tv Whatd You Miss Bloomberg January 23, 2020 4:00pm-5:00pm EST
he volatility? things toting for come back, mostly what i hear. there was commentary that with iran and with virus concernswitw maybe we finally see the uptick. it has not played out. a be the u.s. election will bring it. alicia: our first candidate is february 3. it is the iowa caucuses followed by the new hampshire primary. the polling data are all over the place. this is an opportunity for a mini selloff. scarlet: the dow lower. it opened lower and closes lower. the s&p and nasdaq finishing higher. they should make it a record high for the s&p 500. hold on. looks like it should be because it recovered. no no. we are doing this in real time. we are stuck in record high. joe: feds got to cut rates.
scarlet: it is worth noting as well that volume has been picking up as well. 33% higher than the 20 day average for the dow and s&p. we have investors in china ready to take off for the lunar new year holiday golden week. we have earnings coming in. intel reporting results. half billiona dollars. analysts were looking for 72.2 billion. enough to to be good lift the stock in after-hours trade. joe: the market liking this one. scarlet: let's check in with our reporters who have been monitoring different stories. abigail, what are you keeping your eye on? abigail: the dow transports. this area of the market is sensitive to the virus scare bad,dering that if it got it could clamp down on
transportation. we have transports down 1.2%. something i would like to point out, earlier today on the selloff this morning, the dow transports down more than 12%. the day. 1% up on investors looking past. a lot of it has to do with airlines in the u.s. those stocks are higher, having nothing to do with the virus scare. this chart suggests we may want to watch the dow transports. the s&p are looking at 500. at one point last week, the dow transports up 3.7 on the year, leading the s&p 500 cared this week, down. at one point, we have the dow transports negative on the year. at this point, catching up to the s&p 500. it could be a bearish tell around market reaction to the coronavirus.
light: they are down about 6% over the past four sessions. that brought the night banks from to the lowest since october at eight dollars 56 a gallon. demands the supply and aspect of the story. gasoline supplies are at a record. in the meantime, a four-week average demand is the lowest for three years. the question is, what does this mean for retail and consumer discretionary stocks? littlehoppers have a left over after they fill their tank. this green portion shows that gasoline prices and consumer discretionary and retail stock have a positive correlation. it is a weak correlation. asshows it is not as simple lower gas prices equating higher
retailer and consumer discretionary stocks. taylor: i am taking a look at shares of intel. coming out with earnings stock rising 6%. looks like it is across the board. fourth quarter revenue coming in at 22 the lien dollars. bottom line coming in at 152. the forward guidance forced quarter revenue also a broad beat. at $19 billion versus estimates of 17.2. bottom line coming in at 130. the 2020 revenue guidance coming in better than expected at 73 and a half billion dollars. they are raising their dividend by 5%. share fromto $.33 a the last dividend, which was 31 and a half. as we shift through these numbers, i want to take a look at a chart we are showing inside
the terminal. we knew we were dealing with supply shortages. intel trying to stave off end. -- andy. rising to 38. rising just about 70 times. not the typical volatility we see for the stock. very broad across the board. taylor and the markets team. still with us is katie and alisha. we see those intel earnings after the bow. chips have been on an incredible run. it looks like the companies are delivering even with the incredible optimism. what does that tell you about the market? alicia: the message is that the bottom was put in during this third quarter. the cyclical growth bottomed out
sometime in the third quarter. it drives with what we have been seeing in the market. it kept on going. it really fits with the characteristics of what we are seeing in markets. today is a strange day because it has defensive characteristics but also risk on characteristics. wellave the semi's doing and the transports doing well. the cyclical story remains in tact because the companies are telling you that. but, the risks remain out there. a yields stay low and you get further flattening, the banks are going to struggle. scarlet: we see this is a liquidity driven economy. katie, when you look at the overall impact of monetary policy, incredible easy monetary
policy we have, what do you think of christine lagarde aching a clear the ecb is going to reassess the whole strategy? this is going to be a month-long process. what does it mean for how people think about inflation in the eurozone? katie: when i was talking to people today about the comments, they kind of fell flat for the people i talked to. they are hoping for a lot more details. combined with her saying she was not as optimistic as she hoped. that is why you saw the euros fall today. it is really surprising because she did make those inflation comments. there was some moderate increase in inflation. joe: talk to us about this seeming one wayness we are seeing in the bond market. we are seeing rates go down significantly, especially if the virus were to worsen or if the economy were to weaken.
it is hard to see what would cause rates to go up given the expectation it would take a lot for the fed to do anything. alicia: the surprise would be that growth is better than expected. when you think about it going into the second and third quarter, that is where you're going to get the benefit of the 75 basis point and cuts in the u.s. housing isd earlier, coming back. we have not seen the full effect of housing either on the wealthy effect on consumption or construction or in production. i think that is ahead of us. i expect there is a surprise coming out of the u.s. early to mid summer that would get yields up. it is clear there is a wait sitting on -- there is a weight sitting on securities. scarlet: i does when it's a get
your thoughts on one, we got from davos. bob prins went so far to see we have seen the end of the boom bust cycle. alicia: somewhat sympathy because when you take inflation out of the picture, take central banks out of the role of squashing recovery. we have this low and slow going on. low growth. low rate. there is no need to kill it. i am not willing to say the business cycle is dead, i just think the cycle can go on longer than in previous times. the length of the cycles have coincided with inflation going down. news assetoomberg reporter katie gray feld -- katie greifeld.
coronavirus a deadly road health emergency. singapore reports new cases of the disease. revenue and earnings top estimates. -- eight ex fargo wells fargo executives face fines. fromwe have breaking news incentive. the founder gets 66 months in prison for opioid fraud. -- he was sentenced to 66 months in prison for leading fund airacy that held crisis. this comes after the celts chief of the same company was sentenced to 26 months. helde seeing folks being accountable for the road in spreading the opioid crisis. we will keep you posted on
further developments/joe. . executives and investors alike watching -- joe: executives -- the most atussed risk. can imagine the level anxiety is very high when someone gets a cold now. there is a question if it is much worse. again because the whole office to lock down. week are trying to stay close to our clients. tourism areon and at risk, especially coming into the chinese new year. joe: here with the latest is bloomberg's shery ahn. what we saw today is an expansion on the restrictions of 70's --hain more restrictions of travel. more cities limiting who can go.
shery: getting praise from the who. the director general saying china has been very cooperative and transparent. we have seen the restrictions on wuhan city. in 2018, it was surveyed by the as the happiest city. we have seen the corentin take place in the wee hours of thursday morning. that did not go into effect until 10:00 a.m. a lot of people were rushing for the exit. social media in china criticizing this could be too late because a lot of the students and migrant workers -- wuhan city has a lot of workers in the auto and manufacturing industry. scarlet: they had already left town and a lot of people were trying to flee anyway. the concern is it could last a
lot longer than for the next couple of days. that would put a dent in china's economy as alicia levine was telling us, seems to have stabilized. 6%ry: we are talking about economic growth for the full year of 2019, 16.2%. we have seen surprisingly good economic data coming out of china. given the structural shift, we have had a smaller services sector saying the impact could be better. it is the difference in time between the infection and the detection of the disease. we are talking about 584 cases being reported to the who. have mentioning that we potential cases in hong kong. they.
have not been confirmed the who saying there have been cases confirmed in japan, singapore, thailand, the u.s. and vietnam. at least 17 people dead. scarlet: thank you for the update. do not miss shery on daybreak australia. we want to bring in jennifer nuzzo. she is a senior scholar at the johns hopkins center for health security. dr. nuzzo, thank you for taking the time to speak with us. the who opted against calling the virus a public health concern. it is a good or bad consent -- good or bad sign? dark i think there are still a number of important questions that have to be answered regarding the situation. the key for me and other public health folks is how transmissible is the virus and
more importantly, how serious are the illnesses that the fire seems to produce? until we get a better handle on these questions, it will be hard to gauge what the global risk from the virus is. ho, setting aside the w what do see in response from is very dramatic travel restrictions in multiple cities. how do you compare their response versus how china dealt with sars? i think we have to hold separate what china has recently done and what they have done with reporting the outbreak to the who. sequencing it, publishing the sequence for everyone to see you. praisel hear many people china for being transparent and
sharing information. we also know that there has been international cooperation in terms of sharing information. positive signs. the recent developments in terms of the quarantines and shutting down mass transit are deeply worrisome. this idea we may be forcing people to leave where we think the epicenter is, that to me is very worrisome. if this virus is highly transmissible and deadly, the drivingwant to see is cases underground where public health authorities cannot find them. scarlet: there are a lot of concerns that chinese authorities are underreporting the amount of people affected. i know there is a lot of praise for how they are handling things. perhaps a better comparison is how china dealt with the outbreak of african swine flu. there was criticism that they
were not as transparent as they needed to be. given their track record, are these concerns that there is an under reporting justified? dr. nuzzo: i have not seen any evidence to suggest there is a deliberate underreporting. any time a new outbreak occurs, it is difficult to get a handle on how many people are infected. you're pretty much relying on initially, finding sick people who turn up in hospitals. it may be the case that we learn the outbreak is larger than we anticipated, and that is not something i would fault china for. i will say it is in every country's best interest to be as transparent as possible regarding the number of cases because once people lose global confidence, though only exacerbate the harm that comes to these countries. we will only see an increase in travel and trade restrictions,
which would only amplify the toll for that country. if there is a tendency anyway to be not transparent, that would come back to harm a country. you have seenwhat regarding the transmissibility and the virus and the mortality of it, is it too early to get a handle of what it is and its effects, or do you have some sense of the nature of it spread? dr. nuzzo: it is somewhat too early. one of the things i look at is what the severity is more so than the transmissibility. it is important for people to realize although the -- although this is a new virus, these viruses are circulating all the time around the globe. what is potentially arming -- potentially alarming is the possibility this could be more severe. .eople are looking to sars it is estimated that 10% of the
known cases died. i am somewhat reassured by the report of debts that they are largely occurring among people we know to be at risk of death from infection. people who are elderly and otherwise medically impaired and have other underlying medical conditions that could make them more likely to suffer a severe outcome from a respiratory infection. if those data change and we start seeing more young previously healthy individuals develop severe illness and i, that would be very worrisome. nuzzo, seniorfer scholar at the johns hopkins center for health security. from new york, this is bloomberg. ♪
scarlet: intel reported earnings after the close and investors like what they see. in particular, the outlook for the full year and fiscal first quarter. adjusted etf's will be a dollar 30. first quarter revenue will be a dollar 19. quite the beat. let's bring in the bloomberg intelligence senior analyst for semi conduct ears and tech hardware. we had you on yesterday to talk about texas instruments, it was an indication of intel overall. intel is limited to pcs and data. >> the cloud is back. the numbers are very strong. this is a story we want to see from intel.
they have guided up from the next quarter. it is not fully reflected in the full-year numbers. the stock is reacting commensurately. we think there is more earnings power at the data level. a pc, pcurom perspective. engines are firing. joe: avi was on vacation, but you say the cloud is back. when was the cloud not with us? serversloud spending on took a hiatus for three quarters in 2019. towards the fourth quarter, they started picking up. q4, numbers were very robust. the big fear is that this spending segment tends to be inconsistent. they have been spent for three to four quarters. they go dark for three to four
more. the inconsistent spending leads .o ups and downs we had that in 2019. things are turning around in 2020. torlet: intel of -- also sting their dividend share. are there any concerns for how they use their cash? anand: they could be better buyers back of stock. in the long run, intel is a capital management story as much of the stalwart data center. buybacks are a part of the story. earnings power is a part of the story. joe: the cloud is back. the bloomberg senior intelligence analyst of semi conductors and hardware. giant up, index fund increasingly under scrutiny from u.s. officials. we will discuss with one of the co-authors on the seminal paper on competition.
mark: i'm mark crumpton with bloomberg's first word news. house democrats declared today no president has ever abused power the way donald trump did in his dealings with ukraine as they open their second day of arguments in the historic senate.ent trial in the house judiciary committee chairman jerrold nadler who is one of the house managers told the senators quote, the itsident's conduct is wrong, is illegal, it is dangerous. democrats will wrapup their case tomorrow. then, the president's attorneys will have their turn. the world health organization says a viral illness in china that has killed want -- has killed 17 and second hundreds is
not yet a global health emergency. a public health emergency of public health concern. the agency issued this evaluation after chinese authorities moved to lock down three cities indefinitely and then canceled major public celebrations and gatherings in beijing during the lunar new year holiday. fact that i am not declaring today should not be taken as a sign that the who does not think the situation is serious or that we are not taking it seriously. nothing could be further from the truth. the who is following this outbreak every minute of every day.
mark: the steps taken by china to shut down cities with more than 18 million people are unprecedented in public health as countries typically shy away from such extreme measures. britain's delayed and disputed brexit bill has officially been signed into law by queen elizabeth the second. the european parliament must also approve the deal before january 31. brussels are due to vote on it next week. it has been more than three and a half years since voters narrowly opted for brexit in a 2016 referendum. jimtime american journalist layer who cofounded the pbs nightly newscast has died. he anchor the newscast for 36 years before retiring in 2011. an obituary says the news man often reminded his colleagues, it is not about us. he had nine rules for reporting
the news including quote, assume there is at least one other side or version to every story and again quoting, i am not in the entertainment business. he was 85 years old. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. let's turn now to a bloombergs group. haveantitrust officials begun asking companies about communications with their biggest shareholders. this adds to growing scrutiny of the power of giant index funds. alz.s bring in martin schm he is the co-author of one of the seminal papers on the effect of index ownership on competition. in your view, what is the
strongest evidence that increased cross ownership of firms that we see a lot of changes corporate behavior? martin: at this point, we have several studies, dozens of show behavior changes when common ownership increases including product market outcomes. many other studies have been done in many industries. we have seen half a dozen studies. --nging intervention changing innovation efforts. there is a whole host at this point. scarlet: the airline industry for instance is particularly egregious. there has been research done on this. is this something you see across industries? study ofhe airline
showni am a co-author has price increases due to common ownership. is similare seen results in u.s. banks. others have seen other industries as i mentioned. common ownership exists throughout the economy. this is why there is limited evidence in other as it -- in other industries. joe: talk to us about the mechanism. we can see there is evidence of correlation -- if all these companies have the same set of shareholders and you see this change in behavior. what is the mechanism in which this occurs? why kill each other with price wars when we are not even in competition?
martin: exactly. the question you're asking is one the sec might be after. we have the evidence that coownership has been accumulating over decades. the evidence on how it happens is starting to emerge. --t we know is that competitors are more commonly known. they still have incentives to act in their interest. the common owners have a voting record. that can lead to -- we know funds are more likely to sumsfor a merger if the have shares in the target, which can compensate them. most importantly perhaps, we know that doing nothing -- not pushing to compete against each
other can outweigh competition. to face one particular firm's value in isolation. think of richard branson at virgin america. think of elon musk of tesla. --tead of whohave an asset manager knows as much about your firm as your rival. you to have more market share for arrival. theg nothing is one of potential mechanisms. what we have only anecdotal evidence for is to the extent of firms could hold as an additional mechanism to harm competition. to learnthe fdc wants more about the communications
between companies and their biggest shareholders. our customers are worried about the impact on index providers. likeit include companies berkshire hathaway that invest across industries or activist investors? martin: i have to say i have not familiar with the details of the policy. i have not seen anything that would target index funds or the big asset managers. berkshire hathaway has been the largest common owner of u.s. airlines for the last few years. this is not a problem limited to the index providers. joe: like everyone else, i read the work of matt levine who has been writing about your work and this question for a lot longer than authorities have been paying attention to it. there is a question in his newsletter today. ceo's, maybe they have common
ownership, they have to make these decisions. they tend to overrate the shares of their own company. override whenhat they are making a corporate decision, the fact that a bunch of people own blackrock index fund the echo -- index fund? have copa.do what you see is in the commonly owned firms, ceos get much less rewarded for their own performance and their pay is less performance centered. the point is not so much that ceos have the right level of compensation, but are these even flatter in more commonly owned firms.
he also correctly points out that in the context of mergers, involvement could increase social welfare. by facilitating efficient and adjusting mergers, that would not have happened without common ownership because the shareholders could liquidate evaluation. that is not necessarily a bad thing. scarlet: great contact. alz of the university of oxford joining us by phone. os.ng to head back to dav we went through a whole process of -- with the 232 investigation. the president has digested that. we have a perfect justification to put tariffs on if we wish to.
the president had decided it was better to negotiate. we have had very constructive negotiations with the german car manufacturers, with the koreans and the japanese. so far, we have not felt a need to do it, but if people do silly things, if they do protectionist and discriminatory things like the polar one of the digital service tax, we are going to respond. jonathan: let's talk about the investigation. from what i am hearing, the outcome of the investigation was that it is a national security risk. is that true? >> the president so announced. yes. jonathan: are is the followthrough? people look at the self-imposed deadline and say, it has expired. the administration cannot use section 232 anymore because that has expired. >> they simply do not understand
section 232. what was needed in november was for the president to decide on a path full it. he decided the path forward was to negotiate as long as that was bearing fruit rather than immediately put in something else. jonathan: your interpretation of the legal issues is section 232 still applies even though the deadline has come and gone. >> this is an imaginary deadline. the deadline was that he would take a decision. he took a decision. jonathan: let's talk about what would need to happen to stop the tariffs. thehings stand currently, tariff forecast coming out of the united states from europe -- from the united states to europe is 10%. from europe to the united states is to and a half. there are some big trump tariffs. what would you like to see from the europeans in the coming months? >> first of all, the digital
service thing clearly is meant to be discriminatory. there are very few companies in the whole world other than the american companies that fit that definition. the clear intent was to be discriminatory. we have other laws that also againsts to retaliate discriminatory behavior. if there is discriminatory behavior, we will fight back. forget anything else. jonathan: if the french go through with this, is that a red line for this administration? wilbur: that is up for the president to decide at the time. it defends what else is going on. it is clear this is a protectionist and discriminatory proposal that was made. joe: that was u.s. commerce secretary wilbur ross. quick breaking news, jamie dimon had a good 2019 according to
scarlet: we have more now from davos. the president of columbia sitting down with francine lacqua. >> many people were setting i was going to present a pension reform. it did not happen because we did not plan to present any reform. we believe it has to be a consensus. why do i believe there has to be a consensus? in columbia, one out of four people older than 65 years have access to a pension if we do not close that social cap, it is
going to turn into long-term poverty. we have to solve this in a way that is sustainable. francine: will we see a pension bill in 2020? >> between the government, the workers in the private sector, we have to agree on a mechanism that can ensure or people in columbia have access to a pension. the excess by pension system is the principle of equality. we will continue to search for that. francine: what are the chances of this agreement coming together? > i think this is an important chance because this is for the good of the nation. allowinge against people to have access to a pension? we have 22 million people working in columbia. only 8 million people are contributing to the pension and social security system. if we continue like that, it is going to generate more in melody toward the future. to expand the basis
of people who have access to a pension is one of the things that are needed most in columbia. francine: in book a hotel, -- how much investment do you get to -- do you hope to get from china? >> it was a public bidding. when people asked me, what is your opinion about chinese investment? french, italian, wherever it comes from. investment generates opportunities. onea is the u.s.'s number trading partner. while we believe it is countries that want to invest in public things that are transparent and for and in favor of the citizens mobility at electricity, it is important for our nations. was the president of columbia.
fargoformer wells executives are facing almost $59 million in fines from the u.s. banking industry. the bloomberg finance reporter is here with the story. he already knew that wells fargo had all kinds of problems, several massive scandals. still, reading something like the former ceo who had this folksy warren buffett like charm, it is still kind of a shocking headline. >> this has never happened before to a major bank ceo. not only is he banned from the industry, he also gets a 17 and a half million dollar fine. fined $25s being million. this is something we have never seen before. it is unprecedented. both the levels and this enormity of the people facing the fines. scarlet: agency doing this is
the occ. there has been a lot of different punishments handed out. the federal reserve has a cap on the growth. it's hands are being tied. >> definitely being tied in many ways. this is the first agency to come out with these fines. regulators are working in concert to sort out the mess. the occ has taken the lead. we are talking about the chief administrative upset -- chief administrative up a these are not lower lieutenants who maybe could be blamed. severity of punishment to you is surprising? >> it is definitely striking. you have never seen the level of seniority with the level of fines we're talking about. scarlet: charlie sharp took over as ceo. how did he react?
>> he says the behavior is inexcusable. in of the executives are going to be -- none of the executives being eggs -- being investigated are not going to get any money they might be owed from the company. he is saying the bank is taking it seriously. this is not the end of it. scarlet: thank you so much. the latest here on wells fargo. this is bloomberg. ♪
at play. united won. some of the biggest funds of competition has come from chase sapphire. they are also facing competition on the airline side. you have delta with its relationship with amex. all of the cards are creating a tough environment. knighted has been saying, we know we deserve a better deal. the so, the pressure on card issuer comes from the airline? >> it kind of depends. this is a unique one because these airline deals are lucrative for the bank and airline themselves. since there is not a ton of banks that can deal with the cards, folks get a little boxed in. their going out on all of analyst calls and making the complaints vogel, it does put pressure on the relationship. scarlet: how important have these credit cards become?
for jp morgan, they are very reward heavy. what is it mean for the airline? >> these cards can be a huge driver for revenue and the bottom line. airlines face a lot of different tough dynamics with boeing and air travel in general being a tough place to be in. credit cards can be a huge source of profit. you're seeing them always look for ways they can get more out of their programs. joe: what is the hot card that card geeks are into? >> it is a good question. it always depend on -- it always depends on what you spend on. if you spend more on groceries, the grocery cards are the right one. if you spend on both, maybe going with a chase card could be the right one. scarlet: they need to make a reward system for venmo. >> they came out with a new
card. scarlet: do you go. for those who fly united, good news. they can continue to use their jp morgan cards. coming up, we talked about airline points. the american express company reports fourth-quarter earnings for the bell. joe: the number for u.s. manufacturing pmi comes out at 9:45 a.m. eastern. scarlet: bloomberg technology is up next in the u.s. joe: have a great evening. this is bloomberg. ♪ sometimes your small screen is your big screen.
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taylor: i'm taylor riggs in san francisco. this is "bloomberg technology." coming up in the next hour, diagnostics. how exactly did the hacking of amazon ceo jeff bezos's phone go down? we will explore the mystery of malware. plus, day in court. the first round of hearings for some -- wrapsrap up in canada. the appetite