tv Bloomberg Daybreak Americas Bloomberg July 23, 2019 7:00am-9:00am EDT
can i think you and your team at the conservative central office for doing a fantastic job? it's been a team effort and shown the conservative family at its best. if i could make one plea as a backbencher, can we be kinder to the next prime minister then we've been to the current prime minister? [applause] without further delay, i'm going to hand you over to the one for cochair -- to the wonderful cochair of the committee. [applause] >> thank you very much, charles. on the 24th of may, the prime minister, the right honorable theresa may, announced that she would be standing down as leader
of our party on the seventh of june. over the past 46 days, the 1922 committee organized five ballots of members in parliament, and then worked with the party chairmen and electoral reform services to present the final two candidates. they are qualifying nubbers of the conservative and unionist parties that can vote for our new leader. i want to echo charles' thanks to brandon, the party board, and the party staff for all their sterling work, and also the ers, who have conducted a very professional operation collecting and counting the , and from home and abroad also the 1922 executives, especially my cochairmen charles walker, with whom it has been a pleasure to work, and at least we have brought equality to the top of the 1922 committee. [laughter]
gender balance is important. and the officers of the 1922 all together here today, and our own parliamentary staff who have given up their spare time to help conduct what i believe has been a very successful election. finally, i would like to thank all those party members who voted, and those who stood in the election, and particularly my colleagues jeremy hunt and boris johnson, who, despite the challenges of the contest, run in the glare of press comment and public scrutiny, have emerged as worthy candidates for the position of leader of our party. i think you've all been waiting long enough. [laughter]
but in the honored tradition, i'm going to ask my beautiful assistant to handmade the envelope before the announcement -- to hand me the envelope before the announcement. [laughter] it's called teamwork. i, the joint returning officer for the conservative and unionist party leadership election, declare that the total waser of eligible electors 159,320. the turnout in the election was 87.4%. the total number of ballot papers rejected was 509. the total number of votes given to each candidate was as follows. ,656.y hunt, 46 ,153. johnson, 92
therefore, i give notice that boris johnson is elected as the leader of the conservative and unionist party. [applause] [cheering] mp johnson: thank you very much. thank you very much. good morning, everybody. thank you. thank you. thank you, everybody. good morning. thank you so much. for a fantastic, well-organized campaign. is a lot of credit to our party, our values, and our
ideals. i want to begin by thanking my opponent, jeremy. an absolutely formidable campaigner, a great leader, and a great politician. in the course of 20 events, more about 7000iles, miles crisscrossing the country, you've been friendly, ofd-natured, a font excellent ideas, all of which i propose to steal. [laughter] above all, i want to thank our outgoing leader, theresa may, for her extreme their service to this party -- her extraordinary service to this party in this country. it was a privilege. mp johnson: -- it was a privilege. [applause] it was a privilege to serve in her cabinet and see
the passion and determination that she brought to the many causes that are her legacy, from equal pay for women to tackling the problems of mental health and racial discrimination in the criminal justice system. thank you, teresa. thank you. i want to thank all of you here today and everybody in the conservative party for your hard work, for your campaigning, for your public spirit, and obviously for the extra narrate honor and privilege -- the extraordinary honor that -- the extraordinary honor and privilege you've just conferred on me. i know there will be people around the place who will question the wisdom of your decision. [laughter] mp johnson: there may even be some people here who still wonder quite what they have done. i would just point out to you that, of course, no one party, no one person has a monopoly of wisdom. but if you look at the history
of the last 200 years of this party's existence, you will see that it is we conservatives who have had the best insights, i , and, into human nature into how to manage the jostling sets of instincts in the human heart. thatand again, it is to us the people of this country have turned to get that balance right, between the instincts to own your own house, your own home, to earn and spend your own money, to look after your own families. good instincts, proper instincts, noble instincts. the equally noble instinct to share and to give everyone a fair chance in life, and to like after the poorest and neediest, and to build a great society. in the last 200 years, it is we conservatives who have understood best how to encourage those instincts to work together in harmony to promote the good
of the whole country. and today, at this pivotal moment in our history, we again have to reconcile two noble sets of instincts between the deep desire for friendship, free trade, mutual support and security and defense in britain and our european partners, and the simultaneous desire, equally deep and heartfelt, for democratic self-governance in this country. and of course, as some people say, they are very near irreconcilable and it just can't be done. and indeed, i read in my "financial times" this morning, devoted reader that i am -- seriously, it is great but is press. -- great british press. [laughter] nojohnson: i read that
incoming leader has ever faced such a daunting set of circumstances. i look at you this morning and ask myself, do you looked on to? do you -- do you look daunted? do you feel daunted? i don't think you look remotely daunted to me. i think that we can do it, and the people of this country are trusting us to do it, and we know that we will do it. we know that the mantra of the campaign that has just gone by, in case you've forgotten it -- you probably have -- it is deliver brexit, unite the country, and defeat jeremy corbyn, and that is what we are going to do. [applause] mp johnson: we are going to defeat jeremy corbyn. and i know some have already pointed out that deliver, unite, and defeat was not the perfect
acronym for an election campaign since unfortunately it spells dud, but they forgot the final e for energize. i say to all the doubters, dude, we are going to energize the country. we are going to get brexit done on october 31. we will take advantage of all of the opportunities in a spirit of can-do. we are going to believe in ourselves and what we can achieve. like some slumbering giant, we are going to rise and ping off the ribs of self-doubt with full hyper broad-brimmed spiting -- full fiber broadband sprouting in every household. i thank you very much for the incredible honor you've just done me. i will work flat-out from now on with my team that i will build in the next few days to repay your confidence, but in the meantime, the campaign is over and the work begins. thank you all very much.
[applause] david: we have been listening to and watching the announcement of the next leader -- the new leader of the conservative party and the u.k., boris johnson, by a margin of something like 2-1. welcome to "bloomberg daybreak." i'm david westin, alongside alix steel. he definitely has a flair. alix: he does, as does the entire conservative party. david: it was a bit like miss america. you could feel the suspense building, but in the end it wasn't really close. he says he will deliver brexit and unite the country. those are two tall orders. alix: the cable rate is off the lows of the session, mixed in with michael saunders of the boe talking about that he may not advocate a hike, but maybe take a re-think. that shift from dovish to hawkish also playing out in the currency market as well. david: the remarks were
interesting, saying maybe we shouldn't pay attention to the data right now, but what is coming down the pike. to go through the procedure here, we now have boris johnson as the head of the conservative party, but he is not prime minister. theresa may first has to go to the palace tomorrow and tender the seals to the queen, and then boris johnson goes over and accepts the seals, and then he will become premised or. alix: looking forward -- become prime minister. alix: looking forward to that in what it means for the market. what has now is bloomberg's francine lacqua. painted picture of what the next 48 hours looks like, and what is on boris johnson's agenda. francine: first of all, the boris johnson you were hearing here is a classic boris johnson on great form, but really speaking to the conservative party. he had some jokes. if you look at the live blog on the bloomberg terminal, one of our editors mix a very good point. he now needs to be leader of the
country. he is not yet prime minister. he is leader of the conservative party. tomorrow, theresa may will have andender her resignation, he becomes officially the next prime minister. then he has a long list of things he needs to do. it was interesting to hear his speech to say, look, this was my mantra. deliver brexit, unite the country, and defeat jeremy corbyn. by him saying defeating jeremy corbyn, is he actually campaigning for a general election? david: at the same time, he said the conservative party for 200 years has really understood people better. it was a blend of taking care of your own family and things like that, but also sharing and having a larger call to progress. is that part of the way he hopes to unite a country that seems to be very divided over the question of brexit? he has a country that is very divided and a party that is very divided.
they have different factions within the tory party that still don't want frexit, those that will vote for a no deal brexit, those that want a mild brexit. the person he hasn't mentioned that he will have to contend with, especially if he calls for dinner elections, -- for general elections, is nigel for raj -- is nigel farage. he was a force for brexit to contend with. it depends on whether boris johnson will decide to give him something to form some kind of agreement. going back to what boris johnson very clearly laid out, his number one challenge in the coming days will be to form his , and it depends on whether he feels strong enough to have a pro brexit chancellor, or whether he feels like he will give way to any program a chancellor's to balance that -- any pro remain chancellors to
balance that. alix: thank you for that. in the market, you are seeing s&p futures up about 3/10 of 1%. we have a earnings coming in sales onrong, seeing the back half of the year. michael saunders turning a little bit more dovish. that is really the key to the currency market today. a tiny bit of selling in the bond market on the long end. 2-year note's coming down the pike later today. we are looking at oil, also dealing with the geopolitical risk to continue, but down 6/10 of 1% on brent. time now for bloomberg first take. the first is boris johnson, winning that race to be the next u.k. prime minister. then, finally a debt ceiling. we got it. then we get earnings continuing to move in. utx raising their full sale guidance.
we are joined by brooke sutherland and marty schenker. let's kick it off with boris johnson. he's got a field. donald trump likes him. what now? marty: now comes the hard part, and that is delivering on a brexit that he has promised to deliver, and he is even threatening a no deal brexit, a hard brexit which a lot of people think would be catastrophic. , try too go to the eu construct a new deal if they even get one, and get it through parliament. david: what does he have in his toolbox that theresa may didn't have? marty: a huge personality. alix: that's a tickly right. marty: i don't mean to be unkind to theresa may, but she was somewhat robotic. boris johnson is anything but that. he may have the charisma and the goodwill of being a new prime minister to get a deal done. alix: i wonder, if you are a
company operating in the u.k., what are you thinking today? brooke: i think you are a little bit nervous because there is that threat of the no deal brexit. you talk about that charisma. he also has the ability to make a no deal brexit sound somewhat more credible than theresa may did. i think that is a worry for companies. ,f that doesn't that happen boris johnson think that that would not be as catastrophic as some are warning, but whether or not anyone believes that is another matter. david: yesterday we heard from president trump that they've got a deal with the congress, a bipartisan deal that will raise the debt ceiling for two years. they will also raise the spending caps quite a bit as a practical matter, although it doesn't necessarily avoid a government shutdown. they still have to figure out how to spend that money. marty: they do. there are a lot of conservatives in the republican party who are not going to like this deal, spending hawks. on the same side, progressive
democrats feel that some of their programs are not going to get funded. none of this is written down. it is sort of a handshake agreement. they will probably get it through, but the real issue is going to come two years from now when this deal expires. who will be president when that happens? david: but it takes the issue off the table for the election because it moves it passed that point, which is important for both parties. marty: i think the leadership of democrats ande republicans feel this is a good way to take it off the table for 2020. alix: i have to wonder if you oh,a company, you are like, we get some extra stimulus right now? brooke: we did get a bit of an uptick from that house spending bill put forward. there was always an opportunity for a bit of compromise there from the senate. it looks like we settled somewhere in the middle. that is great for defense companies. i thing about the united
technologies-raytheon merger. they see a lot of that money will go towards research end of element. they want a bigger budget so they get a bigger slice of this. this is a big deal for companies, and it goes back to the certainty of having a deal being a good thing. we are already hearing those is out of the 2020 democratic presidential candidates that this caps the ability to do some of their projects if they become the leader of the united states. whether or not they can push forward some of these agenda items or they will still be stuck in this fight, 21 he won -- this fight in 2021. alix: let's talk about earnings. we were talking about how bad these earnings were going to be, and these on the surface were really good. look at coke, organic revenue up 5%. sherwin-williams, full-year adjusted earnings higher than originally estimated. united technologies raising adjusted earnings and organic sales. the one that is off is harley davidson.
they actually had to cut their motorcycle shipments. is it all good news, or do we need to read a little deeper? brooke: i would read a little deeper. united technologies is really aerospace. the numbers that stood out for me were warriors of carrier, their hvac unit, down organically in the quarter. the elevator division down 6%. those are troubling. if you look at the industrial economy writ large, that makes me nervous. monitoring -- black & decker also moderately lowering. aero safe remains a very safe space to hide. it is very robust despite the 737 max crisis. elsewhere, it is getting shakier. david: a slow down, except when it comes to the federal government. that is the one thing keeping it going. is it disturbing the fact that the rest of the economy keep up
-- the rest of the economy can't keep up? marty: it is disturbing, and don't forget the fact that a potential breakup will keep that going -- potential rate cut will keep that going. the other thing to keep in mind is capital spending. we will have to see whether or not there is in fact a slowdown that the fed is trying to prevent. alix: when you have these earnings, some of them still does it take away the juice that the fed needs to actually cut? brooke: it seems like they are focusing on a not necessarily right now type of slowdowns, but the prospects of a slowdown accelerating through the course of the year. that i would tend to agree with, but on the capital spending front, i don't think it 25 basis point cut really does much for me if i'm an industrial company. the cost of debt has been low for a very long time. they've also got that influx of overhaul.the tax
if you are going to make new investment because of that interest rate cut, i don't think so. i'm not sure if that stops the slowdown in its tracks. david: on the other hand, keeping interest rates low helps coca-cola and other companies that borrow a lot. it helps them on their interest costs. brooke: it does. alix: and refinancing. brooke: and united technologies buying raytheon for the point of having a cleaner balance sheet. i do think that is something comedies are worried about going forward. alix: to that point, if you worry about having a 25 basis points, is that going to be enough for president trump? marty: probably not. [laughter] marty: he's been on the whole quantitative easing issue about the fed stopping its purchases in the open market or scaling them back. he think that is a mistake. i don't think anything the fed does is going to satisfy donald trump because basically playing the game if the economy slows
down, it's the fed's fault. david: he said he wants 100 basis points, but he's got a nominee to the fed now who said you should go 50 basis points at the end of the month. we now have a nominee saying the fomc should vote. that: we have a report now says the fed is a little worried about that nominee and what it will mean for fed policy going forward. atx: as you take a look industrials and the broader companies as well, what is going to be the best signal to watch to see if donald trump is actually right? if you do need that kind of basis point cut to get the juice flowing? brooke: i would look at these consumer companies. when we see companies like coca-cola with strong numbers, that does suggest things are doing well. it does seem now fairly confined to the manufacturing world. are we more looking at a 2015-2016 type of situation where you did see a so-called
industrial recession, but the rest of the economy did quite well? is this isolated, or is it starting to spread to more consumer facing ethics of the economy? -- consumer facing aspects of the economy? david: what is next for president trump? marty: he's got to get a trade deal with china, or at least play it out so he can say he stood firm. at the end of the day, he definitely wants to get a deal done with china and be able to take that into the 2020 election. alix: bloomberg's marty schenker and brooks of the linde -- and brooke sutherland, thank you very much. we will speak with james quincy, coca-cola chairman and ceo, coming up. let's recap some of those earnings, because a lot of them pretty solid here. coke sees full-year organic revenue up by 5%. they also beat on earnings for the second quarter. united technologies coming in pretty strong, raising their adjusted earnings and organic
sales, although that is mostly aerospace. if you are a motorcycle guy, harley davidson had to cut their shipments. david: what is interesting is as you can see these stocks up in the premarket, it has all been mixed. there's been good news on all of them, but on the other hand, for instance, coca-cola's forward guidance remains down. the market seems at the moment to be ready for some good news. alix: earnings volatility, i guess that is the name of the game. that is definitely continuing. coming up next, we talked to the head of alibaba.com. it is the business to business of alibaba, how they compete with amazon, and what the environment is like. a rainy day on this tuesday. this is bloomberg. ♪ hey! i'm bill slowsky jr.,
i live on my own now! i've got xfinity, because i like to live life in the fast lane. unlike my parents. you rambling about xfinity again? you're so cute when you get excited... anyways... i've got their app right here, i can troubleshoot. i can schedule a time for them to call me back, it's great! you have our number programmed in? ya i don't even know your phone anymore...
excuse me?! what? i don't know your phone number. aw well. he doesn't know our phone number! you have our fax number, obviously... today's xfinity service. simple. easy. awesome. i'll pass. alix: this is "bloomberg daybreak." it is a busy, interesting session unfolding today. s&p around the highs of the session, up by about nine points. european banks and auto stocks
crushing it today. banks higher. ubs wealth management did quite well. you have autos doing well after chinese companies have taken more of a stake in daimler. in other asset classes, seeing a much stronger dollar story. the cable rate now flat. michael saunders at the boe coming out and talking more devilishly than hawkish lay, and then you have a new prime minister -- more dovishly than hawkishly, and then you have a new prime minister potentially in boris johnson. you have two-year notes coming out. crude down, nevermind mind the fact we are sectioning some chinese companies for buying iranian crude. we are just down by 4/10 of 1%. david: it continues to be a mystery to me. i don't get it, but fortunately you understand it. let's turn now to alibaba. alibaba grew from a small
startup in jack ma's apartment to one of the largest companies in the world. it started on business-to-business sales, giving chinese companies access to sell their products to the world. millions --ervices alibaba now services millions around the world, including in the united states. here to announce a change is john kaplan, head of alibaba north america. thank you for being here. what is it you are doing today? guest: today is a great day for u.s. small businesses, manufacturers, and wholesalers that can join alibaba.com today to sell to the world. the platform is now open to enable those businesses to reach 190 countries around the globe, where we have 10 million business buyers on the platform. david: how big you estimate that business to be?
is $23.9 trillion. david: i did not realize that. b2b is many times larger than the b2c. alibaba is the biggest b2b marketplace on the planet. have a global storefront to market to customers, and to reach deep into the globe so they can sell their goods. david: besides being here on bloomberg, how do i know if i am a u.s. company today that i can .ow sell into alibaba.com john: one is the announcement, but there are businesses we have been working within the united states. you have been servicing on the platform -- you have been sourcing on the platform. now you can sell to the world on the platform. we are entirely focused on the b2b market. alibaba.com is purpose built to help small businesses sell to
the world, so we are very focused on helping digitize small businesses around the globe. statistic, 70% of u.s. small businesses do not sell online today. this market is not yet digitized , so what we've created are simple to use tools to get those businesses get online. you wind up competing with other areas? who are your competitors, and what does that wind up meaning? john: it is an interesting space because the value chain for soll businesses, for b2b is complex, that no one has digitized it end to end other than alibaba.com. we've created a platform that enables a small business to message, talk to come and negotiate with, pay, handle the logistics end to end. so i think we are in a class by ourselves. david: how does this read into some of the u.s./china trade tensions? john: our business has seen
triple digit growth. planning for this for many years. the transformation from our business from yellow page two end-to-end procurement let form is now adding the globalized supply to the platform. alix: how about regulation? when you are the dominant player , how do you deal of that when amazon is him and europe? amazon is coming under scrutiny in the u.s. and europe? john: in our dna is helping small businesses operate, and our business model is such that we are in ally to small businesses. david: what about data? there's a lot of concern with amazon, with facebook and others . you have the gdpr in europe, and a lot of countries are concerned about protecting data. what do you and his bait about protecting data? john: we are totally focused on
data protection and ip protection for all businesses, so that is of paramount importance, and a big team of hours works on that. alix: what are your biggest challenges right now? john: well, we are getting the word out today. [laughter] alix: no, no. you have to look at global uncertainty, you have trade, you have more protectionism the not. what are your challenges? john: certainly the global trade environment is in flux, so we are very focused on helping global small businesses connect to each other and do business with one another. things, a include small business owner today is very focused on the tight labor market. we hear that we want to grow, but we are also looking for qualified employees. we built an ecosystem of relationships with companies like office depot, ch robinson, ship station, to provide the tools and technology to help businesses thrive. we are beginning a u.s. national tour took about and listen to small businesses across the u.s. about their needs and challenges. david: how sensitive is your
business overall growth, whether it is global, chinese, u.s., european? david: our business grew triple digits --john: our business grew triple digits last year. it is on pace to do that again this year. trade is essential to how all of our economy's function, and we are seeing great growth across the platform. ofx: john caplan alibaba.com, thank you for joining us. we have a lot of earnings coming up this morning. lockheed martin delivering a pretty solid beat, $137 billion backlog in the second quarter. sort of echoing what we are seeing with united technologies. cook also seeing strong results. joining us now is chris for jay wealth first republic management. what i thought we would be hearing is downgrades for the rest of the year.
that is not what we are seeing. there are fears about how trade was going to affect the swath of u.s. companies. they tend to have revenues associated with non-us markets, so that is important. but also, the management that ceos have of the flock of analysts that follow them by guiding down expedition. wereve a second quarter numbers have come in better than expected. we've seen the effects of the trade issues show up in a more narrow, more spotlight way, not as broad as everyone anticipated. as a result, we are seeing a little bit of pickup. there's credit availability and a lot of different industries that's made relatively high. mna,-- you see things like opportunities to expand businesses. there have been pockets, defense be in one area, that have been written painting -- that have been remaining strong, bringing up averages. as they you look at it
are cutting because the economy is in trouble, or keep boosting the economy? christopher: i think it is the latter. we are in what i would call the great divide. you have the bond market signaling recession and the stock market at 3000 on the s&p signaling that things are going to get better. that is an uncommon situation. if you asked me the year ago if we would be in this place, i would say it would take a real narrow set of circumstances to get here. well, here we are. david: you mentioned a lot of these companies are very effective in their of inches -- in their investment relations. what we are seeing in some of these companies is they are beating estimates and the stock tends to go up, but if you look at year-over-year, it is not as happy a story. isn't that really what we should be concerned about in the medium and long-term? christopher: i think so. we are. the real key is going to be third quarter.
second quarter is a blip related to long-term expect patients. if you don't make third quarter, you don't make the whole year, and what happens if next year's numbers come down? put that on the backdrop of a flat yield curve, the fed starting to cut a bit, and concern that not only inflation may be too low, but we are not seeing it translate to the rest of the economy. david: as you follow earnings calls, what are you hearing? are they concerned about trade, about inflation, about labor costs? where are the concerns, or the optimism for that matter? christopher: the trade issues tend to be industry specific. we see it more in the materials and industrials. we see strength in consumer areas. overall consumption, the jobs data continues to support, is a pretty compelling consumer story. the third thing, something i found interesting, we don't see a huge push or a budget flush likely to be -- a huge capex push or a budget flush likely to
be coming. ultimately that is keeping profit margins high, cash flows good, and helping defeat the by backstory, one of the big pieces of white earnings-per-share growth is going to look pretty good for the rest of the year. alix: which we know congress loves. so what do you like? christopher: we like some of the areas that reflect strength. alix: you want to keep going with momentum? you want to keep buying what is working? christopher: for new clients we are averaging in in this market, the system is dominated by machine-based trading, by very few alternatives beside equities. you have high corporate profit margins. reasonably good fundamentals except for small caps. u.s. markets lead by -- u.s. markets led by the consumer. i don't see a lot of things in the near term that will upset this applecart. you favor u.s., the large caps come the dividend stories, and your keeping some balance in
your portfolio. where it is appropriate, we continue to look for opportunities in the private areas. david: what are the machines missing? christopher: i think it is very tough these days. you need to be thinking about where you are positioned early tip to the index. in some ways, retail money has left the active market and gone towards indexation. that has pushed more power towards machine-based investing. it is hard to see that changing and their term. ofid: christopher j. wolfe first republic private wealth management will stay with us. viviana hurtado is here with first word news. viviana: president donald trump and the u.s. congress averted the risk of a debt shortfall, agreeing to raise the debt ceiling and spending caps for two years. both sides could focus on provisions they consider a win. guidelinesler given
for what he can stick to tomorrow before congress, being report.stick to the johnson, as you saw alive at the top of "daybreak," is poised to be the next prime minister of great britain. the former foreign secretary defeating jeremy hunt in a ballot of the conservative party members. johnson will take over a country in crisis and a government on the brink of breaking apart. he will have just 100 days to negotiate a divorce deal with the european union before the u.k. is due to leave. 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 the the art auto. this -- i'm viviana hurtado. this is bloomberg. david: with us still is krista for jay wolf -- is christopher j. wolfe.
so are you going long on boris johnson? [laughter] markets have largely figured a lot of this out. the u.k. stock market has done pretty well in the last six to eight months. the bottom line for a u.s. investor looking at that situation is it has two interesting things. it has the rise of populism and confirms the story that global supply chains will probably more country based then integrated. that is not great for margins long-term because you have to reinvest in infrastructure and likely raise costs. the second is you might hope there is a bit of a trump streak out there in mr. johnson. ab they don't do the hard brexit because that will not be a great result for britain, and our view. alix: what was moving the cable rate before we had the election was michael saunders at the boe, the one who voted for rate hikes for two of their recent sessions, now saying that the
economy was not overheating, not growing above potential pace. wait."ld afford to you now get a disparity between the forecast and the actual policy vote. joining the central bank rate cut party? how do they win in that? christopher: i don't think there's a win. i think they need to join because if my competitor going downrates are and mine are high, i may have some problematic effects in the brexit scenario. we expect a cut in the u.s. later this month. we expect potentially one more. i don't know that the market gets the full four we expect. cutsnt from four hikes to in the span of a month. david: two way over some bluff waybasically -- to
oversimplify, is that good for the investor because it tends to drive up asset prices? christopher: yes. it is also pavlovian, so be careful with that. have a world where arms are natives are not good enough yet -- where alternatives are not good enough yet. you're trying to get dividends out of equities and taking the volatility that is likely to come with that in this type of environment. increasingly, people are moving across the spectrum into private markets. in some cases, there are some benefits with more risk where it is appropriate. that is when i think happens when you keep the cost of money very low. toid: thanks so much christopher j. wolfe of first republic private wealth management. from aup, ubs emerges slump, but the ceo sergio ermotti sees further struggles.
viviana: this is "bloomberg daybreak." coming up later on "bloomberg ey,kets," james quinc coca-cola chairman and ceo. we turn now to wall street beat to cover three things wall street -- [laughter] were talking about something totally different. first, ubs challenges are not over yet. ceo sergio ermotti says challenges are not over. then one company surprises wall street by announcing the
surprise departure of their ceo. and the disgraced financier jeffrey epstein's role within wall street is running deeper and deeper. david: joining us is should ali ak.sett -- is sonali bas sergio ermotti talked about interest rates giving him troubles. this is what he said. >> the u-turn turn on interest rate expectations is not only dramatic in respect to what happened the last six to nine months, but also if you look in the last quarter. we have to now assume that rates will stay lower for a longer period than expected. that is why we are focused on mitigating actions. david: like all european banks, they are facing a really challenging interest rate environment. sonali: interest margins are under pressure. he's been pretty honest about what his challenges are. that said, he's shown some
growth in profitability at the wealth unit. margins are pretty good come of it if you compare it to morgan stanley, there's still a bit of a catch up game, but investors do like to see a turnaround. alix: where are the mitigating actions? where is a bank like ubs feeling at the most, one of the better ones in europe? sonali: one thing people wanted to see is expense reduction. while headcount isn't going down too much in that wealth management business, julius baer loweresterday showed growth in net new money, so we are seeing them hold steady in wealth management. david: our second story is td ameritrade. sort of abruptly stepped down, which raised attention for may be where they want to head. sonali: it is interesting. just a year ago our reporter asked him whether he would do a big deal, e*trade maybe. he said scottrade, which he came
in and did a year after he came into his position, was kind of a distraction the last couple of years. the pressure is not going to go away, especially when jp morgan is bringing the game down. this says maybe they will be again,, day -- two m&a but we will see. they are not the first brokerage on wall street where we are seeing changes at the top. david: there are quite a few job openings, actually. alix: in the last story has to do with jeffrey epstein. the list of how it engulfs wall street, when we first started talking about it, we were like, i don't think it really does affect wall street. now it is starting to. sonali: "the new york times" dropped quite a bomb last night on jes staley. he had a relationship with jeffrey epstein as an executive
in the wealth division. a lot of these lasted well past 2007, 2008 when these epstein issues really started. epstein had known jes staley through leon black, who he did some tax and estate planning for , and helped jp morgan. david: there's no indication that any of these people had anything to do with his wrongdoing or knew anything about it, but highbridge was just a big player jp morgan, and it appears to be through jeff epstein. sonali: it was a huge bet they made back at the time. there's element of highbridge that are still there to this day, but the epstein ties did in , according to "the times," in 2013. but like you said, there's no wrongdoing. david: the main point is how deeply embedded he was in wall street. alix: but also, you don't want
your name in an article with him and it. david: exactly. thanks so much to sonali basak. coming up, one of germany's industrial icons just became more chinese. china is strengthening its hold on daimler. alix: and if you jump in the car, you can turn into bloomberg radio on sirius xm china 119 and on the bloomberg business app. this is bloomberg. ♪
david: this is what i'm watching today, it is daimler, and china's stake in daimler. it turns out they had a relationship with the very large beijing automotive group, and they have now taken a 2.5 percent interest and had a right to go to 5% interest. what i have not focused on is already, we've had a name you may or matt now -- you may or may not know that owns geely, a huge chinese automaker.
two of the top shareholders are chinese. alix: which isn't necessarily surprising to me because we are seeing a lot of alliances in the car industry. the pair up in that kind of alliance is not surprising. david: they only money to go to electric vehicles, which you know so well. and who is driving electric vehicles? china. alix: and it is making the batteries. the biggest battery maker in the world is in china. good stuff. you're seeing auto stocks rally big time because of it. coming up, we speak to the former minneapolis federal reserve president. he will be joining us. we've got good earnings. did you really need a rate cut of 25 or 50 basis points? we will discuss. this is bloomberg. ♪
leader of the conservative party, pacing brexit, a crumbling cabinet, and a fight with ron. ubs stash with iran -- with iran. we will speak to former minneapolis fed president narayana kocherlakota. and earnings not all bad. united technologies and lucky to raise full-year guidance, harley davidson cutting forecasts. david: welcome to "bloomberg daybreak" on this tuesday, july 23. becomehed boris johnson the new leader of the can preservative party -- of the conservative party, tomorrow the prime minister. we wonder how long the honeymoon period will last. alix: here's what he had to say. you. trump: --mp johnson:
know the mantra of the campaign that's just gone by. in case you've forgotten it -- you probably have -- it is deliver brexit, unite the country, and defeat jeremy corbyn, and that is what we are going to do. [applause] ofid: he also has a sense yuma because that spells dud -- of humor because that spells on, but he says there's an e the end so it is dude. [laughter] alix: remember, there's a bubbling conflict now with iran that is drawing and the rest of europe and how they are going to move tankers through the strait of hormuz. that's not an easy thing to manage in this context. david: that's a great point. we are all focused on brexit, but he's got a more imminent problem right now. alix: at least donald trump likes him. he tweeted already. david: there may be some similarities there. alix: in the market, you have some pretty sell their earnings helping the i's and p -- helping
the s&p. the cable rate down to tenths of 1%. you've got michael saunders of boe coming out more hawkish. bond yields put much go nowhere. crude down by 4/10 of 1%. the geopolitics not being able to support the news today, in particular in the u.s. sanctioned a chinese company for buying iranian oil, so now it is entering that sphere as well. david: there's also a lot of oil sitting in tankers apparently in chinese ports. alix: technically they are not offloading, so what does that mean? anyway. david: let's turn to the fed now. everyone seems to agree that the fed is going to cut rates later this month. the only question is how much, and when the next cut will come. we welcome now on the telephone neri on a kocherlakota, former -- on the telephone narayana
atlas --ota, formerly former minneapolis fed president, and now bloomberg contributor. if history is any guide, it will mean that the fed is highly unlikely to be willing to raise rates for the next 25 to 50 meetings. that is a big deal. that is a big deal. what leads you to that conclusion? narayana: thanks for having me on. it is based on history. forecast is by looking at the past, and the fed is really a slow moving animal when it comes to thinking about monetary policy. it goes through phases. it was in a tightening phase from 2004 to 2006, an easing phase from 2007 until 2013, and we've been in a tightening phase from 2013 through the end of
2018. now i think the fed is reentering and easing phase -- is reentering an easing phase. the fed is obviously responsive to data come about the bar i think for tightening, to raise rates after this meeting, is going to be pretty high. tohink about the next three five, maybe even a little longer, years as being ones of easing in the federal reserve. alix: how much of a need for weaker dollar is that easing cycle feeding into? david: you know, i think that the fed, the dollar to the fed is just one more way its interest rate policy filters into the u.s. economy and the world economy. i think the fed looks around and sees global trade risks, low inflation, and so i think given that those two ingredients, it
sees a world where into ring into an easing pattern is the safest way -- where entering into an easing pattern is the safest way to keep the economy strong. david: if you prove right and they are not raising for another 25 to 50 fed meetings, what does that tell us about where inflation will be over that time, and maybe even growth? narayana: you know, that forecast of mine is based on the idea that inflation is going to remain soft. the past behavior inflation has not been responsive to how low employment has gotten that's how low unemployment has gotten will continue to be true. -- responsive to how low unemployment has gotten will continue to be true. i think once you enter this easing phase, the bar for them in terms of what pushing patterns they have to see to start to raise rates is pretty
high -- what inflation patterns they have to see to start to raise rates is pretty high. it will have to be substantially above 2%. alix: can i and for from what you are saying that the fed -- can i infer from what you are saying that the fed is actively pursuing a weaker dollar policy? narayana: no. the dollar from the point of view of the fed is completely under the treasury. if the administration once a weaker dollar, that is up to the secretary of the treasury. the fed, by easing interest rates, is trying to stimulate aggregate demand in the united states. one way that happens is the dollar tends to fall when the fed eases policy, and that makes goods and services in the u.s. cheaper, and people abroad are more lightly to buy it. but there's many channels. interest rates on car loans fall , interest rates on furniture layaway fall. these are all channels through which monetary policy work. alix: narayana kocherlakota,
thank you so much. really appreciate your time. here's how the current cycle looks through the second quarter of 2020 when it comes to various central banks. this is the overnight swap index showing what the market expects and how much cutting we will see from different central banks for , and then the boj about 10 basis points. joining us now is centerstone investors' founder. i found that chart really staggering by how much the market is pricing in central bank cuts. how does that affect your investment view? guest: this is an unusual time when you have some a different crosscurrents. wego stock by stock or security by security, so in pricing and what a business is worth, sometimes we have to consider what interest rate policies are going to look like. as far as we can tell, it looks
probably in the cusp of an easing cycle, but it is a complicated kind of picture. we are starting to get word for the first time a while that june foran especially bad month companies involved in the trade side of things. as the trump tariffs start to bite, that is having an exhaustion effect on what is already kind of a weakening global economy. there are some green shoots. we are starting to hear good signs from our european businesses, ironically enough. as the u.s. seems to be weakening, big don by these trade pressures, the european to domestic economy seems to be stabilizing. on top of that, you got the japanese that are going to potential he raise taxes later this year -- two potentially raise taxes this year. we have to be considerate about how we approach that market as
well. david: you are a bottom up investor and you tend to try to resist responding to the daily news up or down. at what point do things become cyclical, not just structural? are we really looking at a different world? abhay: it depends on what your timeframe is. before the 1970's, most of us in the investment community either were born or lived through the 1970's and have that as our historical background, if you see that, you've got a huge spike in rates in than a decline. before that, you just had a range of rates for a long time, so i think we are going back into that phase. i'm not expecting a huge run-up in interest rates or a massive decline, but more of a continuation in this range. alix: when you take a look at the chart that shows all of the central banks potentially from what the market expects cutting, how does that affect your regional outlook of how you structure your portfolio? abhay: not much, really.
except for the fact that some of these expectations sometimes and stockrket panics market volatility that might just the stock prices from their actual intrinsic values, in the emerging markets, sometimes dislocations can be quite severe. at $.50 on stocks the dollar. in the emerging markets, the the dog-- the tail wags sometimes, but you have this weakening cycle accompanied by a currency crisis, and that can lead to massive volatility, but we are not really expect in that. for now it is just a run-of-the-mill slowdown. it doesn't look like a global recession 2008 sort of financial crisis or anything like that. we just have to mitigate used to the r word appearing in the united states -- we just have to maybe get used to the r word appearing in the united states. alix: abhay deshpande of
centerstone investors will be sticking with us. the latest nowt on what is making headlines outside the business world. viviana hurtado is here with the first word news. viviana: boris johnson will be the next u.k. prime minister, defeating jeremy hunt. johnson will be taking over a country in crisis and a government on the brink of breaking apart. he will have just 100 days to negotiate a divorce deal with the european union before the u.k. is due to leave. president donald trump and the u.s. congress of hurting the risk of a damaging -- congress averting the risk of a damaging payment default, the copper mise leaving all sides unsatisfied. still, negotiators -- the compromise leaving all sides unsatisfied. still, negotiators still have positions they can consider a win. robert mueller has been told to
stick to the already released public report. he is not supposed to discuss ongoing cases, plus some details of work on the regression -- on the russia investigation may be covered by exec it a privilege. -- by executive privilege. 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 the vr or tonto. this it -- i'm viviana hurtado. this is blumberg. -- this is bloomberg. alix: coming up, more earnings season. this is bloomberg. ♪ ♪
show strength in the aerospace market, seen as an endorsement of the ceo's plan to reorganize around aviation and defense. apple may have found a way to reduce reliance on qualcomm technology. the company is negotiation to buy intel's struggling cellular it develop to help new mobile internet devices. the company wants to reduce reliance on by imports -- on buying parts from qualcomm. ago, blackstone inested about $1.5 billion the first major liquefied natural gas terminate in the u.s. the stake is now valued at about $8.9 billion. that is your bloomberg business flash. alix: thank you so much. that is a nice little bucket of change for david foley of blackstone. about 30 s&p company's reporting this week. you've got industrials and tech.
pre-positive news when it comes to lockheed martin and united technologies -- pretty positive news when it comes to lockheed martin and nidec technologies. -- and united technologies. still with us is abhay deshpande . what about sectors in your portfolio? abhay: industrials is a big one. that is a big general industry, but we own a company in the netherlands that do exactly what should near does. you saw the company that owns the terminals, and this represent a big discount to the some of the parts of the terminals. it is very similar to what they are selling here. that is an example of how, if you go into europe, you can find companies suffering from this european wet blanket sort of discount purely because of the headlines. many times, people are ignoring
the fundamental values that are there. we continue to get companies taken out from us because of this. we had a company like merlin taken out. it was the second largest traction company in the world after disney. they run the legoland theme parks. it was because of the persistent valuation cap. eventually someone decided to bite the bullet. we are continuing to see that kind of activity of businesses trading for below intrinsic value in europe in particular getting taken out. david: sometimes people are just making mistakes. the market is just mispricing. sometimes there is a reason for the difference in dow you wish and, particularly when you look at -- in the evaluation, particularly when you look at europe. do you distinguish between the situations that are real and the ones that are just market imperfections? abhay: for businesses, regardless of industry, we are
looking for businesses we can own for a long time. that would mean structurally advantaged companies or businesses in structurally advantaged industries where we are not suffering from overcapacity, for instance. we are looking at managers that can maintain that pricing discipline or whatever again this them -- whatever gives them that advantage over time. because of these businesses, sometimes they do go through cycles. you want a balance sheet that can survive most of those stresses that arise. once you put all of those filters in place, there's not much really left. got an air separation business listed in france, but compared to its intrinsic value because it is "french," but not really because most of the business is in the u.s. or china , plenty of opportunities like that. me, brexit u.k., for is like kenny rogers said.
'em, or run.d i just couldn't figure it out, so we decided to not do. anything there we have one business -- to not do anything there. we have one business called first group, a smallish company, but you've heard of some of their assets. greyhound, for instance. buses, the largest private operator of school buses in the united states. but it trades in the u.k. it is a similar kind of did namic -- kind of dynamic. alix: what about european banks? abhay: no. i think the banking system is ok there, but ok because the cycle is turning. other than that, capitalizations ar so thin that it is a binary outcome. zombiestill got a lot of
companies still kind of a live because of very low interest rates, but if things were to normalize, i worry about the capitalization of banks. alix: so if we were to see -- what would make you want to buy european banks? abhay: almost a miracle, i guess. [laughter] abhay: let's separate. that's also another very large category. deutsche bank, i think they are going to have to do some kind of recapitalization. but then if you step into ubs, fornd, banks like instance, is a great private wealth management franchise, but the actual bank sitting there having to deal with negative interest rates. if that environment were to somehow reverse, that makes you feel of these banks, i think a lot of people would rush into those banks, but i don't know if that would happen. david: you did say a miracle. [laughter] david: abhay deshpande of
david: time now to look at three companies worth watching this morning. first of all, i'm watching apple. the report is they are in talks to buy intel's modem business for cell phones. they've been in a deal with qualcomm, a troubled deal to license. this will maybe protect them down the road when they are out of their qualcomm deal. alix: what a lot of companies and were, basically buying the talent. david: the patents and talent, that's right. alix: realogy is surging because they have a partnership with amazon to offer a program that connects a potential homebuyer through the amazon portal to a real estate agent. then you have zillow, redfin
shares falling on that fact. what can amazon not disrupt, at the end of the day? [laughter] david: nothing. they just haven't gotten to some of it yet. alix: exactly. third set of companies we are looking at is stanley black & decker and sherwin-williams. for more, brooke sutherland is here, bloomberg opinion columnist. brooke: this is sort of a read on the consumer right now. both companies beat in the second quarter, but did not raise estimates for the full year, which for me is always a bit of a red flag because it signals caution going into the back half of the year. on the sales front, a little bit disappointing at the margin. stanley black & decker lowering expectations for organic volume growth for the full year. sherwin-williams taking its sales guidance down pretty significantly, now expecting at most 4%. they've been previously looking for as much is a 7% gain in sale. for me this reinforces the sense
of a general slowdown, but both stocks are up. i think that is partly just a reflection of lowered expectations and clinging onto the positives. david: it is interesting and perhaps a little disturbing because the one thing we have seen hold up in the united states is the consumer. if these companies are saying we are not sure if the consumer is going to be there, that is troubling. brooke: and it is more than just being conservative. it is taking a little but of a stance on where you think the macroeconomic environment is going. if you are not expecting those sales to come through in the back half of the year, that needs to be taken into consideration, particularly in this conversation about a potential federal rate cut. alix: if you look at some of the industrial and defense names that we got that look really good, when you dig beneath the surface it is like one area is really good. brooke: exactly. united technologies had really good aviation numbers,
but hvac and other building trolls saw sales dip in the second quarter. -- other building controls saw sales dip in second quarter. otis elevators also down. you have this we are dynamic where investors seem to be seizing on whatever the positive is from. these earnings reports some of that is just not really -- whatever the positives from these earnings reports. alix: thank you very much. coming up, boris johnson is the new u.k. conservative party leader. what his leadership means for equities in the currency. this is bloomberg. ♪
europe crushing it. technology, part of that is you had better read through like ims, at its highest level in 10 months. upbeat, constructive view of the overall environment. story, thedollar cable rate down .2%. saying chief economist you have rates on hold, michael saunders a little more dovish than hawkish when it comes to rates. look at the two-year in particular. selling ahead of a four-year auction today at 2:00. 183 is where we sit for the two-year. crude down .4%. it has to be demand concern. there's an explanation for you. let's go back to great britain. they have a new head of the
conservative party, boris johnson, who tomorrow will become the new prime minister. francine, looking at boris johnson, a moment of triumph -- how long will the honeymoon last? >> he certainly has a lot in his inbox. willew prime minister choose to handle those priorities tomorrow. the first thing he will have to do is choose a cabinet. we will see if he chooses ones close to him or pro remain -- he did win with 66% of the vote. that will have a lot of implications on the kind of support he will have for no deal. he pie minister has said will go to the eu and renegotiate. if that fails, he either doesn't
do anything and there's a default out no deal by by october 31 or he says to parliament i want no deal -- or something he's negotiated with the eu and he gets that through parliament. his relationship with parliament has not changed. maybe his energy and style will change something in the near future. david: we are all focused on brexit. at the same time, he hasn't an even more imminent issue -- he has an even more imminent issue in the strait of hormuz. >> he was foreign secretary in the past. we know that he will have to deal with iran. if you look at the relationship between the u.s. and u.k., that is a critical one.
we know when president trump was in the u.k., he has endorsed boris johnson. he wants to remain close with the president of the united states. they don't see i to i when it eye to eyean -- when it comes to iran. there's still a chance that they can salvage the nuclear record. maybe boris johnson will bounce around issue. it will be quite important for the future relationship between the u.s. and u.k.. david: many thanks to francine lacqua. is it hot in london? alix: is it 100 degrees? no. david: brexit one of many trade issues weighing on markets today. authored a book --king at a different aspect
i thought this was a terrific piece. we are focused on trade in goods, there's a whole issue with licensing and services that tells a different tale. >> when we think about globalization today -- the reason we are thinking about globalization a lot lately is and theof donald trump populist assault he's led on globalization and free trade. when we think about globalization, too often, we think of old-school, physical globalization. we often use images of shipping containers to illustrate our trade stories. story, a whole digital there's been explosion across data flows whereby we are just shipping widgets, we are shipping licenses to produce widgets to other countries. we need to think
about globalization a little differently. david: does that get expressed in current account balances and trade deficits? does it make up for some of the deficit in goods? >> part of the reason we have an old-school view of globalization is we have some very old-school data. we are very good at measuring the physical flow of goods. we are not so good at measuring the flow of services around the world or measuring the flow of data. even when it comes to measuring the flow of goods around the world, we are not good at measuring where the real value is added at factories. the oecd ha does a great job at putting out the numbers, but it takes them 3-4 years to assemble those. if you look at those, the trade deficit between the u.s. and china is much less than it is an official u.s. data on merchandise trade. down if you look at
the traditional, old way. but if you look at the extent to which s&p companies are getting revenue, it is up. >> during earnings season, we are worried about the china growth story. a lot of american companies derive more and more of their revenues from china. that's companies like gm, caterpillar, apple. we saw the hit that apple took last year when it was worried about a slowdown in iphone sales in china. it's not just about where you locate factories. that is the foreign direct investment story. it's also about where you are getting your revenues from. the reality is wall street derives a lot more of its revenues from the world outside the united states than it once did. alix: really great perspective. great article. blackrock investment institute out with its latest outlook for
midyear. money managers playing defense by raising cash. joining us, one of the men and frome report -- centerstone investors, walk us through your strongest conviction in the back half of the year. >> just starting where we left thinkth shawn, we things have changed materially this year. the first thing is the big protectionism push. we want to go along the lines of going away from the old-school school way of looking at trade. it's not about tariffs. it's about a broader requesting of global supply chain. we think this has changed materially. now, we are in a world where this is affecting the macro outlook and the uncertainty is real. central banksce,
have made a significant dovish pick up -- there's been a pretty material change since the draghi speech. that has provided to us significant support to markets. oursee the arrange line is financial condition index. you see a big turn happening in late june, which has been upsetting a big part of the run-up we've seen in trade. these are doing a tug-of-war. as a result, we think we are in a benign environment. we heard about confirmation bias in the previous segment. it is a petit powerful force in place with central banks that will be continuing to support the markets. force inty powerful place. we need to be a bit more careful in where we take that risk. we still think u.s. equities are
attractive for various reasons. emerging markets in asia, those exposed to the trade complex require a bit more care. alix: you take a look at the different things we outlined like consumer, being exposed to trade, how do you look at companies and sectors? abouthink we talked earlier, there's some big --ture stuff to look at trade is clearly important as well. business, a couple of businesses that might benefit from all this dislocation in asia. one is carrie logistics. they might benefit from all this stuff. logistics is an interesting business listed in hong kong. they have warehouses, logistics
splattered throughout southeast asia. as corporations decide to reorient their trade routes, these guys benefit. modern warehouses all through the belt and road initiative road. traction oroes get if the continued trade route dislocations will also benefit them as the warehouses get utilized more rapidly. minneapolis fed president had this to say about the bar for hiking. >> once we are in this easing in termse bar for them of what sort of inflation pattern they have to see to start raising rates is pretty high. sustainablyove 2%, above 2% for them to switch into tightening mode.
alix: if that cycle extends for quite a long time, what are the longer-term implications for your asset allocation? >> we are in a low rate environment, we had adjusted to this environment, and even lower rate environment. clients are asking does it still make sense to get significant exposure to fixed income when a negative yield in europe and low yield in the u.s. -- it's not for return expectations. in terms of the balanced role of the portfolio, the ability to accept big equity drawdowns -- one of the key implications is not to be afraid of fixed income. they will still be playing a significant role in terms of providing that protection. the inflation protection, fixed
income is maybe starting to be more attractive as well. david: it strikes me that the two things that jean referred to, protectionism and central federal spending on defense can be added as well. since the financial crisis, governments around the world are determining what's happening in the markets. they are certainly determining what happens on the yield curve. shop toull in a china use interest rate policy to solve a bigger problem. until it is joined by fiscal jean mentioned the term "tug-of-war." that's what happens when you have tight financial
power, wilbur ross, u.s. commerce secretary. this is "bloomberg daybreak." in the second quarter, facebook and amazon setting records for lobbying. facebook spent more than $1.4 million. amazon, just a little less. washington has ramped up scrutiny of technology companies. voting in favor of industrial action as part of a pay dispute. a walkout would be the pilot's first strike in decades. it would come during the crucial summer travel period. softbank on the verge of launching its second investment technology vehicle. it will be modeled after its vision fund. the likely backers will include two investors who put money in the first fund, saudi arabia's
public investment fund and abu dhabi's fund. david: time for follow the lead. today, we look at headwinds facing the aviation industry. matt miller is live in berlin iata ceo, alexandre de juniac. talking first and foremost about global growth. this is something that affects iatathe airlines in the alsotly, of course, but with the rate cutting cycle from the ecb. do you see that as well? alexandre: we published our forecast in june. it was lower than our forecast in january. we have seen a decline in the
number of passengers, even if this number is still positive. we have seen a significant drop in cargo, which means international trade growth has stopped due to trade wars, protectionist measures. that's the most worrisome facing the potential growth of our market. relation -- ifhe we get a boost, these interest rate cuts work and we get global growth running again, what is the increase in cargo and travelers? alexandre: we usually have a totiple of 1.5-2 gdp growth have the demand in the passenger. and usually in the cargo market.
have, therowth we faster the aviation market grows. matt: that has been one geopolitical issue. how have the changes in the weather been for the airlines you represent? we see more and more extreme climate. we areit is very hot, looking at heat waves across europe. -- a few months ago, we had storms canceling flights. industry: the aviation is heavily impacted by weather forecasts. concern, it is a because you have a storm, it is too hot, it is too cold. the weather is a concern. more broadly, this industry is askonly one in the world to
10 years ago for them to tolement a gigantic program reduce the carbon footprint of this industry. we are committed to reduce the co2 emissions per passenger. in 2020, we will start a carbon neutral growth, which is quite ambitious while doubling the number of passengers. by 2050, we will have reduced our co2 emissions by 50%. matt: why are we seeing airlines was just added to a list of the 10 biggest emissions polluters inside the borders of europe. alexandre: we are emitting co2. we represent something more than slightly -- slightly more than 2%.
weng the airline industries, were convinced it was absolutely necessary to protect the planet. 10 years ago, we launched this worldwide program. that's a mix of strong conviction and our interests. opinion would become open. matt: we do see in scandinavia, there is flight shaming, as well as concerns about carbon footprints. what do you think about the effect of an eco-tax? it's been talked about in the u.k. and france, a tax on airlines' kerosene use. >> we are not in favor of a tax. will significant a
modify the behavior of producers. other elements modify this behavior. markets -- a tax never works. it will be paid by the passenger, so it will increase the price of an air ticket at the same moment the air transport is becoming very democratic way of traveling. it is not the industry for wealthy people. it's a way to travel for everyone. that is nice. we connect people, we connect cultures, we allow trade to develop, we allow business to develop. we are a strong tool to bring prosperity and openness. we are proud of that. we consider it our duty to reduce our carbon footprint. no industry on this planet has done more than we are doing now
david: it is an umbrella organization. it has a lot of real estate agents. you go on amazon, we will find you and agent. alix: once you get the house, you have a free moving benefit, deep cleaning, a handyman to install your pictures and shelves. david: and then alexa can listen to you. dwyer willg up, tony be joining jonathan. ♪ we're the slowskys.
coming up, equities continuing to grind higher. the dollar stronger for a third straight session. the ecb rate decision, the next stop for this market. boris johnson will be the next british prime minister. good morning, good morning. here is your tuesday morning price action. futures up 11 points on the s&p 500. in the bond market, unchanged. once again, a bit of dollar strength in g10, euro-dollar 111.69. 1.12 to extraordinary evaluations. >> valuations getting squeezed higher. >> we are back to where we were when the market peaked last ye