tv Bloomberg Markets Bloomberg October 9, 2015 10:00am-11:01am EDT
good morning. i am betty liu. we made it to friday. how concerned is the imf about slowing global economic growth? an interview with the imf new chief economist. europe and asia, stocks propelled a rally as commodities surged. why sink is rising the most ever -- zinc is rising most ever. republicans in disarray after kevin mccarthy pulled out of the race for speaker of the house. who will fill the power vacuum? we are about a half hour into the trading session. markets shrugging off the political news and what the fed said yesterday because they are rallying this morning.
julie hyman has more. julie: we have an extension of the gains we have seen recently. a long rally in process for stocks. today, material stocks leading the gains. a rebound in commodities prices. that seems to be helping matters. all three major averages are up. they are up around .75%. the have retraced 50% of the losses since the august selloff. 20 through the bottom in august, a decline of about 12% as the s&p 500 entered a correction. we've had a bounce back of a percent. -- 8%. yesterday, breaking above the 50 day moving average for the s&p as well as the 2000 level. best andto look at the worst performers. the best performer is a material
stock come international paper. the company said it was exiting a joint venture in china. pulling back from that nation to some extent, makes for options. -- may explore options. ip is the favored stock. the worst-performing stock is cap after saying banana republic sales fell more than estimated last month. -- gap. the creator director for that unit was brought in last year to a lot of fanfare. there have been good reviews them about it did not work out. clothing were not fitting well. julie: yeah. i stop shopping there. --ty: let's go from retail the atlanta fed sticking to this idea that we will see a rates rise in december.
julie: it does look like the market is buying it. 2.1%, but still not changed on the day. betty: thank you so much. julie hyman at our bloomberg markets desk. let's check in on the first word is. -- first word news. vonnie: we start on capitol hill, open warfare among house republicans. the favorite for house speaker dropped out of the race. it did not help that he suggested the committee investigate benghazi was politically motivated. this benghazi committee was only created for one purpose, to find the truth on behalf of the families of four dead americans. i should not be a distraction from that. vonnie: a group of house
conservatives opposed mccarthy. house republicans have no clear leader. have to raise the nation's debt ceiling in a month. u.s. defense secretary ash carter has confirmed his decision to end a program designed to train syrian rebels. the knowledge meant that the program was a failure. efforts will focus on working with kurdish forces in syria. deadly gunfire erupts on and american college campus. one dead and three wounded after an incident earlier today and northern arab -- northern arizona university. say a suspectls is in custody. president obama is heading to oregon today to meet with survivors from last week's shooting at a community college. to look atlans flooding in south carolina.
he will be traveling to columbia and charleston to meet with officials. pushed fortion that democracy is honored by the nobel community -- committee. the international dialogue comprises civil organizations. back fromht tunisia the brink of civil war. you can always find the latest on bloomberg.com. betty: thank you so much. world -- where world leaders have gathered to debate the global economy and the timing of the fed rate hike. there is no shame in waiting while others question whether postponing the liftoff is helping or hurting. >> i'm very much in favor as soon as it is possible to
normalize monetary policy. the same goes for europe. we are in a different phase. the u.s. is ahead of us. but let's not postpone. a small step is the right time. betty: eurogroup's president making this comments with francine lacqua in lima, peru. francine has another eu leader, the vice president of the european commission. francine: thank you so much. we are joined by the commissioner. i guess europe is not seen as the naughty child of the world because we have structural reforms throughout our region. what is the main concern that world leaders have here? is it the fed hiking too soon?
or is it that we don't understand what china is going through? for thef the concerns global economy right now is the slowdown of emerging economies. not only china, also problems in brazil and russia and other emerging economies. the main reason why i have revised down my outlook. oururope, we will update macroeconomic forecast next month. i will not expect any major changes in the outlook. we currently expect the eu to grow at 1.8% this year and accelerated 2.1% next year. francine: when you look at emerging markets will financial , they took on too much debt.
fourfold, the amount of debt that corporations and emerging markets took in the last 10 years. are you worried about the credit crunch? valids: prudent lending and always something you need to take very seriously. financial stability is precondition for a, growth. -- for economic growth. you have to look at a case-by-case basis because different economies have different challenges. when we are discussing about the slowdown in china, we are talking about growth between six and 7%. we cannot expect china to grow forever with double-digit growth every year. francine: when you speak to policymakers or finance ministers, sometimes it seems we talking about tightening
about adding to qe. do you feel like we are in a bipolar world? valdis: monetary policy throughout last year, it has been quite consistent. u.s.s what we saw in the and still see in the u -- the eu. that it is time to move away from this very accommodative monetary policy gradually,ightening that needs to be addressed.
there are many spillover effects andeveloping economies developed economies. francine: you have been too many meetings. and news conferences. what are people most worried about? aldis: i would like to think that we are able to win sure that the world economy continues to grow. nsure thate -- and the world economy continues to grow. concentrate on what we need to do to strengthen the fundamentals of economic growth. francine: i spoke to the ubs chairman and president of the eurogroup. they had a different take on whether monetary policy was a
risk at the moment. do you think the fed needs to wait until next year? valdis: respecting central banks independence, it is up to them to decide on their monetary policy. it has been quite consistent. that monetaryar policy alone cannot solve the structural problems. especially if we talk about europe, there are structural reforms to be implemented. with monetary policy, we can only buy time to implement those reforms. we also need to look at structural side of the economy. we cannot spend all the time on monetary policy. francine: how much have you
talked to other delegates about political risks? with the new development of vladimir putin in the middle don't like to talk about it. see certain positive factors like low were oil prices -- lower oil prices. riskso see a number of such as the ukraine conflict which leads to instability. we need to take those developers into account, especially in the eurogroup. that?ne: how do you model bewe get into 2016, we will one of the risk factors. it is difficult to quantify. >> you need to do some
assessments. it's even more important to work towards minimizing those risks. towards helping the countries in the region. to work towards a theing solution to russia-ukraine conflict. respects theat territorial integrity of ukraine. francine: what is the biggest risk? valdis: we need to concentrate on how to address the risks. in steps europe is taking
andring lasting peace seeking a solution for problems in the eastern ukraine, new initiatives stabilizing this nation -- there are a number of things we can do and we should do to minimize those risks. francine: thank you so much for joining us. we have two others coming up. and the chief economist italian central bank governor. -- the imf chief economist. betty: thank you so much. the worldacqua at bank meeting. she will be back later in this the for the interview with imf chief economist. much more ahead on the "bloomberg market day." glencore shares rallying again.
futures to their biggest gain in more than two decades. republicans in the house and turmoil. they look for a figure that can unite various factions of the party. how will this uncertainty in washington play out on wall street? ipo,ri gearing up for its aiming for evaluation of $12 billion. boosting shares of fiat chrysler, the owner. ♪
the action in etf's. julie: i am. volatilitying at the in late august that caused chaos in the world of uts. many trading far from the value biggeste of the providers is out with a detailed report of ways to avoid that sort of turmoil. michael regan joins me now to discuss. black rock came out with this report. it is not just what happened in august. the mini flash crashes have been especially tough. what is your prescription to fix this? of the big issues that came up in august is the arbitrage trade around etf's. market makers buy and sell stocks increased and delete shares to match the prices and values of the underlying stocks. what happened on august when he
four, half the stocks were not 20 minutes trading into the session. -- august 24. that process broke down. how can you tell what the value of an etf is when half the stocks are not treating? black rock has bold solutions for this. one that stood out to a lot of people is simply shutting the market down. pulled the circuit breaker on the market, which they already have a plan in place to do that. it is not until the market gets to a 7% drop. that we have not seen in a long time. blackrock is suggesting narrow that to 3% or 5%, shut the market down for a time and let everyone catch their breath. or, shut it down if there is enough stocks that are not
treating because of the issues we saw in august or because of caused 1300 -- it makes a lot of people nervous per how do you shut down this $23 trillion stock market in the middle of the day without people flipping out and panicking even more? shut it down and open it up back again. -- open it back up again. julie: we will have to leave it there. betty: thank you so much. , paul ryan says he does not want the job of house speaker. coming up ass members meet behind closed doors on capitol hill. more from d.c. next. ♪
>> we have a good conference working together, trying to work together. i know a lot of speculation about who should run -- paul is looking at it but it is his decision. he would be an amazing speaker of the house. is kevin mccarthy who shocked everyone in washington saying he is not going to run for house speaker. there are plenty of names being thrown around on capitol hill. nobody willing to take on the job of speaker of the house. the house conference is meeting behind closed doors. one name that keeps coming up, paul ryan. he has made it clear more than once that he does not want the job. we are joined by phil mattingly in washington. how many more shockers can you handle there in washington? was the hours ago, he
sure thing to be the next speaker of the house. 20 hours ago, sure to be the next speaker of the house. the question is all about paul ryan. a press person could not have put out a statement faster after kevin mccarthy decided to pull out. he said no over and over again. his team said no. here is where the currently stands. members across the board are urging him to run. jason chaffetz said he would drop out if paul ryan decided to run. outside party representatives, lobbyists, tea party members of the establishment have been calling on paul ryan to run. has said he is thinking about it. there are a couple issues he is meeting on right now. his family, he has a young family. he is not willing to put on leadership response abilities. a lot of people do not see this
as any type of winning situation given the debt ceiling on november 5, the highway bill on october 29 in the budget on december 11. betty: those are big pressing issues. here is what somebody on wall street thinks about paul ryan. david rubenstein. david: the republican leaders are turned to convince paul ryan to do it. i think you would be a good person to do it. he has the credibility and intelligence and experience. i gather he is reconsidering his position and that would be helpful. betty: that was earlier on bloomberg go. what will happen to this debt ceiling debate? phil: there is no clear pathway. that is one of the issues kevin mccarthy pointed out. he did not know how he could get 218 votes to increase the debt ceiling. there is no sense of paul ryan stepping up changing the
dynamic. from the market perspective, no matter who is speaker, the debt ceiling is a serious issue that is not coming off the table anytime soon. betty: phil mattingly in washington. still ahead, dei math new chief economist has been on his job only for one month. -- the imf chief economist. he is being asked if a global recession is looming. we will get his latest outlook live from lima, peru. ♪
word news this morning. >> we start with oregon. president obama going there to meet the surviving relatives of those killed in last week's community colleges shooting. and right supporters plan to protest. the uss some of russia's missiles are missing target since areas -- in syria. four of them landed in iran. they say they are targeting rebels, not a terrorist. joe biden may be inching closer to a white house run. they reportedly discussed the primary calendar and ballot access to.
police confiscated a throw that crash landed near the white house this morning. the operators were issued tickets but not arrested. in washington dc is the most restricted in the country. city, aansas a rainkeeper goodell was the blue jays lost the first game in their series. newsis the first word right now. you can always find that online. betty: that poor guy on the field. for joining us. peru where thea,
imf it annual meeting is going on. they are worrying that even the to economicerable forces outside of its borders. we have a new chief economist at the area. i am delighted to speak with you because we have a bit of concern about china and the emerging markets. thank you for joining us. if you look at this week, oil prices are going back out. currencies are starting to recover. r.j. they more confident about the future or is it all about the fed? have seen ae may little bit of downside volatility in response to the
concerns over china in the last few weeks. i think the fed is a factor. i think you cannot really tell when they are going to make their move. getting the move will be data dependent. when they make that move it will be in an environment with a accountant that u.s. growth is going to be strong that will be a physician that is also favorable to the world economy. >> forward guidance does not work. is that fair? >> no. i think they have been communicating how their decision will be made, which depends the data. data is inherently uncertain, and the the market in the position of trying to forecast the data. standard errors, but we do our best. >> when i speak to policymakers and a lot of famous registers here, the fed normalization is definitely the one thing that
people what to talk about. we've known this a long time. a position now where it is the one topic of conversation. >> it is natural for people to focus on big watershed events. on the other hand, a lot will depend upon what the fed communicates about the subsequent path of interest rates after the initial hike. the fed in recent years has become incredibly more transparent in its communications. that has been a good thing for markets. >> what do you say to criticism that they are missing and forecast? >> we call it the way we see it. [laughter] our most likely outcome forecast is somewhat pessimistic,
downgrain compared to july. we do forecast better growth in 2016. moreover the whole message of the fund from the managing director is that there are important policy upgrades that can and should be done now that will help the world economy deal with whatever is coming. whether that be development in china, or something else that we cannot anticipate today. today --s in full out there is a poll of today, saying a u.s.ed 15 tenths of recession in 2016. is that too high? >> that is high by my reckoning. u.s. consumers have been confident, consumption growth has been driving the economy. we have seven weakness in the exports signs. the u.s. is relatively closed.
that is not a big percentage of gdp. i think the idea that the u.s. ofl go from a growth rate negative growth is far-fetched. we have seen very on events in quarter one connected with weather, connected with the way that we seasonal i stayed out. we have not solved the puzzle yet. >> as you walk into these quarters as the imf world bank, how many questions do you get about her politics that -- u.s. politics? >>? surprisingly few, actually. how do you model, can you impossible trump win? >> you cannot rule out anything
in u.s. politics. he has promised to generate a 6% growth rate, and if he can do that without will be greater for the world economy. >> final question on china. are you confident on which you have heard here from the officials say that they are well aware of the situation and how they will transition the economy? goaley have announced this years ago. it is a long-standing goal. it is happening, the service sector is growing rapidly. road,lly is bumps in the hard to manage a massive economy like china's. we can be confident that while growth will decline, we are not seeing a milestone in china. >> thank you for joining us.
we will be back within an with the interview italian central-bank minister. betty: thank you. be sure to catch her interview with the u.s. secretary general on chemo and -- u.n. secretary-general coming up. much more in the market day. live to the nasdaq for the biggers and movers. -- biggest shakers and movers. ferrari during a for its own ipo. look how much the company is revving up to share its shares to the public. ♪
betty: welcome back. we are just over an hour now into the trading session. welcome back to the bloomberg market day and it is time now for a business/. innovative changes at walmart. he has been in charge for five thes, the do cfo will be current cfo of walmart international. he will reduce equipment spending by as much hundred million dollars. sprinting is the smallest of the
four major wireless carriers expects dennis lockhart a new interest rate hike later this year. in a each day he said he's easily lift off his body either this month or in december. he support the decision last month to leave interest rate unchanged. you can always get more business news and bloomberg.com. now it is time to get you caught up on the action all around the world markets. from hong kong, to london, to the nasdaq to europe. inwas green across the board asia. the shanghai composite of 1.2%. finishing up about 1%. one big story out of the region, with their bond bubble, david ingles has this from hong kong. >> when you see chinese market, it is the chaos and equity markets that we see that
immediately comes to mind. this flight to safety has actually driven up on prices to six years highs. the credit default swaps on debt to two-year highs. the chances of a crash by year-end are at 20%. not screaming high, but that was a serial back in the summer. we just emphasize that most analysts now think it is worth borrowing because of these levels, and presents a new source. betty: another warning sign out of asia. we are seeing a sea of green and european markets right now. floor or has the latest. losing a little bit of steam. rising for the
sixth consecutive day. that has not happened since july the 20th they think that the fed will not budge on interest rates . in the last six days, have a billion euros of value have been added. these are the big gainers in europe over the last six days. it is the mining companies, the s are the driving force behind the six-day rally. days,ave gained for nine and that has not happened since year 2000. 27%.auge has risen by when joined the best week seven years, automakers are enjoying
the best weekend for years. here's a question for you all. how do you get a return of 100% and nine days. trough right there and 66 .7%. resurrection for glencore as it plans to cut production by one third. happenedseen what has to the price of zinc today? i will show you what happened to some of the currencies today. the euro is rising against the pound for the second day.
most bystry fell the 2012. indicating a faltering economy could persuade bank of england to keep interest rates lower for longer. .s for me betty: thank you. .e will be back pimm fox has the latest from the nasdaq the tech stocks are rallying. pimm: i do not have any superlatives like more, but i will tell you that the nasdaq is holding on the gains that we saw yesterday. it is trading near the high of its morning session. one initial public offering that came out this morning, and electronic card maker.
currentyment cards company with the stock is up almost 26%. it may be a little bit of money on this deal, but the initial public offering the cpi this morning. group theyrlines were up 7%. they had record capacity for the timeframe. american airlines also moving her this morning. if you've the gains we saw anderday being given up
then finally you will pay even more. technology companies, stock is more than 1%, mainly on two pieces of information. exiting the company, they will be looking for a replacement. you are familiar with the guys finallythe capital, is cap petitions to go after the patent protection for drugs, one of the drugs made by my. they have been rejected, but he is going to refiled. just a little bit of an update. initial public offerings doing pretty well. betty: you company a lot of bases.
betty: welcome back to the bloomberg market day. the li na be a more desirable sports car or for any man or woman than a ferrari. and while most of us will only drive one in our dreams you may be able to own a piece of the luxury carmaker to the super rich. legend of its kind. it is a legend because it is toable, it has been capable
protect the brand, to protect the numbers, and not give poor than what is needed. betty: i love their glasses. ofs could push the value $212 billion. to $12 billion. you cannot do any story about cars and matt miller. >> this is one of the best. betty: they do not make a lot of cards, and yet they are super expensive and how were they commanding a $12 billion valuation? last year for our rebuilt about 7000 cars -- for rory errari built-- f about 7000 cars. rory is not just a carmaker but . total luxury brand
that is the reason they are getting such a valuation. familiar say he is getting what he wants. it is a of at least 10 billion euros. betty: it is like a louis vuitton or product. i actually have a graph here on the bloomberg luxury goods price by ebita. these are skewed because chinese carmakers have insane valuations with the daily high and chinese luxury goods makers are extremely low. obviously, with only 9000 units, it is obviously a luxury brand. it is not like field which sells one million cars a month and
-- a month. betty: are they trying to expand, is that not part of their plan? wanted tomer chairman preserve the cost of production to 7000 cars a year. he thinks that they can boost in 2019.9000 cars feels they can boost production without losing money. we heard them saying the same thing earlier of muslims -- about exclusivity.
he is not the only one with a say. the second and only slimming sun is going to have a 15% voting rights than 10% sake -- estate. -- and a percent stake. how many do you not want to make. >> he is vice-chairman, and part of the board. think they will lose the exclusively if you build 2000 more cars because the number of wealthy people all over the globe, where you do not sell ferrari's until two years ago, it is in china. you're not going to see many rore ferraris in new york o atlanta, but you will see many where there were none in the past. betty: do you think the dw
situation will have any impact? >> no. luxury goodsy a maker. it is not a carmaker the same way ford is a carmaker. it is a different product. betty: thank you for joining us. what more ahead on the bloomberg market day. the reserve bank president began a monetary policy. we'll have the latest about what they are saying on the economy and when the fed may raise rates. ♪
from bloomberg world headquarters, good morning. here is what we're watching this hour. the latest on when the fed may raise interest rates. we've already heard from dennis lockhart the biggest weekly gain since august. why they say the worst in the collapse is over. and trying to fold coldwater on the 100 million offer from bud. we are 90 minutes into the trading session riddles go to our markets desk. julie is watching the indexes. julie: they are holding on to the gains.