Transcripts For BLOOMBERG Bloomberg Surveillance 20151023 :

BLOOMBERG Bloomberg Surveillance October 23, 2015

Bad is the economy . Tom that was dazzling. He was like a power pitcher. Thor is your picture and the league. We will get the story and a bit. Lets get to our first word news. U. S. And Russian Diplomats meeting for the First Time Since russian jets started attacks in syria. The Obama Administration considers a Major Administration shift in the crisis. Trying to revive efforts to the catastrophic civil war. In washington, officials are setting up a Officials Say setting up a nofly zone is on the table. At least 42 people are dead a truck crashed. More stimulus by the European Central bank. Indicators point to the risk of a slowdown. Mario draghi suggested more stimulus may be needed by the end of the year. Hill, vote counting. The next speaker of the house will be paul ryan. The job. Ccept a formal vote will be held next week. Congress has 10 days to raise the debt ceiling. s jeff bezos third richest person. Shares jumped 10 after an upbeat report. Tom let me do a quick data check. Futures up. They advanced through the morning. Yield, 2. 03, 2. 04. Alan ruskin stepped onto the set. Is. 6209ear u. S. Note and the twoyear german note is not. It is 0. 32. That is a wider spread. Higher u. S. Yield to lower german yield. That gets your attention. Snapshot of the euro this is a massive call. Pascual talk about barclays. In alanay to bring ruskin. Did you change your call yesterday . Alan no. Tom you are smart. Are you going to stay at 105 . Yes. Tom this is what happened yesterday. I showed this to ted fine. Line is the german twoyear. The orange line and the blue. Ine are what the pros look at two standard deviations of movement if the yellow line goes on. Mario draghi first through the bottom to 3. 8. We rounded up to the four. Why did he surprise the market vigilantes . We all that this was coming. Alan we did not. We thought the lower level was it. That was it. To open the door and say no, the lower limit is much lower than this vonnie is this the market saying mario draghi is going to reduce the basis points in december . Alan i dont think it is necessarily december. The smart thing is 10 basis points at a time, leave it up to the market. You can do more in the future. December is an open call. The markets may be running ahead of itself. France is i want to go back to toms charts. Francine i want to go back to toms charts. How can we not be nervous about this . Alan what we have seen so far is that banks have not passed on the negative rates. You are seeing the retail section not being impaired. Banks, the profitability is impacted. This well. Anaged you see sharper negative rates outside the euro area, particularly switzerland. You can get another 10 or 20 basis points. The question of whether you can go to 75 or 75 basis points, or 100 basis points, that would be more challenging. Francine mario draghi was talking about threats, the currency, a higher what this means for exports. How are we going to get growth . Is better than i would have expected. If you asked me the same question six months ago. Worked andes have worked well. Independence on a weak currency. The New York Times had an article on the gilded age. Is the same thing going on in europe, where what mr. Draghi is doing, it is only benefiting the have versus the wide body of europe . Monetary policy works differently. In the United States, you have to pump up asset prices. Because of the mass of the economy. It is stock, the holdings of stock are not as widespread in europe. That is the main effect. That is why is so important. Tom this is critical. Canada leads and government officials manage can elites and government officials manage Exchange Rates . Alan you get this measure from the ecb and may be an makes a fed rate hike much less likely. You get some effect. Not lost his has gift for talking down the euro. Alan you have to look 2, 3 months in. He is going to deliver. Run with thearely story now and he is expecting Something Big in december. Chart thate have a shows what eurodollar does every time someone from the ecb tries to talk down the euro. At 114, policy makers get nervous and we have them try to talk it down again. A very nice chart. You hit the nail on the head. This currency whenever we get close to 115. I recommend strategies that look as selling the top side anywhere near that level, 114, 115 makes a lot of sense. Some cheap buying strategies on the downside. You can look for 105. Tom what is the impulse to drive us to 105 . I do not see it. Alan you have the ecb on one side. On the other side, the question of do you have the fed . Of thee central banker world is now the central banker to mario draghi. I just want you to get in trouble. Alan not quite. They have to work in tandem. The Exchange Rate is some variable the fed will have to look at. More important is what the economy is doing. December becomes a possibility. Then, you have impetus. Ecb, going in opposite directions. Tom may be a theme for next week. Adamant december is still on the table. We continue our conversation on Bloomberg Television with alan ruskin. Later today, daniel yergin. The author of the prize and of the quests. This is fun. Bloomberg surveillance. Get your weekend started, a sensitive view of hong kong. It is an artsy view. Absolutely gorgeous. It is a beautiful. It is beautiful. Lets go to business with vonnie quinn. Of the worldser largest shipping line is cutting its profit outlook. Container rates have fallen because of worries about chinas slowing economy. Twitter ceo is donating one third of its companys stocks to its workers. They will go into an equity pool for twitter employees. It could improve morale after some job cuts. Clout sales more than doubled from a year ago. Been focusinghas on selling the cloud services. Lets get started with the cloud. I forgot my password on apple, so i am not hooked up to the cloud. Mr. Sweeney speaks to four or five geniuses on this stuff. What is the single message nonsophisticates need to know about the cloud . Growth had extraordinary rates. , if you think about where the distributive computing is going, it is going to the cloud. Tom how much falls to the bottom line . Amazon has had no Profit Margins for years for investors. Started disclosing the profitability of their web services to 25 operating income margins. How did they get it so wrong . That is amazon. You could live a truck through it. It is a crapshoot every quarter. Tom they are making 25 on the desk . 25 on the cloud world. Paul they are investing a lot, but the residue is 18 . Thisfrancine i have to do tom francine says i have to do this every show. I look like a tool. Who has not caught up . Not one ofhere it is their legacy businesses, or it does not lend itself to going to the cloud. A hard timeies have making the switch to the cloud, where Companies Like amazon, those aree, Like Companies that were not in the computer storage business, but as the business grows, they have to find a way that was the most official way to manage storage. Francine do we have a latecomer to the game . Paul there is room to grow. There is wrong for a number of players. Amazon, google, microsoft have established themselves as the early leaders. Lets talk expense control with paul sweeney. Technologist paul of the year. She is the technologist of the year. Her hand on cost, created this alphabet thing to give it more transparency and is returning cash to shareholders. Based ceo isw york going to Silicon Valley and teach the children how to run the books. In with a mandate and has executed it. She has the support of the board. Investors have been thrilled with the changes she has made. Amazon has added 500 plus products. This is where the growth is. What do they do to keep that growing and look after their core business . Amazon, the core ecommerce business continues to grow double digits. That is what investors have signed up for. Beatsoft had a nice yesterday. What got investors excited was the growth in cloud business. Companies that can show they have a leadership position s next year the acquisition of the cloud . Yes. Tom full disclosure, i still do not know what it is. Ballmerpalmer steven will be talking basketball and possibly the cloud. Francine this is bloomberg surveillance. Beautiful, live pictures out of london. Visitingse president the home of the red devils archrivals when he visits Manchester United with david cameron. A little bit of soccer, football for you. Tom this is something alan and i have talked about many times. Shouldis means, everyone simply put much less faith in financial engineering. Leverett should be reduced and making bets on derivatives should simply become a much smaller part of what the financial industry does. It is about distribution. When do we get a greater it can do . Out what they put in the risk, some extent priced in. Tom forget about the strategy. How do you use derivatives differently now than you did in 2006. There is more possibilities in terms of the kind of p l shape you want. You can match that almost perfectly. There is a cost in terms of setting up any form of hedge. It depends on the client, how they assess things. They see the benefits as outweighing the costs. Is there a region that does this better . The way you look at economics and finance, are their research that does this better than others. Allen new york is sophisticated. At this point in time, that kind nformation francine humans can take back control of the markets. There have been 35 bazaar. The issue of liquidity is a big one. There is a treasury market and it was a huge deal. On an ruskin with us we will speak with kenneth burns. Really looking forward to that on bloomberg radio. From new york city and london, this is bloomberg surveillance. The only way to get better is to challenge yourself, and thats what were doing at xfinity. We are challenging ourselves to improve every aspect of your experience. And this includes our commitment to being on time. Every time. Thats why if were ever late for an appointment, well credit your account 20. Its our promise to you. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. Tom good morning. It is bloomberg surveillance. Right now, first word. The u. S. Considering a major strategy shift in syria. Kerry is sitting down in the anna today with the Foreign Ministers of russia, turkey, and audi arabia. In washington, officials are planning to shield syrian civilians. Setting up a nofly zone. The collision of a tour bus caused a fire ball. Most of the passengers were elderly. A 19yearold man was killed last night. Its target with an argument over a dice game. The shooter fled. Ben carson is ahead of donald trump in iowa. You can listen in on bloomberg radio. The formal election as next week. Congress has to raise the debt. Imit by november Third Congress also has to pass the spending bill. If not, the government could shut down. Phil mattingly joins us from washington, d. C. There are conditions to his acceptance. A couple were he wanted to bend weekends with his family. The campaign arm needed to pick up the fundraising duties. That box was checked. He wanted all three of the major sub groups inside the conference to get behind him. Two of the three, not a problem. He was not able to secure their explicit endorsement. Enough for him to move forward with this. Is this a condition for someone to take a Senior Office in the legislature . A creature ofs this institution. He was a young member, he has come up. He believes in the committee process. Speaker is on something he wanted. Conditions were one way to get himself out of it. Most of the conditions were met. The crucial condition, the idea that they could not put on a remove him as speaker, he has backed off of that. Tom what is he moving forward to . What does it go back to . What does a go forward to . Sam rayburn had a power centric reign as speaker of the house. This will not be that. What changes with paul ryan . Nothing. Republicans have no clear path forward. Francine why was he reluctant to take the job . Speaker will ruin his chances of becoming president . That is an element. The committee he was cheering was response ball for or tax writing care issues in the country. He thought he could do a lot there, most notably an overhaul of the u. S. Tax system. Not this was the way to do it. Jobtically, it is a chaotic. Ishe wants the future, this the position he takes. Phil mattingly cannot explain this to an american audience either. One more question, royals or blue jays . Im going royals. They will make it and Daniel Murphy will hit another 14 home runs. Vonnie your prediction direction your prediction record has been pretty good. I am like 030. Tom later this evening, dr. Ben carson, editor ted cruz , a spiritedcruz conversation is expected. Stay with us this morning. Bloomberg surveillance. Tom good morning. Sunrise here in new york. Francine we are going to talk about sylvia berlusconi. Allen is an american journalist. Great to have you on the program. I grew up with sylvia berlusconi. No one would vote for and then always got voted in. Do we need to look at his appeal . Is it an italian thing or because he was plain speaking. A lot of critics would say it is because he had media power. He abused his control of media to get elected. We know here that never happens. The key here in life as he promised to cut taxes. He was a Ronald Reagan republican in italy and he taxes and create jobs at a time when that was unusual. Berlusconi was a largerthanlife figure who had charisma. Francine he did more worse for. Taly than anyone else forou think there is a risk Silvio Berlusconi to come back . The phenomenon is of historic proportion and is about how you manage to get elected, stay in power and this is a man regulation, and he failed to make them because the italian system is against structural reforms. Tom i congratulate you on the book. You end your photo part of the babes. Th two tawdry when did he shift from being a guy to being cartoonish . Alan berlusconi is known for scandals more than achievements. He was acquitted. He is still facing other charges. He is a selfmade billionaire not dissimilar to the early days of donald trump. A real estate mogul, made his first millions, invented commercial tv at a time when there was only state tv. He bought a Football Team and became a sports leader, then he became a politician. Tom what is mr. Trump going to learn about being better, giving mr. Berlusconis travails . Think anything can help donald trump one. He should tone it down, by a Football Team. He needs a Football Team to be like berlusconi. Francine in italy, there is a feeling that this guy did that things for the country. It was a difficult system to push through. He did not want to push these reforms through. How would you explain the parallels . If you are a u. S. Citizen, can you look at berlusconi and say there are alarm bells telling me what not vote for donald trump . He can be compared to berlusconi in the early days. My way of putting berlusconi in context for americans is to think of donald trump who morphed into Rupert Murdoch and has has billions, media control, then he takes over football and the white house. That is the american comparison. Francine you asked berlusconi about trump. What did he say . I said i would not try to imitate him as i were you, silvio. Did not he express an opinion to you . Alan he likes him. Thanks he is a strong guy. Berlusconi as a guy, i am not defending him or attacking him. Inent to see Vladimir Putin july. He talked about his friend. Tom interesting. 250 pages on berlusconi. Language about lagarde and sarkozy. Right now, we need photo angle. A long day for hillary clinton. She left the benghazi hearing after 11 hours. On committee focusing security divans security demands in benghazi. Francine, you have our second photo. Francine we are looking at nicola sturgeon. She promised there would be a future for Steel Manufacturing in scotland. She spoke to Union Representatives and wants to find a buyer to keep the plants open. This goes back to steal manufacturing and they are always blaming china. Some are saying they are just not competitive enough. Vonnie students in south africa have been protesting tuition hikes. Raise 10 ,going to the government has dropped the rates to 10 . Alan ruskin, he went to the university of cape town. Did you pay any money . Much less than you would expect. Francine most of the rest of the world has low tuition fees. Being ableyou see it to come into the United States. Something is going to give. There is change in the air. Tom good photos today. Thank you so much. The former microsoft ceo, he owns a Basketball Team in los angeles. Ballmer, later. Tom we will get to a discussion on the u. S. Dollar and what it means. We need to go to a eurodollar. Lets make it eurocentric. Eurodollar, 110. 97. 1. 1097. There i am, doing my hands. Forget about dollar yen. A lot of pros saying this is where the trade is. Now, lets get to a business flash. Vonnie u. S. Dropping charges inside a major Insider Trading case. The case was weekend by an appeal for a decision. Close down 14 , they are facing a lawsuit in oregon. The lawsuit the company says the lawsuit has no merit. Tom a full praise a britain. In channeling the legendary roger angell on baseball. This is something george would love. It was after midnight. Nearly all of the cubs fans left , bound for establishments. Beautifully written. Really well, dispatch from chicago. Be wearing should white, looking out at robert redford. We need to look at the history of the u. S. Dollar. It is about urodynamics. You see the market trading better. Much better against the euro. The dollar is trading better against the euro. And has lost a little bit of ground again. Havenne is it not a safe anymore . Saw in the space is that we had to move to both the yen and all three g3 currencies. Francine we heard from mario draghi yesterday.

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