get outsized gains is because of market inefficiency.
the more we talk about it, the more it will catch up. david: how much inefficiency is on the supply side? if you had more women and nonwhite people making investments come up with that make a difference? carla: that is an interesting thing. that is supply-side. but no question, you are absolutely right in the direction you are going. the more women and multicultural investors we have, i certainly think that would make a difference in wiping out the perception of it being a subsector. lisa: have you seen improvement in this area? carla: i have. many competitors have announced programs similar to this since we started our's three years ago. i see improvement, but i am a bull. [laughter] lisa: what is the crux of the issue holding this back? carla: there has been a bias and a misperception about size risk --a misperception of outsized
risk. there's data out there, but it has been largely ignored. that is why we continue to amplify the message. david: the question is do we have to change this from the top? carla: i am bullish about what is happening from the bottom up. i think millennials and zers have a much bigger appetite. david: always great to have you. carla: thank you very much for having me. drogencoming up, leigh of estimize will be here to talk earnings. this is bloomberg. ♪ alright boys, time for bed.
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numbers move away from the target in the fed gets ready to discuss what can be done about it. earnings extravaganza. over 1/4 of the s&p 500 report their earnings this week. so far, not so bad. ceo answers to shareholders as questions continue about what went wrong with the 737 max 8, and how we will know when it is truly fixed. welcome to "bloomberg daybreak" on this monday, april 29. we have a bit of news here involving davida. a kidney -- owns owns kidney dialysis centers -- dialysisns kidney centers, so an incredibly lucrative business. its ceo will step down, and is going to be replaced by the company's head of kidney care. this according to the company this morning. plan --ill an ongoing
in ongoing plans to have a deal with united health. david: they've got a physician's care practice they may be selling off. this is pretty much continuity. as you say, he's been there for quite a while. lisa: we are seeing shares pop in early trading. we will keep you up on that as we get more information. let's get more market action as we see the open. basically flat s&p futures after closing at a record high friday. crude dipping a bit. spanish 10 year yields dropping by a basis point as they have some continuity with their leadership. the euro just a touch down versus the dollar. david: it is time now for the morning brief. today we get u.s. pce data for the month of march as boeing shareholders meet in the midst of the 737 max crisis. tuesday, trade representative lighthizer and secretary mnuchin resume trade negotiations in beijing, and china releases pmi numbers. wednesday we get the fed
decision on rates, and thursday the bank of england's turn. friday is jobs day and we get another important read on the u.s. economy. all throughout the week we get more earnings, including alphabet, apple, shell, and royal dutch shell. apple,ind out what is -- ge, and royal dutch. let's get more with viviana hurtado. viviana: terrifying moments described by the rabbi wounded in a weekend attack on a southern california synagogue. weapon the shooter's miraculously jammed after he shot four people. one person died. the suspect is described as a
19-year-old college student. he allegedly posted in anti-jewish, anti-muslim manifesto on social media. socialist pedro sanchez is on his way to returning as president in spain. when his budget failed to pass, he was forced to call an election. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. lisa: 1/4 i've s&p companies will report their earnings this week. here to give us the scorecards are far as taylor riggs. taylor: it looks like companies the incomes down they've made, beating on the top line. 70% of companies are beating on the bottom line.
perhaps that shows how low expectations were coming into this earnings season. we've been talking so much about this earnings recession and when we might start to see a rebound. we are coming in right in line. you have negative earnings growth this quarter, really the thing about flat for next quarter, then really starting to pick up. you will hear this anecdotally from companies, really looking to the second half of 2019 to really start to see some of that earnings-per-share growth come back in. so far we that a lot of people question how strong this rally really is. if you want to come into the terminal here at gdb go, we've at g tvat gt vigo -- , we are having a lot of broad-based strength behind this rally. david: joining us is leigh
drogen and michael antonelli. i will not ask you, michael, what happened to the celtics, but where are we with earnings? michael: what we were expecting coming into this quarter, at the end of march we were expecting a decline of about 4% on earnings-per-share. estimizehrough, and will back me up on this, the decline has been up a little over 2%, so that is better-than-expected. we can nitpick at all we want, but right now earnings eps growth is at about -2.3%, and that is better than we thought would happen. lisa: does eps matter as much as revenue? with your research is that the revenue beat rate so far is 42%, which is historically low. it should normally be right around 50%.
estimize numbers are going to be a little more not biased. we are still in kind of a slow growth environment, and what it says for the back half of the year, what everyone is counting on to get the market going again , we are getting above five and 10 year high pes, and we are going to have issues with gross margins in the back half of the year -- with growth margins in the back half of the year. we have consumer names over the next few weeks that will give us idea of what we will face. that could be the thing that could kicks this issue of 5% revenue growth, but that won't be enough if the labor cost stuff pushes this down. david: where are we on pe ratio from your point of view? pretty much the historic norm? michael: the historic norm is about 16, give or take, and we
are right there. we are not extremely overvalued. technicals might bother me a little bit, but if you look at forward pes, we are really at a 25 year historical level, so i am not terribly concerned that the market is extremely expensive. lisa: let's go back to what you were saying about margins. this is something people have been talking about a long time, that this could eventually eat into earnings and be bad. we have seen wages go up a bit. we have not seen wage pressures eat into the bottom line is much as many people were saying. bob doll from nuveen was just saying he has not seen it. leigh: it is a very bifurcated market. in technology, we've been able to catch so much revenue without having to add people from these companies. yes, facebook is adding people, but not that many. technology and the massive amount of revenue coming from tech relative to other sectors these days is pushing that
number down. on the other hand, let's see what happens to consumer names this quarter because more of the economy is becoming conservatory , and we are seeing inflation there, although not other places. david: come back to where the stock market is. it is really around the historic norm for price-earnings ratio. it is looking ok. does it justify where the stock market is right now, anticipating what is coming in earnings? this time it was so high they must think great things are around the corner. michael: i think the stock market -- you know, i spent a lot of the weekend looking at economyand i think the basically acted heroic over the last couple of months. we've been carrying the world on our shoulders, carrying this weakness abroad, and the market is reflecting that. the u.s., like captain america, has put the world on its shoulders and is looking for the
world to turn. [laughter] michael: that's what is going to happen, and the u.s. can carry a little less of that weight. lisa: you're basically saying right now that you watched "avengers." michael: i don't want to spoil your viewers, but i would if i could. gh: if you look at the last year and a half, the s&p has gone nowhere. we had a credit meltdown, basically. pes became pretty low, which was a nice buying opportunity. earnings didn't fall off a cliff. china didn't fall of a cliff. but the upside scenario is in the back half of the year, margins don't collapse, which would be nice. you should get a 10% rally over the next year or so. that would be a base case scenario at this point. david: leigh drogen of estimize and michael antonelli of baird will stay with us.
viviana: this is "bloomberg daybreak." anadarko will resume talks with occidental about its $38 billion takeover offer, a move that threatens the previously agreed-upon deal with chevron. anadarko says its board determined the occidental proposal may be superior. at the same time, it says the agreement with chevron means in effect. marriott is reportedly set to take on airbnb. according to "the wall street journal," the hotel is launching a home rental business and could
announce details next month. home rental guests would be to earn and redeem loyalty points just as they do when they book a room at a marriott hotel. shares of disney are up after a record-breaking weekend for its new superhero flick, "avengers: officee," setting a box record by raking in $1.2 billion worldwide. the film grossed $350 million alone in the u.s. and canada, beating the previous opening we can record by almost $100 million. that is your bluebird business flash. david: thanks so much -- your bloomberg business flash. david: thanks so much. there's a disney movie out? [laughter] david: alphabet reports earnings after the bell today, and apple comes out tomorrow, rounding out the so-called faang stocks. drogenith us are leigh of estimize and michael antonelli with baird. this chart is quite stunning. it came out just this morning.
it basically says for the last several months, they have gained $1 trillion. this is microsoft, amazon, google, and apple. they are up to like $3.8 trillion right now. you have to laugh. 100%. they deserve it, you have this super cycle spending, mainstream companies redoing their technology from the ground up in the cloud. amazon numbers were great. consumers super healthy there. we are going to get apple. that could be the variable because they have some interesting issues with pricing and stuff like that. google, the most interesting part is going to be why were they spending so much on capex and r&d last quarter? they basically doubled it, and nobody has a clue why. and they blew the eps numbers
out of the water while spending that much money. if they hadn't spent that money, it would have been even crazier. i am interested to see if they are going to spend that much money, they have to probably know that they have a very strong confidence that that is going to flow through to actual revenue and some sort of business out of the back. is it cars? is it ai? lisa: this isn't necessarily just another moonshot project. leigh: something fundamental. lisa: talking about that market value you have seen, the big tex shares gain -- the big tech shares' gains in the recent recovery, what does this have to do with the slowing economy in china? michael: they are definitely benefiting from a low rate environment. everybody that is watching this, we used to rely on these companies to carry the day for
the stock market. we had to have apple do well. we had to have amazon and google do well. i don't think that is the case anymore. apple, i am excited to see what they have to say, but we don't need them to carry the day anymore. they are a great company with great leaders, and have had a great rebound off the low, but when it comes to earnings, we are looking at financials and semis and transports to be more important right now. david: you are totally right. i just put up a chart that shows the ratio between the s&p and the faang, and it has gone down. your right. -- you're right. of thisut also, because kind of technology super cycle, you see all of the mid and small tat -- and small-cap technology stocks drafting off of the demand. while we are not is tied to these companies doing so well, in a sense, when they do well, it reads well to all of the
other names that have been going nuts the last couple of years. lisa: what about the trade pressures? what about the fact that the smartphone cycle is dying, with apple and the iphone? to me, isn't that going to weigh things down? michael: it is true, but people are starting to look at apple as a services company now. look at the profit margin in services. that will probably be more of what people focus on, less the phones. high, andis near its that knock on effect going through the chips is more important than the big important -- then the big, important releases in tech. david: we have enterprise tech and consumer-based tech. are they really the same, or she would be looking at them differently? michael: i think we don't need
to separate them all that much. the market is rewarding this idea of recurring revenue. these companies have recurring revenues, so that is what people will be looking at with apple. people are going to value that more than they did in the past. leigh: i actually think apple is an idiosyncratic issue. i don't think the market is going to give them the benefit of recurring revenue because it is so tied to the platform itself. if they lose the installed base, which at any point in time, could happen over the course of two years -- it is not likely, but it could -- the reason the market doesn't give apple better names iscloud service because it could all collapse under that. lisa: it is still relatively small compared to just iphone sales. that is the bulk of their business. leigh: i think it is tied to it. if you lose the platform, you lose that.
but i think apple is an idiosyncratic name. you will not see read through to the other names if apple doesn't perform well. lisa: leigh drogen of estimize, thank you so much for being with us. michael antonelli of baird is sticking with us. boeing's annual meeting has a lot to answer for. this is bloomberg. ♪
david: time now to look at three companies worth watching this morning. first of all, bayer shareholders voted by majority, 55%, to get rid of the ceo. debord board met right away and said, no, we like our ceo. this is because of that round of litigation. they are losing their shirt. lisa: why didn't they do due diligence on the monsanto acquisition? david: they keep saying the
science is there, but they are looking at jury trial after jury trial and potentially billions in liability. at thenadarko looking occidental bid very seriously, then saying it intends to resume talks, but the board affirming that the chevron deal recommendation is the one that they are sticking with at this time. meanwhile, chevron came out and said the anadarko accord gives the best value and most certainty for the company. certainly seems to be setting up a bit more. david: the question is, what is anadarko saying? lisa: and how much does this bidding war make it more difficult for chevron to be successful? david: the third company where watching today is boeing. brooke sutherland joins us now. i'm not sure where to begin. i know they have a shareholder meeting, but every time i look there is another report. brooke: it is not exactly the
news flow you want going into that shareholders meeting. there's a couple of different reports out. the first is that the airlines did not necessarily have that warning light that would notify the pilots that the angle of attack sensors were getting different readings. that was not standard activated on the 737 max planes. southwest is confirming they didn't know about it. and they didn't know they didn't know about it, which is a huge problem. that goes back to the issue where pilots were saying you didn't tell us enough about the system and how we deactivate it. now we know the warning system wasn't necessarily standard on all of these planes, so that is a huge worry point. there's also a report from cnn that faa investigators are looking into whistleblower reports from inside the company reaching out to regulators, saying we are concerned about issues with the angle of attack andem in the mcat system, talking about potentially foreign debris causing problems, which raises even more questions. lisa: there's also the issue
that some of these sensors would have gone on if they had paid for an additional service, which a -- really kind of lest really kind of left a bad taste in the mouth of it is true. atoke: they are saying southwest they thought this was standard activated on the plane as with older models. it turns out, you had to pay up for another additional safety feature in order to have those warning lights actually work properly, which is not with the airlines thought they were getting. certainly not with the pilots thought they were getting. it goes back to the heart of the issue, which is how did this happen? how did boeing think it was a good idea to let all of this go through? david: michael, i want to bring you in for any thoughts. boeing is not just a revered company, it has done really well since their ceo took over. it took very little time for it
to seem to turn around 180 degrees. michael: let me use one quote. when things are really dark, and a little piece of good news will be magnified to the upside. movies, tv shows. when things seem really bleak, it will be manned fight to the upside. any positive news is going to get rewarded, so watch for the snapback. david: so boeing gets an exclusive on the "avengers" movies. [laughter] lisa: are you basically saying you would recommend investors buy boeing stock right now given how beaten up they've gotten? michael: no, i don't pick stocks. i am not a recommender. but i am a price action guy. there's a lot of bad news, which means any piece of positive news will have a magnified upside. david: right. brooke: it really hasn't been beaten up that much. david:. that's right lisa: good point --
that's right. lisa: good point. brooke: at one point it was higher than it had been before the lion air crash in october. david: brooke sutherland, thank you so much. michael antonelli of baird will be staying with us. coming up, we are minutes away from the latest fed reading on the inflation gauge. this is bloomberg. ♪
the dow is flat. the ftse 100 has turned positive after being negative and the ibex is down .1% after the election. we do have grew down, the dollar up. 10 year yields rising and emerging-market currencies rising great we do want to bring you march core pce prices to give you a sense of what is going on. actually, missing. david: a little bit pure pce court of later is one the fed really looks accurate it is 1.6% which is a little less. the survey was 1.7%. month over month was zero, it was flat. are seeing decline everywhere except one indicator, which is personal spending, which came in above where people had thought. david: which is good for people concerned about retail sales
numbers. income was up less than expected. .1% as opposed to .4%. income not have as much. spending up more. it could be good for consumer spending. year-over-year is 1.6%. lisa: right now i am looking at market reaction. not seeing much yet. what this does is confirm the view that has been widely accepted that we do have spending increasing, strong consumer and confident consumer in the united states. incomes are not rising as much as people had expected. meanwhile, inflation tame. month over month, the fact you are getting 0% in the court of slater increase -- in the core deflator increase is telling. we want to get more on what this
means for the federal reserve and the u.s. economy. joining us is sarah house, michael antonelli is still with us from milwaukee. i want to get your view, sarah, on this reading. we do not seem to be getting a but confirmtion this low inflation backdrop in the united states. sarah: exactly. we knew given the details of the gdp report we had a sop quarter for core pce and not surprising giving the march crunch and the health care component of ppi. we knew this was a weak quarter, to some extent exaggerated, but it goes to show the overall inflation trend remains tepid and will remain a big hurdle. david: that is the issue. there may be specific things this month, but it is the overall trend. we will put a chart on where the trend has been an court in basic pce, well below the 2% number
the fed has stated as its goal. what does this mean for the bad as they head into meetings this week sarah:? what we are seeing -- this week? sarah: until they see inflation begin to rise again and get close to their target but overshoot, i think it is a high bar to get the tightening again given the fact we have only seen core pce hit their target for 10 months of the 10 year expansion. i'm struck by is personal spending continues to increase at a faster pace than personal income. we have seen credit growth increase, credit card, auto loans, student loans, at what point does this become concerning that confidence is outstripping the financial backdrop for a lot of americans? michael: we have to look at the dominant -- the denominator of that formula. morey be spending a little
, spending is something have been worried about. retail sales is one of the things on my radar. consumers have done a good job deleveraging post crisis. we hadan easy fed, inflation tame, we had spending increasing, that is good, i am happy with that. david: sarah, you said they are not likely to raise rates anytime soon. are they going to cut? the marketplace seems they -- seems to think they're going to get a cut. sarah: that is a difficult move at this point given that growth still remains above trend. you have seen an easing of financial conditions. there is easy as we have seen as far back as september when the fed is still talking about raising rates. overall, the bar for moving to the downside or upside in terms of policy tightening or easing is pretty high. lisa: there's a question whether
the low inflation rate in the united states is a function of some massive structural shift or perhaps there is another reason. take a look at what kevin has set, chief -- kevin hassett, chief economic advisor to president trump had to say. >> inflation surprised on the downside. i think we have non-synchronized growth around the world. the u.s. is growing much faster than your and there is a risk we might be importing deflation into the u.s.. it is something we have to pay close attention to. lisa: sarah, is that your perception that the low inflation rate is due to what is going on in europe? sarah: that is one of many factors. more recently we have seen the dollar strengthened. that is putting pressure on imported prices and you are still seeing the broader global inflation picture cap and. -- inflation picture tepid. there are other factors. we've seen productivity pick up.
that is easier for firms to absorb costs without having to pass on higher prices. economy remains high.s there are a number of factors keeping that overall inflation picture tame, including overall inflation expectations. david: michael, one question we've been asking. mohamed el-erian asked this question. whether given the growth projections reflected in these hebers, this is part of what has said, if the underlying growth in nominal gdp is as low as indicated, what our stock prices doing at record highs and what does that mean for future financial stability? does that give you pause? thatel: the only things give me cause or technical factors in the stock market like the number of stocks making new highs or what the small caps are doing or some of the optimism indices. when i look at the stock market, we are still in the slow modest
growth economy which is good for corporate topline. on the whole, the stock market is reflecting something we have been in for a decade, which is a slow 2% to 3% growth model and the consumer being healthy. the only things that worry me are technical related. i do not get scared about what the economy in the market are doing now. we have seen a pickup in delinquencies and defaults among auto loans and credit card loans in particular. does that give you pause as the deadline for how much longer this goldilocks scenario can continue? sarah: not at the moment. uptick has been modest and we have seen lending standards tighten and respond. when we look the health picture of the consumer it still looks good. the inflation backdrop for consumers remains tame. they'll be positive for the real pace of spending. david: sarah house and michael
antonelli, thank you so much for being with us. , the pce coretor deflator is up 1.6% year-over-year. the headline deflator is up 1.5%. personal spending is up more than expected on a yearly basis, up .9% which reflects on consumer spending. let's find at what is happening outside the business world. we turn to viviana hurtado with first world news. viviana: the imf warning u.s. sanctions could push iran's inflation rate of 50%. the trump administration is ending waivers granted to a handful of countries buying iranian oil. the goal is to cut the countries exports to zero. be theen picked what may toughest election battleground state as the site of his first campaign speech of the 2020 presidential campaign. the former vice president speaks today to an organized labor crowd in pittsburgh,
pennsylvania. that state forming the core of president's most likely path to victory. he won the state in 2016. 's picks for ap seat on the federal reserve board is vowing to survive a smear campaign. stephen moore said he would withdraw from consideration if he becomes a liability. liability fora ridiculing women. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. david? david: thank you so much. very interesting news, particularly interesting to lisa about deutsche bank. or financial stability board reduce the amount of capital buffer deutsche bank has to hold from 2% to 1.5% of risk-weighted assets. i'm just asking lisa why is that specific to deutsche bank?
because it is not as systemically important as it used to be. lisa: interesting the board may iter how much additional cap needs to hold to ensure can withstand the crisis. if it does fall apart, it will not be as important. this will definitely get attention from other regulators as well as investors. shares down in germany 1.3%. david: i'm not sure if it is good news or bad news. it does not have to take effect until 2021. it is not immediate. lisa: right now, the fact that regulators are trying to help the bank out, the best way they can help them out is say you are not as important as you used to be so you do not have to be as worried about your future home. this is allegedly and this is only according to reporting so far. it is preliminary. an interesting development. david: coming up, we look at what is really going on in the economy as seen through the eyes of manufacturing. our weeklong series kicks off.
viviana: coming up later on "bloomberg markets," steve schwarzman. this is "bloomberg daybreak," i'm viviana hurtado with your bloomberg is this flash. nissan in the government of japan reportedly spurning efforts by renault to engage in merger talks. according to the financial times, relations between the companies have hit a new low. they were already tense because of the arrest of carlos ghosn.
warren buffett is making a bet on to buy for -- on dubai's real estate brokerage is opening an office there. sinceextending a slump hitting a peak more than four years ago. the british medical marijuana company backed by snoop dogg's venture firm once big pharma money. seeking $50is million in its latest fund-raising round. the company says truck makers getting involved in cannabis would validate the industry. firm has been one of the more active investors in the pot boom. that is your business flash. lisa: time for follow the lead. a deep dive into stories making are takingith -- we a look at how the u.s. economy is truly doing. we are talking to ceos of companies who need to navigate through it. today we are looking at the real
economy with snap-on ceo. bloombergs michael mckee has a look at how snap-on performance is matching up with what we are seeing in u.s. data. michael: everyone is talking about whether the u.s. economy is slowing were not. a parallel the 2016 we saw the manufacturing economy drop. we did not going to recession but we heard the economy growth rate. let's take a look at some of the numbers and how snap-on matches up with that. the white line is the i sm manufacturing numbers. we will get new ones wednesday. healthy from 2016 on and drop off this year. is it a signal of something? when you look at snap-on's revenue and sales, they rose in line with the list -- with the rest of manufacturing and they have also dropped off. are there reflecting what is going on or leading what is going on? that is going to be one of the questions for their investors
and the people following you manufacturing. one of the things that concerns people watching the economy is the buildup in inventories. these are factory inventories in white and you can see the trend starts to go up. snap-on's finish good inventories rising significantly as well. is there a reason? that is a question for the ceo. if you are working off inventories, you're not building new stuff to add to the economy. inventory expected to be a drag on the u.s. economy. of theake a look at some things that have come up over the past couple years in the donald trump presidency for corporations in america. he wants to add drops in manufacture -- at jobs in manufacturing. this is snap-on's employee total. they do not add many people. manufacturing may be doing well but they are not growing their employee catalog. -- if youare growing look at revenue per employee, net sales per employee has skyrocketed.
they are getting a lot of productivity out of their workers and that is something the president wants to see. this yellow line is their effective tax rate. they are paying about the same year after year and then you get to the donald trump tax reform and look what happens. what will they do with that cash? david: thank you so much. a great snapshot of snap-on. joining us is the ceo snap-on, nicholas pinchuk come and we have with us brooke sutherland. let's start in the order you took us. are you seeing softness in manufacturing? nicholas: no. we are hiring people despite that curve, in the united states we are hiring people in the factories. difficult to get because we train them ourselves. who not want to work first step on -- work for snap-on? there's a lot that goes in and goes out. europe is going down but the
u.s. is strong. if you ask the national association of manufacturers, they will say it is strong. you have 500,000 jobs going unfilled. that is positive. that is one of the things we always wanted. down i wanted to drill into a specific aspect of the manufacturing market, the auto market. it has been a tough quarter for industrials but not so much for you. you saw a healthy rebound in your u.s. bands business, can you walk me through that dynamic? nicholas: we are not tied to the automotive new car sales. road 11.8 on the years old and they get older every year. the demand for our tools is important. we keep bringing out new tools. our demand in our sector is not tied to that. that is why we grew it
mid-single digits in the repair business in the united states. it is one of the things people love. lisa: one of the things that stuck out to me, michael mckee was talking about this, the productivity increase for your employees, the number of sales per employee has been increasing steadily. how did that happen? nicholas: we focused on that. this is the stock in trade of a manager in a manufacturing business. we have people at every site that think about doing that. we have japanese consultants come in two different times the year and work on special products. my team goes to a factory once a year and spends the week there working with the people. six months later they have recovered. we push that and we have a celebration. the teams come in and we recognize the best one in the ghetto traveling trophy. we put that front and center. but we productivity, have given salary increases 3% every year to our people. if you're working for snap-on,
you have 30% more pay since 2009. lisa: this is not the constant. we have heard the productivity has been low not increased as much. brooke: you see a lot of gains in manufacturers. this is been the focus point for these companies, especially after the so-called industrial recession in 2015-2016. you see these companies cutting costs and reinvesting in their businesses to try to make them more productive. youone question i have, talk about higher freight costs and labor cost, the other is currency which was a factor in your first quarter earnings report and i wonder was that underappreciated? nicholas: we had a percent worth of pain in the first quarter and $26 million on the top line, but we've had a before. we had currency swings all the time. one of the things about currency is it is one of the
underappreciated things because people talk about tariffs and material, but the currency is a bigger swing. and our quarter we absorbed all of those supply-chain disruptions, currency, and new product rolling out. our gross margins were the highest we have seen in decades. david: and you are paying less taxes. what do you do with that money? are you putting it into capital investment? nicholas: capital investment and new products. 5000 new products do not come cheap. training has to occur associated with that. we have new software products that have over 130 billion records, data points that guided technician in solving a car problem. when you roll something like that out, you have to spend a lot of time training euro franchise to sell it and training technicians to use it. we spend money on that. snap-on is in a great position because the auto repair market keeps moving upwards, even in a
recession. the worst recession of my lifetime where people were putting money in mattresses, wrote pair -- economies slump but repair shops tom. -- repair shops hum. david: all those old cars. lisa: nicholas pinchuk and broke sutherland. thank you much. we have ceos of 3m. lisa: coming up, anadarko plans to resume talks on a takeover by occidental. more on what i'm watching, next. this is bloomberg. ♪
chevron deal seems to make the most sense. just to give you a sense of the price action, chevron shares up 1.4% in occidental down 2.1%. beid: chevron has to sharpening their pencils to make sure they do not want to put any more money on the table. lisa: this is going to be a bidding more which will make anadarko more expensive. i do not understand why anadarko shares are down. if this is a bidding more -- a bidding war --? david: they have a lot of debt on their balance sheet and going through this will put more debt. lisa: and occidental has a much bigger debt-to-equity ratio. david: if they take stock, it depends how much the stock is worth. lisa: it could potentially be costly. david: which benefits chevron. lisa: perhaps that is why chevron is up higher. definitely one to watch as it speaks to oil prices and
potential merger and acquisition activity. david: that does it today. stay with us for live coverage of the global conference with guests including stephen schwartz and david solomon of goldman sachs. the open with jonathan ferro, allianz global investment strategist. from new york, this is bloomberg. ♪
jonathan: coming up, the nasdaq at a record high as big tech delivers big results. alphabet coming up next. cap it inflation keeping fed rate cut hopes alive and well despite better-than-expected gdp growth and u.s. officials during a for trade talks in beijing with key issues still unresolved. 30 minutes until the start of trading. futures going nowhere. muted price action. euro-dollar 1.1154. treasuries softer after last week's bid. yields up the -- three basis points. we begin with the big issues. rate cut that's still alive and well -- rate cut bets still alive and well. >> the market is pricing in a rate cut. >> a rate cutting cycle. >> the idea of an insurance rate cut. >> o
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