tv Bloomberg Markets Bloomberg August 2, 2016 12:00pm-2:01pm EDT
>> good tuesday afternoon. i'm scarlet fu. >> i'm angie lau. here's what we are watching. the dow is on track for its longest losing streak in nearly a year and crude oil falls the lowest since april in new york. scarlet: in japan growth remains far behind. angie: america's fight against zika takes another turn after the cdc's warning. dr. anthony from fauci. we are halfway through
the u.s. trading day. julie hyman has been tracking the moves. s&p on track for the biggest loss in a month. back-to-back declines in more than a month. down for seven straight sessions. it has still been a pretty tight trading range for stocks the past couple of weeks even with today's decline. we had been moving incrementally higher. one of the things putting pressure on stocks today is oil. energy stocks had been holding up their games but now we are seeing below $40 a barrel. we will get the weekly inventory data from an industry group after the close today. from the government the official data tomorrow morning.
500of the groups in the s&p are now lower with the decline in the oil price. technology shares also putting pressure on stocks today. apple was downgraded. samsung is introducing a new phone today about a month before apple is expected to introduce its next phone. we are seeing facebook and amazon decline. there is a story today about the uber sale. interesting take as we see tech shares under pressure. companies reporting earnings today, e-mail and document servicing company cutting its forecast for the full year. seagate is not sure it can its cloutarity on
forecast because the cloud landscape has been changing so rapidly. coming out with some concerning numbers because it's gain in earnings last quarter came from fuel prices falling. we have been talking a lot about carmakers today. they came out with disappointing july sales. there is a ripple effect here. all falling at the moment. scarlet: thank you so much. angie: let's check in on the bloomberg first word news. mark crumpton has more. the prime minister of singapore is joining president obama at the white house to discuss the transpacific partnership free-trade deal. singapore is one of the 12 nations in the tpp, an agreement that is key to mr. obama's efforts to build strategic ties in asia.
the prime minister's washington visit comes as opposition to the tpp intensifies. both donald trump and hillary clinton are against it. a new poll has mrs. clinton leading by a point -- eight points. she leads 50 to 42%. race including gary johnson and jill stein, clinton leads trump 42% to 38%. attorneys for the man charged with killing nine black parishioners at a charleston church are challenging the death penalty in the federal case. say thefor dylann roof death penalty is unconstitutional and if it is taken off the table he will plead guilty and spend his life behind bars. a rare meeting with executives
from global companies. it's the government's latest attempt to manage economic fallout from the attempted military coup. global news 24 hours a day. i'm mark crumpton. scarlet: oil falling below $40 a barrel or a second straight session. wti crude entered a bear market yesterday. bank of america merrill lynch head of global commodity research expects an additional quarter in the third but says prices will ultimately rise. he made his case on bloomberg surveillance this morning. >> i think what's going on right now is quite seasonal. if you look at what happened last year between the settlement of the july contract in late
june and the settlement of the september contract in late a half we lost 18 and dollars a barrel on the btr. we are close to $49 a barrel. now we are going to settle i , 39, 40. it is all extremely seasonal. in the u.s. we lose up to 2 million barrels of crude oil demand from refiners. weak we willbeing probably lose more than usual. i have this oil chart which is basically an oil rig count. you see it going up as the price of oil becomes around 30. the problem with demand is there is a linkage between oil and global growth which is very
strong because we don't know what kind of growth we are seeing. you're confident this is all seasoning? -- seasonal? >> we're fairly confident it is a seasonal pattern. in our view we are still looking for oil to be back in the 50 plus range. we view this as a buying opportunity. obviously the market has moved into a steeper angle so the price drops at a faster rate. 2016u look at december prices we are trading at 42.5. those prices will end up settling over 50 bucks. the market is always trading roughly two months ahead. we start seeing a pickup in refinery consumption for crude oil which gets turned into product. demand was very strong last year. one of the strongest years on record.
we are seeing very strong demand so far in the first half of the year. certainly brexit puts a bit of a question mark on global growth. i think it's tit for tat. i don't see a drastic change of this point. >> i look at where we are now. the rationalization of the microeconomics of oil which is a great mystery to everybody. bring up the chart. brent crude log, slope matters, down we go. my point is, $20 million a barrel was the outcome of 80 and theng at rationalizing at $60 a barrel. aren't we doing the same thing now trying to rationalize mysteries? percent of the likelihood you could be wrong? >> that's an interesting question.
>> good question. confident we will see a rebound in oil prices unless there is a global recession or something like that. supply is looking pretty dire heading into it year-end. we're predicting a contraction. not only are we already on a year and your decline rate of 300,000 barrels a day that is going to turn into half a million barrels a day and possibly 700,000 by the fourth quarter. supply is already contracting on a year-to-year basis. it's rolling over. demand is still ok. as long as demand holds up prices will move into year and. it will feel like a seasonal downturn. than we be steeper expected. i have not changed my work asked since january -- forecast since
january. i am probably the only analyst who hasn't done that. we are still calling for a pullback into the third quarter because of seasonal factors. historically the saudi's piled down toaled up and dial keep a stable profile. we rationalize supply and demand and the saudi's are no longer acting as a central bank. the market has to create meaningful price swings to adjust that balance. i think demand is actually quite good. around the world demand for air travel is actually quite strong. prices are cheap. as long as we are $40 or $50 a barrel people want to drive more and fly more. was francisco blanch speaking earlier. you look at oil prices, what was
interesting is it had stabilized this morning before taking another leg down below the $40 a barrel mark. is francisco blanch going to be right when he sees pickup in the second half of the year? because if we don't it could mean global recession, it could be indicative of macroeconomic factors. scarlet: let's check in with president obama who is holding a news conference right now with the prime minister of singapore. let's listen in. >> human trafficking or anticorruption measures. standard,t a low lowest common denominator trade deal. isn't creating high standards, then china's rules will govern in the fastest-growing part of the world.
that's bad for us economically but it's also bad for security interests. it's also bad for the interest in promoting norms against child labor or human trafficking. making sure that everybody is working harder to raise conservation standards. and that's the alternative. that's the option. so i think it is very important for us to get this done. in terms of assurances, nothing in life is certain. but we've got a pretty good track record of getting stuff done when i think it's important. and i will say this. this actually is not just a obama administration initiative. this concept began in a republican administration.
we pushed it through. we made it happen. we made sure the things i care about in terms of labor and environmental standards were incorporated into it but historically this has had strong bipartisan support. the bottom line is we will go out there and make those arguments and ultimately i think we are going to be successful. in terms of my rebalanced board we ares the just in the game. on asia in a way that we weren't when i came into office. the countries in asia have noticed. our alliances are stronger. our security arrangements are deeper. weather in australia or the philippines or singapore. reflect ourbudgets commitment to things like
maritime security in the region. the continuing efforts around building the east asia summit architecture means that there is the kind of day-to-day interaction around a whole range of issues whether it's disaster relief or public health issues or counterterrorism. there's consultations that are taking place today that were not taking place eight years ago. dimension,on every we are in a much stronger influence, engage, and learn from our asian-pacific partners. the thing i probably enjoy most has been our young southeast asian leaders program just because whenever i meet with the young people from those
countries, i am inspired. it makes me very optimistic about the future and what's going to happen over the next 50 years. because if you ask them about the future they want to see, they are very much committed to an interdependent world. a world in which people are ideasng and exchanging and engaged in scientific and educational exchange. and a world in which people's different cultures and backgrounds are a source of strength and cooperation as opposed to conflict and fear. and that's true in southeast asia. that's true in africa. that's true in latin america. that's true in europe. fear, the choice that was posed by prime minister between interdependence and
self-sufficiency that is not achievable and ultimately rivalry and conflict, those who opt for rivalry are folks were looking backwards. you talk to young people around the world, they understand that interdependence is the way that we're going to ensure peace and prosperity for all of us for years to come. te so that may be that thing that has some of the most lasting impact. i suspect there are future prime ministers and presidents and business leaders that are going to do great things in those town hall meetings and i'm glad to be able to play a small part in that. that wasdallas presiden
president obama. made some remarks on donald trump, saying he is woefully unprepared to do the job of president. and that he never said john mccain and mitt romney were unfit. he also asks rhetorically the republican leaders, why are you still endorsing donald trump? angie: we know donald trump is a big opponent of tpp. we've got some headlines coming out. singaporetist or of appealing to americans. ratifying the tpp is a litmus test of your credibility and seriousness of purpose. we know the american pivot to asia by obama in terms of foreign policy has been central to the tpp so not only can it exert military influence but it
scarlet: this is bloomberg markets. i'm scarlet fu. angie: i'm angie lau. scarlet: another sign the u.s. auto market may have peaked with last year's record deliveries. ford and general motors reported light truck sales last month. gains thater posted missed estimates. angie: australia's central bank
has attempted to cut inflation in the job market. the bank of australia lowered the cash rate. the country's economy has grown faster than predicted. inflation and wage growth are at record lows. scarlet: japan's economic stimulus plan will increase spending. the measures include low cost loans for projects at state-run companies as well as money for infrastructure and disaster relief. japan has been hurt by a stronger yen and weak consumer spending. that is your business flash update. angie: let's take a deeper dive into currency moves in her weekly fx roundup -- our weekly fx roundup. vince cignarella spent decades as a currency trader on wall street. here to bring his experience to our studio. where do you want to start? the rba? >> why not?
the rba cut rates as a majority of people expected. it was not as broadly expected as the bank of england will be later on this week. cpi have beeny, below expectations. housing have not been making the upward strides as they have in the past. they had to cut rates. scarlet: if you look at the movement delay, it dipped to slowly after the announced and came back up. this is a longer-term chart. what are you looking at with this? date is bounce off the 100 day moving average. this is a repricing of what we have seen on the u.s. fed rate policy which is less hawkish. gdp was less than half what
people expected. essentially the boj under delivering which is making high-yield currencies mainly the commodity bloc relative value versus the rest of the g 10. we saw a jump in yields and the yen. what does it really reflect here? that the boj just doesn't get it? >> i think this is more the abe stimulus plan promising a great deal and under delivering. plans a fiscal stimulus --ch is really translated when you undercut your own expectations it leaves people completely disappointed. you could tell yesterday in late new york trading, dollar yen wouldn't go up. you can see the markets hesitant to believe what was going to come out last night and they
were dead right. scarlet: once upon a time, dollar yen reflected monetary divergence between the u.s. and japan. now it seems to hinge on every shinzonce from should e abe. it is really a proxy for japan's fiscal stimulus possibilities. actually trades really closely to u.s. 10 year treasuries more than anything else. when you are looking at yen within the g 10, just throw logic out the window because nothing seems to make sense. why is the yen still a safety haven? fundamentally it just doesn't make sense. play thatychological is actually creating huge impact. ofis a function of the size
the fixed income asset markets in japan relative to other havensthat are typically such as switzerland. if you need a fixed income trader portfolio manager to get in and out of a trade and you and thisng for safety, is how yen has derived this safe haven status, it's because the size and scope of the asset market and the ability to move in and out with liquidity. liquidity is the safety. not the actual yen. there was talk last week of japan issuing a 50 year bond. it got people kind of excited. why is that seen as a logical next step? >> essentially it is monetizing the debt. i'm not sure some people think that is actually legal. there will be some discussion on that. what the market appetite will be for if it's not
all bought by the boj. there's an option coming out next week. we could see yields continue to climb if the market backs off this issue. cignarella, first world fx analyst for bloomberg. coming up next on bloomberg markets, staying safe from the zika virus. health officials are advising pregnant women to avoid parts of miami. what else can be done to prevent a bigger outbreak? we are talking to dr. anthony fauci of the national institutes of health. he will join us next. this is bloomberg. ♪
markets. let's begin with the headlines on bloomberg first word news. mark crumpton has more from the newsroom. mark c.: hillary clinton said she raised 63 million dollars for her campaign in july. both clinton and republican nominee donald trump who said earlier he raised 35 point $8 million in small donations last month must report their bydraising information august 20. new york city's top cop is resigning. bill bratton will stay until next month. he is the only person to serve in that position for new york or los angeles. he reportedly plans to take a job in the private sector. italy says it will deny any request to use the sicilian airspace. in february they agreed to let
off fromnes to take their airbase only to defend airbases from extremists. statement, th cbc says is being diverted from other health resources until funding is provided by congress. for more on the zika virus, i'm joined by the director of the national institute for allergy and infectious diseases at the national institutes of health. welcome to bloomberg. i appreciate your time today. >> good to be with you. mark c.: we are hearing that zika is spread by mosquitoes i.
a florida we are seeing growing number of people affected by this. are we talking about homegrown mosquitoes or are we talking about people who have traveled to infected areas and have been bitten and then transmit the virus here. this is local transmission. we have over 1600 people who have an affected outside the country, likely south america or central america who then travel .ack to the united states florida has at least 300-400 of those people. we have, in florida, the mosquitoes that are quite capable of transmitting thzika -- very similar to those that you have in puerto rico.
we saw first two of them and .hen for we now have a total of 14. they are concentrated in a very thet area, just north of miami-dade ea. angie: what is the incubation period? how long before signs are noticeable? >> a ranges from a few days to a week or so. a mosquito cycle of an infected mosquito is usually about 30 ays, the lifespan of mosquito. if the mosquito bites me and
it is likely to transmit, that mosquito will be dangerous for four weeks or so. the situation is mosquitoes do about 400 orfar, 500 feet, which explains, in some respects, the confined nature of the clusters of outbreaks. mark c.: is there concern of a wider outbreak beyond florida? >> certainly. there are concerns of that. there are travel related cases that are throughout the united affordableluding the part of the southeast of the country, along the oath coast where you can, in the summer months, have a semi-tried local ofsemi tropical type
climate. i would not be surprised if we have other infections and other texas, florida, or other states that are not necessarily along the gulf coast. we predicted that we would see transmission in states like florida because of the large number of travel related cases in an area where the mosquitoes that are capable of transmitting our president. the fact that we have had the travel related cases is a signal that sooner or later we would have local transmission. right now, in florida, that is exactly what we have. local transmission. mark c.: i'm sticking with the director of the institute of allergy related diseases from the national institutes of health. our federal officials now in position to contain any spread of the virus? do they have the resources and
manpower? as you probably know, the president of the united states, billionary, as for $1.9 as a zika virus response resource. that includes the work that the cdc does in the public health insures they do collaboration with state and local officials. you, quite frankly, we have you, quite frankly, we have reached the point where we have had to pull money from other diseases and accounts to get the anti-zika virus effort going. we are getting to the point where we do not get the money very soon, things will start slowing down with what we have to do. mark c.: have you spoken to , giving themngress
a sense of urgency of the situation? >> we have done that multiple times. i have done that usually together with dr. tom f friedman. we testified officially before congressional hearings multiple times since the president asked for this amount in february. we have briefed staffers on the congressional and senate side of the capital. briefed a number of individuals and spoken continuously about why we need these resources. mark c.: we have about one minute left. in addition to avoiding infected areas, what else can people do to protect them selves? >> you can protect yourself to the best of your capability, avoid mosquitoes and particularly if you are a pregnant woman. .hat goes without saying
you have to do that by staying inside, making sure the windows and doors have screens intact so that the mosquitoes do not get in. wear protective clothing that covers a substantial part of your body. deet.e mark c.: -- i must ask you quickly about 20 seconds -- besides what you have told us, there are concerns that this could be sexually transmitted. there is concern, particularly from male to female, but there is case of female to male. there have been a number of them who have transmitted it to their sexual partner. even though the viruses cleared
from the blood, usually within several days, in men, some men, the virus can linger in the days. up to 80 that is the reason why if you get infected or are in an area where you might get infected, you follow the cdc guidelines , that are well spelled out on the cdc website. dr. fauci, always a pleasure to have you on the podcast. thank you for your time. global news 24 hours a day powered by over 1600 journalists and analysts in over 120 countries. back to you. scarlet: still ahead, foreign investors have not had much of an appetite for u.s. six kitties -- securities.
scarlet: this is bloomberg markets. i'm scarlet fu. oil prices are back in their market territory. prices were higher, but they did below the $40 level again. here is the technical chart you want to look at as we approach this bear territory. of course, the yellow line is .il what you are seeing if it has fallen below the moving averages. the purple, blue, and white line. that is the first time it has happened since february.
oversupply is the backdrop here. the rollover should not be too much of a surprise. 2014.ou have here is escent.s the oil d once again, you see this crest, and rollover, right around mid-june. there is a lot of oil, obviously, in the world. german bys are demand. there is usually a spirit of demand in the spring. make a segue to indonesian bond deals. the low price of oil is keeping inflation rate very low.
that is giving the bank of indonesia a really good space here -- take a look at this. it explains it better than i do. indonesia actually is offering in most attractive yield asia. it is because of the record low inflation. it is making a most attractive in asia. checked thejust latest option. indonesia got the largest amount trillion -- i7 converter.rency it works out to $1.2 billion. they got a bid in the bond auction today. that is not too bad. that is what they are looking at right now. that is where i am based.
hong kong field, most negative, after of course inflation, in part because of monetary policy, the hong kong dollar is pegged to the u.s. dollar, of course, federal reserve monetary policy. scarlet: the story is part of story you're the federal reserve has made it clear that it is not ready to do anything when it comes to interest rates. more now for stocks and bonds -- .ecidedly less ravenous they have been dumping u.s. securities. what exactly is going on? , who wrote the story for bloomberg.com. this story is actually a myth based on the latest data.
tell us more about what the data finds. interesting findings. flows have been decided the week . it is really a macro story. it is about chinese wealth funds and central banks in asia and the middle east tried to the goa date of the u.s. securities to generate some dollars of currencies and moderate the pace of outflows from those countries. some really interesting data, on may, itg basis until recordn the lowest on since 2014. a really interesting story. thatet: we definitely saw
uaned to stabilize the y fixing. putting pressure on saudi arabia and trying to raise cash. who is buying? sid: that is a clear story. clearly, in japan and , they are buying on the yields. investors from those regions have been buying u.s. securities , especially bonds. we have seen -- in fact, bank of america merrill lynch had a report that implied quite heavily that even if the u.s. increase monetary
tightening policy, investment grades should be put in place amongsto strong debts investors in the eurozone, switzerland, and japan. that is a strong story. thelet: you talk about official institutions of the emerging markets selling u.s. securities. there is a difference between the sovereign wealth fund and central banks which is another factor in the data. you also mentioned that some officials show up as official sales. don't they? : the real problem here is that is very difficult to know to what extent official sales are march by private sales.
institutions -- in .elgium, private sales in the private sector, what is happening, we don't really know. that theysts reckon are looking to buy key products like insurance products in hong not in theore, but u.s., and repaying external debt more generally. data. looking at balance that is the u.s. government report on flows. it is really an incomplete and of flows.snapshot we do not have a great understanding of what the
chinese private sector is doing and just how big the official theor the quotation of u.s. goodies have been. angie: we do have one that we look at in hong kong which of the export and import figures. that see the discrepancy, tells us a lot. we've will leave it there. thank you so much. bloomberg knows. american-basedy companies are so attractive right now. we will hear from michael fish. this is bloomberg. ♪
and holding the s&p down. energy stocks once again the drive. let's head over now to have legal doolittle with the latest from the nasdaq. abigail: what a difference a day makes. today, we have the nasdaq on pace for the worst drop from the end of june. as is often the case, the decline comes down to the names like facebook, amazon, also that, and of course, after all. -- apple. hard to get away from apple. the source of the weakness to date in apple appears to be a the company appears to be transitioning towards a
service and content company. call, andg about the analysts raised her price target. over the course of the year, she seems to believe that the stock will rise. what is interesting about the price, when we look at the one-year chart that we have been looking at for apple for some time, yesterday, we were showing the recount of the selling pressure. that remains in effect. when we look at what happened in april, the stock pushed right back down in the range. that could happen again. there is actually a reversal pattern that is confirms here -- confirmed here. who knows. maybe the shares of apple and the nasdaq can recover from today's nasdaq -- today's selloff. scarlet: thank you so much.
angie: in the year when the private equity funds are facing less deals, america is facing more. michael fish joined the bloomberg team earlier this morning explaining the reasoning behind their successful strategy. >> there are great men and women running the company who we have invested in. it helps to be american. we have only invested in american headquartered companies. >> you are middle-market and u.s. centric. how do you find the deal that makes sense for you? what is the imperfection you can spot the other people are missing? >> we try to do one thing which is by the market-leading company in the stable and growing demand industry.
we are all about supporting existing management and being good partners with them. >> how has your business more over the last five years as we look at more regulatory scrutiny ? what has been the big change in your business? >> private equity is really no longer private. public equities? >> it kind of is. that was american security ceo michael fish. coming up, japanese prime minister seeks to boost the country's struggling economy. will the new semester package work? ♪
from bloomberg world headquarters in new york, good afternoon. i'm angie lau. scarlet: i'm scarlet fu. here is what we're watching, and dataks in retreat raising concerns on the stamina of growth in consumer spending. oil declined deeper into bear market territory. off in japana risk after the prime minister announces $45 billion in surging. it is the abenomics program working? warren buffett rips into the republican nominee over his refusal to release tax returns. we are halfway into the trading day, let's head to the markets desk, where julie hyman has the latest. julie: continuing to see
declines in stocks and bumping along the bottom with his losing streak we are seeing for the dow jones and s&p 500 as the selloff enters a second day. sessionsen 17 straight that we have seen the s&p 500 move at least 1% after the closing bell. we are getting close to a 1% selloff today, so we will see if we see an end to this streak of unusually low volatility. a strategist at j.p. morgan has written about this. he says the s&p 500 has been in what he calls a dead zone, this area from 2150 to 2180. june, theback to late last time we had a 1% move in the s&p 500. oftalks about a number factors influencing this lack of volatility and movement. one of them is expectation for central-bank accommodation,
although that perception may be changing to some degree today with the bank of japan. he says he believes volatility will take backup. today, analyst commentary coming out on nordstrom as well as macy's, talking about weakness in retail sales. we also got the weekly johnson redbook same-store sales that showed continuing declines. also weakness in the transports. the dow jones transportation average is pulling back by 2.75%, and it is spread between different kinds of transportation stocks. delta came out with its july numbersr per revenue declining, and then there is royal caribbean, whose numbers were bolstered by fuel. passenger yield also came in a little bit higher, but not enough to please investors. a reasonably brought us a lot happening right now. away from stocks we see
and in usual combination across asset classes. julie: take a look at oil and the dollar. lower, we have this dramatic turn lower earlier in the session, now accelerating to 1.75%. $39.35 for a barrel of oil right now even you would expect to see an inverse relationship, but it is not happening today. the dollar index down about .75%. gainourse, the yen's factoring into this. still, unusual to see such a divergence of their. -- there. scarlet: let's check in with works word news with mark crumpton. mark: president obama outlined today why he does not think
donald trump should serve in the most powerful office in the world. he made his case during a white house news conference with singapore's prime minister. >> yes, i think the republican nominee is unfit to serve as president. i said so last week. he keeps on proving it. mark: the president also challenged congressional republicans to withdraw support for trump. the pentagon is are good to approve work on a new nuclear armed missile. the defense department will open competition between three top military contractors. it is likely to rekindle debate over whether the u.s. can afford to modernize its nuclear weapons. firefighters are battling at least seven wildfires across the western u.s. parts of and california is not only filling the skies but also wreaking havoc on air quality. the elderly, children, and people with respiratory issues have been ordered to stay inside. more than a dozen homes have been destroyed in montana and
evacuations are underway in nevada, wyoming, and oregon. british prime minister theresa may will try to get the economy moving again with a new industrial program. she meets with the committee on the economy and industrial strategy to chi says if the uk's to take advantage of the opportunities provided by brexit, the whole economy must be firing. global news 24 hours a day powered more than 2600 journalists and analysts in 120 countries. i'm mark crumpton. this is bloomberg. back to you. angie: is the age of austerity coming to an end? global superpowers are talking more about higher-quality jobs and inequality, and less about deficits. japan is assembling a $273 billion round of stimulus that will include fresh spending on infrastructure and
transportation. moss, our now is dan executive editor for global economics. austerity, george osborne out, shinzo abe in. there is a subtle but important change taking place in the way national leaders talk about austerity. it is no longer than the all and end all. stimulus has gone from being a bad word to a word that can be deployed sometimes. in that sense, japan is ahead of the pack. the issue with what was announced overnight is the amount of new spending this year , pretty small compared to the massive figure that the prime minister announced last week. richard haass of the council of foreign relations said japan may not be the best example of a developed economy that is serious about change. listen to what he said this morning. >> japan is not just a traditional society but it is too successful.
if you ask the japanese people, rather than aching risk or doing structural reform, they would prefer where they are rather than taking the risk of serious change. they are too comfortable to have the social drive. they are too comfortable to embark on that serious change. ,s there a japan exceptionalism and therefore, cannot use that as a model for other developing economies? right. sense, he is if you walk through tokyo over the weekend, there are no tent cities. it is not like there is a depression going on. and othersto abe when they came in, they did make an impact. cpi, which have been consistently negative, started to head back toward the boj target. the problem is installed out at 1.5%, and have been drifting lower ever since. not justfighting
cyclical issues the long-term demographic issues, like a shrinking population. is criticism of other three arrows. we have the monetary, the fiscal. we are talking about reform here. aren't we seeing that with the kind of spending in the stimulus that abe just mentioned in the details? women, daycare. this may seem like soft issues, but for japan, where you lived in a very important and critical. they are critically important. how does a population and workforce replenish itself? again, a shrinking population and work force, which is one problem that japanese guppies are having, investing at home. arrows wereo designed to buy time for this other stuff to kick in. we are talking about structural change, change in the attitude norms that long-term
cannot just be addressed by hitting a button and printing money. scarlet: when you look at the research and what economist say, what does it indicate about the payoff of fiscal policy, how much of a boost can and give to gdp, and as a last beyond the first year? >> our colleagues did an analysis and worked out the boost to gdp this year from the new spending, not the overall kitchen sink, was only going to be about 0.1% of gdp. next year, it will go up to about 0.25%, 0.3%. we it is like the u.n., don't know how bad the counterfactual would be. how bad would it be if it was not there? there have been people saying, central banks cannot go it alone, governments need to do more. here is a government doing more. it is doing something.
angie: australia is doing something, even before philip lowe gets into the chair september 18. a lot of people thought maybe reserve that firepower for him, but we saw the latest figures coming out of australia that showed there is scope for movement from the rba. further steps downward, what is the expectation? >> the expectation is there will be more. -- thelowe is a guy rock's career, academic time at m.i.t. -- has fought a lot about global inflation and this inflationary forces and the low and declining inflation expectations. australia is not immune from that. he will not get a boost from the fiscal side. the treasurer has made it clear he is worried about a ratings downgrade. don't expect too much help there. scarlet: in terms of impact on the markets, we did not get much of one.
the aussie briefly fell and then came back up again. why is that? many economists anticipated a cut and people probably realized we are coming to the end of the stevens administration. let's see what dr. lowe does. angie: he has to battle that high aussie dollar as they transition into recovery. thank you, dan maes. scarlet: coming up, we will hear ceo of one dyer, one o of the largest commercial real estate companies in the world. this is bloomberg. ♪
"bloomberg markets." i'm angie lau. scarlet: i'm scarlet fu. -- of the largest commercial commercial real estate companies in the world reported second-quarter earnings that beat analyst estimates. angie: the company said strong d bynue growth was lea leasing among other things. ceo colin dyer discuss the commercial global real estate market, as well as all yachts's investment. >> the market has been pretty strong, sustained at high levels for the past few years. we have seen a little bit of softness over the last six months, given the market volatility earlier in the year, the contagion effect of brexit around the world. new york activity has been strong and sustained. this sort of deal, which is a major institution purchasing for a large sum of money, a quality, long-term asset, that is the sweet spot of were institutional
investors are looking for real estate globally. big, stable acids in gateway cities around the world. >> there has been a flat period around the world, picking up in the last 60 days. what caused the pickup, what caused it to come back? the early part of the year saw the volatility in the financial markets, which spilled over into confidence in the real estate sector. it took a while for the markets to recover from that. activity is down overall in the first half year on year by globally, same5% in the u.s., but there is a sense of a strong liquid, active trading market. there is a huge amount of equity trying to buy quality real estate, sustained availability of debt for banks and other institutions. so we have a good and healthy trading market. >> there was a lot of coverage xit int happened post-bre
england particularly. what is the current state of the english commercial market? >> europe as a whole did well. the rest of europe had no contagion effect, if you like, from what happened in britain. in britain, things are very hesitant. while leasing deals are getting done, companies are moving ahead cautiously with their plans on taking space, the investment sales market has dropped off by 40%, more still in london. the reason is investors are not clear where pricing is. compared to nine months ago, the sense is maybe 10% lower than that. institutional, international capital is seeing the opportunity of buying into the british market, which is very liquid, very transparent, at prices which are slightly off the sterling has
also dropped about 10% from its peak. so for international capital, it is an attractive time to be buying in the british market. deals just need to begin flowing again. scarlet: that was colin dyer earlier today. angie: time for a look at our biggest business stories in the news right now. help beating earnings estimates. the company also raised its full-year forecast to add pharmacies and a nursing home drugs business helping to grow revenue. wasnd-quarter adjusted eps $1.32, two cents better than estimates. 18%, 43 pointo seven billion dollars, slightly below estimates. scarlet: proctor and gamble says fourth-quarter estimates -- sales beat estimates. they were helped by rising sales in their help care division.
revenue fell about 2.5% to just over $16 billion. that also beat projections. angie: consumers purchases climbed more than anticipated in june. the commerce department said spending advanced .4%. incomes rose less than projected, .2%, while the saving rate declined to more than a one-year low. ahead, e-commerce is meeting mobile content in what is being called a next generation commerce. more on how companies are capitalizing on this. this is bloomberg. ♪
the way they buy. it is when e-commerce meets mobile content. if you see a product on a blog, how do you go about buying it? from bluerunger ventures joins cory johnson on radio. thanks for joining us. jonathan ebinger from bluerun ventures is here with us. this notion of next generation content, there are some big dollars behind it. a bigre is really difference between what people were paying for in the past when going to amazon.com, buying what they wanted, not really a shopping experience. want a story, they want to learn more about the brands, the history of the products. after the story is told, then they buy. cory: the big example of this right now is dollar shave club. of au cannot think category with less excitement and buying a razor, but people
want to know more about it, they want to buy it. they want to engage with the brand. jay peterman on "seinfeld" he had that catalog. voice, everying product had a story to it. >> that's right. you do not get that from traditional .com sites. brands are trying to find a way to connect with customers. amazon had a great quarter but they still have a small fraction of e-commerce sales. so an opportunity for the print to reconnect with customers. cory: i forget how big the offer was for dollar shave club, but they see a huge market there, and a way to go after an incumbent like to let. >> they picked up a 10% share in five years. furthermore, they are connecting with the customer. see things like chat
boxes where people can text dollar shave club. looking at start up companies, again, we are talking about big categories, a lot of money. what kind of capital requirements are required? >> we are going after businesses , software as a service, which takes venture dollars to really get the flywheel going. years investing 5, 6, 7 ahead of the ultimate liquidity event. cory: with fingers crossed, of course. >> with subscriptions, you spend more money up front to acquire the customer and then you work hard to keep them excited about the brand. cory: give me an example of one of your investments along those lines. hoopla a fewd in years ago.
paying a fee every month and are getting more quality as their service evolves. they get the new product offerings without having to buy a new product. creator of content, this makes me nervous, where we worldhis advertorial slipping into content. something created by the advertiser, not a journalist. to take it further, the idea, the risk is that customers will get sick of getting tricked into clicking on stuff and the value of these clicks and the likelihood that the customer goes to these places decreases. >> there is that risk. advertisers have definitely overplayed their hand. now, you haveeing folks who are you tube famous.
they have a million followers but they cannot monetize. now companies are allowing them to monetize the products they are endorsing with the service, so there is no click bait. cory: so the youtube star is showing a great cake recipe, and they know what they are talking about. tale.nds like a long software orhave something that allow small increments to be sold into this, not the big super bowl ad. >> that is right, the long and middle tail. followers has 700,000 on instagram, they can monetize on that. something lessr than a large broadcast television. cory: so my 1200 instagram followers, stick with my day job? >> i think you are doing a good
job here. cory: jonathan ebinger, some interesting stuff to think about commerce and content. back to our tv audience. angie: that was jonathan ebinger . scarlet: coming up next, billionaire investor warren buffett ripped into donald trump over his refusal to release tax returns, and more. we discuss all of it next. this is bloomberg. ♪
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let's begin with the first word news. mark crumpton has more. mark: the centers for disease control and prevention is making available $16 million in funding to fight zika. in a statement, the agency says the money is to establish, enhance, and maintain information gathering systems to rapidly detect micro-and subtly and other health problem's caused by infection. the cdc says the money is being diverted from other public health resources until funding is provided by congress. attorneys for the man charged in a june 2015 killings of nonblack parishioners at a charleston south carolina church are challenging the death penalty in the federal case. lawyers for dylann roof say the law is unconstitutional. if it is taken off the table, he will plead guilty and spend the rest of his life behind bars. clinton says she raised six he $3 million for her campaign in july.
democratic president shall raise another $26 million for the democratic national committee and state parties. ,oth clinton and donald trump who said he raised $35.8 million in small donations last month, must report their fundraising information to federal regulators by august 20. billionaire warren buffett is challenging donald trump to meet him anytime, anyplace so they can reveal their tax returns. he appeared in omaha, nebraska on monday with hillary clinton. him, he can pick the place, anytime between now and the election. he will bring his return, i will bring my return. we are both under audit. nobody will stop us about talking about what is in the returns. meanwhile, trump told a crowd in ohio last night that he believes the november election may be rigged against him. global news 24 hours a day powered more than 2600 journalists and analysts in 120 countries.
i'm mark crumpton. this is bloomberg. scarlet: thank you. for more on politics, let's bring in margaret talev. remind us here, when it comes to releasing tax returns, it is a tradition but not a requirement for running for president. did donald trump respond to warren buffett's response in that way? did he retorted in his usual bombastic way? trump's main response so far is that he does not care about warren buffett. it was interesting to watch warren buffett yesterday in omaha, it was like a wild west dual, except it is over guys and tax returns. this is the fourth richest man in the world telling donald trump, if i have nothing to hide, you should have nothing to hide. telling the audience that this is not so much about him being concerned about what the irs would find out, but more about
what voters would find out. so no, donald trump has not risen to the challenge yet. who knows. it seemed to be more of a rhetorical tactic on mr. himett's hard to challenge to live up to what every other presidential candidate has done for a long time. angie: it is high noon at the ok corral. hillary clinton has the backing of a couple billionaires, warren buffett. is this a win in her camp? this is a very different election cycle. is this a win for her, in that it brings her credibility, or does it reinforce the fact that she is establishment, and that he is trying to protect his own interests here? margaret: if you are trying to distance yourself from wall street or big finance, embracing warren buffett is not the clearest line from a to b, but on the other hand, she is not really aiming for the hard-core
donald trump supporters with this sort of a move. she is aiming more for the centrist, moderate republican, establishment pro-business republicans, or independents who are increasingly uncomfortable when donald trump but are unsure they can get behind her. what somebody like warren buffett or mark cuban is aimed at. i think mark cuban is aimed at the younger tv set, but warren buffett is much more establishment. imagine maybe older republicans in the 1960's or 1970's -- in 70's, more from a libertarian perspective, rather than social liberalism, and are not comfortable with trump. making affett is also local argument as well, even though he is a national figure. ands revered in omaha
nebraska has a weird particularity. they are one of two states that apportion their votes by congressional district. the district around omaha is considered a swing district, represented by a democrat. president obama was able to win the district in 2008, but not 2012. hillary clinton can compete there with hillary clinton. i last yeart. donald trump is already saying that he worries the general election will be rigged in november, capitalizing on fears that voter fraud is rampant. is there any evidence that you know of that voter fraud is a huge problem right now? butaret: of course not, this is donald trump again building an argument that not only appeals to his core supporters, but he is hoping that some of those bernie sanders supporters who are saying dollar never -- never is a code worded
for those bernie sanders supporters who thought that the convention was rigged against him. also reaching out to those democrats who, it is unclear if they would vote for trump, but they do not want to vote for hillary. angie: the other interpretation of the election being rigged, kind of insinuating that the entire election process is not legitimate, and whoever the winner is, especially if it is perhaps suggesting that people should not take this as a legitimate result. goal may part of the be to depress turnout among people who are already feeling disenfranchised. plans assume donald trump
to go forward through this election campaign and stand as the republican nominee until the end, if we all agree that that will happen, this is about reaching across the aisle and validating his core supporters concerns that the system is stacked against him, against them, and so forth. scarlet: margaret talev, thanks for joining us. angie: earlier on bloomberg surveillance, richard haass, president of the council of foreign relations, issued his campaign advice to donald trump and looked at how the republican party is approaching the elections. theeople have been hoping day will come when donald trump becomes a traditional candidate and starts talking about the issues. the other day you have the jobs numbers and economic growth numbers. ande are on the growing 1.2%, why isn't the republican candidate hammering away at that? instead, he is taking a fight with a family of a lost soldier in iraq. badlyl lose the election
if it becomes a referendum on his character and temperament. the only way he can win is if he makes it a referendum on the issues. 70% of the american people think the country is moving in the wrong direction. the obvious ploy for mr. trump is to make this a referendum on that, the case for change rather than continuity, almost the american equivalent of the brexit vote. >> you know the ohio eat those. they all have to win ohio. oberlin is its own bubble in ohio. >> it is granola land. >> you have advised both parties, you are a political. what is your to do list for republican leadership now? people from all persuasions are screaming for them to act. do you agree or do they leave him alone? minimum, you will see a lot of republicans take a pass on the presidential race, that
is what you are seeing a lot of the republican leadership doing. doing a pro forma endorsement of spending and all of their resources on congressional races, to keep the senate, make sure they do not lose the house. republicans, most the people who bankroll campaigns, or politicos are doing. if mr. trump keeps on doing these things, the question is whether you see people moving away. john mccain did it a little bit yesterday, congressional leadership. point,l issue is at some if trump crosses lines -- and some would say that he has already done it -- if republicans de-endorse. the most likely outcome is they allow the presidential race, to low the gypsy fall where they may and then focus on congressional races. coming up, games are
line, such and such calling. avon calling. brushing up on international profits and an about race because the company is now exclusively international, outside of the u.s. and north america. the company sold its north american operations to cerberus closing in march. you can see how the stock has done since march, a 29% gain. a lot of that coming today after the company reported results. avon shares of the most in five months. profits, seven cents a share. three senses what analysts were anticipating. they have been cutting costs, announcing job cuts of 2500, moving its head office to the u.k., a plan that is intact, even after the brexit vote. sales increasing in nine of the 10 regions it covers around the globe.
the exception was brazil. if you look at the gains it is seeing in the wake of these earnings numbers, pretty impressive gains, 15%. also curious to see the breakdown in the company's types ofby different stuff. skincare is still the biggest portion of it, followed by fragrance, then cosmetics, fashion, and then home. were reminiscing about their skin so soft. you are asking me earlier about some of the other companies publicly traded. revlon, you can see they had done pretty well your to date. most of that outpacing the gains from the market. i like how you anticipated us asking you about the other makeup companies. well done. in canada news, foreign buyers
purchasing homes in vancouver will be hit with a 50% additional sales tax. this is in response to exploding sales prices in the city. -- 15% additional sales taxes. for more, let's bring in amanda lang in toronto. a new foreigns investor tax necessary right now amanda: it is a reflection of the concern of how hot the housing market is being driven not by fundamentals inside canada. there is a story on the terminal where they tell you, within a five-week period this summer, foreign capital represented $1 billion of the vancouver real estate market. the increase in that single family home, $1.6 million is now the average price, up 39% from last june. of theans 90%
single-family homes in that market are now over a million dollars in price. so the concern is, is this creating a housing bubble? to put this into context, we have a graphic that gives you the vancouver market, the increase in prices in the market over the last decade, relative to san francisco, london, and new york. big-city markets. capital, in many cases, russian, butparts in the vancouver market, it is a lot of chinese capital. we cannot quantify it but we know it is the purchase of hard assets. what it currency doing has been doing, sort of on sale late. angie: it is not all downside. having this capital flow into the region, there has to be some benefits. things thatof the was great about this story, you worry about affordability.
without question, affordability is out of reach. percentw, you need 120 of the median family income to purchase a home. but when people buy homes, they buy other things, dishwashers, landscaping, a bunch of economic activity that goes around the purchase of a home, especially a luxury home. and of course, it will be interesting to see whether these foreign purchases at all fazed by this new 15% tax. if not, it is a new bit of revenue for the government. when you ares, pricing people out of a market, you have to worry about where are they living, is there enough of a rental market to absorb people that can no longer afford their homes? and a real unknown is how patient is this capital? if there is a housing correction, economic correction -- prices cannot only go up --will the capital flee?
scarlet: as we mentioned, this is an additional sales tax for vancouver. toronto and certain neighborhoods are seeing a huge influx from chinese billionaires. is there something similar being proposed in toronto? >> we have not seen it yet, but a great question. it is cool slightly and, the purchases, and if it is a way to raise revenue, i would be surprised if we did not see it. worldcountries around the have similar controls on the purchase of property by foreigners. bermuda is one of the most famous examples. the question is, if it works in this jurisdiction, we may see it spread. angie: amanda, thanks. up, we hear from hsbc usa president and ceo pat burke. he discusses the growing connection between global banks and doing business in china.
angie: this is "bloomberg markets." i'm angie lau. scarlet: i'm scarlet fu. angie: earlier this summer, the people's bank of china announced it would expand u.s. access to china's onshore financial markets. it would come through a $38 billion renminbi qualified for institutional investor coda. this is the largest in the world. ages sb date -- hsbc on the move. earlier we spoke with the ceo pat burke. >> if you think of this through the lens of a contract to do business activity in china, they are less concern of what is happening in the political arena and more concerned about what it means to their own fundamentals and market opportunities. focus in on what the
clients are trying to accomplish, everybody still seems to have a very bullish view on what to do, and in many cases, how to do it. i would say there is no real change in sentiment from u.s. investment. about deciphering the political tea leaves within china? there is some tension between the leaders and how they want to pursue reform of the economy, whether you focus on growth or utking the pain now to p the economy in a structurally better position. >> china is in the process of becoming an open market economy, so this will not happen overnight. we have seen a series of steps and initiatives that the chinese government have undertaken. they have not always gone smoothly or perfectly well, but when you have to see underlying it all is, nonetheless, a steady progressive march toward an open market. that course, if you will, will not be one that we change.
you will continue to see the chinese government work toward an open market, the currency being the latest example of that. us ant: can you give example of where china has moved faster than where investors expected, surpassed expectations? >> in the recent announcement in the u.s. that was done in june, the sheer level that the u.s. as a renminbi clearing center now million -- a billion rmb, that was bigger the people thought, only second to hong kong, which stands at 270 billion. size ofhink at the that, income investment, it is summer in the order of 1.4 trillion of rmb investment coming to china. that number is growing fairly fast. >> over the past years, there have been developments in equity markets that have made developers nervous. figuring out where to put stop limits on stock moves.
they have also been keeping a keen eye on u.s. short sellers in their market. is it a safe time to be in chinese equities? >> you have to view this from the point of, this is a market that is not yet fully open, this is a market that does not yet fully function like we know it in the west, but it is a market that continues to evolve to one that we would be more familiar with. you have to understand what you're trying to do and what your time horizons are. if you are in this for the long-term, you should not have any hesitation. angie: that was the hsbc ceo pat burke. scarlet: joining us now is joe weisenthal. we are staying on the topic of emerging markets. with all of this money flowing into e.m. bonds and stocks, there is a question of if the fundamentals justify it, and it capital inflows will create the conditions for recovery. market bonds are
seen as one of the last areas of the entire world where there is a decent amount of yield left. given the political instability year, seems to have quieted down, given the economics -- they seem to be better. why not take advantage of this? scarlet: we have somebody from note aboutote a this, examining the different ramifications. he included a chart of the share by u.s. trade by country. obviously, mexico and canada are off the charts because of that stuff. if you look at the other countries -- nafta. if you look at the other countries, especially asian countries, that is where we are focusing. if donald trump were to win, what would be the follow-up from the markets. naturally, what is the impact on emerging markets, mexico, asian countries?
historically speaking, one might have said emergency markets are dictated by the dollar, the fed, exposure to the u.s., specifically he may be seen as more of a risk and anti-free-trade in the globalization scenario. angie: worried about the exposure with tpp being a key election issue. about thattalked today, how he still hopes to get it done. scarlet: joe weisenthal will be back later on. coming up, a conversation on the trump election, if it will matter. this is bloomberg. ♪
david: live from bloomberg's world headquarters in new york over the next hour, covering stories out of seattle, chicago, and beijing. stocks around the world dropping, the dow on track for its seventh straight decline, the longest in a year. the s&p 500 index seeing its biggest drop since the aftermath of the brexit vote. a look at what seems to be -- spooking global investors. president obama saying that the republican nominee is unfit and urging gop leaders to disavow his candidacy. will rising tides inc. all homes ? if sea levels continue to rise, 30 u.s. cities to be white by the end of the century. we have an exclusive look at the company's latest report. markets close in about two hours.