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tv   Bloomberg Markets Americas  Bloomberg  May 23, 2019 1:30pm-2:00pm EDT

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compensate for losses from u.s. trade war with china. under the new program, eight for most crops will be calculated based on what has grown in their county, rather than individual farmers plantings come in order to avoid influencing production decisions. secretary perdue says farmers can expect to receive their first payments on july or august. in missouri, residents are cleaning up after tornadoes ripped through the state, killing three people, injuring nine, and causing extensive damage. twisters have swept across the great plains and midwest over the past several days, along with violent thunderstorms that have led to widespread flooding. at least seven people have died. the severe weather is expected to continue today as the storm system moves east. man charged in the pittsburgh synagogue massacre was to clean not guilty in exchange for a lighter sentence.
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authorities say he killed 11 people and wounded seven at tree of life synagogue last october. he faces 63 counts including hate crime's. like to, carlos ghosn's prove his innocence has moved to the courtroom. the former nissan chairman appeared at a pretrial hearing today. the allegations range from falsifying financial records to redirecting company money into his own accounts. the trial is expected to begin next year. global news 24 hours a day, on-air, and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. >> live from bloomberg world
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headquarters in new york, i'm taylor riggs. amanda: live in toronto, i'm amanda lang. we are joined by our bloomberg and bnn bloomberg audiences. global stocks are taking a beating as trade tensions show few signs of easing up. that has investors fleeing to save havens. haves on the u.s. 10 year some to the lowest level since 2017. we will talk treasuries with the head of u.s. rates interest strategy at societe generale. and the mood ring of the future. developing ao be gadget that can recognize human emotion. a quick check on the major averages. we have seen a risk off atmosphere today. energy leading the decliners. across the board, we see weakness. auto,semiconductors, anything related to the ongoing trade dispute between the u.s. and china is displaying
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weakness. commentary suggesting that trade dispute could stretch into years, some are fearing. pricing in a lot of negativity here. west texas is slumping. the price of oil itself, a double whammy. trade tensions lead us to think the man may be weaker. getting. on stockpiles in the u.s., the highest since july 2017. not a good picture for the price of crude. the energy index slumping. a flight to safety is having gold rise as well. taylor: i love that you pointed out the 57 handle on crude. now we know that crude lower, dollar strength. this has been a dollar strength story ever since that december fed meeting. look at this long-term trend going up on dollar strength. this is interesting. we are pricing in a fed rate cut. we were talking about that this morning.
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lots of interesting divergences going on in the market, from what the fed wants, to what the market is pricing. take a look at the 10-year yield. down 20 basis points alone in the last month. take a look at this long-term trend. out, saying take some profits. look how far we have come down. at the bottom end, looking at the rfi. above 70 means we are overbought. below 30 means we are little bit oversold. we are approaching the oversold double or yields. that really means we are overbought. we know the price moves in verse two yields. a lot going on in the bond world. amanda: absolutely. let's get some insight on where these yields may go next. thank you for being with us. let's start with the reaction we are getting here. obviously, this feels like we are pricing in fear.
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are we also realistically pricing in reduced expectations for economic growth? >> is a combination of both. clearly there is an overshoot, the lowest level of the year. it's a combination of near-term risk to trade, trade negotiations, as well as potential for growth. mostly because of risks associated with the trade negotiations. talk to me about the levels we are seeing right now on a 10-year. is this the absolute level that is concerning, or the rate at which we got here that is concerning? >> we been relatively range bound. it is a confluence of factors. we saw that headlines on china, oil prices coming down. trading in line with oil prices. and weakness in global growth.
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data has been on the weaker side. it's been a combination of things that have led to the basis point rise we have seen today. taylor: talk about the inversion of the yield curve as well. some of the weaker data we have gotten -- i was taking a look [no audio] a recession in 2020. to me, the signals i'm getting from the yield curve are very much in line with the slowdown
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next year. youra: square for us outlook for interest rates. you are contrary to what the market is suggesting but also with the federal reserve is looking at. overlay that with the unknowns. is that could not reflect on what happened today with china. should they be, how does that change the picture? >> our view is it will be arranged on for the remainder of the year. last week we published a note saying it is skewed to the downside, toward lower yields. really, there are a variety of factors that are going to prevent yields from meaningfully rising, even to 2.50 over the near term. trade tensions with china is a key driver. globally, yields have been declining. the gravitational pull coming from overseas yield,
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are negative right now. that environment will keep the treasury anchored. what stands out is the market pricing of the fed. right now, the market is pricing in one cut october. -- for october. that means a little too soon for me and we got positive information yesterday in the minutes, the fed was positive. maybe the timing of at october rate cut seems a little early. i just do not buy into the scenario of an insurance rate cut. if anything, if the fed were to cut rates, they would cut several times, not just once. even in 1998, when they did an insurance cut, it was more than one cut. i would say the market is underpriced for cuts next year. amanda: we heard yesterday that they would need to see tariffs in place for a while to factor in inflationary effects. what to defend be doing, what is your thinking about this terrible double where me which could be headed the economies way, inflation coming from tariff, and a contraction from
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the demand side? >> they have given us the answer to that, patients. they will remain patient. answer to that, patience. will have aniffs impact on the u.s. consumer and inflation. it is just a matter of how long this lasts. in some respects, it could get resolved very quickly, but all indications are that this will drag on for a while. in that case, it will be to u.s. and global growth. taylor: talk to me about inflation. you mentioned earlier the big drop in oil prices. the 10-year breakevens. where have you seen inflation going? the fed indicated that they would be able to let it run hot
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but we have not been able to get 2%. >> we have not had 2% for a while for the past decade except for brief periods of time. we have not had 2% core pce. the other thing that is a little bit confounding, i'm not sure yet that inflation, the decline of inflation is transient. 2017 where they use the same word, transient, transitory, we had a discrete event, the mobile prices coming down on cell phones, data plans. that seemed transient to me. now the global inflation picture is a little bit more money -- muddied. we need the data to corroborate that, if inflation is, in fact, transient. i think this time is different 22017. amanda: great to have you with us, subardra rajappa.
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coming up next, how canadian businesses are dealing with trade pressures. we talk to the canadian minister of small business and export promotion. this is bloomberg. ♪
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taylor: this is "bloomberg markets." i'm taylor riggs in new york. amanda: i'm amanda lang in toronto. canadian businesses are looking to diversify the on the u.s. as relations remain strained. joining us is the canadian minister of small business and export promotion. with helpinged small businesses, the lifeblood of the economy get themselves exporting. what are you hearing about trade
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big factor, it a opportunity? >> businesses are concerned about the way they are growing. my job is to help canadian businesses look for other markets. many businesses i mean do not know that canada has access to 60% of the world economy. make them grow and access customers in the international marketplace. amanda: it's often been said that canada isn't exporting nation but not a nation of exporters. what should you be doing to help, what could the government do to get small businesses looking to indonesia, france, all the places we have access to? a onejust put forward point $1 billion trade diversification strategy. i'm working with small businesses around the country to help them become more export ready. how do you understand which markets you need to grow into? how are you going to get the help, how do we give you to help
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?hrough the canadian how do we help you get access to those customers? 1.5 billion customers in the marketplace. we are only exporting 12% right now, so you're absolutely right. we will be a nation of traders. taylor: as i sit here in new york, think about the u.s. perspective, so much of the conversations have been about trade. a small we spoke to business group. he was saying that a lot of the consumer sectors, companies like nike, are starting to comment on trade and tariffs. what companies are sectors are you hearing from that are most concerned right now about the environment? who is a little more worried? >> as i have traveled across canada, i met with thousands of small businesses.
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small businesses, it is a bit agnostic about the concerns. it really is where can i grow and how you are you going to help the? are you going to help me figure out what market to grow into? is it the european union, how can i take it vantage of that? i am eating a bunch of tech companies over the last couple of days in toronto. they are asking me, how can you help me get access to those markets? they are interested in pacific rim countries, europe, the u.s. that is what we are helping them to do. taylor: part of that is continuing to look into china. as the u.s. china trade talks blair up a little bit, can you see your small businesses taking advantage of that, looking at that as an opportunity in china, or are they getting more nervous about china specifically? >> canada is in a unique position. is our largest trading
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partner and china is our second largest trading partner. i have met with business partners who do business in china, and they will continue to do that. businesses both assessment their own risks about what markets to go to. my job is to give them all the support they need so that they can enter into international markets. i keep telling companies around canada, one one 5 million customers just to canada's trade deals right now. amanda: what do they tell you they need to be more competitive? we talk about the competitive landscape. what do they need from you? >> capital, knowledge, where they should be growing into. the trade commission service, i call this canada's best salesforce around the world. we operate 160 offices. they need to know what kind of customers i can best position my company to get access to, and how can you help me to do that. amanda: great to have you here. i want to get a check on
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the u.s. markets. in a little bit of a selloff mode. hard to do this without panicking. but a 1%, 2% move certainly gets my attention. take a look at stocks. 2.7%. clearly, trade tensions in focus today. the story for me is all about crude. 57 print. looking off about 6%. some supply and demand concerns coming up with crude after a big inventory built in the u.s. yesterday. eighthe 10 year, down basis points, with a print of 2.30. down 20 basis point in one month alone. you have the s&p off about 1.6%. more next. this is bloomberg. ♪
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amanda: this is "bloomberg
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markets." i'm amanda lang in toronto. taylor: i'm taylor riggs in new york. amazon is developing a voice activated wearable device that can reach human emotions. the wrist-worn gadget is codenamed dylan and uses microphones and sought where to discern a person's emotional state. the device could even advise those where it to interact more effectively with others. we are joined by the reporter who broke the story, matt day. i have to admit, i read the story, and my first reaction, it ain't me a little bit nervous. talk about how this technology works, what they plan to do with it. the technology is super early days from what we've been seeing but it basically charts how excited you are when you speak, really grabs it out on a matrix. out on a matrix.
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see, giventremely to the advances in speech recognition technology, if it can determine how you are feeling. potential he a lot you can do with that. imagines they can direct us to different products and services based on what we are feeling. in sense this is leading that direction, or is this one of those blue sky projects that could end up nowhere? matt: it may. there are beta-test going but it may not appear on the market at all. they have outlined some scenarios where they can make use of it. one of the patents they cited, amazonseem to be ill, could send you some coffee drops, recommend some recipes. advertising targeting implications, knowing a person's emotional history. a lot in the tool chest that amazon can do with this, if they get it right. amanda: thanks for that, great story.
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the co-working space has grown rapidly in the past few years. that is creating big competition for a small market space. ceo discussesces the company's plans to stay ahead. sowe are a little company, market valuators evaluate what we make our money on, returns, so you cannot compare private equity to these companies. i do not do it. happy with his valuation because it is a bit of a disruption in the market. it is what we do as the new kids on the block. also the big players have to adapt and change. then we will see if they can deliver. been a nimble startup entrepreneur. now you are partnered with other types of flexible office, regis being the best known. how much better would you be
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outside of that, how much benefit you get from that? >> it is a bit like a hotel chain. it is all about experiences. all about small differentiations. the platform, those reports, backgrounds of improvement. you have to have a strong background within your company. i think that helps us. is, regis changing to iwg. regis alone doesn't fulfill the needs of the new world. there is also we work. amanda: an understanding in the marketplace that iwg had interest in buying spaces, spinning out its own entity. the valuation of wework must make that tempting. >> of course, you are always testing the market. currently it is not an option. we are growing well. there is a lot of interest in
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the new real estate market to team up with us. on the other hand, the economy. the economy decides what is happening. amanda: on the real estate front, that is one place where is, owning real estate. toif you are working hard make money out of a building, why not own it? have a valuation that is higher than the building. normally a building does about 20 to 25 times rent value. that is a question. on the other hand, if the interest is right, it can create value in the chain. we do it also within iwg, we own buildings. amanda: if spaces were to be standalone, how do you go against we work in the market? >> we are european, so we have to differentiate. we target the same audiences, but the way we look and talk --
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it is like hotel chains, brand values, choices. the new worker will be choices based on their own identity, this is not just about functionality. you have to create an ad about it from the talent. we differentiate from that identity, that you can make a decision based on that. amanda: the cofounder and ceo of spaces. taylor: you can catch all of our interviews on the bloomberg with the function tv . you can look at the markets there as well. red on the screen with chipmakers leading the way lower. this is bloomberg. ♪ ♪
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the speaker told reporters today that impeachment is a divisive place to go in our country. she added "whatever we do, we need to be ready when we do it." pelosi spoke a day after president trump said president trump said that president trump said he would not negotiate with democrats as long as -- president trump said that he would not negotiate with democrats as long as they were investigating him. told lawmakers this week that it put american officials at a disadvantage. on twitter today, president trump accused tillerson of making up the story and said he is "dumb as a rock." in syria, bombings by government forces have damaged two schools in the rebel facility in the last stronghold in the northwest. that came after insurgents at a power station at a government health town. fighting has


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