tv Whatd You Miss Bloomberg July 17, 2019 4:00pm-5:00pm EDT
bells, let's bring in senior portfolio manager at wells fargo. you see a down day. a couple of down days. have had a couple down days. we are still near the record highs. you look at the multiples, what is the outlook for whether the stocks are risk on or off? >> i think there is opportunity in the marketplace. there are some areas that give me pause. the main area that gives me that pause is the bond proxy group. utilities, consumer staples, that area trading -- scarlet: netflix has reported results. second quarter streaming paid up by 2.7 million, much less than what they were looking for. they were expecting more than 5 million. as for the outlook, the third-quarter net change adding 7 million. that too, let me say, that is higher than weather analysts were looking for.
the reported second-quarter number for a net change in streaming subscription mist of the ball, but revenue is up. 4.9 3ne: up about 26%, billion was the estimate. net income of 271 million. $.60, that is a beat as well. what people want to see is the growth in terms of subscribers. romaine: it is a fairly decent report. we have seen the ebbs and flows on a quarterly basis, but as laws they go upwards he will see investors willing to continue to take a shot on this. scarlet: it is all about the outlook, the second quarter has the release of "stranger things," which is their number one show. people knew that the second quarter would be soft. it depends on how they step things up and what they focus on during the conference call as well. caroline: back to you, saying utilities are overbought, what you think of the faang names? >> some of them are overbought as well. they do not bother me quite as much, if they have the growth
opportunity. what bothers me on the opposite side is that money flow has been pretty extreme into the utilities in consumer staples, looking for safety, but more importantly seeking yield. that is very difficult in the market to find. now you have those areas of the market trading above the market average, so rather than seeking safety i think that you are taking on more risk than investors expect in those areas, that is the area i would avoid. scarlet: we are looking at netflix shares dropping an extended trade. we have figured out a direction as investors react. let me get your take, because we know that netflix is a thing stock and it is the second best performing after facebook this year, up 36%, but does it give us a read into how the high-growth tech names do? gina: i would say yes and no. it gives you a read into media communications focused tech.
certainly it gives you some read on the consumer and what they are willing to spend on. netflix, though, is in a niche. it is not representative of what will happen with apple, certainly not with anything happening in semiconductors with respect to trade. there are many different issues facing technology right now and i think that netflix offers something, but not a really big read through for the broader tech sector. romaine: when you think about this idea that these large cap stocks are what got us here, there has been speculation about how small caps play into this. we have not seen them really participate in the rally, at least on a relative basis with the rest of the market, is that something that is attractive or do you wait this cycle out? ann: i think it is something investors should pay attention to. in the last 20 years, there has only been four times where the small-cap stocks or russell 2000 has led by more than 10%, and we are in that cycle right now
where the russell 2000 is lagging by more than 30%. in those prior events, that gap has closed rather quickly, actually. so this one hasbro more extended -- has been more extended. but there is reason to believe the gap will close. small caps have better growth, they have lower yields, but better growth. and they are open for m&a. they are less exposed to china as well. so i do think that there is a real opportunity for investors trading at a discount as well to the rest of the market. so that is an area that we like. caroline: stay with us, now we will dig into netflix, down 9%. ann and gina are both with us. what do you make of these numbers? 2.7 million in terms of second quarter streaming, much less than forecasted? >> that is a substantial mess.
they were expecting 5 million adds in the second quarter, so that raises the question now of how much of an effect of the price increases that they instituted earlier this year's have been the subscriber numbers. having said that though, i think that the turn will be more for short-term issue, there will be volatility, but i think as long as -- we have seen them come over -- seen them overcome these issues before. this is what we are seeing in the outlook my fairly robust in terms of what the street was expecting. i think they should be able to move past this pretty quickly. scarlet: they should be able to move past it quickly, and in fact that they have already reiterated their forecast of $3.5 billion for 2019 for cash burn, and improvement next year. at what point would investors question the amount of money that netflix puts into its original programming, and say, you should back off.
as long as you do not have the subscriber growth to back it up? >> there is a lot of that, that is a huge concern. but they have repeatedly shifted the focus now away from just -- the hyperfocus on subscribers to more of profitability. the negative side is turned, but there is a positive element, like topline. increasing revenue and profitability my that should help moderate -- profitability, and that should help moderate the cash burn issue. we will see it at 3.5 billion this year, but there is a substantial improvement coming in 2020 and beyond, as we see the revenue from the price hike. romaine: the cash burn and a subscriber growth, they were intertwined for years. you cannot really get the eyeballs on the platform unless you have new content, whether it is content they are purchasing or making themselves, so how do
you continue generating that buzz if you are not sustaining that cash to spend that we have gotten used to seeing from them? >> they have been doing this since 2015, and if so far their original strategy has paid off. we have seen a lot of their shows resonate with audiences. there has been concern over the past few weeks about the loss of licensed content and of the shrinking of the syndicated library with the loss of shows like "friends" and what it could do for subscriber numbers, but i do not think it will be that bad. i think that this gives them additional wiggle room in terms of their budget to increase their marketing spend, increase their spend on original content, which has a longer tale and better are you i. -- our odi. scarlet: you can see the stock is sinking right now more than 10% after its second-quarter
subscribers missed estimates. we still have gina and ann with us. ann, for in what you are seeing with expectations for the federal reserve to cut interest rates, are you in the camp that believes that we are one and done and they will hold off and see how the data shakes out, or is there a commitment to further cuts? ann: i think it is one for now, and we will see how things play out. i do think the fed is very open to more, but i think that they will reserve a little judgment to wait and see how the economic data looks after the one in july. caroline: from your perspective, what are you looking for in terms of management speak, the forecasts, in terms of earnings a season? do we have concern about trade, the interest rates as they affect the banks? the financials are heavily focused on not only topline
activity, but margins. so interest rates are incredibly important for them. for industrials, you will hear more about trade. with tech, trade is a huge issue. but it is not a big issue for those in the health care space, for example, where you are looking for different things. so you are looking for different things, but in general for the s&p 500 we are looking for companies to try to confirm what is being forecasted, better growth ahead. i'm not convinced we will get that from companies. in the first quarter we were hoping that was the trough, but it turned out maybe it is not quite here and it is looking more like we are not convinced it is a trough yet, maybe it will be third quarter where we see the low. that will create a little bit of a hurdle for the market to get over. and it is probably also something that will keep the fed on track to continue to cut rates. scarlet: especially with the s&p pushing down.
caroline: netlist reporting shares, tumbling after subscriber growth disappoints. why when investor season some bubble trouble for the sector. attention in washington, iran foreign minister says that the u.s. has a shot itself in the foot by pulling out of the nuclear according. libra's biggest challenge may be facebook's reputation. we speak with a blockchain advisor. get to netflix, because it was a big miss in terms of its second-quarter subscriber growth, which is basically half of what was anticipated, 2.7 million, rather than 5 million. we are seeing that the numbers overall are looking better than anticipated. net income at 470 million overall. they are reaffirming their free cash flow view for 2019 as well. the shares are sinking more than 10% after hours, clearly the average revenue going up only 3% was not enough to satisfy the
user base. romaine: another company reporting earnings, ibm. it actually beat almost of the headline numbers, we should point out though that expectations were pretty low. they shares are rising after hours. the company saying it is on l cash flowhieve ful expectations for 2019, excluding the impact of red hat. they say they will update what the impact of red hat will be and they will do that on august 2. they are projecting to come in ahead of expectations for most of their etf's and casual metrics. thatr: we will stay with text toy, netflix and others in a bubble that is on the verge of bursting. sidedecent report, -- that the weight of the faang stocks, along with apple and microsoft in the russell 1000. joining us is the founder and chairman of research affiliates, he specializes in investing and
creating unconventional portfolio strategies, joining us from newport beach, california. walk me through the methodology so far on why the value of the weight of these, or the overweighting of these in the russell 1000, makes you believe there is a bubble on the horizon? >> the first thing we have done is define the term bubble, because people do not ever really define it. we defined a bubble as an asset or market in which using a conventional valuation model that compares growth expectations with current values, you would have to use implausible assumptions to justify today's price. and secondly, the marginal buyer does not care. the marginal buyer expects to resell at a profit to somebody else. that very simple definition allows you to diagnose bubbles on the spot while they are
happening, instead of years after the fact. what do we find? we find a lot of tech companies today, the faang stocks, many are priced to reflect lofty expectations, expectations for continuing future growth that is in fact implausible. it is not to say the growth is unlikely, the growth is likely, but not sufficient for current multiples. whatct, some stocks are would classically have been defined as zombie companies, companies where the earnings before interest rates and taxes are smaller than just the interest payments alone on the debt. tesla and facebook come to mind on that. excuse me, tesla and netflix come to mind on that. so we are not suggesting that the whole tech sector or stock market is in a bubble, we are suggesting that there are bubbles within these sectors. romaine: what is a money manager
to do? obviously, the old maxim is you will get trapped in this, but there is research out there that shows that these crowded trades, they do pay off in the long term. rob: they pay off until they don't. so for careful about saying they pay off in the long term. the tech bubble of 2000 is a wonderful example. at the start of 2000, if you took the 10 largest market capitalization, the most valuable technology companies in the world, those 10 companies, how many beat the s&p 500 over the last 19 years? one, microsoft. how much, about 1% a year, that is all. four others produced positive returns that averaged about 2% a year. not impressive. the other five lost money over the last 19 years, and two of them disappeared entirely.
win.at is 10 stocks, one in bubble territory, the bubble continues until it doesn't, so you need to be careful about being too aggressive in shorting the companies. caroline: do you want to own the benchmarks within? microsoft, apple, facebook, they account for 20% of the s&p 500's returns of this year alone. and they are significant in terms of the waiting -- w eighting. of them, count up all plus apple and microsoft, their aggregate market value exceeds every stock market in the world, except japan and the u.s. they are worth more than the entire british economy, they are worth more than the entire german economy. weird and strange. that surmises that these be superpowers in
their industries for the foreseeable future and will grow rapidly for the foreseeable future. think back to the peak of the tech bubble. palm was briefly worth more than general motors. how many people on them today? how many people on a blackberry today? 10 years ago, that was a big deal. then the iphone came along. you have got to be careful about disruptors themselves getting disrupted. some of these tech darlene's will be disrupted, some of them will not. i would be very reluctant to guesstimate which ones will be disrupted and which ones will not, but some of them will be in they are all priced as if they won't. taylor: talk to me about the anti-bubble, the places in which the analysis shows that there is under evaluation and where you currently see some opportunity?
rob: thank you for asking. we coined the expression anti-bubble 10 years ago in describing financial services companies and consumer discretionary companies during the global financial crisis. during that meltdown, we pointed out at the time that each of these companies is that fails clears the runway for the survivors to have a better path to a bigger profit margins. to so, what a great time invest in these sectors. today, i would say the same thing about emerging markets value stocks. not the tencent, alibaba and baidus, but the value stocks. many of these are state owned enterprises. what is an anti-bubble? a market in which it would be hard not to have a risk premium, in which it would be hard not to beat bonds and cash by a good
margin, using conventional assumptions about forward-looking growth. and secondarily, where the marginal seller does not care about the valuation stories. state owned qualifies. they do not have to grow at all to be the bonds and cash handily. they grow and if they allow the foreign shareholders to enjoy part of that growth, the possibility of earning double-digit returns is not difficult. but people shun them because they are afraid. romaine: ok, great stuff. we will have to leave it there. now, back to the breaking news. earnings moving across the wire. ebay earnings are out, gross merchandise volume at 22.6 billion, below estimates. revenue continuing up. eps above estimates. the real news, the company
confirming it is reviewing the also of stubhub, saying it has reached a tactic to sell its fashion business it acquired in 2010 and 2011. taylor: another stock all about ibm, revenue and a second quarter parading earnings-per-share beating estimates. they are on track to achieve their earnings-per-share and free cash flow views, excluding the red hat acquisition. this is interesting, because it shows ibm is seeing shrinking sales in their biggest unit, trying to get out of their legacy units and all eyes are on the red hat acquisition. that is next. this is bloomberg. ♪
earnings. that looks down by 10% as they missed u.s. customers for the second quarter. they said they lost 130,000 customers in the u.s., facing higher prices perhaps, and a weaker slate of content. the sign-up was in the millions globally, but also a miss where they forecast 7 million new sign-ups in the third quarter as they bring "stranger things" and other series back. romaine: ebay moving higher. the bigger news is that they said that they are reviewing the reviewing stubhub and they will selloff their brand, their fashion business that they had. investors were looking to get rid of some of these units as a way to unlock a little more value. taylor: we are looking at ibm, shares up almost 3% after a pretty good quarter on the second quarter on both the top and bottom line. most importantly, it is all about the full year 2019
earnings per share and cash flow views, excluding red hat. i want to bring in our guest who covers all technology into tech services for us at bloomberg intelligence. they are managing down that income statement and doing better than we thought, at least for the full-year view, talk about the margins and moving down the income statement, excluding red hat before we can get the acquisition. >> one of the most important things right now and technology services, summer low-margin, and to some services are high-margin. ibm with red hat can get a lot of high-margin stuff into different segments. right now, they are getting rid of legacy stuff in their order segments, and that is where you saw 100 basis points off the margin improvement. caroline: what are you expecting to hear from the cfo, hearing him saying we will see improvements to the numbers as we get into the second half? how much improvement is the market baking in and what optimism do you want to hear from management? >> they are getting rid of the
low-margin businesses, which is dragging down the total growth rate. and as that is completed, you will see improvement and growth rate. once we get the new benefit of the red hat integration, maybe six months from now, that is when we really start to get benefits on the top line. romaine: this will be critical for them. the global technology business is down 6.7% in this quarter, so a lot is riding on red hat. are they a little late to the party to make it work? >> it will take some years to figure that out, but at the same time the cloud movement, a lot of the legacy and odor companies moving to the cloud, we just started to see that movement now. that is why this acquisition makes sense for them. caroline: it is always great to get your expertise. some breaking news, this time on a deal. combining with a red card, owned by target. romaine: interesting deal.
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so why didn't we do this earlier? life line screening. the power of prevention. call now to learn more. mark: i am mark crumpton was bloomberg's first word news. a defense attorney said the mexican drug lord joaquin "el chapo" guzman is frustrated about the outcome of his trial. his attorney said guzman is not a saint but was denied a fair trial, jurors lying to the judge about their exposure to media reports, saying "half the jury insist," but prosecutors no. >> from the mountains of sinaloa to the courthouse behind us today was paved with death,
drugs, and destruction, but it ended today with justice. thanuzman thought for more 25 years that he was untouchable, that there was no problem affecting the sinaloa cartel that he could not write, intimidate -- bribe, intimidate, torture, or kill his way out of. mark: his request for a new trial was denied based on claims of juror misconduct. today,ision was defended saying the allegations of misconduct were minor compared to what he called the "mountain range of evidence against guzman," calling him "evil." demanding the resignation of governor ricardo. over thetions began weekend after the center for investigative journalism published 900 pages of the governor's private text messages. the messages uncovered a vengeful approach to government,
attacks on journalists, threats to turn over political opponents to police, as well as homophobic remarks.ynistic ms rosello says he will not -- rossello says he will not step down. a w.h.o. expert committee declined on three occasions to make the declaration of ebola as a global health emergency. the declaration was made days after the virus was found in goma on the border with an international airport. >> the evidence remains that the risk spread in the region remains very high, and the risk of spread outside the region remains low.
mark: more than 1600 people died since august in the second deadliest ebola outbreak in history, which is unfolding in a region described as a war zone. 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 mark crumpton. this is bloomberg. mark, thank you. lawmakers are sounding off on libra again, facebook's proposed cryptocurrency. brad sherman of california said it is frustrating mark zuckerberg is not here answered questions, calling the currency bucks," and said drug dealers will use it, and it will do more harm than good. rep. sherman: the most that happenedng this century was when osama bin laden came up with the
innovative idea of flying to airplanes in the towers. that is the most consequential innovation, although this may do more to endanger america of an event that. caroline: i am not sure what question came out of that, but rr,ning us now is guy he executive member of the blockchain association energy group that joins us from washington. he will brief lawmakers on libra. guy, did that particular lawmaker have any particular validity to what he was stating? do you think this libra currency will enable drug deals and the like? guy: i think it was a media grabbing type of statement, and he got what he wanted, but the fact of the matter is that the crimes currently running on cf currency is $2 trillion of prime transaction or happening using
seo currency, dollar, euros, yen, so that i think the problems is the white paper and has yet to of code, demonstrate whether it has any bearing on crime or terrorist activity. and contrary to what congressman sherman was saying, i think innovation is good. innovation was exploited and will continue to be exploited by that actors. it is just the nature of things. leveraging under innervation, badthey will probably make use of this innovation, too, but net consumers worldwide would blockchainm cryptocurrency and perhaps from libra as well. uy, does mr. marcus lee washington, head back to silicon valley, and feel like it is a job well done, he did what he needed to do, or does he go there iswing
significant legislative headwinds facing him and facebook? job.i think he did a great i think he presented the project in a responsible manner. thatnk he kept insist ring they are taking it slow, that they are considering the concerns voiced by u.s. regulators and regulators worldwide. i think that he was trying to show that he is there to try to answer those questions and try to work with regulators to make and that this is compliant that this is beneficial, so i think he was, you know, by and large was successful. the one thing that i think was a bit concerning is that when questions were addressed to him with regards to censorship, censor witould they payments to or from certain
institutions that may not be socially acceptable by facebook, with a block that? and he did not -- would they block that? he did not give a clear answer on that, and that is something libra should think long and hard about if they want to be widely accepted and embraced by everyone of the whole. this is basically one country on will be a pretty tour. you have the g20 talking about libra and all the issues surrounding it. how does he go to the other countries, sell them on this, and at some point circle around to each country and create some sort of cohesive understanding of what labor is and how it should be regulated? can he do that? guy: i think he can. i think right now, libra can go on. libra can launch that romaine: that is assuming no one comes out and stops it. one thing we have seen as it seems like every politician on
earth hates this thing. guy: [laughs] i think that that is correct. the effort is to prevent new legislation from banning it outright or severely hampering the success of it. i think that is the effort. i think under current law, in most important jurisdictions, it can happen, but i think you are correct, the effort right now is to prevent an outright ban for legislation that will severely hamper the opportunity here. so i think that is the play, and i think, you know, they need to win over a lot of hearts and minds. they have very strong opposition. i do not think that point was made clearly enough by the banking lobby, and banks are very worried that facebook might, you know, compete with their business, even though it is not a banking scheme, it is a payment framework.
multilateral agreement, and no multilateral agreement can be implemented unilaterally. everybody has to chip in. the europeans believe this is important for their security. if it is important for security, then you invest in your security. you just do not get security by praying for it. invest. you must do what is necessary. and the europeans need to take the necessary action. has basically,es in my view, shot itself in the foot by withdrawing from this agreement -- john: what is the necessary action the europeans need to take. you want them to buy the oil or buy some credits? mr. zarif: it is up to them to decide. they had made a commitment that iran's economic investments would be normalized. they made the commitment after the united states left the deal. they knew the u.s. was leaving. they knew the u.s. impact on the economy, but they committed themselves to allowing iran to
sell oil, repatriate its money, have shipping, have insurance, and we have none of that, so they need to live by their commitment. if they don't, then we don't have a quorum, we have a mechanism within the jcpoa, within the nuclear deal. we negotiated this deal with open arms, without trusting each other. nobody trusted the other side. that is why we have mechanisms within the deal that we reduce our commitment. theory, they complied. once they comply, it can be erased. beyond certain limits, the results will be much more difficult and much more costs. john: if they don't comply, you will -- mr. zarif: we will continue with the steps. and these steps are legal, in line with the agreement. we will not build nuclear
weapons, because if we wanted to build nuclear weapons, we would have done it a long time ago. john: you think you could build nuclear weapons tomorrow or very rapidly? mr. zarif:. there a rapidly. had we wanted to build nuclear weapons, we would have done so during that time that we paid the price of building nuclear weapons. the previous administration, we had all these sanctions come all the pressure, it had we wanted to build nuclear weapons, we could have done that. john: you think you can build nuclear weapons within a year or very quickly if you wanted to. mr. zarif: if we wanted to. but we don't. and the supreme leader has made a commitment, a religious commitment, which is not breakable. his religious view is that a biddingweapon are for -- that nuclear weapons are forbidden. john: president donald trump, there have been noises recently on his side that he is willing
to sit down and talk and all these things. what would the iran's red line, he is putting up issues, the commitment of missiles. having a deal on missiles in general. mr. zarif: first of all, you do not buy a horse twice. they have invested in this deal. they are not going to buy. john: this is a different course, though, because missiles -- mr. zarif: we also paid for that. we pay for that accepting certain limitations, accepting certain sanctions, and the missile sanctions were not listed by the united states, and they were not listed by the united nations, because they do not prefer to discuss. we changed the language in the resolution, which is very clear. inis a different language 2031 that it is in 1929, the previous resolution, so it is clear what we decided.
now they have misinterpreted what i said, yesterday, i was very clear saying the united states has a lot to do before it can talk about our missiles. first, implementing. they did not have a revolution and the united states. a government in the united states, elected by its people, had an agreement with the ron, and that agreement was endorsed by the security council, where the united states was and still is a member, so nothing has changed. so they have to live up to their commitment. lookingy need to start at where the problem is. is notblem in our region the $16 billion a year that we spend on defense, it is the $67 billion that saudi arabia spends on buying weapons from the united states and other countries. the $22 billion that the emirates spends, the united states is sending $50 billion to
our region. that has to stop. that is making our region, eh, flammable. john: what about those people who look at president trump as a look, look what happened with mexico? he came in, he did a deal with them, the renegotiation of nafta. isn't that a path you can follow? mr. zarif: with now, he raised a new demand, and he tried to push mexicans into giving them a little bit more, so he always believes, it seems, that "what is mine is mine, and what is yours is negotiable." john: what is he said to you, the supreme leader, to go to mar-a-lago, would you go? mr. zarif: the supreme leader snoke leave the country. [laughter] john: would you go to mar-a-lago, though? mr. zarif: it is not a question of political opportunity. it is a question of moving forward. we did not leave the negotiating table. my colleagues were meeting with brian hoke until april of 2018. it was the united states was
abruptly decided to leave the unite negotiating table, maybe even surprising brian hoke. john: do you feel bad about this? if you look at trump, trump is prepared to go to pyongyang. even your worst critics will say in many ways, a democracy, certainly with north korea, he of theared to go to one most violent regimes on earth, but he will not come to iran? isn't that a big failure of iranian diplomacy, if you cannot get that? mr. zarif: not really cured it is not that we did not have negotiations. it is not that we did not try. we had hours and hours and days and months of negotiations. we broke records, for two foreign ministers, secretary kerry and myself, to continue meeting. we worked out not a two-page document but it was hundred 50-page document. it is based on mistrust, and that is why it is 150 pages
long, otherwise you would say "do not build nuclear weapons," and i that would be that. but it cannot be improved. i can say that with certainty, because i know this deal. john: many people looking at this will say, look, iran is simply waiting for donald. trump to go in a year and a. half are you waiting for a new president? mr. zarif: no country in their right mind would make their for policy based on events that they do not have any control over. no, we not waiting for president trump to leave office. we do not know what will happen in 2020, but there is a better than 50% chance that he might still be in office, so we would need to be with him for another six years. we do not deal with other countries based on their domestic politics.
we deal with other countries as unitary pal players in international -- we know that no country is a monolith. we are certainly not a monolith. e need to meet with othe countries as a unitary player, not a clear with various branches of government. sort of impossible to go back to the situation on the day that donald trump was elected. we are not going to go back to exactly the same place that we began from. mr. zarif: well, i could just say that is not my problem, because we are in limiting our part of the bargain, and the u.s. withdrew. cannot, in law, you benefit from fruits of illegality. that is a basic principle in law. nobody can benefit from violating the law. and i think the united states is a country of laws, and i do not
believe the united states wants to create a precedent. i do not think president trump wants to create a precedent that lawbreaking will give you an advantage. taylor: that was iranian foreign minister speaking with bloomberg's editor-in-chief john micklethwait. it is time now for smart charts with abigail doolittle, where we of the timely prospects charts, and, abigail, you are taking a look with some commentary at the fed. what is the chart say? abigail: you are right about that, taylor, and to break down the possibility or the likelihood of a rate cut, aerial weld of oppenheimer. have really outdone yourself. let's talk about a 25-dip cut versus the base. guest: sure. clients want to know -- what is
the application for the equity market? is it going to be like 1995, 1998 when you had a fed cut followed by gains in the market, or is it going to be like 2001, 2007, where you had a fed cut that was followed by a significant drawdown in the market? we did some work on this. we look at the ninth that toting cycles going back last 50 years, still a pretty small sample size, but what we found is when the fed cuts by 25 points or low, -- or less, it signals insurance that the fed is getting in front of the issue. conversely, if it is a 50 point cut or greater, you tend to see negative returns, and economic th recession, suggesting they are a little bit too late. abigail: it sounds pretty defensive there. offensive, we take a look at your next chart, outperforming small values.
ari: let's tell the value story, when we think of big versus small, growth versus value, the key laggard has been small-cap value. rootll make you want to for the weak and invest in the strong. this is the dominant chart in the top panel. we're still in a bull market, but here is the risk, to our view, if this small-cap value starts to head north. i do not think that is the case yet, but that is the risk. abigail: very quickly, momentum. ari: small-cap momentum less caps,he caps, -- big small-cap momentum, it has cleared nine months, resistance, it also turning higher versus a very strong s&p 500 benchmark. very tough to find a small-cap etf that is showing that much of a turn on a relative basis. abigail: re: weld of
oppenheimer, thank you so much -- ari weld of oppenheimer, thank you so much. andline: pg&e led by pimco elliott management coming up with an alternative recovery plan for the company's restructuring plan, $27.5 billion, you remember, proposing to learn 85% to 90% of the company's shares. they offered more than $1 billion to execute. shares falling after hours. this is bloomberg. ♪ is bloomberg. ♪
emily: i am emily chang in san francisco, and this is "bloomberg technology." coming up in our next hour, netflix losing subscribers in the u.s. for the first time since 2011. what it means as the competition terms of the volume. plus, facebook's crypto crisis, facing a second lawmaker interrogation over the company's
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