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tv   Bloomberg Markets Americas  Bloomberg  December 3, 2019 1:30pm-2:00pm EST

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and as she struggled to define her candidacy. the first-term senator from california enter the race after making a name for herself as a tough question on the senate judiciary committee during contentious confirmation hearings for brett kavanaugh and william barr. toher campaign, she pledged prosecute the case against president trump. in london, the president criticized the french president for his comments on nato. president macron described the alliance as "brain dead." mr. trump called that very insulting. >> nobody needs nato more than france. frankly, the one that benefits really the least is the united states. with the clock ticking toward a general election in the u k, jeremy corbyn is standing by his claim that the country's national health service would be threatened by a post-brexit trade deal with the united states. that is despite president trump
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saying it will not be a part of any negotiations. corbyn has used the line of attack against boris johnson in the run-up to the december 12 vote. graduate of unionized student workers at harvard are striking today. last ditch efforts fail to produce an agreement. the union has been negotiating since october 2018. it seeks a 5% increase in salaries and stipends, as well as better health care options. the student workers face pressure to secure an agreement before possibly losing federal labor protections in the new year. global news 24 hours a day, on-air, and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg.
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shery: live from bloomberg world headquarters in new york, i'm shery ahn. amanda: live in toronto, i'm amanda lang. we are joined by our bloomberg and bnn bloomberg audiences. andy: president trump macron are pulling forth dueling visions of nato as the leader defends a $2.4 billion tariff threat on french goods. the bank of montreal makes the industry's deepest job cuts in years. we have a roundup. an act of work. a cyber attack is pitting it against insurers. the question is who pays for the damage? amanda: quick check on the major averages here. we have some degree of negativity out there, and thanks, part two a new pessimism on just how long trade talks and tariffs may continue with the
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u.s. president saying this could not be resolved until after the next presidential election. the fundamentals being watched closely across the broad markets. earnings are still in focus. in the s&p 500, only real estate and utilities moving higher. financials, industrials, consumer discretionary, down. is moving higher of the dow industrials. one of the worst starts we have seen to the month in a long time. the list of concerns continues to grow. have a look at the loonie. we have been keeping our eyes on this one ahead of the bank of canada decision tomorrow. the reading of gdp was a mixed bag. the central bank has been alone in not easing. it?weestion is when might are keeping our eyes on the canadian dollar before any signs
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-- not for it to move, but where it could move at some point. shery: we are watching that decision closely. no change expected there, but investors expect the federal reserve to have to ease again. we see haven assets rallying, treasuries surging. the benchmark yield down to a one-month low. this is a bond etf which is set to surge the most since the brexit vote. this bond rally will depend on tomorrow's report on the services sector were, which if it comes in below forecast, we could see a number like higher for that bond rally, as we have seen u.s. consumer resilience keeping recession fears at bay. this may be turning as we get more negative news from the trade front as well as the global economic front. talking about geopolitics, nato's birthday celebration kicked up with fireworks today in london, mostly between the world leaders. president trump and emmanuel macron sparred publicly over
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turkey, the direction of nato, and u.s. threats to expand the front, $2.4o a new billion worth of goods in french goods. laura davidson joins us now from capitol hill. tell us about this $2.4 billion worth of tariffs on french goods that could take place here in the u.s., and what the french are saying about this. these could hit anything from sparkling wine, makeup, cheese, these quintessentially french products. it will go through a review process. the trade representative's office will hear feedback. these could go into effect in the next couple of months. the french are very upset about this. digital they have this tax, which is fine, the u.s. says is discriminatory. here is thissue negotiation going on about some sort of tax -- fair tax for
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google, amazon, facebook, these large tech companies spread across the world. they are working on how to resolve that. meanwhile, this is the ut behindat playing o the scenes. amanda: that digital tax has been floated here as well. in terms of what is happening at nato, spending on defense is very much on the table. there has been a fractious this u.s.' approach to nato. he was in the position to defend it because of president u.s.' is remarks. to be a good meeting in terms of the cosi -- cohesiveness of that organization? laura: you see a lot of money fights playing out on the nato front, digital tax front, everybody looking at these large saying i should get a
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bigger slice of the pie. saying i should get a bigger slice of the pie. it does not bode well for the agreements on the digital pact. they hope to have an agreement with 135 countries by the end of next year. that is moving slowly. still some optimism they could get that resolved. that would repeal the french tax. they would back up from that if there was international agreement. but they would keep it in place until then. that would also indicate that stay in placell until they can reach a larger deal. amanda: thank you so much. laura davidson wit from capitol hill. the stock is moving a little lower as the bank makes the most romantic job cuts by a canadian bank in 15 years. we will have more after this. this is bloomberg. ♪
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shery: this is bloomberg markets. i'm shery ahn in new york. amanda: i'm amanda lang in toronto. bank of montreal is making the industry deepest job cuts in more than 15 years, a move that overshadowed the banks earnings beat. it is the second the canadian bank to report their earnings. us from toronto is john aiken, barclays director of global research. it is a deep job cut, it will be a big restructuring charge, putting off by fax for a quarter or two. characterize these cuts. is this something the bank had to do, will others have to follow? series ofave seen a restructuring charges from the banks. if you take a look at what the banks have been doing, they have been restructuring, trying to improve their inefficiencies. whether they take a restructuring charge depends on the depth of the cuts they are
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anticipating, as well as the timing. , it wasaround, bmo anticipated by the market that we would see a restructuring charge. don't believe we will see this with the rest of the banks this quarter, but you never know what banks may need in 2020, whether or not revenues come in line with expectations. there are a budget of variables in play. toh of the banks are trying improve their efficiency, get expenses down, because we are a new lower revenue environment that may have been the past two years. shery: it doesn't help with the bank of canada turning dovish. net interest help margins, if we see a move from canada later next year? any of the cuts by the bank of canada will be negative for the banks. unlike what we see for the u.s. banks, where it is likely one quarter and then you move on after the cut, for the canadian banks, given they have a longer duration in their portfolio, the
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impact on margins is longer tail. a 25 basis point canada,n by the bank of that will put on incremental margin pressure on the banks. that will carry through 43 or four corners. amanda: the bear case for canadian banks were that they were you prepared for a downturn, especially if it was a housing led downturn, and did not have the set-asides for loan loss provisions. are we in better shape now? the housing market seems to have stabilized. i don't think canadian investors were ever concerned about a housing market downturn. that was largely investors outside of canada and didn't know the dynamics of the marketplace. looking atists are later stages in the cycle. we may see credit turn, but given the general forecasts like that, it's not expected to be a deeper session if it happens. if we look at what the banks have been putting away based on a new accounting regimes, but
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also in terms of capital levels, i don't think anybody should be terribly stressed about the outlook. shery: we saw scotia bank focusing on international markets. how are other banks looking at overseas markets, and with this be a time to do that when we have so many uncertainties? john: scotia is certainly the most international out of the group. exposures are latin america, caribbean, mexico. scotia has actually been trying to reduce its exposure. if you look at the exposures of the canadian banks outside of scotia, it is largely to the u.s. and canada. there are some exposures to europe, little bit in asia, but that is more along the lines of wealth management, a little bit capital markets. they have been struggling with revenue growth in europe. they don't have the same credit exposure as some global banks
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do. canadian bankshe really is, with the outlook for canadian gdp being tepid, they are looking for growth outside of canada, but that has been largely focused in the u.s.. amanda: since the credit crisis, phenomenalreturned capital gains. stocks have performed extremely well, but they have also returned yield. that should not have been at the same time for 10 years in a row. bmo, 4.3%. can they be both a capital gain and yielding stock? john: capital gains may start to slow as earnings growth darts to slow. canadian banks can generate eps growth 10% and above. you look at that in terms of the gain in share price. canadian banks can generate eps given where they are, the tepid outlook for canada, not fantastic outlook for the u.s.,
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the market is looking for 5% growth in earnings. that is what you can expect on capital gains as well. at valuations are trading below where they were on historic average, but that makes sense in a lower growth environment. in terms of the dividend yield, over the last three decades, the canadian banks have benefited not just from earnings growth, but also from an increasing payout ratio, moving from the mid-20's to 40% on average. all the guidance we are getting from the banks looks like they will not try to pierce the 50% level, as we saw during the financial crisis, where there were concerns about capital levels. dividend growth will be in conjunction with earnings growth. now, think about the dividend yield as being solid and incremental on capital gains next year. shery: john aiken, thank you. a world where a keyboard can cause more harm than a gunshot, a legal dispute between
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its giant merck and insurers could determine the future of who pays for cyber damage. joining us for the story is our investigations reporter. david, great to have you with us. the white house called this the most instructive and costly cyber attack in history. before we get to the legal dispute, tell us how extensive the damage was. david: it happened on june 20 7, 2017. the u.s. and u.k. believe that russian military hackers infected tax software in ukraine. from there, it caused tremendous thege the right ukraine, to government, two companies, and multinational companies around the world like merck, monfils, k.d maers tremendous damage, billions of dollars in damage. now subject tois
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litigation in state court in new jersey. amanda: we often see insurance companies arguing over the fine print. they don't like a big payout if they can avoid it. is there a case to be made that this was something that you could not ensure as a cyber attack? in this case, the argument is it was an act of war. david: in this case, 30 insurance companies denied coverage to merck which had $1.5 billion in coverage. those companies said that this was, in fact, an act of war. what is not clear in u.s. law is what war is in a cyber age. that is what is being litigated in new jersey. both sides have what they arguments. powerful they will play out in the months and perhaps years ahead, as this case moves forward in state court. they have been covered by some part of the damage. argumentsif property policies f
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them that you note in your articles, how do you differentiate, and what is the court debating right now? the company had a number of different policies under its property coverage. all of them in some ways have had cyber events. the question was whether this cyber event was, in fact, an act of war or not. there are four companies that have settled with merck, but the rest are holding out in the hopes that if it ever goes to trial, they can convince a judge or jury that this was actually war. amanda: we have to leave it there, david. thank you for your thoughts on this. you can read the entire story and more in the latest issue of bloomberg markets magazine. amandashery: coming up, bye-bye, bridgewater. more details on the departure next.
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this is bloomberg. ♪
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shery: this is bloomberg markets. i'm shery ahn in new york. amanda: i'm amanda lang in toronto. it is time for the bloomberg business flash. a look at the biggest business stories in the news right now. ismer purdue pharma ceo being accused in lawsuits of playing a key role in fueling the u.s. opioid crisis, is making a hefty paycheck. now ceo of the biotech firm, the medicines company, last week agreed to be bought by novartis for $10 million. this means you take some $60 million. according to lawsuits from state attorneys general, he is alleged to have directed staff to mislead doctors about the effectiveness of painkillers. starbucks may have a problem. the chain is replicating too
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fast. the result is it is cannibalizing its own store sales. starbucks warned that its china comparable sales could rise as little as 1% this year. the cfo said the company has picked up the pace of new store development, and with that comes some cannibalization. he says it is intentional, so starbucks kim bro total sales. twitter ceo jack dorsey is off to africa next year. he plans to live on the continent or something between three and six months. he has not said why, but his plans coincide with the presidential election year, likely to be marked with debate over online hate speech, and the role of tech companies in public disclosure. that is your business flash update. shery: another ceo out the door a red bridgewater's eileen murray, co. chief executive is stepping down next quarter after 10-plus years at the firm. dalio took to
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successfully transition bridgewater and to create a lasting leadership team. five people have held the title since 2011. for more, let's welcome catherine burton. do we have any idea about what led to this departure, and if this will be a positive for the company? >> we don't really have any idea why eileen left at this time. it has never been our understanding until today that she was ever going to leave. it was always going to be a co-ceo position. so we don't really know what happened. amanda: there has been a sense of a fair amount of movement at the top since ray dalio stepped back. this is kind of a loss of stability. what do you think this might say, will it cause concern about what is happening inside the company, and the guidance in ray dalio's assets? the positive for bridgewater,
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david mccormick, who is remaining, has been the person face-to-face with clients. they probably have comfort that he is still the person at the top. shery: do we know if there will be more management changes? as we mentioned earlier, there have been so many different leaderships in place since ray dalio took a step back from the firm. is really unclear. as i said, david has been the person that has gone out and interacted with clients. maybe at somee point he may want someone who is there at the firm while he is going around. shery: usually when you have those changes in leadership, do we see a change in how the business operates as well? >> no, not really. amanda: give us a big picture about whether you think there is any fallout from this, or whether this is likely an they in squabble, and fact clarified will be the longtime leader for bridgewater? >> it's incredibly hard to tell
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whether there will be a difference. i think it probably won't. thatger problem might be their performance just has not been that good over the past few years. so they will have to deal with that. shery: do we know at this point what ray dalio's role will be at the company going forward? we have seen him be more active in different social circles. he published a best-selling book. do we know that he will become more involved in the firm or just keep stepping back? >> he is still the co-cio, and will remain. i don't think there will be any change. amanda: all right, we believe it there. thank you so much for that. -- we will leave it there. we are hearing from the house intelligence panama releasing its trump impeachment report. can tellheadlines we
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you so far, the can tell you so far, the president used his office to solicit foreign interference. that was at the heart of the matter of the impeachment. there is a note, that is a breach of national security, compromised national security. we are hearing -- i suppose we will have the house intelligence panel with this report, bloomberg will bring it to you as soon as the entire report is dropped. where the early going, compromise of national security, using the office for foreign interference. you can interact with all of the charts you have seen on the network. the function is gtv . from toronto and new york, this is bloomberg. ♪
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every day, comcast business is helping businesses go beyond the expected. to do the extraordinary. take your business beyond. mark: i'm mark crumpton with bloomberg's first word news. bloomberg reports kamala harris has suspended her presidential campaign after months of declining poll numbers and as she struggled to define her candidacy.
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in an email to supporters she wrote "i can't tell you i have a path forward if i don't believe i do." the first term senator from california pledged in her campaign to prosecute the case against president trump with slogans of truth and justice. both the police officer and an arm to student were wounded in a shooting at a wisconsin high school today. it is a second school shooting in the state in as many days. the two were transported to nearby hospitals. no one else at oshkosh west high school was injured. today's shooting happened 80 miles north of yesterday's incident. the u.n. envoy for iraq says it's political leaders must rise to the moment to build a stable, inclusive and props -- and prosperous nation after the unrest that has ripped the country. janine hannes told the un security council today at iraq's troubles cannot be resolved by "pursuing partisan i


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