tv Bloomberg Markets Bloomberg September 9, 2016 3:00pm-4:01pm EDT
seeing the selloff in stocks and bonds. gmm categorizes the various aspect classes by their standard deviation from the norm. you see equities on the far left there. we see brazilian stocks plunging along with the s&p 500 in the west and what we saw happen in europe and in fx markets, we see the dollar green but other than that, a steep selloff and a selloff in bonds as well with an increase in sovereign debt around the globe. let's get a deeper breakdown on what is going on with markets. abigail: we really do have stocks down sharply today down near session lows.
all down quite sharply. the worst day in u.s. stock .ince june 24 the nasdaq and s&p 500 moments ago had been down more than 2%. today wasory going to the fact the s&p 500 had not traded 1% or greater for 43 days. and we see the selling has been excelling at the all day. we are right near session lows. today's selloff really taking a toll on a weekly basis as well. this is a weekly chart of the s&p 500 in white. the s&p 500 weekly decline is represented by that candle and it's the worst since this one back in february. the brakes is doing the opposite, having its best week
since january. we may see a continued selloff in stocks as the vicks rises. risk, we have the defense trade-off as well. the defense sector trading sharply lower. this includes telecoms. all of these are dividends yields but today, these stocks are selling off as rates are going higher. year going and two higher today. reflects double line talking about the fact the fed is likely to raise rates this year. let's get a check of the headlines. mark crumpton has more. mark: united nations secretary-general has condemned north korea's latest nuclear test as a brazen breach of you
when resolutions. he called on the security council to take urgent action when it meets in emergency session this afternoon. kim jong-il's regime says it nuclear explosion today. it is the second in eight months. donald trump says russian interference with the u.s. election is unlikely. the nominee spoke to russia's international news network. trump said democrats may be putting out stories of russian interference. he has been criticized for his praise of vladimir putin. a windfall today for organizations seeking to defeat of donald trump. the billionaire cofounder of facebook says he and his wife are giving $20 million to eight anti-trump efforts. he calls the republican presidential nominee divisive and dangerous and says he
appeals to americans who feel left behind. nasa is celebrating the successful launch of a rocket that will have a rendezvous with an asteroid. the spacecraft is headed to the exotic lack rock. the spacecraft will vacuum up handfuls of gravel from the surface and deliver it back to earth. the mission will take seven years. news 24 hours a day powered by more than 2600 journalists and analysts in 120 countries. this is bloomberg. stocks and bonds falling sharply today. central bankers weigh the benefits for their actions. joining us now is the chief international economist.
as lisa pointed out earlier, it was somewhat remarkable for we can dohi to see anymore at this point. >> an important development is the market has been on the hunt for a yield regime to matter what central bankers a date. the fact the ecb yesterday did not extend the program and said let's review the program and see how things are going, that was a significant development because it suggested the european data has been improving quite a bit on some indicators but the mindset from the market is still that we are waiting from central banks in the questions i got yesterday and today is is there a change in town. >> there seems to be a time of introspection here. reevaluating.pan
>> it shouldn't hopefully be that dramatic but the fact they say the ecb in doj now we have a comprehensive review in japan and the ecb saying we have got to look at how they are working. either we need to do more or do something else or maybe they are trying to tell us maybe we need to stay on hold for a little longer. have eric rosen coming out with some slightly more hawkish comments today saying may be an interest rate in september would be warranted. are we on strong enough footing in the u.s. to see a rate increase? saying, theye are are dovish.
they're saying maybe it's time to get going sooner and they indicate it's a good idea to start think about hiking rates. it's a global development saying u.s. rates will stay low for a lot longer but domestic businesses pointing more and more toward the fed should get going. looking at signs of inflation here when the cleveland fed meeting came, the meeting inching up. >> in most meetings, people say there are no signs of inflation and you say, really? we look at a lot of other indicators. they are all at around 2.5%. you could say just because the
fed target a certain measure of inflation, other measures are unimportant and they are suggesting there is more of an upward trend in maybe that is what is happening today and to sayay, beginning there is a case to be made. this: how do you balance inflation data you're talking about with gdp for example which has been tested with the isn services number, with the jobs number we have got and most recently. how do you balance that out? >> we expect gdp growth over the next -- the unemployment rate should continue to fall and continue to see significant movement in the unemployment rate. the bottom line to your question
is it has been a little bumpy also on the isn indicator. at the same time, most other indicators continue to suggest is what they are try to tell us today, that things are moving in the right direction. if she is also suggesting things are not that bad, that could be an important smoke signal. jessica from double line calling this a moment. live us your perspective, put this in the context you see here. give us a sense of a magnitude we are seeing. >> you could call this a mini tantrum in the sensitive rates go is what they are try to up. when the stock market goes up, we should have rates going up. maybe there is some repositioning here. it could read investors are reassessing what is going on.
the macro data has been chucking along quite nicely. to fulletting closer employment. be beyond full employment suggesting there is more inflation we should worry about. things start to move to medically. i think it's important to remember the main concept of the federal reserve is are we at full capacity, full employment because that is why all investors should be focusing on inflation at the moment. when you paint this picture of the u.s. economy and whether we are at an inflation point be beyond full employment suggesting there is more inflation we, we should be posir the u.s. stock market or global stock markets. >> sometimes we say can we get
back to the days we are watching earnings. julie: but the earnings are so fantastic. like to see projections for earnings will actually go up over the next four quarters. earnings are low at the moment mainly because of energy and many factoring not doing well as those shocks fade, the consensus is expecting you will see a rebound in earnings in energy and manufacturing companies. there are certainly some hope here for earnings and profits and wages for workers. david: great to speak with you. thank you very much. coming up, tensions are rising out of the latest north korean nuclear test. this is bloomberg. ♪
david: you're watching bloomberg markets. watching stocks selloff as you can see. the dow now down over 300 point near the lows of the session as we see this global stock and bond selloff today. it was triggered by the ecb commenting that no more stimulus is forthcoming from that central bank. hasd: president obama joined other world leaders in condemning north korea's latest nuclear test. it now has the ability to mount weapons on rockets. joining us is christopher hill, currently the dean of the school of international studies at the university of denver. good to have you with us today.
the un security council meeting here today in new york to discuss what happened. this is a country already subject to so many sanctions. what more could the u.n. do at this point? >> the role problem is north koreans don't care what we think , what anyone thinks. weapons on rockets. they seem to have internalized the sanctions so i'm not sure there is a lot of those that could be accomplished. they had a military program, they are conducting these tests. some are failures, some are successes. all our tests from which they learn. i think we will be confronted with a different landscape, with the fact they will sooner or later marry of a nuclear device andthey seem to have internalizd a deliverable nuclear weapon
and we have to decide what we want to do. for now, we need to take this to the security council, we need to condemn the north koreans in any way we can but we need to think about what we can do to slow down this program. avid: secretary kerry of issued a statement earlier today calling this a great threat to regional security and to international peace and security. given we have seen tests previously, what makes this one different to you? here is a grave threat and is why. this is part of a military program. this is the fifth nuclear test. of theoughly two thirds bomb that was a drop in hiroshima is. it's a beginning to look like they have overcome some of the technical issues there and we are not hearing any more about fizzles. we are hearing about serious
explosions. i think there is much to be concerned about and when you look at their announcements, there are some subtle changes in how they talk about it. these are no longer devices. these are actual weapons. up.t of that can be chalked ise they don't care if these tests don't succeed. they are not being done for attention fromt international community. they are being done as a military testing program and i think the secretary is quite right. the question is what are we going to do about it? the x factor seems to be china. china did condemn this test today. is that a mark of something changing, china joining the international sanction with north korea? >> no question the chinese have their views on north korea evolving.
there are a greater percentage of chinese officials who are. as with the north koreans. furious with the north koreans. we look at north korea as one of these nasty but distant security issues out there. it is part of the chinese domestic politics and the whole their partner for somebody decades, what does that say about china's system? there are a lot of chinese who worry if there is a north korean collapse, this is somehow a .ictory for the united states fs no one is ready to kind of sign on to the north koreans. there are a lot of problems in terms of how china looks at this. they tend to need a consensus before they move forward. maybe not try to discuss every
issue under the sun but go right at this north korean issue because it's clearly getting more and more dangerous and i think the threat to the region . is very real.dy to kind i think the chinese are increasingly getting there but we need to have this deep conversation. we need to make it clear that we are not looking to take advantage of china here. we are looking to end the north korea nuclear program. david: i was struck about how these tests loom large over people in south korea. when you look at the potential economic ramifications of theses tests and tensions, what are they? >> it's been interesting over the years. you would expect the south korean stock market to take a hit each time this happened. most of the time, that hasn't been the case. the south koreans have internalized this and are used to this behavior. for theit's critical u.s. to be seen as a reliable partner and ally, which is why
every time our president goes to asia, tests and tensions, what are they? he certainly meets with the south koreans. they need to realize that nuclear umbrella is really meaningful and the same goes for the japanese. are righte koreans there. many koreans can see north korea from their window. i think they need to be convinced we are there with them. david: thank you very much. he certainly meets with the south koreans. theylooking at major indexes hen the markets today, all in the red dramatically. the nasdaq down where the 2%. the dow down 1.6%. this is a slide that started. stocks in of the 500 the s&p 500 are lower today,
david: this is bloomberg markets. julie: it is time now for options insight with abigail doolittle. abigail: joining me today for allen, markett is strategist at the low -- bullseye options. what a day with the big fella for the s&p 500 since the end of june. what about the vicks. we see a huge spike higher there. do you think a correction is ahead? >> the stock market had been .nchanged until today
anay, we see a bit of explosion. the vicks trading between 12 and 14 for many weeks and the midpoint of this last move is that target is about 16 to let's see of that acts as the over under for today's session to give us a true feeling of what this really means. abigail: one source of volatility today is of course mario draghi perhaps disappointing yesterday in terms of accommodation. do you think we will see rates rise through the year and would you expect this to pressure stocks and cause an even greater spike in the vicks? >> i don't think so. if there is a rate hike, it will be put 5%. i think the market traveled and needed to break out and break down and we hadn't had a 1% move forhe s&p on the downside
50 sessions. this has not change the overall market. this is one day so far. let's see how next week filters out. the interesting issue comes on the table, off the table from time to time. a real bigt fundamental driver here today and everything is down. even treasuries are down, which is very interesting. long-term rates are moving higher and everything is gold, oil. knoweaking of ranges, i starbucks has been ranged around . can you take us through? >> coffee is on sale. 7%rbucks had been down about over the last year. it's a mere image on the downside.
we are at the lower end of that range. forlooking at the 50 call january. the low so far in the last calendar year. money.ive dollars in the it will act very much like the stocks. looking for a rebound in coffee. abigail: good stuff. thank you so much for joining us. we hear from up, the former president of the federal reserve bank of minneapolis, gary stern. this is bloomberg. ♪
markets. >> let's start off with the headlines. we go to mark crumpton. house of representatives victims ofto let 9/11 go to saudi arabia. 15 of the 19 9/11 hijackers were saudi nationals. a democratic aide says there is probably enough congressional support to override the president's veto. the head of the centers for disease control and prevention is the money needed to fight the zika virus is gone. the funding bill needs to be passed by the end of the month to prevent a government shutdown. democrats blocked a republican backed measure that would provide $1.1 billion. the bill would also cut funds from obamacare and bar planned parenthood from getting public money to treat pregnant women.
what could be a pivotal phase of the presidential election began today in north carolina. the first of 37 states that allows balloting by mail or in person. data compiled by the associated press shows early voters are expected to make between 50% and 75% or more of all ballots. inassenger train derailed spain early today. four people were killed. 48 others injured. it happened about 280 miles northwest of madrid. the train was traveling in neighboring portugal. global news 24 hours a day powered by more than 2600 driverless and analyst in 120 countries. this is bloomberg. scarlet: thank you. it looks like stocks have broken out of their summer stupor. we have a selloff on our hands with the s&p 500 down 42 points in the dow losing 300 points.
all 10 industry groups in the s&p 500 are lower. as is the worst retreat since the you will -- u.k. voted to leave the european union. we want to head to the nasdaq. nasdaq moving lower this afternoon, down for a second straight day. it is down around 2% and it's on pace for his worst day since june 27 and on pace for the worst weekly loss since april 29. one on tuesday and wednesday. moving the index lower our big tech names. if you look at apple, it's down to percent today and down 4% on the week. this comes after apple unveiled its new iphones heaven and those wireless headphones at an event
in san francisco wednesday. the company saying they will release early sales figures breaking from a tradition in the past. another tech stock moving down, facebook. is it down for a second straight day. this comes after the european union competition commissioner is questioning facebook about a change to its beta and privacy policies for facebook's whatsapp. facebook and instagram using data from customers on what is asked to advertise. they are questioning this change.
so that is the update right now. here is the nasdaq. i will send it back to you. we have been talking about how the capital chief investment officer says he sees the fed raising rates soon. 's or bank ofderal minneapolis president gary stern agrees. stern discussed his thoughts on fomc membersd why assured and be so vocal. he started out on the fed's current challenges. environment, it's the cost of the financial crisis , it's the uncertainty going forward that makes things very difficult. if you think about alan greenspan's tenure, that was one long economic expansion and while i think it's fair to say the fed contributed to that, the fed was by no means the key ingredient in that. the economy was performing very
you avoidedlong as big errors, the economy continued to go well. and want to talk about diminishing returns. , it strikes meon that we are seeing a diminishing return. do you agree with that and what can the fed do? >> i think there are a couple things we should focus on in response to that. i think we are seeing diminishing returns in terms of communication. i think we have got too many people speaking at cross purposes or at least not entirely clearly. i think what the fed can do about it is who will speak for the federal reserve on policy. i think that's a good idea. it's hard to execute that idea
in today's environment because individual governors and individual reserve bank residents view themselves as being perfectly appropriate for them to speak out on policy but nevertheless, you ask me what should be done, that is part of it. as far as diminishing returns to interest rates, i think you can say the fed ought to declare victory. its mandate is high employment and price stability. we have achieved both. those things have been achieved and the question for policy is what is the appropriate level of interest rates going forward to maintain what we have achieved? we are trying to change anything, just maintain it. if you look at what fed people have put out there in their charts, the consensus is rates have to go up. think in my judgment, that is
right and they should take the opportunity when they have it to go down that path. >> i want you to take me inside the fomc. if you want around making this speech and creating a lot of noise, what would they say when you turned up around the table for the meeting? would they say you should let me run this? >> he would have done that. some of paulor volcker's ears as well. paul would not have tolerated that. there would have been disciplined. i would say the chairs have been increasingly lies a fair -- laissez-faire about it. that was my attitude for many years as well, let everybody participate in the communication effort. i have changed my view of that.
i don't think it has turned out to be effective. secondly, it diminishes the franchise. by which i mean i'm sitting here talking about policy for that that is fine. fed presidents in my judgment shouldn't be sitting here talking about policy. they should be talking about it at fomc meetings and so forth. >> for employment, you need growth. it's just a half step away. what would be the effect on growth at this point? growth isect on modest. i don't think in or outside the fed, people are expecting or sharp, significant increases in interest rates. the fed is a good servant of organization by nature. any increases that occur will be
modest in size and gradual in terms of timing. there is that issue. i don't think the fed certainly intends to be disruptive. i don't think they will be. i think the economy is on very firm footing today. is far from buoyant. the gains have been quite sizable the last several years and the economy looks to me like it is quite sound at the moment. joe: that was gary stern earlier. matt: u.s. stocks fell in the worst selloff since written voted to leave the european union. we will focus on the tech stocks. this is bloomberg. ♪
scarlet: it is time for the bloomberg business flash. you look at the bigness -- biggest stories right now. -- thed create the german company could reach a deal as early as next week. kkr holding talks with hig capital this year about a takeover of the midmarket specialist. this according to people familiar with the matter. luminary talkser in the second quarter about a possible deal. hig canceled the talks and
instead chose to sell a minority stake to capital partners back in august. that is your business flash update. let's get a check on u.s. stocks right now. the s&p 500 off by more than 2%. the dow industrials losing at the moment. i was looking through earlier. you have got all 30 members of the dow lower. 90% of the s&p 500 members down. 19 stocks lower for everyone higher. joe: it has been so quiet. we haven't even had a 1% move. we finally got it hard today. stocks are down. the bigs spiking its largest since the brexit vote. a real volatility we have been waiting for. matt: it doesn't look what the vicks has gotten quite to its 200 day moving average.
the five biggest companies in the world are tech stocks. >> and you have warren buffett moving into tech, a large apple shareholder. we are due. technically, we were going really tight for a while so it was a big move coming. it caused -- could have gone either way. are let's talk about these specific names. these tech companies the biggest in the world right now. people look to tech as the one area of the economy that is not interest-rate sensitive and is growing fast. it's hard to find true revenue earnings growth in this economy. do you like these big-name tech stocks? >> i do. i own apple. i own google for a long time. apple is still interesting to me because relatively to the s&p 500, tech stocks were breaking out.
amazon isn't a part of that. amazon is considered consumer discretionary. we all have iphones. 2% of it. they are not a tech company because people aren't technology people. like nike, i love those types of brands. they are becoming tech companies because fabrics, the materials. that's the same word. because they are a extension of you. you have to think through technology. i'm not really worried about today. scarlet: the nasdaq is moving steeper than the other indexes, which tends to happen. when you look at it and we do have that chart up of technology versus the s&p 500. technology has
outperformed and it continues to move upwards. what does that tell us about how investors are pricing growth in this market? that is human behavior. i call it chart art. the relative proportion is is theting but amazon biggest company in the world right now and they are not even considered a tech stock. maybe that has been lagging and that's not a good sign because amazon really is part of tech. it is something that interests me as the whole economy is being lumped into technology. joe: is technology assuming everything? if you're calling apple not necessarily tech but lululemon and under armour arotech come is this definition becoming meaningless? , only because americans consume. we need the world to consume for this bull market to continue. it's not a boom for everybody
but for my business, it's been a boom and i do find a boom as guys like me being able to make money in technology. i consider these extensions of who we are. is that phonek disappears and voice takes over but other than that, apple is a fashion company, nike is a fashion company. buying an iphone now will become like buying a microwave, it's something you do every couple years but you aren't that excited about it. >> i wouldn't go that far because we live with these things. my microwave is a bad piece of furniture. we live on our phones. the few software absolute live on are so powerful and do so deeperr us that we get into the process. they're so much magic at the tip of our finger that we can't even
explore anymore. joe: you mentioned you aren't worried about today. you look long-term. but you follow a lot of crazy traders who are talking about five second charge or five minute charts. in yourthey positioned view? were they of the view that this low volatility will last? short-term, it's always a very bearish crowd. long-term, a bullish crowd. it is the line of scrimmage. you need those people digging up the short term stuff to create a sentiment for these long-term trades. i think today, people were rooting. top, yould us at the take a longer view. that is thea chart case for tech and shows it's finally breaking out of this 15
year. continuingly see it higher hair and will we -- relative to the march 2000 high? collected so close and i think this is why you will see a battle here and a lot of people are looking at that. because like i said, 21% of the s&p 500 is tech and that is scary in terms of proportion. we all lean on tech in this economy and you will see this battle here and if you look at that chart, it's not a player breakout. it is relatively strong. if it does break out, it could be interesting. scarlet: it's poised for a breakout. tech operates with this winner take all mentality. you have disruptive tech companies whether it's amazon or they make sales and profits from other industries.
can the rest of the economy do well? to investors,ly not stock people. every conversation right now is how dangerous it is for early-stage companies because amazon is inches away from buying kroger and finishing everybody off and getting in the grocery business. you know how much money has in spent by vcs a food companies, delivery. all that. wants is it good or bad? we will see. it's exciting, dangerous. it's not for the faint of heart and there is supposed to be risk. there is a lot of risk out there because amazon is so big. the middle sticks. big fund, yoully can do whatever you want. if you're in the middle, it's a flawed because no one is looking
at you and no one cares about your stock and it's hard to get financed. just like the middle class, the middle of the road, these companies that are big and not humongous are in a really tough spot. it's never perfect out there and that is the way the market looks to me. matt: you will stick with us here. howard is a general partner at social leverage and we will continue this conversation. by 343: the dow off points at session lows right now. we will continue to monitor the fallout in equities. the biggest equity declines as the u.k. voted to leave the european union and hitting home when it comes to etf. we had the chart. ♪
citigroup who says we are maybe looking at a cyclical thing here. defensive stocks and he has charted it over the past six or seven years. you can see that in 2012 and 2000 or team we started to make these comebacks that look like a call for cyclicals to come back. my area of expertise so i will declined to comment. the trend is still is down and i still look at this country as we talked about infrastructure and drilling that money -- the rowing that money in that -- that money in. of inflows, the low volatility strategy.
u.s. stocks posting their biggest decline since the brexit vote. all major indexes losing 2%. complacency and global markets ended as central bank starts to question the benefits of further monetary easing. that is causing a whirlwind in the markets. ford is buying into the ridesharing game. record profits and strong sales aren't helping lift the stock as we see a decline going forward. we begin with our market minutes. looking at the s&p 500, the biggest selloff since june 24. the dow industrials losing 392 points.