tv Bloomberg Markets Bloomberg August 2, 2016 10:00am-11:01am EDT
sherry: we are going to take you from new york to washington and japan in the next hour. here is the we are watching. announcesnister of a $45 million in net for spending. the yen -- the yen surging to a three-week high, that is the plan working? mark: oil closes in a bear market, touching below $40 briefly for the first time since april. don't abandon hope, we hear from buy ahead of a rebound to $50 a barrel. sherry: billionaire investor warren buffett ripping into donald trump over his refusal to release tax returns, his business bankruptcies and his
attack on the family of a fallen soldier. in about 30 minutes -- about 30 minutes into the trading day, we go to the bloomberg markets desk were julie hyman has the first look. as we see the s&p pulling back, but the more surprising step comes from the dow, which is down for the seventh straight session. it is the longest losing streak for the index in a year and even if the s&p 500 is down, it is still in a very tight trading range and has seen 17 straight trading sessions that index has not seen a move of 1% by the close, even up or down -- either up or down. this range remains intact in this earnings season. we have the automakers out with their sales for last month, all of the missing estimates, gm sales down, ford down and then
fiat chrysler sales rising a third of 1%, but analysts were looking for a gain of nearly 2%. it is not just limited to cars, planes are also seeing declines. coming out with its july passenger revenue per available seat mile, though shares are down and other airlines are also under pressure. then we have more full earnings reports on various companies. cbs, at not and -- aetna and williams companies -- the company cutting its dividends to invest money in pipeline expansions. to try to get- approval for their merger. cbs coming out with earnings that beat estimates. on the downside, we have pfizer disappointing
earnings on a couple of its drugs. archer daniels midland earnings missing estimates. mark: turn into bloomberg markets later for more on at not earnings. 90 minutes left of today's european equity session. as julie was talking about, how long it has been since the s&p 500 closed either higher or lower by 1%. days since the stoxx 600 either rose or fell by 1%. down by .98%. will it happen today for the first time since july 12? every industry group is falling, led by banks. the year's worst performers, more banking earnings, commerzbank falling to a record low. profit target for
the year and dropping in earnings, putting pressure on the chief executive to cut cost chairs by roughly 8% and then we -- bankker in case are by asset-- boosted sales. -- from the stress test on -- ay, the missed estimates stung by currency swings and modernization caused that cost, shares down by 8.7%. let's check in on bloomberg first word news. president obama is meeting with the prime minister of singapore at the white house. this comes a day after he warned that u.s. credibility is on the line.
the president -- the from minister says ratifying the transpacific trade deal is a litmus test of the u.s. seriousness in the pacific and asia. both candidates have publicly opposed the deal. warplanes struck a tank and two other islamic state vehicles in their first attack against the group outside of syria and iraq. american officials say they will coordinate additional strikes with the libyan government. the pentagon is prepared to approve work on a new nuclear armed missile. the defense department will open competition between the three top military contractors that are likely to rekindle debate over whether you the u.s. can afford to modernize its nuclear weapons. a new york congressman says he will cross party lines and vote for hillary clinton. richard hanna is the first year of the first gop house member to announce plans to vote for clinton. in an op-ed published on syracuse.com, he writes that trump is quote unfit to serve our party and cannot leave this country.
he plans to retire at the end of the year. in brazil, a congressional committee will decide this week whether to recommend impeachment proceedings against president -- against the president. she was forced to step down temporarily in may. brazilian financial markets have rallied since the vice president took office. his aides say the senate has the two thirds majority needed to defeat the president and permanently install him. global news 24 hours a day. sherry: now to the u.s. bond market were volatility appears to be vanishing. check out this chart, a measure of expected price swings in treasuries has dropped to the lowest levels since 2014 as the is the reserve shows -- market too complacent?
president will he and investors are underestimating how many times the central bank will hike. also telling bloomberg tv and increase in september is very much on the table. for more perspective, we are -- one of 20 primary dealers that trade with the new york fed. thank you so much for talking to us. we have been hearing quite some time from analysts that we could see a selloff in treasuries. that has not happened, but we are now seeing that hedging dollars against -- euro against yen could be getting more expensive and foreign buyers may be reluctant to get into the action. could this time be different for treasuries? >> when you look at the rate complex on a global basis, the u.s. has higher rates than anyone out there, and that is what is making it a floor as far
as what people are willing to sell to, because it has natural carry -- after a six with it, but it is about the -- where does the u.s. senate and certainly at 150 yield i think is incredibly attractive from the perspective of where we are on an inflation basis and the fed does want to move, the question is not if but when. it could be a year from now, but they certainly have the bias to raise rates. sherry: they are betting that yield will fall below zero for the 10 year as well because they are saying that what happened in tokyo foreshadows what will happen in treasuries. would this be a possibility? certainly think so, japan had its own issues as far as high savings rates and demographics that were shifting in the country. i do think we could go a little bit lower just because there has to be a place to put your money.
it really depends on what is the safe haven. people are gravitating towards equities and buying on dips because they feel that is a value play. if that goes away, you will see treasuries rally because that will be the last safe haven. mark: how worried are you about the distortions that are taking place as a result of ultra-loose monetary policy worldwide? >> the crowding out effect by the fed and its counterpart is significant. if you look at what is going on, they are buying most of the assets, which is distorting which is record lows, creating another issue, credit spreads are incredibly tight because of that. not only do you have low interest rates, you have low credit. could be ainds, that significant problem for the central banks in the world. mark: talk to me about brexit.
since the u.k. referendum on eu was cantor what fitzgerald like pre-brexit? have things changed post brexit? >> it feels like nothing happened at this point in time. certainly before hand, there was a lot of pent-up anxiety about what was going to happen. i still think we have issues going forward. eurocould be a drag on the as time goes along, but right now, people have moved on pass that and it feels like a nonevent from the perspective of where you -- where are you going to put your money to work? sherry: as part of your pre-brexit strategy, cantor fitzgerald was expanding a leverage business on that side of your operations. update us on that. leverage finance business.
you are expanding on that sector, how are you doing post brexit? >> we are doing that -- we are doing great. we think there is an opportunity to continue to expand our franchise. we are building out our banking capabilities and aggressively growing our business model as the big banks get smaller. we are taking market share right now in a significant fashion, and we think we will take market share for the next several years. mark: market wise, one of the best opportunities? -- what are the best opportunities? >> you look for interesting opportunities in equities. you are just conservative. this is a time when you look at your expectations. you have to manage her own expectations. my expectations should be mid to high single digits and that is where i have to live and that is where the opportunities set is.
>> he has given his financial statement to the election me, asion, but believe has filled out a income tax return, i can tell you they are different animals. you will learn a whole lot more about donald trump if he produces his income tax return. if he produces his income tax returns. how many of you will be afraid to have your tax return made public? you are only afraid if you have got something to be afraid about. afraid because of what -- the irs. he is afraid because of you. >> he also challenged trump to meet anyplace anytime with a copy of his tax returns. for more, but ring in bloomberg's political reporter in washington. to you again.
how much has trump passes refusal to hand over tax returns wait on the campaign and can he keep doing that? that would break away with 40 years of precedent. >> it would and it has weighed on his campaign. from many democrats, consistent calls from hillary clinton's campaign, to release his tax returns. you rightly pointed out it has been four years every candidate since richard nixon. donald to remember that trump candidacy is nothing if not unconventional. he took a lot of rules, he has gone this far while ripping up the rulebook and playing by his own rules. it does not mean he will not continue to face pressure or people will not continue to call him to release his tax returns. i would not bank on him on doing it. male voters seem to be pretty satisfied with donald trump, pulls putting trump with a lead.
buffett have any impact on this? >> it is not clear how many voters will listen to warren buffett and decide not to vote for trump because of that. what they're trying to do is paint a larger narrative that these people fit trump's demographic well. older male billionaires. they should know him well and sympathize with him in some way, shape, or form. one buffett gave a force -- forceful condemnation of mr. trump. michael bloomberg also made the case against trump. people who fit his demographic well. the fact that they are coming out against him is the effort to paint the narrative and make the argument that people who are in similar boat as trump do not like and do not trust him. mark: trump's rhetoric is growing darker by the day,
calling hillary clinton a devil. is that reflecting the gap in the polls? >> a combination of things p number one is the gap in the polls. clinton got a decent bump between five and seven points. she has gone into a significant lead again, high and single digits. the other thing is this is a polarized electorate, and elections at this point are bought -- more about this mobilizations than anything else. people in the middle, shrinking consistently. political strategists will tell you the way to win is to maximize turnout among your base and trump has been doing this. a consistent theme where he is good at exciting his traditional base of older, male, usually white, generally lesser educated voted just voters.
part of what he is doing now. mark: richard has come out and said he will vote for hillary clinton. manyis the first of congressmen and women to break ranks? and vouch for the democrats? do not know about many. he is a unique case because he is retiring at the end of the year. the vast majority of republicans have taken unorthodox additions that do not line up with conservative ideology and have voted against this party on some occasion. unique edition to speak his mind and say what he wants. there is no greater cardinal sin if you are a republican than supporting hillary clinton. speaker ryan seems a visibly uncomfortable with trump in so many ways and has gotten behind
trump. it is very difficult in this polarized era for a republican to remain in good standing with their base by opposing trump. huge numbers in the primary. us.: thank you for joining still ahead, the dive into the $3 trillion if -- etf market. exchange traded funds, that is next. this is bloomberg. ♪
intelligence, julie. inflowindeed, a huge into ecf's in july. is there anything that spurred that, any reason why that we can find that we saw such inflows? >> yes, this is post brexit relief. not as bad as people thought. the flows were trickling in and a lot more coming, switching from mutual funds. the risk was just waiting for an excuse to go in full force. there was not anything that was too good of news. the news was not good enough so it created a perfect storm that investors rushed in and bought in a lot of etf's. >> got you. goldilocks -- goldilocks. sp y was one of the beneficiaries, as we had an even too hot and not too
cold. is that a takeaway? what are other takeaways? >> $14 billion, always a bullish sign. the other 2, 1 thing that is interesting is almost all the money that went into u.s. equities went to large cap etf's. was a little there degree of restraint. though a lot of money went in, it did not go that far and it stopped at a point. sometells me there is restraint going on. >> not perhaps when it comes to emerging markets because we saw the rally and emerging-market stocks confirmed -- into the etm. >> hot money loves that product. retail also took in money. it has taken and now $17 billion .ear to date
there is a death and there is a sustainable rally. can they survive a little hawkishness from the fed? that has always been the catalyst to send people running away screaming. out, tostion is still see if that will happen. this rally looks pretty sustainable as of now. >> we heard from the bank of with today coming out stimulus below what some investors were hoping for. m sgi japan etf, what kind of action do we see in the month of july? >> the central bank trade is .ver even so japan and europe etf's were up, investors are not buying it. the top five, all europe and
japan. 'se central bank trade etf from europe and japan have lost $17 billion. there appears to be a rotation internationally into emerging markets. >> very interesting. thank you. we have got to leave it there. eric talking us -- talking to us about etf's. still ahead, oil falling into ar bear market territory yesterday. a good time to buy or does he have further to fall? this is bloomberg. ♪
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more alicia parenti has from our news desk. >> a rare meeting with executives from global companies doing business there. it is their government's's latest attempt to manage the economic fallout from the attempted coup. turkey's benchmark stock index is lower. the british prime minister theresa may will try to get economy moving again with a new industrial program. she meets again with a committee . she says if the u.k. is to take advantage, the whole economy must be firing. japan's's economic stimulus plan will increase spending by $45 billion this year according to a draft being discussed by the prime minister's ruling party today. the measures include low-cost loans and money for
infrastructure and to the relief. japan has been hurt by a stronger yen and weak consumer spending. firefighters in the u.s. are battling at least seven wildfires from california to nevada. more than one dozen homes were androyed in montana evacuations are underway. firefighters are trying to stop from reaching a security zone. vice president joe biden might have a new post white house career. gay couple,of a both longtime white house aides on monday. it's a blast biden to officiate. he has never performed a wedding the floor. as you shall temporary certification to make it legal. global news 24 hours a day 2600ed by more than
journalists and analysts. shery ahn: oil is trading near $40 per barrel this morning. yesterday on concerns the global bank ofill conduct -- america merrill lynch head of commodity research says while he expects an initial pullback in the third quarter, prices will go up, he made the case on bloomberg surveillance. seasonal. going on is you look at what is going on between the settlement of the july contract in june, late june, and the settlement of the september contract in late august, we lost 18.5 a barrel. to $49 per barrel, and now we are going to settle 38, 39,
40, somewhere in that range. u.s., we use 1.5 barrels per day. pressureutting the right now. >> you can see the price of oil is around 40. the problem with this and demand is there is a linkage between verynd global growth, strong because we do not know what kind of growth we are seeing. you're confident this is all seasonal, not something ugly and and demand. are confident it is a
seasonal pattern. in our view, we're looking for oil to be back heading into year-end. we view this as a buying opportunity. obviously the market -- the spot price has dropped at a faster rate confident it is a seasonal pattern. in our view, we're looking for oil to be and lower prices. you look at december 2016 prices, we are trading and we think those contracts would probably end up settling over $50. the market is always creating -- roughly two months ahead. start seeing a pickup in refinery consumption in crude oil. plaster, one of the strongest years in record. strong demand so far in the first half of the year. brexit puts a question on global growth. low interest rates are helping emerging markets. i do not see a drastic change at this point. now,i look at where we are
i do not mean from you but in general, the rationalization of the microeconomics of oil, a great mystery to everybody. brent crude, down we go, back to the 200 moving to average. barrel was $29 per at outcome of rationalizing etienne and $60 per barrel. utley doing the same thing now, mysteries,tionalize and what is the percent of likelihood that you could be wrong? >> that is an interesting, good question. i am confident you will see a rebound in oil prices year and unless there is a global recession or something. ahead intooking dire year-end. we are projecting a construct -- a contraction in global supply year on year in the rest of the year.
emissions scandal that broke last year. reporteder ford and gm u.s. like vehicle sales in july that fell more than analysts had and to dated. concerns the market may have pete with laster's services. coming up on bloomberg markets, austerity may no longer be invoked. spending money to make money appears to be the new trend. this is bloomberg. ♪
business report. british builders may be putting a waiter troubles. in jeopardy because of the brexit vote. shery ahn: south korea banned sales of nearly all the carmakers vehicles. an unprecedented warning in the u.s. about the zika virus. we will look at why that viruses so dangerous. let's begin in bricks -- in britain where the rest of vote may endanger hundreds of billions of dollars of construction projects in the u.k. intercontinental hotels has posted earnings that beat estimates. the british company owns holiday in. intercontinental says it is confident in the outlook for the full year despite some markets. terror attacks have demand for hotel rooms in europe.
south korea impose one of the toughest punishment yet in volkswagen. the dollars. vw had anticipated the ruling. it had already suspended sales of cars that have been challenged. shery ahn: time now for the bloomberg quick take where we backgroundtext and on issues of in -- of interest. pregnant women are warned to avoid a zika stricken part of miami after an increase in the number likely spread by local mosquitoes. bloomberg quick take looks at how zika is transmitted and why the virus is dangerous. >> this is the mosquito, the main mosquito that carries zika.
developing a vaccine could take years so right now the only tool is to control must it is. the zika virus was first identified in uganda in 1947 and was thought to cause only relatively mild, flulike symptoms. november, brazil had seen a 20 full increase in babies born with abnormally small heads. defect called microcephaly. months later, the center for disease control confirms that zika was the cause. stepsountries have taken -- other countries and territories in america have been rapid. in july, officials identified one of the first cases of sica transmission in the continental u.s. . virus moves to new areas when mosquitoes hitch a ride on travelers or cargo war, more often, when patients infected in
one place go to a new territory and are bitten by ms. he does there. scientists confirmed it can be transmitted through sexual contact. sick, thewho get illness is not usually's and -- severe and last about a week. ofe are seeing rising cases a nerve disorder that can cause paralysis. here is the argument. right now, the main way to stop the cut is by using traditional mosquitoes.ontrol the brazilian government has expanded a pilot program where they have been modified so while they breed with females, the offspring die early. high success rates but opponents fear on intended consequences. there is a higher chance of disease like zika spreading to new places.
ultimately, authorities need better weapons against bugs. more ahn: you can read about zika and all of our quick takes on the terminal. head to bloomberg.com for more stories. austerity mayof be coming to an end. japan is putting together a $273 billion round of stimulus. china is pumping credit into bank, local government. , you will never hear either president -- either candidate talk about the. is an, bloomberg global economics executive editor. what is the new music out there like? is austerity dead? >> i do not know that it is dead. it is currently in remission at
the moment. subtle. it is somewhat about mood music. is a gentle shifting of the debate. you do not hear people screaming from the rooftops that austerity is the solution to everything. it is subtle but there has definitely been a change. mark: maybe to settle, investors seemed disappointed by the details of this stimulus announced today. how do you account for that? >> the challenge is the actual amount of new spending, the amount of cash in just -- that will be injected into the economy is well short of the big figures that prime minister are they are around last week. the big figure is there. it will be done over several years and includes things like loan guarantees, money for earthquake rebuilding that was already in the pipeline. people are focused on, you know,
what is the new new, and somewhat less than figured. in japan, living there for five years, the construction is just ongoing. we have seen the government spending so much over and over it is alsohe around, more of the same. isn't this just a waste of money when they had not enable to boost growth in the past two decades? >> we probably need to draw a distinction between the stimulus that has come around since they have been in their jobs. the big thing in gave their economy that did have an effect -- they got them out of deflation and up toward the 2% target. the problem was it stalled and it is now drifting. the idea is to give the economy a lift and hope that the economy
in investment would fill in the gap. it has not happened yet. i would draw a distinction between what they have done and what some of the predecessors have done. clearly right now, we are seeing a show leading -- leading the way, not only japan but china. >> in china, no news is good news. it has been a long time since we talked about the perils of the chinese slowdown. the result of accumulation and that and some fiscal stimulus. nevertheless, it has been there. in canada, the new promised her came in with a promise to spend more in japan. the very personification in the u.k., poor george osborne, the very public personification of austerity was when his services were no longer required.
mark: we have had former makers to the tune of three today, suggest that monetary stimulus has run its course, which suggests more needs to be done from the government, especially when the economy tips into a recession. overallbe part of the package? probably coupled with fiscal stimulus, maybe in the budget when the new chancellor announces later this year. >> there has been a clamor growing over the last few years. we might be starting to see the beginnings of that. shery ahn: it is great to have you with us, bloomberg executive editor, thank you for that. still ahead, the smell of money, a perfume that costs about $1000
shery ahn: how much would you pay to smell like $1000? if you're in a market for this fragrance, you can expect to pay more than $1000 per bottle. i just smelled the fragrance. it is pretty good. i love it is warm and musky. >> it still smells like the perfume. person -- thethe perfume so expensive? >> he is the only professor of
perfume in the world. it is a distinctive smell. ingredients of others do not use that can cost $100,000. mark: where does $1000 stand in the perfumes? how expensive is $1000? >> it is expensive honestly. these are rare and distinctive. most colognes and perfumes are around the $100 mark or less. what i am really curious about right now is who buys these perfumes? who can afford them? >> rich people. it is a cologne that is meant to make you stand out, not a cologne for a young person. kid kind of smells like ax deodorant body ray, someone
mature and does not want to smell like an over-the-counter cologne here to a lot of people smell a cologne and they're like, oh that person smells like a loan. . mark: is there cheaper alternative? >> yes. -- they use a lot of the same notes. you can get one of their colognes -- they are little more mass-market but it is a similar fragrance. shery ahn: he is not a subtle person himself. >> no. a tapestry of satin coats. a colorful character who has made a great name for himself in the world of cologne. thank you.
latest on the exquisite perfumes. mark, i will try to get one for you on your birthday. too generous. story onind the bloomberg pursuits, your destination for the finest things in life, including travel and dining. mark: looking forward to the gift. coming up, european bankshares falling today. its target and it sees a drop in target. plus italian lenders may consider raising capital. will have the latest on the financial sector. the worst performing industry group on the stoxx 600 today. have a look at the main bosses in europe today, declining for a second consecutive day. the worst performers today, the worst performers in 2016.
check out what is happening in the currency market today, we are still waking the big one on thursday. sterling is rising against the dollar ahead of that today. the euro is falling against the pound. pound, furthere details of course from the japanese government on the stimulus measures and the euro is down against the dollar. in the bond markets, we are seeing equities decline, we are seen yields rising, bonds as well. the yields on the u.k. 10 year is up by seven basis points. we are four minutes away from the european close. this is bloomberg. ♪
30 minutes left in the trading day in your very you are watching the european close on "bloomberg markets." ♪ mark: we will take you from washington to london and cover stories out of japan and germany in the next hour. here is what we are watching today. commerzbank shopping -- dropping the most in a month. we will look at what is draing down the orall sector for a second day. shery: turbulence in japan's markets and for global investors after the government's this golf -- fiscal plan underwhelmed investors. bmw pledges to defend their league in the world's luxury