tv Bloomberg Daybreak Americas Bloomberg September 20, 2019 7:00am-9:00am EDT
who will be the next two take the stimulus plunge? the aftershocks of central bank policy. a danish bank finally passes on negative rates to most consumers. the boj stevens the curve, the fed has to intervene in the repo market again. diversity on wall street. our exclusive interview with marty chavez, goldman sachs global cohead of securities, on what it is like to be a latino gay man at goldman and what more wall street has to do to be truly inclusive. welcome to "bloomberg daybreak" on this friday, september 20. we made it. happy friday. over the next few hours, it is options be about futures expiring, causing a lot of volatility into the open, as well as into the close. s&p futures sitting right on that 3000 level. euro-dollar pretty flat.
a slight bid into the back of the bond market. lots of supply coming on next week. that is front and center, along with the repo market. time now for global exchange. we bring you today's market moving news from all around the world. from mumbai is bloomberg's south brussels, iann wishart. in india, the government unveiled a $20 billion plan to boost growth, including cutting corporate taxes to the lowest in asia. stocks having their best day in india and a decade. we have more from mumbai. reporter: as you mentioned, happy friday for companies. they are: a big -- they are calling it a big bang of sorts. however, bonds obviously felt because they see huge stimulus coming, they don't know where and how the government will fund it. as you mentioned, and yet will
be one of the lowest tax regimes , and that could attract a number of foreign investors and foreign companies as they seek find new venues to set up manufacturing companies amid the u.s. and china trade war. i think it has been a very exciting day in india, and this will continue we have another -- this will continue. we have another set of measures the government is looking into to cut taxes on cars, et.c, so this -- to cut taxes on cars, etc., so this may continue. alix: thank you. merkel's commission secures policies to get climate on track. what is in this package? matt: we don't know how landmark it is just yet. fromrday i heard a number pimco expecting about 40 to 50
billion euro. we were told it would be more like stimulus in disguise here. it is intended to fight climate benge, but it will also very stimulative. we are still waiting to get a headline number from the government. they were negotiating all night, 16 hours of final negotiations from last night through this morning. in just about an hour and a half, we are going to see a press conference with finance minister roll up schultz -- with .inance minister olaf sholz this will boost gasoline and diesel prices by three cents a liter in 2021 and six to $.10 a -- two $.10 a
liter. alix: great stuff. looking forward to that press conference. now we go to brussels. european commission president jean-claude juncker thinks a brexit deal can be reached by october 31. he said, "i am doing everything to have a deal because i don't like the idea of no deal. if the objectives are met, all of them, then we don't need to backstop." ian wishart joins us from brussels. irish ministers then warned us a brexit deal was not even close. who do we believe? ian: of the two of them, i would trust the irish foreign minister. if you look at what jean-claude juncker said, he's not saying very much. he's saying the eu wants a deal and thinks a deal is possible. if been saying that for two and a half years. actually, when you look at the nitty-gritty of the negotiations and the brexit secretary is here
in brussels today meeting the eu chief negotiator, if you look at the details of negotiations, there's still such a long way to go. they need to get a deal before october 31, when the u.k. is set to leave the eu, but there is so much they still disagree on. there's a lot of goodwill. there's a lot of constructive talks. there's papers being exchanged and discussed. but when you look at it, the gap between the two sides is really quite large. everybody i speak to, certainly here in brussels, and also here in london, are quite pessimistic about the chance of that divide ever being bridged. alix: of course, cable optimistic, hitting a two month high. thank you very much. here in the u.s., the new york fed is set to conduct a repo operation for the fifth straight day. joining me is bloomberg's alex harris. what can we expect from the fed? is this a standing repo operation now? alex: that is the question.
some have said the fed is scooting backwards into establishing a standing repo --ility come up for now facility, but for now, the fed will insist this is a temporary repo facility. up to $75 billion of securities yesterday, i think the dealers submitted about $83 billion. if that number continues to go up, it is most likely they will continue to do these operations. alix: we have a slew of fed speakers today and a lot of supply coming online. what are you looking for in the next few days? alex: treasury bill options were very poor this week, both on monday and wednesday. if these continue going poorly, it is sending a signal that the market and investors are not confident that this is under control, and that they are expecting more instability and
more pressure in the funding markets here. everyone will be waiting to see what the fed eventually decides to do. some were disappointed we didn't get anything of a more permanent repo facility at this meeting, but i think most people were resigned to the fact that they haven't been consistently talking about all this year. it has sort of been on and off. the expectation was there will be something in the minutes, but they are not ready to have something in place by the end of the year. alix: thank you very much. something else i am watching is in d.c. the whistleblower case involving president trump is no snowballing. officials have been accused of theewalling complaints, but president denies he said anything inappropriate way foreign leader. "washington post" says the raise questions about his dealings with foreign leaders. this is bloomberg. ♪
alix: time now for bloomberg first take. joining me now is our in-house team of wall street veterans and experts, romaine bostick and former cignarella, plus reformed trader. recovering trader. [laughter] alix: i want to talk about stimulus, india stimulus, climate change in germany. vince is like, no, we have to talk brexit. has anything changed in the last 12 hours? algos think so because they popped sterling yesterday after hours. juncker basically repeated what
he's been saying before. now we've got hardliners talking, the brexit negotiators. is i the asymmetric risk don't want to own with those guys talking. romaine: not only did you see the huge jump in the pound, but when you look at some of the people diving back into the pool and some individual stock names, some of the retailers and supermarket chains, it shows you there are people willing to make a bet on the u.k. assuming that there is some kind of resolution on brexit, and that is all they are waiting for. if you are a u.k. investor or someone who has an invested stake in the u.k., this has to be an encouraging sign. vincent: i think the best bet you can make is what juncker was talking about in the interview we will see this weekend. if johnson asks, we will give
him the extension and be back where we started for another three months or so. alix: so what are they doing? vincent: i would be looking to fade cable, just based on this meeting we spoke about. longer-term, you'll probably get a delay. i don't know how that plays for cable. usually on the short-term it plays well, but longer-term it is a fade because it never amounts to anything. we had three years of this, and we are going nowhere. alix: let's get to my topic that i really want to talk about, which is india. we get a $20 billion stimulus package from the government. they are going to cut corporate taxes. why isn't this the top story of the morning for you? romaine: the problem is -- vincent: the problem is it is $20 billion. it is really good for india, but it is 1/3 of what germany is talking about. for the rest of the world it is not a big deal. for india it could be a big deal, but we have to watch what
the currency does and what the bond market does. we saw a surge in yields. if that pushes back, where is the government going to fund this? they have to find a way to pay for this. if the way they pay for it causes angst in the corporate sector, it is going to work against itself and not be what they hope for. vincent: i think there is a broader -- romaine: i think there is a broader read here, particularly lily and some of the second-tier nations trying to compete for business, trying to attract a little bit more capital. this puts india in a much more competitive position. the terms of the global macro picture and the global trading picture, it doesn't really affect folks sitting here in new york or london, but i think long-term, from a geopolitical standpoint, this positions india anyway -- india in a much better position. vincent: they do have an opportunity in what is happening between japan and south korea to perhaps fill a gap. alix: to me, this is a broader narrative that this is a
government backing up its central bank to create some kind of stimulus in a way that has been calling for on every central bank that hasn't necessarily happened. if it is successful, even though it is an emerging market, even though it is not that much, is that not a template? romaine: and notice the way they tiered those tax rates. are makinginesses out. it is not about rewarding the businesses that are they are, but encouraging new businesses and other businesses. vincent: or foreign investment. that is the real kick. with that 15% lower tiered level, if they can attract foreign investment at the local tax rate, look at what happened with ireland. they brought a lot of business to the country. that is the benefit. but i think it is a little more specific for india as opposed to a global. alix: but now i think apple is regretting that because they might have to pay some back taxes. vincent: getting a better accountant maybe?
i don't know. [laughter] alix: it does raise the performance we have seen in emerging markets versus the wider world. you wind up getting some fiscal, movie that -- some fiscal, maybe that changes the dynamic. does that narrative start to change? i don't know if it is going to work, but it could. romaine: it is at least an attempt. alix: i will take that. it also leads to the fact that we are looking at central banks that have thrown everything at everything. if there is anything we have learned, it is that they are still trying to stimulate growth, but negative rates in particular aren't working. here's what peter fisher had to say yesterday. >> i think it is important we call out how destructive negative rates are. negative interest rates are just central banks are hiding behind. it doesn't really work. it is a nice theory that might stimulate domestic demand. it is not happening.
alix: i think we got evidence yesterday. we had the tltro's in europe with no demand. romaine: the cost of capital really hasn't been the problem, especially in developed nations, for quite some time now. you get the sense that bank don't -- you've got this sense that banks don't really need the money. centralknow what the banks can do at this point. this is one of the reasons why you hear the central banks, everybody pounding the table with regard to fiscal policy makers stepping up. really, and one outside of the ash really, anyone outside of the central bank arena to stimulate confidence in the financial system and take the risks. vincent: there is no incentive. fiscal policy is the new monetary policy. alix: you are totally feeling that. that point, we are seeing not only is fiscal the new monetary, but we are also in the negative
effect of that. not only do the banks not take up on tltro's to land, but also we found a danish bank pass on more negative rates to clients. they said the superrich were going to get taxed. now it is a broader swath, and they are passing it on. vincent: we saw yesterday was credit suisse doing the exact same thing. they take inhen deposits, it is a liability. they have to create an asset, which is a loan. if there isn't a worthy lender to give the money to, they don't want it. they can't do anything with it. romaine: most of the central bankers have pointed out the negative aspects. you've heard from kuroda and draghi. all the ones that have gone negative, they've basically talked about the risk of staying there, and yet we still haven't found a path forward. do we even use the word normalization anymore? alix: no, i don't think so. i just want to end talking about the repo topic for the last four
days here. bill dudley wrote, "the incident is not a harbinger of deeper market problems. rather, provides a useful signal for the fed, which has been seeking the right level of reserves for the smooth functioning of financial markets." i don't know if i believe that. romaine: it wasn't seeking the right level of reserves, because if it had come a we would not have had the situation monday. it is good the fed is catching up, and i agree this isn't really a harbinger of a deeper crisis, but it shows they weren't ready for this. vincent: it shows the fed is not really in touch with the dealers on the street as to what their liquidity needs are. alix: guys, thanks. really appreciate it. you can find all of the charts we used and throughout the next on yourgtv terminal. coming up, the architect of technology push. this is bloomberg. ♪
viviana: you are watching "bloomberg daybreak." mitsubishi is blaming a $320 million loss on a rogue oil trader. the japanese company saying an employee tried to hide unauthorized trading in the crude oil derivative. the employee has been fired and reported to police. facebook called the meeting between ceo mark zuckerberg and president donald trump constructive. the president tweeted, "it was a nice meeting." zuckerberg was in washington to speak with the u.s. congress and policymakers. they criticized facebook over privacy and other issues. alix: thank you so much. divisionachs' trading has been in a hiring spree to meet the changing events of the technology world. the man behind the push is marty chavez, who was once regarded as a possible successor to lloyd blankfein. himli basak sat down with exclusively and talked about the
factors changing the trading game, and what the future has in store. >> there's a lot of things going on in the world. i would say regulatory changes a part of it. interest rates, quantitative ofing for very long periods time. the cleanup and aftermath of the financial crisis. he rise of technology, one of the most deflationary things that exists, the availability of data readily disseminated to everybody, and analytics on the data. these things have combined. sonali: trading is still more than 1/3 of the revenue at goldman. what do you think the revenue will be moving forward? how are they going to pivot into something else? in my: trading prediction, who knows about the future, will remain a core business and a big business, and a major substantive business at
goldman sachs for the long-term. it is in our dna. trading itself is changing in some interesting ways. if you look at the kinds of products and services that we build and ask yourself, how do you make them available in a digital format in a digital age to a broader universe, that is a very exciting evolution for trading that i love to talk about. at the same time, the firm is clearly diversifying and entering new business lines. sonali: talk to me about how you believe technology will change the financial industry in the next five to 10 years. martin: i want to be careful about extrapolating from the past, but i will note a few of the drivers of technological change in our world in no particular order. cloud services, open software, apis, machine learning.
that becauseserve of the platforms that we've built at goldman sachs, where we put all of the data and risk and tools and models and reports in one place, doing things like applying machine learning everywhere is hard, but relatively straightforward because we have the underlying platform. extrapolating that out, here's one prediction. the old dichotomies that we are all used to in a financial system, market data provider, market data consumer, infrastructure provider, infrastructure consumer, i'll of trader and engineer as two completely different things. all of those dichotomies are going away. alix: that was sonali vasek with marty chavez of goldman. sonali is with me now. what was your big take away from the conversation? sonali: there are big, secular
headwinds for goldman, but also everyone else. at the same time, everyone believes they need strong trading desks. i think in the next couple of years, it will be interesting to see not only how they transform, what talent they need, but how these continue to drive growth in these businesses. also how much of the trading desk will be 25-year-old versus experienced traders. sonali: it is not that everyone has to code all the time, but that they have to think algorithmically. that's a new thing on wall street. we spent some time talking about that also. it means the same thing that has existed on wall street, the data business. alix: i met a graduate of a mighty who interned -- of mit
who interned at goldman, coding their basic risk models. that's where all his peers were going to go. sonali: we spent a lot of time in this interview talking about it. ullman just has to look different. they've done little things like address the dress code, but it is them and everyone else. how do you attract talent when you have facebook down the street hiring thousands of engineers? alix: thank you so much. you will be back with more of the interview with marty chavez. coming up come accrued set for its biggest -- coming up, crude set for its biggest weekly gains since january after last week's attacks. this is bloomberg. ♪
flat.ve the dax we are waiting for a press conference from the finance minister to talk about a huge package they are going to unveil for climate change. how much money will that be? european stocks overall up 0.3%. in other asset classes, it's been an interesting story in other central banks. you had inflation at a two-year low in august in japan. japan cutting some bond purchases to steepen the curve, yet the currency is still modestly stronger. not necessarily a good thing for mr. kuroda if the market interprets that is quantitative tightening. you had the cable rate hitting a two month high. we are having reports around brexit. are they close to a deal? talks will air over the weekend on sky news. brent holding onto some kind of risk premium. it has been a wild week for oil prices. saudi arabia is seeking to buy different types of crude from different nations as it is making up for the shortfall of
its facilities after they were attacked last week by cousy rebels backbite -- by houthi rebels backed by yemen, maybe iran. we are making a very serious statement that we don't want war. we don't want to engage in military confrontation. we believe the military confrontation based on deception is awful. it will have a lot of casualties. but we won't blink. alix: joining me on the phone is 'susef gamal el-din, bloomberg middle east coanchor. our people on the ground putting the facilities back together, using construction? yousef: that is what's happening. we just left the second-biggest oilfield and saw some of the
stabilization towers that had been hit. this is the area where seven in,se missiles were going and three of them missed, but four were able to hit their targets. quite a bit of damage. oil melted on the asphalt. there was a lot of intensity in terms of restoration to get production backup. the field is currently operating at 30% of production, and that was within 24 hours of the strike. they are looking to get back up to 1.2 million barrels a day by the end of september. we are now going to the next area, where we will see more of the damage, but very tight security. it is a very select window where we can film and speak to the world, but it has been an impressive journey so far. alix: good luck. stay safe. it is good to hear your
reporting as well. anning me on set, tom to get -- tom digenan, ubs asset management strategist for u.s. equities. are you buying oil stocks this week? ismas: i think what fascinating is how different it is then it would have been five years ago or 10 years ago, before shale. i would be cautious buying the rally, but i do think oil prices have been fairly tepid, and if anything, this gives them a boost. i think it will take longer to get stuff online then people originally thought. every government always says they are going to get things back up and when they really can. does bring into conversation the value versus growth dilemma. come inside the bloomberg, and you can see where we are at. we did have a minor rally of
growth stocks here. take fort going to value to consistently outperform? >> here's the challenge. there's your traditional value, low pe. there's a whole segment in the economy that is not going to revert. they've been competed out of business. those you want to stay away from. then you got the financials, which are solid balance sheets, priced stronger than we've ever seen, but the value doesn't come with stronger economy. it comes with an expectation of a stronger economy. a little had faked monday and tuesday of last week, which was dramatic at the time. alix: so do you need a steeper curve? does the fed need to give you a steeper curve to do that? thomas: if they do, that is the best thing in the world for banks. even the non-interest-rate rate
sensitive financials benefit from it, so i think it helps them quite a bit. alix: prepared for being steepen. it did is that enough to get value growing, or do you need it substantial -- do you need a substantial spread? thomas: given the interest rates we are trading out now, these are not trough earnings. normally selling at a higher multiple, they are selling at a big discount to the market. alix: based on that, it seems that a inflation expectations well help up. when would you by value? it seems like you are making a case to not by value. thomas: this is where the value in my name is extensive value -- is intrinsic value. growth is a good thing, and there's a lot of value traps out there.
cigar but investingt -- cigar therenvesting works, but are long ways to go in areas like retailing. alix: what i'm hearing is you've got to buy defensive's even though they are getting expensive. what do you do? thomas: here's my conundrum. once you say even though you are expensive, i kind of preclude that. what is working today doesn't necessarily work tomorrow. stocks that trade at a fair value will outperform. -- it is lumpy and discontinuous, and i think that is a challenge for all investors. if anything, there is a patient's trade out there that there is tremendous health and. alix: what is your top -- tremendous health in. alix: what is your top trade?
thomas: long financials, long semiconductors. it is kind of an offsetting bet. alix: thank you very much. we want to get an update on what is meeting headlines outside the business world. if jan or todd a is here with first ash viviana hurtado is here with first word news -- viviana hurtado is here with first word news. military leaders will warn the president taking action against iran could escalate into war. president trump is considering how to respond to the attacks on a saudi oil facility. inflation in japan hitting a two-year low last month from a year earlier. just 1.5%. rising in bigger factor, a drop energy prices adding to speculation that the bank of japan may add to its fifth stimulus -- may add to its
stimulus. in texas, the houston area is still reeling from three feet of rain stretching the region that homes.ndated we have some breaking news on the terminal right now about the presidential campaign. new york city mayor bill de blasio dropping out of the race for the democratic nomination. double aussie of had consistently been at the bottom blasio hads -- de consistently been at the bottom of the polls. 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. alix: coming up, how climate change affects national security. sherri goodman, former defense undersecretary for national security. under terminal, check out tv for all the charts and graphics and anything you
♪ viviana: now to your bloomberg business flash. struggling retailer jcpenney preparing for talks with creditors to ease its debt burden. that would give the new ceo more breathing room as it heads into the crucial holiday shopping season. stockholders have been pushing become a swap for extension of some of its $4 billion of debt.
amazon founder jeff bezos pledging to meet the goal of the landmark paris climate agreement 10 years early. the world's richest man saying amazon will reach 100% renewable energy by 2030, up by 40% today. >> leaders and role models have been in the center of the issue on this, and we want to be the forefront. want to be leaders. the company of amazon's scale, scope, infrastructure is delivering this, so can you. ordered 100,000 electric vehicles from a startup. our focusontinue now on how climate change affects various aspects of the economy. here's what various
guests have said. >> climate action can result in new jobs and opportunities and considerable economic growth. >> we are very close to the socioeconomic tipping point. >> addressing climate change and being a leader presents tremendous economic opportunity not only for our leaders, but especially our communities. >> within a few years, you're starting to save money year after year. >> folks are already seeing the value in this. we just this past year saw climate change as the number one risk. >> we are 100% carbon neutral as a company. chandraoomberg's emma has more. emma: thanks very much. climate change can act as a threat multiplier, essentially driving conflict by deepening existing fault lines. it creates instability. that is something the former
u.s. secretary of defense jim mattis acknowledged, that it is impacting stability in areas where u.s. troops are already operating. let's look at how they may work, first of all with rising temperatures. they can cause deteriorating agricultural conditions that affects the food supply. the 2017 report that temperatures in the southern have spear -- in the southern hemisphere will see greater implications in europe had rising probability. rising sea levels are another impact, and we are already seeing this in the arctic. the sea ice melts, creating a new flashpoint. poleis making the north more accessible and navigable, setting up the fight over the region's resources. and others lay claim to
the region, but so does china. alix: thank you so much. from paris to sydney today. tens of thousands are pouring onto the streets to demand action on climate change. similar protests are expected in new york and toronto. we did get some action from germany. reporting to -- according to reports from a daily newspaper, they are planning to spend more than 50 billion euros on a potential climate deal. more on that in the next hour. joining me in washington is sherri goodman, center for climate insecurity senior strategist and former secretary of defense. wonderful to see you. why is climate such a geopolitical issue? can you to connect the dots for me? yes, we see climate stabilizer.threat
in the arctic, we have a whole new ocean opening up sibley because of climate change. i just returned from oslo, from the first over -- from the first ever nato arctic gathering because we need to understand how to operate in a region that is changing so dramatically, whether it is geopolitical tension or just pecora -- just permafrostthe rising and falling temperatures at -- and rising temperatures at twice the rate of the planet. many others seeking direct this isnts there, so going to be a challenge with global migration occurring. we see in our own country that extreme weather events are now requiring military forces to come to the aid of our first responders on a regular basis as we face hurricanes and flood
events and extreme weather around our country and globally as well. alix: do we feel like countries, companies, citizens, are they ahead of this were behind this -- ahead of this were behind this? of the reason angela merkel is having such a hard time with her government, who is winning or losing? sherri: i think we have to be clear about what the risks are. it is an opportunity to really transform our economies and take advantage of the new technologies emerging to help us move to lower carbon energy -- energymbler yes futures, but yes. our governments really have to cope. , if managedn be
well, a healthy thing, but we need to take in that we have more climate findlay -- more climate friendly agricultural water sources. to our increasing risk oceans, freshwater's, and arctic regions. issue causes political unrest. that causes revolutions in countries that move people out of those regions. sherri: exactly. there are two parts of the world where we will see the stress increasingly. first is the very hot metals of the middle east, where parts may become almond habitable on a regular basis -- may become uninhabitable over a regular basis. people are going to move out of their ancestral homes to higher parked intentially
the caribbean. that is why we have so many people around the world today recognizing that, as the cradle -- recognizing that as the greatest global challenge of our era. alix: if you were still in that role, what would be your number one recommendation? sherri: my number one would be to incorporate this into every planning and programming. the un-present opportunities to seize the technology advantages come a move lower carbon energy futures, and of the same time, take advantage of predictive analytics that will help, but better understand these risks, and be able to address them on a closer, real-time basis. alix: is there a price tag you can put on all of this? sherri: we see the price tag
occurring already today in the billions of dollars that's affecting just our military infrastructure. it is one small piece of this every year. we have estimates of over $5 twoion just to repair military bases that suffered heavy damage last year. the took serious damage in hurricanes of last year. and that is just two months ago, but we see the costs mounting daily. we should see those and convert them to positive climate resilient infrastructure and opportunities for our future. alix: thank you so much. sherri goodman of the center for climate insecurity, thanks. bloomberg is part of a global collaboration to highlight climate change. coming up on the program, gm's pivot to ev's and self-driving car's.
alix: we turn to "businessweek" beat to profile the latest story in issues of "bloomberg businessweek" on newsstands today. gm workers on strike. then airbnb readies for an ipo, but new york city's rules could be a roadblock. and how one startup is increasing honey output from working bees. joining me now is silvia killingsworth, bloomberg businessweek at her desk bloomberg "businessweek" editor. >> mary barra's says she wants them to be selling one million
electric vehicles within a few years. that's huge. they are really moving into that space. they've made a lot of acquisitions and they are in the middle of a huge strike. alix: they also have automation and a really big timeline for that. can they do this? lvia: it is pulling the plug on gas powered vehicles into electrics. it will be important to watch. sherri: new york city, although it only accounts for 1% of the global revenue, it is whether a city has really typed tenants laws, so whether they will be successful for the future. alix: so new york is the only selling block, or will other states follow?
sylvia: it is a real point of interest right now. if new york pulls back on those, perhaps others could. how to makeea is any worker more productive and make better products, and that applies to bees. sherri: exactly. they start with a solution that makes bees more productive. energyet be five hour energy.l it bee ok.: silvia killingsworth, thanks very much. you can read all of these stories in the latest edition of "bloomberg businessweek," on
newsstands now. coming up, we are looking at a market that is just tired. it is an exhausted market. it's been a really crazy week, and now the only conversation you can really have is will we s&p hold the 3000 level? in other asset classes, looking at the currency market. interesting somatic things happening. rebuking any positive brexit news. yet had lower inflation, the currency really goes nowhere. the curve in the u.s. tries to steepen in the u.s.. this is bloomberg. ♪ devices are like doorways
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daybreak" on this friday, some timber 20th. president trump learns -- friday, september 20. president trump learns today what options he has on iran. the administration has blamed tehran for saudi attacks. paris to sydney, protesters are rallying to save the planet today. students skip school and workers walked off jobs to demand action on climate change. similar protests are planned elsewhere in north america. in texas, the houston area reeling from the effects of tropical storm imelda. more than three feet of rain has inundated the area. houston's biggest airport is closed and won't reopen until this afternoon. fun one of never
banks untiliggest now. it woman has been named to the had bank of scotland. in the market, there is one word , quadruple witching and exhaustion. i guess that is three words. you can some options and futures expiring. on the other side, can the s&p actually hold 3000? do we really care? feels like it was a big week for a lot of central banks. one country not taking a break is india, the country announcing a $20 billion stimulus plan, cutting corporate tax rates that match the rest of emerging markets. ng the in india seei biggest boost in a decade. katie koch, goldman sachs asset management cohead of fundamental equity, joins me now. what does this do for india as a country?
of ourindia is one biggest overweight positions in our overweight portfolios. so this is great news for us. as you mentioned, big stimulus out of india. the government in our view has been much too conservative on the fiscal side. this is holding back growth. india had a bad growth print in june, growing 5% year-over-year, which is a chilly -- which is essentially a recession in india. they cut corporate tax rates to the lowest in the region, the very good news. it is going to get corporate sentiment approved. fdi.ll see a pickup in and i'm glad you mentioned fdi. it can benefit from the trade war elsewhere. is that also part of it? you don't want to deal with mexico, you don't want to deal with china, come deal with us. katie: india in general is more
moreated because it is a to domestic oriented economy, but india has more to do. reelection in may, the government needed to make more progress. the other thing we are going to look forward to is more privatization. there are 23 state owned enterprises they are looking at doing strategic divestments of. we think that can be another positive thing in a big leg up for the equity markets. alix: if we broaden it outcome of for me the reason it was such a top story because we usually don't talk about india at eight: a3 on a friday, you have the 8:03 on a -- at friday, you have the government central bank. katie: and he has a very independent one. alix: which makes the -- india has a very independent one. alix: which makes the move even
more interesting. katie: one of the things that makes them very interesting is you have governments that can act counter cyclically. they have ways to stimulate growth that may not be available to developed market governments. that is really interesting for emerging-market investors. we continue to think clients should have strategic allocations to emerging markets. you don't want to be a tourist in this part of the world. actually, you do. beautiful places to visit. but as an investor, you need to be strategically committed. we continue to think this is a great time to put capital to work. obviously, we think you need to be highly selective. alix: you can see the emerging market index versus the world index this year. obviously, emerging markets underperform. what changes that gap, or does it stay and you have to be super selective? if so, where? katie: emerging markets are driven by the same thing all equity markets are driven by,
which is earnings. developed markets have putting good earnings this year. emerging markets still needs to make recovery, but we are seeing that improve, and we think that will be the catalyst for outperformance versus developed markets. we see better growth. we think that is going to translate into better earnings, and we think clients have an opportunity to get awesome valuations. alix: i know it is a long-term trade, but do you need a dovish fed or a fed that can be dovish for its own sake, but hawkish from market expectations? what do you need to get that call right? relativeerging markets to u.s. markets have decoupled more than they ever have, so we should expect them to act more independently and also counter cyclically.
becourse, a dovish fed can supportive and helpful to emerging markets, but even if we were in an environment where we had a more hawkish fed, if that was happening because growth was good, emerging markets could perform. alix: it feels like now we are stuck in the middle. on a relative basis, you have a hawkish fed. in reality, you have a dovish fed. you have to extrapolate what they are doing now and look over time. it is still dovish. on a relative basis, it is hawkish. can they not ease as much as they wanted to? katie: actually, i don't think that is the case. i think a lot of these governments have tremendous room to do fiscal expansion and in many instances, to be able to cut rates. i think they will be committed to it and have the power to perform. alix: what is your favorite area in the developed market? katie: right now the country we are most excited about is japan.
i just got back from their last week. that really reinforced our view that this is one of the most attractive equity markets in the world. i also think it is one of the markets where you have to be the most selective because there's going to be the greatest bifurcation globally between winners and losers in that market. alix: interesting. much more on that call in just a moment. sachs willof goldman be sticking with me. coming up, oil's wild ride following last week's attack on saudi oil facilities. we will hear more next. is anything actually being done? this is bloomberg. ♪
there are reports that indicate saudi arabia is looking to buy some superlight oil condensate after the wake -- condensate in the wake of attacks on its oil fields. iran is continuing to deny involvement. i am making a very serious statement that we don't want more. we don't want to engage in a military confrontation. we believe that a military confrontation based on deception is awful. it will have a lot of casualties, but we won't blink. now is yousefme "number-din, daybreak: -- "bloomberg daybreak: middle east" anchor.
yousef: we barely got any chance to be able to capture some of the moments. we are looking at some of the stabilization columns, which are a critical part of the whole infrastructure. four of them were badly damaged in the attacks in the oil field, , where thelargest crew gets pumped out. they are working around-the-clock, and that is what we saw. the activity is like a beehive. they are very keen to get to 30%e the they are now, capacity, back up to 100% by the end of the month. planebeen on a 20 minute trip, and now in our to get to this next oil processing facility, the largest in the world, to see more of the damage and get a better understanding. is there any rhetoric on the ground of how they are looking at retaliation for the
rhetoric from iran's foreign minister? yousef: not at the moment. saudi has been exporting this problem to the international community. the framing is that this was not an attack on saudi arabia. this was an invasion of a critical piece of infrastructure of the world. so there is a responsibility for the international community to find a way to counter it. be unilateral action would hard to expense in terms of the potential consequences on it till you iran, which would -- on retaliation from iran, which would bring a lot of casualties infrastructure. alix: thank you. katie koch of goldman sachs is still with me.
there's still a lot of unknowns here. i would say more broadly, when you look at the positioning across portfolios, we've actually been underweight carbon assets for a long time. this is going to play out. it is important we should talk more about oil prices, although i think they are more difficult to predict. andve three kids, ages five under, and i don't think they will be driving a car with a combustible engine. i think that technology is making it possible that we will move more away from oil. there are a lot of people who feel super passionate about that. big oillot of the companies have a nice dividend, a ton of cash flow, and they are trying to diversify. do you look at that? how do you see that? katie: that is a great question. we do own some of the oil majors. some of them are going to
reinvent their business model, and there are a few that will be successful at that. secondarily, they do pay off a good dividend. something that investors in this market really need is yield. central banks have told us they are going to staying lower for a much longer time, not just in the u.s., but all over the world. that should give a continuing bid for energy stocks as well. alix: it brings up a broader conversation of value versus growth, where and how and when you can bite the bullet. this is a long-term ratio of value versus growth. it is pretty rough if you are a value investor. where do you stand? katie: it is tough. it has been a tough market for value investors. our value and growth investors sit together, and it's been a tough 10 year run. luckily, our value team has been great at picking stocks and can still selectively find some winners.
unwind.omentum i think that makes some sense. but i believe there will be some consistent outperformance of growth versus value. the other way of looking at this equation is separating the disruptors from the disrupted. the truth remains that there are still a lot of companies that are disrupted in the value sector that are facing demise in terms of their business model. so i think we should be aware of that, and i think it makes sense for clients to be tilting their portfolio into secular winners. i think technology has gone from being just a sector to actually disrupting across all sectors. that means clients early should have posturing toward the future. the reality is, you can find more of them in the growth space. alix: katie koch of goldman sachs will be sticking with me. i want to break some headlines for you. we are getting some details about the climate package coming out of germany. it looks to be over 50 billion euros, a little more than expected, but they are saying
this is going to have a neutral impact on government finances. part of the conversation was are they going to have to have a deficit in order to finance this, and how they the package will be. it appears it will have a neutral impact on government finances. there are a lot of little issuinghere like certificates, banning new oil , spilledrom 2026 on about three digit euros billion on a climate plan, working with electric vehicles. lots to work through. we will keep you updated on those headlines as they come across. ,t is going to be a big package but a neutral impact on finances. coming up, jcpenney said to be getting ready to talk to creditors to ask about some breathing room ahead of holiday shopping. more on that in today's bottom line. this is bloomberg. ♪
viviana: you are watching "bloomberg daybreak." mitsubishi blaming a $325 million loss on a rogue oil trader. the japanese company saying an employee tried to hide unauthorized trading of crude oil derivatives. the employee has been fired and reported to police. facebook called the meeting between ceo mark zuckerberg and president donald trump constructive. the president tweeted, "it was a nice meeting." zuckerberg was in washington, d.c. to speak with congress members and policymakers. google will spend $3.3 billion to expand server farms in europe. since 2007, the committee will have spent over $16 billion on european data centers. yesterday, google announced it is making the biggest clean energy purchase ever by a company for wind and solar farms on three continents. alix: thank you so much.
time now for bottom line, where we look at three companies worth watching this morning. inare joined by emma chandra london. emma: platform and streaming company roku gaining a sell rating from pivotal research group, sending its stock down some 5% in the premarket. this follows a 15% plunge for the stock on wednesday. the issue for roku seems to be growing concerned about competition, something that the pivotal analyst says will eventually drive the cost of over-the-top streaming devices to zero. that could certainly be true given news from facebook and comcast, discussing streaming devices, and particularly comcast saying it will now include a streaming device with all internet only subscriptions. roku' streamings device accounts for some 45% of its revenue, down from about 70% of revenue
three years ago, but still a significant portion of sales. we should also point out that pivotal research analyst set the price target for roku at $60 a share, 55% follow yesterday's closing price. alix: next we take a look at datadog following its public debut. sonali: datadog is already one of the best ipos of the year at more than $10 billion in market value. you think it might be worth more than wework already. for an ipo to do that well on the first day looks very good for the company, very good for the bankers. of course, venture capitalists which they would have been even more on the first day of trading , but certainly people are liking the healthier margins on this company and some profitability into an ipo, unlike some of the other darlings we seen this year. alix: thanks very much. the third company we are looking
at is jcpenney. jordan is here to take us through the latest. jordan: department store jcpenney is trying to stages latest come back. the new ceo is trying to say that they are focusing on the core business, but right now the stock is still hovering in penny stock territory. yesterday at closed at $.81, and it has been up and down nine cents all year. it has about $4 billion in debt, so while she is still trying to improve the stores and fitting rooms, analysts think they have too many stores and that they are still too mall-based. alix: joining the onset still is katie koch of goldman sachs. katie: the market likes that because it is a more defensive sector and was oversold for a time, so we do like consumer staples, but i think you do need to be quite selective in that space. we are really focused on niche brands related to trends we are
talking about. for example, millennial consumers that have figured out a way to do hybrid online with brick-and-mortar, and people that have come up with good advertising campaigns to target the millennial consumer's healthy lifestyle. the jcpenney situation is interesting. we don't own that company in our portfolio. it is interesting because they have an exceptional management team with great execution capabilities, but this trend of moving online is hard to fight, despite how talented the management team can be. alix: have you noticed anything with the companies you do like in terms of margins, trade war impact, etc.? katie: margins have been pretty resilient across the whole u.s. market. we will see in the consumer , the consumer has been
very strong in the u.s.. alix: does that continue? if you are looking at those stocks, where do you look for the first cracks of something not working? katie: definitely you would see margins not coming through, and that would feedthrough to earnings. we had great earnings, which is why margins have been resilient and topline has grown by 4% quarter over quarter. positive for consumer staples specifically. alix: are there less extensive ways to play the consumer? katie: when you look at valuations for consumer and that sector, i actually think they are attractively valued. i would argue there's part of the tech sector that's overvalued, but in terms of the consumer, you get some tech innovation plus access to a very wealthy consumer at valuations that are in-line with their average over the last couple of years. alix: does that mean you wouldn't like tech?
katie: there's definitely parts we think are fully leave -- think are fully valued. we would be neutral to underweight, and neutral to in the secular, growing part of the market. beneficiarieshe of things like 5g build out. alix: again, it is a trade war risk. you hedge that or take a longer term view? katie: there's a lot of semi companies, and we had jet by being super selective of which one to own. they are more exposed to the secular growing areas of semis. alix: let's talk about more breaking headlines here from germany. we got the news earlier that looks like the package is going to be a little more than 50
billion euros. it will be a budget neutral, though. now you have angela merkel's coalition targeting about seven by8 million electric cars germany. we are going to break that down as well. there's also some other details that wind up trickling out. they are banning new oil heaters from 2026, raising subsidies for e-cards under 40,000 euros -- ars under 40,000 euros. we will get more on that as well. this is bloomberg. ♪
will we be able to sustain the 3000 level? that is the question to the dax no change, but you will want to dig under the hood for that. out of germany, interesting nuances, phasing out heaters, for example, hiking airline taxes, reducing train cost, subsidies under 40,000 euros. we will dig into that in just a moment. asset classes, looking at dollar-yen goes nowhere. the boj in the market, not buying any bonds anywhere. the markets that will look at that as some sort of quantitative tightening. cable rates now lower, no shocker there, in the u.s., four basis points. poultry is what we are looking at. one story i am watching, just got real for some banking clients in denmark. the country with the longest history of monetary policy did just this, shared the cost of negative rates paid, saying it will impose a rate of -75 basis monsanto private clients -- on all private -- or more.
i talked about the pain negative rates can cause. >> i think it is important we talk about how destructive negative rates are. negative interest rates are just a's grain central banks are hiding behind to run policy. it does not really work. it is a nice the area, and it might stimulate domestic demand, it is not happening. alix: joining me now, peter coy global socksh of asset management is still with me. i thought the banks thing was interesting, because usually it is in the really high-end. this is usually for the everyday worker. what happened. how does it play out? what is the conversation? peter: i imagine an individual was hit by this in denmark and was not happy, and that is why the bank has not done it. they have been absorbing the pain in order to protect the relationship with her clients.
you wonder if it is going to be a ripple effect and it will start to become a thing. alix: and that does wind up hurting consumers on a different level. what struck me during the meeting this week was then saying they have more firepower than the ecb. actually do,they because their positive rate is -0.1%. east european central bank is 0.5 negative, so there is more room if they wanted to, although as peter fisher said, that is not necessarily mean it is a good idea, but it is conceivable that could cut more. alix: katie, that is what you are bullish on, but you are looking at a tax hike coming at the beginning of october. negative rates could get more negative. walk me through. katie: sure. absolutely. the equitysted in markets, so we do not have to worry about the bond market is much. taking a step back -- alix: but you do not own the banks. katie: we do not.
we underrate bank across most of our portfolioss for that reason. taking a step back on japan, i was excited to be there last week. we took a group of 20 clients, equities, of publicd in tokyo and kyoto, and we met with policymakers. my take away is this is a really exciting equity market for the next five years, but you need to be highly selective here. the badt is despite all news you just talked about, it is home to some tremendous growth opportunities. to says, e.v., great way that through the inside part makers. the third would be the emerging market consumer. just in japan, it is a three-hour flight from tokyo to beijing. five years ago, they had 20 million tourists. this year, they will have 40 million inbound tourists in japan, and it will go to 60 million in the next few years. these are growth opportunities.
the second thing i would say if there is a corporate governance revolution happening in japan, and as someone who has gone there for 20 years, i can tell you when we used to meet with would haveteams, we great meetings conducted in a list with nuanced conversations, and then when we got to the part where we asked them about corporate governance, it kind of fell apart. they wanted to exit the room, they did not want to answer the question. alix: it is different now. katie: wait a for now. dividends being paid out, share buybacks, cross shareholdings seen on welcome independent board of directors used to be an oxymoron in japan, but now we have gone from 20 wha -- 20% having one independent director to 99% having one. another i would make is valuation. japan is the only global equity market that has actually seen a derating in the multiple over the last 10 years, so you have 50% of the market trading below book. by the way, part of the market should be trading below book, like the banks you mentioned,
yet there are growth opportunities that terrific valuations. alix: peter, we tend to come down hard on japan and the bank of japan for the policy, lack of inflation, etc., but is it possible that we are wrong? is it a lot better than we might have thought? peter: the bank of japan this week had a chance to cut rates and chose not to, and that is because there were some signs that were on the trajectory toward getting inflation for the 2% goal. kuroda -- then we had the data coming out saying in fact the core inflation, and when i say "core," not only credit but also fuel, was 0.6% year-over-year. that is well short of 2%, but at least it is not falling even more. and so it is looking now like there is a good chance they will end up cutting in october, their next meeting, but we have the report coming out. japan was one of only two
-- a few countries come along with canada, in which the oecd raised the projection for growth. katie: i will give you a reason why that is the case. and japan, there are a lot of things to be said about for the macro, and the demographics of melissa, there is no way to argue with it, they are very bad. we will have a country going from 126 million people to want hundred million people -- to 100 million people. japan went from five years ago having the worst female labor force participation rate of any actuallyn the oecb to the best. within that, there are too many part-time workers, and we need more women in senior directive positions, but it is a good move, and it is positive for growth. the second is they need to do immigration. they need to allow more immigrants in the country that will help with demographics, and you saw early signs of that. we heard the company speak to that on the ground. those are positive for growth. alix: all right, peter coy from
"bloomberg businessweek," thank you very much. katie koch from goldman sachs asset management will be staying with me. meeting the climate goal, unveiling a package with al over 50 billion euros, talking about granular things. "we need to do more on climate." one of particulars going to cut the tax on distant rail tickets from 17% to 19%. they're going to raise tax on airfare. they're going to help sell more e.v.'s by offering subsidies to those who cost less than 40,000 euros. experts will help them monitor their climate targets, and they learned a lot by not achieving their previous goals. she understands critics that are doubting that. talking about up the potential to look at some green bonds, the country looking to deal with that as well as part of all of this. they are going to plan to issue some green bonds in the future. i want to go to bloomberg's richard jones.he joins us in
berlin. looking at the dax, nothing is happening, but in the bond market, it could get interesting on this. richard: yeah, good morning, alix. if you go back to the ecb meeting last week, one of the things mario draghi was talking about was the governments that do have the fiscal space should stimulus, and that is what germany is doing today, spending tens of billions of euros on this new climate package, so to the extent that that stimulates the economy from an ecb perspective, that is a good thing. however, the german government will not be issuing any new debt to finance this package, so it is actually going to be pretty neutral for the german bond market. i think a lot of people were thinking that germany would take on new debt, and that might put some upward pressure on german bond yields. they might still do that, and there might be other fiscal stimulus that germany is going to do, but specifically related to this climate package, that is not the case it will stimulate the economy in theory, but there
won't be any new debt. it will not put pressure on german bond yields. alix: it is a great point, and we have seen bunds go nowhere on that. how does that fit into their neutral budget? i think that is yet to be seen, and i am not sure with the details are yet on it, alix, but it is something that will be an increasing trend that we see, not only for the german government but for other governments as well. the interesting thing here is the package is around 50 billion euros, i think, was the original estimate. let's see how it plays out, and this is the first of several physical things that germany is going to do to try to stimulate the economy. as it stands now, the german economy has had a pretty rough couple of orders, and a risk -- quarters, and the risk of recession is real. alix: fair point.
we would see a civics bond that would not necessarily be so we will its debt, watch out for that. richard jones, thank you for that. katie koch of goldman sachs asset management still with me. he talked about transitioning for a climate neutral world, how else do you plan the scene? katie: this is the number one thing that clients want to talk to us about over the world, how to get better positioned for it. fundamental investors are trying buyo three simple things, great businesses, not overpay for them, and engage aggressively to unlock shareholder value. the way we look at the world, we are really invested in climate-friendly companies, because those are sustainable companies. we had up having a fully integrated bull esg process and be a fully integrated toward renewable and sustainable companies, as i said, very underweight legacy acts. alix: what you do with
automakers? they will obviously be beneficiaries in some ways of new subsidies, but at the meantime, they will be selling cars at a loss. they will not make a profit. how do you think about those companies and transition? katie: we do not own them. they arecited making that transition. if we feel it is a positive inflection point, we will be exciting about that. things we do own, a leader in the new renewable space, i will spend time with the ceo of the dsm, the leader in more sustainable food production, for example. those are companies that are focused on solutions, and they are making profits for investors right now, those are the assets we want in this portfolio. clients interested in building portfolios that are focused on these issues, and we focus on it not because it is a good thing to do -- although we are good people, we like to do the right thing, so that is true -- but it is a way to make money for our clients, because we think they will be secular
on china's good side. they want to repair damage done from the huawei matter. pretaxts 75% of its profit in greater china. for the first time, a woman will had one of the biggest banks in the u.k.. alison rose has been appointed ceo of royal bank of scotland. she is currently deputy ceo of natwest holdings. rose will replace the ceo. he announced within a year he would be leaving rbf. -- our bsp are diane viviana hurtado. f.anks -- rb i am viviana hurtado. alix: thanks, viviana. we spoke with martin chavez, and he spoke about what it was like to be one of the only openly gay man on wall street and the diversity workforce. in the being that man
1990's, it was very clear to me that i did a good job and the firm valued me and treated me was, and might be a day never an issue. it never has been for me, not since the beginning. do not have a lot of company, i will say that, and that is more that has space, that is something you have to process on your own and decide whether that is going to stop you, or if it is just going to be an observation that you make along the way. and then actually i will say in the specific instance of being laughed in one of my best career moments was when all of a sudden come out of the blue, i got asked to go to buenos aires to talk about risk management in spanish. it is something my mom always said when i was a kid, "use your spanish, perfect your spanish, it will be great for your career." i rolled my eyes. "what do you know about my career?" and what do you know, my mom was right?
she got me out into the world and that she with clients, because i spoke spanish. >> one of the other things i've read about with you, your mother told you you have to work twice as hard to be have a successful, right? martin: that was one of the speeches. >> do you think that is still the case on wall street? i think it -- martin: i think it is still excellent advice. and i see the downside of it. it can be exhausting for diverse people, if you follow that strategy, if you have a paranoia, will "they," the paranoid plural, will they think i got this job because i am diverse, or because i am good at the job? well, to leave no margin of ever in their thinking, i am just going to overdo it. that can be a recipe for success. it can be exhausting. and then ultimately, another bit of my mom's advice, what will people say, she used to say,
nah."hem say it is a spanish expression for "i don't care." i am going to do my thing and trust that it will work out. >> what you know about parties trying to change the culture of their own firms right now? martin: i would look at what david, john, and stephen are doing a goldman sachs, which is really doing everything at once, and, importantly, starting with a message. david has just made it clear that for our incoming analyst classes, they will be 50% women. and you can subdivide them in a lot of different ways, regionally, by functional role, and they will also be 50% women. he just said it as a statement and he is absolutely serious about it. it is amazing how quickly it happened. so that is a big part of it. and then also, another big part of it is just being incredibly data-driven. having a uniform way to see
where we stand, and then also just saying, well, who are all the people that we interviewed for all of these positions, and what are we doing affirmatively to cast our net really wide? and then holding all the executives accountable to do this not just once in a while but every single day over large periods of time. it is working. alix: that was bloomberg's sonali basak with martin chavez of goldman sachs. it was a really good interview, and i love that part, because it is easy to be critical of wall street, to say things like, "ok, are you really being diverse, or are you just performing lipservice?" started and heard a lot of stories, but women in particular, they wanted to hear about how somebody rose despite of the hardship. walmart he said being gay was not something that hindered him from doing his job, he also said his mother's advice, you have to
work twice as hard to have as much success, was something that was still very true and something that could be exhausting for a lot of people on wall street. alix: it does feel come in particular, having some of it off the record before he even got the ceo job, it is real for goldman sachs, to bring more women up in the workforce, for example. sonali: that is true. there are a lot of women who have been lifted up to the management committee, and let's give a lot of credit to the women already at the top your , i hear aboutn her all the time, flying to conferences that have nothing to do with finance at all to raise women up. it is definitely having to do with women and getting women at different rates. women,iversity, lgbt, latina, how you make them rise altogether is a hot button issue across wall street. alix: it was a really good interview, a really loose executive interview. check it out online.
bloomberg's sonali basak joining us. been -- earthlings have been defending on area 51, a supersecret base in nevada. i kid you not, there is a weekend festival being held there, starting by an internet hoax to see area 51 and "see them aliens." big men dj paulo can filled -- thereakenfeld will spin for entertainment here we are looking at cars, and update next in today's traders take. if you are bumping bloomberg in your car, sirius xm terminal 119 -- channel 119 and the bloomberg business out bloomberg. -- app. this is bloomberg. ♪ this is bloomberg. ♪
him all day started and i :00 a.m. on bloomberg terminal -- at 9:00 a.m. on bloomberg terminal. germany unveiling the climate change package, 54 billion euros. travel,e tax on train increased taxon airplane travel, increased subsidies for e.v.'s under 40,000 euros. does that help with stimulus? >> not really. this is a little bit of a drop in the bucket. this is come again, specific to germany and how it affects their particular industry. germany has bring much attempted to get away from the whole structure and change their energy package, but this is deficit neutral, so we may see this curve but not necessarily a major shift in the euro, i think. green bonds, weighs
around, well, maybe we will issue a civic bond that will not count against debt, etc. they are actually increasing the deficit spending, and will this be something material for the economy, or until we see something huge, it does not matter? vincent: until we see something in a big way, it will be a minor shift along the curve, where people are investing. again, it probably will not affect the euro very much. we see headlines coming out of the u.k., barclays -- alix: you started -- vincent: i did, i did, i am sorry. johnson & johnson are going to talk next week. when you see the euro slowly, that will have a bigger impact on currencies and rates at this point. alix: rounding out quickly, what are you watching? trade we have been talking about in the last day or two is screwed volatility, which shot up after the drone attack. it has fallen back down. traders are looking at that is a better way to play oil as
opposed to price direction. we have a couple of these coming up. in five or 10 minutes, we may hear about sanctions on ir an, which trump measured were coming, and that usually happen at night :00 a.m. on friday, so they could happen at any second -- 9:00 a.m. on friday, so they could happen at any second. alix: bloomberg's vincent cignarella, thank you so much. tune in to him at 9:00 a.m. that wraps it up for me on "bloomberg daybreak." coming up on "the open" with jon ferro, happy friday, everybody, you made it. it is a tired market. do not get excited. this is bloomberg. ♪ this is bloomberg. ♪
coming up, the s&p 500 hovering within 1% of record highs, as trade talks continue between u.s. and china. oil is set for its biggest weekly gains since january, saudis are promising more output. aftere music improves jean-claude juncker says a deal can be reached by halloween. good morning. here is your friday morning price action with futures positive 2/10 of 1%. in foreign exchange, the euro is weaker, 1.1025. ten-year.e u.s. stocks are closing in on another record. >> we are near record highs. > it is an all-time high again. >> hovering at all-time highs. but it is a different makeup. >> a relation between value and growth and