Transcripts For BLOOMBERG Whatd You Miss 20180118 : vimarsan

Gop is showing incompetence with what he calls, quote, mixed signals. He compared mcconnell and President Trump to abbott and costello. Despite the restoration of a military hotline and at north talks inirst formal about two years, north Korea Remains north korea a great threat. John allens comments to reporters came before you and Security Council meeting on north korea. The council will maintain its unity in ensuring the consequences of defying International Law will be felt by the North Koreans. Because the North Koreans have an opportunity to change course. Added thatsador alan by changing course, north korea could pave the way for greater economic benefits and inclusion for its people. Scientists believe manmade Global Warming caused 2017 to be one of the hottest years on record. Nasa and researchers from berkeley rank last year second only to 2016, even in the absence of el nino which boosts temperatures naturally. The global average temperature in 2017 was about one. 5 degrees fahrenheit above the 20th century average. The five hottest years have been from 2010 on it. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. Im Mark Crumpton. This is bloomberg. Julia live from bloombergs World Headquarters in new york on julia chatterley. Scarlet im scarlet fu. Joe im Joe Weisenthal. Julia stocks are mixed, taking a step back from yesterdays alltime highs. Joe the question is, whatd you miss . Scarlet the clock is ticking clock isnment the ticking for lawmakers to avoid a Government Shutdown. Week, bbtngs this expects to invest its windfall back into the business. Kelly king joined us in the next half hour to tell us where the savings will go. And investors of bitcoin are strapped in for a wild ride. Out whether bitcoin Needs Technology more than Technology Needs bitcoin. 2013 islashbacks to lawmakers each closer to a federal Government Shutdown. Ofall comes down to a matter votes. Speaker paul ryan is close, according to his team, but the chairman of the House Freedom caucus mark meadows disagrees, saying he does not have the votes, at least not yet. We are joined by National Political reporters ideal couple were on capitol hill with the latest. Take us through how many votes we think weve got here, and how many, are we talking about a fiveday push back . Ahil double conversation is about this roughly one month resolution to keep the government funded through roughly february 16. A couple of measures passed through, most notably secure extension of the Childrens Health Insurance Program. The house with count seems very, very close. Speaker ryan has roughly the amount of votes he needs or a few short. Expect some House Democrats to hop across the island support this measure. So that prospects look better in the house, but the senates were the real problems are at this point. It is very difficult for me, having conversations with a number of democratic aides in the senate and some democratic 60ators today, to count votes in the senate to keep the government funded past midnight tomorrow. I think democrats have reached their breaking point. They face a lot of pressure from the based on hold firm and include some sort of daca resolution as part of this and the Republican Leadership says there is no chance of that happening before friday at midnight. Scarlet it seems like the two sides are pretty hard on their positions, and a headline just crossed that said Senate Democrats have the votes to block a stopgap spending bill. The president did not make any mention of this when he spoke in pennsylvania and the last hour. He is campaigning for the republican congressman in western pennsylvania to make sure the republicans hold on to that seat. Going forward, how involved is the white house in all of this . Or have a washed their hands of all this, because the president s tweets this morning seemed to add to the confusion . Il they have not washed their hands of this. They have done the just opposite. They added an element of chaos today with this tweet. Republicans want to put it on the floor and put it in a sixyear extension of the Childrens Health Insurance Program, which seems like thats what the president is objecting to. They president said no, lets Childrens Health Insurance Program a shortterm attachment, indicating he wants it attached to a longerterm bill. But the white house is doing a little bit of cleanup on aisle trump today. We are looking at the house voting between 7 00 and 8 00 p. M. Tonight. The senate will try to pick up something very quickly after but there are a number of Senate Democrats who carry this over the finish line last month when they had to do another shortterm funding measure, who are now voting no. Again, the whole game is 60 votes in the senate right now and its difficult to see how they get that. Joe help me understand a little bit further the tactical approach the democrats are taking. To try to understand it, so they want to get obviously Childrens Health care, chip, funded. So the current stopgap bill would also funded for six years even though the bill only keeps the government open for a month. They also want to include something on immigration and get that soft. What is the reasoning for not taking the ship win, if you will, now, getting that taken care of now and then fighting exclusively on immigration a month from now . I think the calculus for the democrats is that they already supported three short term funding bills in this fiscal year, since last summer. And the return they do it gets harder and harder to explain to their base why they keep finding the government without using this, which is essentially their only leverage point, to force republicans to come to the table and have some sort of solution for the dreamers, these about 700,000 young people who would be at risk of deportation if there is no solution for them by the march 5 deadline that President Trump has set for ending the program. The short answer is democrats dont believe there will be any daca extension unless they use this which is the only extension which is the only leverage they have. The question has been for a will, democrats saying we do another shortterm measure in the time we will take care of it, next time we will take care of it and it is just gotten. Arder and harder to do it last week the president s remarks in a private meeting, the inflammatory language use, as made it worse for democrats in terms of crossing the isle to support something the republicans are doing without a daca solution. So it is a tough political place at the moment. Can only imagine that twitter handle, if we do go into a Shutdown Scenario here. Here forhe bigger risk the democrats, not using the leverage as youve described in pushing for a solution for the toamers versus what appears be on the service there forcing surface,n on the their forcing a shutdown. the party that controls the white house, white house, and senate, that has not shutdown a government has not happened. The shutdowns we saw under barack obama and Ronald Reagan were all under divided government. So republicans would be in a difficult situation. Having said that, if the reason for the shutdown is that republicans in the Senate United but couldnt get a super majority for keeping the government open, then yes, democrats would have some explaining to do and could be blamed. There are trumps state democrats, about 11 of them now with doug jones facing reelection in november. They dont necessarily want to go home to their constituents and say we shut down the government over democrats, about 11 of making se young, undocumented people get legal status. I dont think that plays well in certain parts of the country so for democrats its it tricky balance your scarlet a tough political position, as you said, sahil kapur, our National Political correspondent on capitol hill. Coming up we will speak from senator mike rounds of south , and thats coming up at 4 30 p. M. New york time. President trumps tax cuts help alleviate what has been a rough quarter of trading. The details coming next. This is bloomberg. Scarlet whatd you miss . The big banks wrapped up their Quarterly Results this morning, stubborn banks face problems in 2018 rising problems rising profits would be among them. Hoin us now is leigh estimize. Continuing gloom in trading, low volatility, this is a story with been talking about for quite some time. At say when we look cryptocurrencies and icos, thats where the excitement will really be. Markets i right now and its a good time to raise money. Big companies are raising money, but if you look at tech companies, there havent been too many big ipos. Telegram, 2 billion this afternoon. Scarlet ive never heard of telegram, by the way. Leigh its a good messaging app. The question is for a lot of these icos, what is the value of these tokens right now. While there isnt really a fundamental thing happening inside of the business, that the tokens are being used for, they are raising a ton of money on the backend. With banks, before we move on from them, trading revenues kind of mediocre. Not mediocre. It was terrible. A couple of different things, and we see this these are the contributors on our platform. People are not trading as much. Longterm hedge funds are closing shop at the fastest rate that they have in decades. A lot of money has gone to quant. That money has made value not a strategy anymore. Momentum and growth has crushed value over the last nine years. Scarlet and its all done passively. Leigh and its all done passively. All these things are contributing as well as the financial technology. Especially on the fixed income side now, degrading the ability for goldman and others to really drive margins on those debts. So they are firing a lot of traders and they are highly they are hiring programmers and installing technology. Do they put a brave face on it and say, these things will come back . Is the feeling you have looking at both sides of this . Leigh this is a personal view. This is how i think it going it is going to shape out. You will have bouts of volatility that are sharp and quake and then we will return to normalcy. At the underlying fundamentals, the way it market is structured now, is not too many value estors there now to catch there is no 10 billion manager in fidelity that is going to buy stock xyz at some level that that supplies some kind of support to the market when things go out of whack. Joe you mentioned there arent. Ig tech ideas tech stocks did phenomenally well. But in terms of the community you see and the people you talk to on their platform, do they feel like 2018 is going to be a repeat of 2017, a handful of companies gobbling up a greater share of all the prophets in the country . Are going toigger get bigger. There is a monopolistic affect the goes on among these companies right now, more than any time in history. I feel like a broken record little bit because i have been here a couple of quarters now and basically said, its kind of hilarious the tech stocks have been up so much yet the multiples have gone down. And we sit there and say wow, they are up so much but when you ups andfacebooks revenue numbers, they crush estimates. Ours are almost always higher by the street higher than the street by a significant amount of the still beat them. I would expect again, given the way we are seeing the trends in global in google revenue expectations, facebook revenue expectations, netflix revenue expectations, they are all up and the reports often bp expectations. Scarlet something we have seen over and over again. Among the big tech names though we havent seen that many instances of spending, and that is still to come. Its interesting, given where we are in this Economic Cycle a lot of people say 2018 will be peak gdp for everybody around the world. I believe we are at the top of an Economic Cycle and you are going to see rates rise. And this would all coincide. I think when we let at the big tech stocks, revenue per employee continues to increase. And we are going, when are they going to hire all these people . The dont need to. Its not a classic industry where you have to add that person to generate a piece of revenue. I think when we look at more midand small cap tech, names like tub spot and then dekes ubspot, and enterprise marketing tool. I think these names are really going to benefit. We have seen them beat consensus numbers over and over again with rising expectations. Those would be where i would focus if you want to rotate into the right parts of the tech sector. And they are the names you like this earnings season. The ones to watch. Drogan, leigh. F estimize thank you. We are focusing on the worstperforming stock in the s p 500. This is the Worlds Largest producer of lithium and it is being punished as its rival wins along winning reduction dispute. Julie alb is the worst performer. It is a Chemical Company but has gotten more into lithium through acquisitions over the past couple of years. The company is part all of this is from chile, sq am is what it is referred to. It is in chile which is where a lot of the lithium production comes from and there has been a yearslong dispute that has been going on here. Qm operates one of the Worlds Largest deposits of lithium and now it as a result this dispute with chilean authorities and that should in qm, and thatd for s means more lithium supply coming to markets. Shares are trading a little lower and anything else that produces lithium is the client today. Joe at the bottom there we see the etf down 7 . Lithium, and battery tech. Let the them is one of these new, not new, a bunch of tech newly in demand for hightech and electric cars and all that. Ulie electric car batteries its not that there would be anofmarket demand, but its just a matter of how much supply is going to be out there. Qm will boost s its annual capacity from 66,000 tons of lithium carbonate. All in then is timing, as well. How quickly is a going to be able to get this online . How quickly is it going to be but to get to market . There is dispute among analysts how significant is is going to be for albemarle are some of its competitors to get to market. Albemarle has done well over the past several years as lithium prices climbed as demand, to your point, joe, has climbed as well. Julia julie, thank you for that. Vanguard talks about passive investing in asia. From new york, this is bloomberg. Julia whatd you miss . Passive investing isnt a major force in east asia but that hasnt stopped vanguard from exploiting opportunities there. Aboutuards chair spoke the companys asian plans. Vanguards chair spoke about the companys asian plans. How things get interpreted and so forth, and we are staying very close to that. I think being here is very important. There is a lot going on in this space. Do you see the likes of alibaba or tencent as competitors to the vanguard model . They could be potentially but they could be potential opportunities force as well. We have paid a lot of attention to the alibaba phenomenon and what they have been able to do. It is kind of a Playing Field for the team right now. Theyre up there talking to everybody. Asia as a reason, they are liking when it comes to passive fund investing. Is that a challenge for vanguard s growth for the region argue focus more in the active funds . William im not sure yet but i think what it means to us is, there is a lot of opportunity for what i would call lowcost investing. There is still a lot of very high cost product in the asian market. But whether it is lowcost or passive, i think you can make a case for both and you will see us doing both overtime. The likes of fidelity are starting to push back and lower their fees and become more competitive, what changes are you seeing in the Fund Management industry . William i think for the first time there is widespread belief that price actually matters. And there is a couple of things driving that. One is a certainly our success people arent just coming to us because we are lower cost. We are coming because the net return to the investor is better and that is really double driver of the cost argument. Actuallyk people have weakened to this. Some of the data are overwhelming and you just cant charge, if you are elected fund and you charge 100 basis points, you have very low probability about performing over a long run. Money management has been a very lucrative profession for active managers and its going to get less lucrative. People have got to reinvent themselves and get smarter about how they actually run money. Out therere skeptics who say this huge embrace of passive investing poses a significant risk to the markets. How do you defend against that . William the data just dont support it. Passive investing has provided with yday investor when you think about it is a zerosum game at the end of the day. The only represent returns is cost. Vanguardsat was chairman William Mcnabb speaking in beijing. Change are not rising to record highs. They were yesterday but we have come back a little bit with the dow off 95 points, the s p 500 losing 2 10 of 1 . From new york, this is bloomberg. [applause] [cheering] whatd you miss . Highs. Day record multiday averages are in the red and the tenured yield is about 2. 6 for the First Time Since march. [bellringing] scarlet im scarlet fu. Joe im Joe Weisenthal and if in live oning twitte