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tv   Bloomberg Markets  Bloomberg  September 13, 2016 2:00pm-4:01pm EDT

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julie: clear live bloomberg wrote headquarters in new york over the next half-hour, covering stories from washington, when is a red, and istanbul. vonnie: market volatility is back. -- when is a red and in the -- instanbul.s and julie: hillary clinton on the sidelines as she recovers from pneumonia. questions remain around her health disclosures. >> the inaugural argentina business investment forum underway. bloomberg tv has been there all day. bob dudley along later in the hour. >> markets close in two hours.
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heading to the markets desk. all of the running there. -- oliver renick is there. >> it always hurts more on the way down. slow on the way up, and then you have the day where the market sells off. friday over 8 billion shares traded. not selling on small amounts. when you look at the markets, we are still down. s&p down on the day, as well as the dow. the nasdaq is also hurting a bit. some strength in the tech stocks. theing at some of , this is one of the most interesting aspects. friday we clearly had a market that that seemed to be selling off on expectations of moves and interest rates. financials today doing pretty well. doing pretty poorly. does not seem like a has the same contour of the friday selloff. wells fargo has dropped quite a
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bit, leading banks slow were. obviously pretty weak numbers. almost 4%. down the rest of the sector leading the s&p down a little bit more, especially when you consider friday they were one of the sectors staying afloat. mason invesco,g it is across the board, which is interesting, especially when you consider higher volatility can be good for the stocks. shaky markets do tend to scare people out of bed a little bit.
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>> we are preparing to invest in argentina. if these guys were siskel and ebert, they would get the argentine government a two thumbs up. we have yet to see if this is a if you build it, will they, situation. there is a lot of positive things happening, a lot of ambitious reforms today. the key is money.
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companies commit billions of dollars or say they will commit dozens of dollars, but over the first few months of the administration, only an additional $1.3 billion of foreign investment into the country. that tells you something. more will see how much money will be coming their way. argentina business and investment forum. he will be back this hour with an exclusive interview. coming up, as argentina stages a comeback, we will talk about the risks and opportunities in it and other emerging markets. we'll talk to an investor that is also looking at that country.
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♪ >> this is bloomberg markets. >> i am by plane. it is time for the latest bloomberg business/. wells fargo ceo says he is ready to testify before congress. to share wells fargo story. he also told the paper that there was no incentive for employees to do bad things. more than 5000 employees were fired with connection to the opening of more than 2 million client accounts without their approval. ministernadian prime plans to recruit at least one new oil pipeline project in his first term, that is according to people familiar with his plan. he will neither approve all of the projects under consideration
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or reject them all. >> viacom and other companies will start letting third parties track children's online activity. third-party marketers to track their ip addresses and other data. it is against the law to collect information on children without parental approval. that is your latest business flash update. stocks falling for the third day as investors weigh projections of a prolonged oil glut. joining us now is a man who has been advising on emerging market investment since 1987. he is managing partner at any markets. changeas been a definite in what they called mood music in the emerging markets. >> indeed. it has been a good year.
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if you look at the etf, it is up 12%. 3x. that is quite a move. >> speaking of etf to get us into our viewers had, if you visit your bloomberg, you will see the money flow into emerging markets. the bond index. >> a lot of it is the search for yield. the desperate search for yield. there is no yield in europe unless you want to go to greece. where are their yields? there are yields in emerging markets. that is the story. >> what is the next phase of this? you have the central bank in the u.s. deciding whether to raise rates. you have oil that is rolling over to some extent and having a negative effect on emerging markets over the last few days. will this downward bias continue? bias was actually flat to
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negative in the post-july time anyway. week, have started last but it was clear it was coming. as far as we were playing it. >> you think it will continue? >> this is also seasonal. it is also the presidential cycle in the u.s., which is a very strong cycle. it is an eight year cycle. an eight year cycle is much more difficult than a four-year cycle because the entire eight years staff of the washington dc establishment is leaving. >> washington, d.c. has basically checked out in terms of doing business. that is a big thing. look at the 2000 eight year cycle, 2008, a year cycle.
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that is what we have now. >> just a quick look at the emerging markets index. this is since the beginning of the year. it is tilted towards a couple of specific countries, including china. when we talk about emerging where youet's zone in think we should stay away from. >> em will follow global which will follow the u.s. >> not all em. >> there are different markets -- pockets of places where you will look for opportunities. i know your gentleman who interviewed -- here is the story, argentina is kind of the emerging markets story that you look for as a professional. it is what you might be calling a bombed out story. 1997, asiano
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crisis, you had korea, indonesia, thailand, the russian ruble process -- crisis. you have the turkish crisis. this was all in the last century. not that long ago. the story never changes. six months after, if you were there at the right time, that was the play. i think argentina could be very good. the president is very determined. he will be here this week. he will be at the world bank imf meetings. that is the kind of thing you are looking for. >> what about your native country, turkey? you have the aftereffects of the coup. a cracked down there at the central bankers are trying to bolster loan growth. is it a good time to invest in turkey? >> what is happening in turkey has a lot to do with warfare on
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exporters. that is a very -- on its borders. that is very complicated. i should be one that understand it better than most, but even i have trouble. >> the changes day by day. >> exactly. who is the partner, who is the enemy, that changes. that is what you need to pay attention to. unfortunately, we have to leave it there. thank you for speaking to us. talking to us about emerging markets, managing partner at me markets. now, dueling speeches on the campaign trail. president obama is stumping for hillary clinton. he is speaking in philadelphia. donald trump is speaking right now in iowa outside of des moines.
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watch both speeches on the bloomberg. ♪
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this is "bloomberg markets." > here is part of an interview from earlier today on "bloomberg surveillance." >> i don't think there is anything seriously wrong with hillary clinton. i think she will be fine. i have had pneumonia four times. three out of those four times i cap working. i don't see it is a serious problem.
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we know more about that then we do know about trump. i think she will be fine. >> you are a supporter of hillary clinton. doesn your support, what mr. trump need to change his message? >> i have not thought a lot about it. one thing, he should change his economic plan. out with a report on his economic plan and concluded that if it was economy wouldhe shrink, the gdp would shrink, investments would fall, and employment would fall. you have one candidate who has proposed a plan that is a sound one which others have said will
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grow the economy substantially, 3 million jobs over the first four years. you have another candidate whose proposal would shrink the economy. seems to be we will end up we willuation where have different parts of government canceling each other out in the next administration. is that your sense as well? no, that is not my sense actually. finished election is and the new administration is in , a lot of her economic plan centers around infrastructure, but including college affordability, capping childcare costs in relation to household income and so forth, will be able to be passed. >> there does seem to be a sense
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that maybe the infrastructure story will be something the republicans can get on board with, but it probably ins there there. where do you see the more difficult battlegrounds lying? both parties support the idea of big, new initiative at the federal level on infrastructure. in recent years at least in terms of how to pay for it, so i think that is an opportunity for a bipartisan agreement. is immigration. i know it is a politically charged issue. i think there may be enough members of the republican house caucus who realized that that party has to reposition itself at the national level in order to compete seriously for the
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presidency, to bring together under paul ryan's leadership in the house at me agreement on immigration. i think immigration and infrastructure are two areas where there could be bipartisan agreement and an early phase of a clinton administration. er making a new proposal for monsanto. the antitrust breakup fee would be doubled. say the monsanto board could discuss and approve the offer as soon as today. this confirms an earlier report. monsanto has rebuffed them three times already. this is bloomberg. ♪
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a gorgeous september afternoon. this is "bloomberg markets" from
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new york. commodity markets are closing in new york. we start with agricultural, sugar hitting a high. gold is trying to snap a four-day losing streak. finally, oil plunging today, settling down 3% at $44.90 a barrel. the supply glut is seen as persisting into next year. for more on oil, let's bring in our guest. still calling for oil hitting
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$80 a barrel next year. i thought it was $60, right? we are looking for oil to be in the 60's by this year and 2017.ing by $80 by the industry does not need $80. supply can be managed in the 60's. ,f supply will be shrinking psychologically you could see $80.ment take oil up to >> can you walk us through that? given this iaea forecast, talk persistingupply glut , that would seem to be a big headwind for prices. what we mean?
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yes, inventories are high. inventoriesry of looks like it's heading in the .ight direction global inventories shrank in q2, are accelerating in the current andter and into q4 throughout 2017, so that is the recipe for higher prices. that we getumbers every wednesday from the department of energy in washington do not tell the whole story. that is only one subset of global inventories, may be as little as a fifth. if that is what the market focuses on, and the tendency is for excessive attention to be paid to these weekly numbers, that is not the whole story. gettingis the iea wrong? more think demand will be
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2016, 300,000 barrels a day higher than they are. non-opec supply 2017nes would persist in in the event that oil prices stay at current levels. remember, we are looking for oil to be in the 60's by the end of the year. in that scenario, supply is turning higher in the u.s. and several other countries as well. if we assume current oil prices persist through the budget cycle for these companies looking at 2017, that is the recipe for steep supply decline, another year of production rolling over in 2017, and demand would be more bullish in that scenario because lower prices will
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stimulate greater demand. >> something we have not touched on is the meeting, the opec meeting, and there has been talk about whether there will be new production agreements. where do you stand on that? isour stance is that it irrelevant either way. this is a pr exercise. they move prices on a day-to-day basis, but isdamentally speaking, opec not the real issue for the oil market right now. , saudince two years ago arabia and particular, has signaled they are happy to let prices set to where the fundamentals will let them settle, and that is what we have seen. if opec says we are going to freeze production, reality is that most opec countries are already producing as much as they can. in fact, some opec countries are seeing production decline for different reasons, like nigeria
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and venezuela, so for them to pledge stable production is completely meaningless, or pr. >> would you imagine that oil prices would rise to $80 a year, the companies in your universe are they going to up their capital expenditures? >> if we are right about oil prices, they have to. with oil below $50, it is virtually impossible for any player in the industry with the rare exceptions to increase production, and if demand continues to grow, whether it is one of many forecasts, supply k forever.in
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capital expenditure has to get into a more sustainable level of investment out of the current austerity mode, and that will only happen with meaningfully higher prices, $60 or higher. >> thank you for your time. we appreciate it. prizes are just below $45 a barrel right now. in just a few minutes, more on the outlook for oil with top dudley. .- bob dudley he joins us in an exclusive interview. let's check the headlines on first word news. peres is hospitalized after suffering a stroke. a spokeswoman says he is sedated and on a respirator. held virtually every senior political office in israel over seven-day guides -- seven decades.
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of israel'sead national security council is in washington to sign a defense aid package. they are expected to sign the deal this week to replace a long-standing pack to that provided $3 billion in annual aid. donald trump will unveil proposals to make childcare more affordable for working families. republican presidential nominee is expected to call for guaranteeing new mothers six weeks of paid maternity leave. he is also expected to discuss creation of a new dependent care savings account that would allow families to set aside money for their children or elderly parents. meantime, hillary clinton's edge over mr. trump's twinkling. in the latest poll, 48% of ,egistered voters favor clinton
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44% for trump. clinton's lead is even smaller and a four-way matchup, leading by two points. gary johnson gets 11%, the green party's jill stein gets 4%. news 24 hours a day powered by more than 26 hundred journalists and analysts in over 120 countries. this is bloomberg. >> thank you. let's look at u.s. stocks. near the lows of the session, the s&p losing 34 points, the dow up by -- the dow off by 260 points. it is a broad-based selloff. look at the map of sectors in the s&p 500, which you have is that everything is lower except a small subsector of tech. we saw apple rise today, but
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that is one of the rare areas of green. energy is the biggest drag today. real estate not doing so great there. a lot ofates higher, the interest rate-sensitive group seven rolling over. , and now been leading they are the first to go. >> the vix at 19, the dollar >>index showing some strength, l down. .ook at the 10 year yield it was a weak thirty-year auction. this is bloomberg. ♪
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"bloomberg markets". i am vonnie quinn. .> i am julie hyman we start talking and focusing about interest rates, this is a chart looking at the percent moves for these two different groups, the brighter blue is the move in the financial sector, the darker blue is the utilities. movesn see the utility have been bigger with more volatility.
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look at friday. that is basically a big move and utilities. financials today are the ones losing more. the utilities group overall. today, it seems like a lot of the moves are related to energy companies. today may not necessarily be a dividend referendum as they were on friday. over the course of the past year or so take a look at the chart year to date, this is looking pretty good, this rally up from the february lows, financials getting knocked around a little bit in the past couple of days, but if you think about the expectation, the hawkish commentary on friday, financials held up ok. so itwas more weakness, called into question the theme that seemed clear on friday.
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you look at some of the companies in the financial sector,. wells fargo not doing too hot since the big account scandal, hathaway,berkshire also interesting because they have a big stake in wells fargo ting hit pretty hard to. >> thank you. appreciate it. what happens when prisons run out of prisoners? . we went to investigate. paul joins us now. what is happening to the prison population. >> there was a plateauing and a is at decrease, and this big problem for companies that had depended on the growth in
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the population as the generator of their growth. we have had announcements that they are considering or have decided to pull out of private prisons altogether. >> when you hear an announcement like that, what do you do? >> they are saying they saw this coming a few years ago and had begun to diversify away from traditional prisons and toward corrections,munity halfway houses, check-in centers, and other types of facilities and oversee people who are not full-fledged inmates but are still in mashed in the criminal justice system. that population looks like it will be growing in coming years, so that is where the industry seems to be headed. >> thank you for joining us. coming up, argentina has a
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vast natural resources. how can oil companies capitalize? bob dudley joins is next in an exclusive interview. this is bloomberg. ♪
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.> this is "bloomberg markets" i am julie hyman. vonnie: i am vonnie quinn. new president tries to spur international investment in argentina. is a viable target for energy companies. schatzker is joined by bp's bob dudley. >> what was it that brought you to argentina?
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why are you so encourage by the market? >> bp has been in argentina since the 1950's. for the last 20 years, we have had a great joint venture, 250,000 barrels a day. i am really encouraged by what i hear and see. >> what you think is going to happen here. have spent time with the government and president. they are saying all the right things. of the momentum just starting. people,ture, great natural resources. i am excited about it. >> bp has been here for a long time. you know how in trench the bureaucracy is in this country. you know how powerful organized labor is. you know how deeply corruption runs.
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are you not perhaps concerned that the president is over ambitious and what he might be able to accomplish here? >> it takes enthusiasm and ambition. i think the corruption tape is being cut. there are two kinds of countries around the world, those with red tape and those with red carpets. everywhere i go, it is the willingness to cut through red tape. you can't do it overnight, that huge different messages in the last nine months. >> how thick has the red tape been in this country? >> where has argentina been, it has not been on the radar screen for almost a dozen years. suddenly it is. people are beginning to see it. those of us who work here see the tremendous change in the needle. dynamic cabinet for the president. >> here is where the rubber hits
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the road. the p itsdetermine if investment in argentina? prices are low, hypercompetitive for capital. is a business that is making money, even through these low funding prices. the business you have here is making money? >> it is. we have some upstream and some downstream aspects, so you have to think of it as an integrated oil company. work. a lot of people to argentina can be self-sufficient in time with natural gas. the right conditions are here to completely change the country. >> i will go back to the question, what determines -- is it the oil price or what this government does that will
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determine if you invest more here? it is the efficiency of the industry. the government has to move towards the free market. the cost structures are coming down. it has to be competitive for capital around the world, so it is the cost efficiency and infrastructure, but also the size. if i had to say where i think this is going by the end of the year, i think we will be making further commitments to invest. >> you are not ready to make them yet? >> i think we are. that is why we are here. that there is a great desire to make this happen. i think you will see not just bp. i think he was the global energy companies coming here. there is an area of argentina with enormous amounts of gas. think this is the
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second-largest area of shale gas in the world behind the united states, and that has enormous potential. >> how real is that for unconventional oil? date, the only real shale industry is back home in america. >> there have been 751 wells drilled here, not horizontal, not all the techniques are here. what the industry needs is a lot of infrastructure, but the geology and testing indicates that it is there. of need a massive amount briggs and infrastructure pipeline to go along with it. rigs and every structure pipeline to go along with it. geographic aboveground and below ground conditions for this to be quite a successful area in the future. >> how long do think it will
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take? i presume we are talking about years before it is a major source of production. will take many years to be like the united states. when to get the momentum going, rakes, infrastructure, it can move pretty fast. does it compare to the permian basin? >> the permian basin is different. there are sweet spots in the permian. there are sweet spots in argentina. there is a lot of natural gas here. >> we were talking about whether bp would or would not commit more investments to argentina, and you are leaning in that direction, would you do so with bp or your joint venture? >> our partners, we will work together on this. we put it together and have great people and great talent, great know how, efficiency is one of the best in the industry
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here. we would do it with pan america. step back from argentina and look at what bp is doing globally, you have been among the most active among oil majors in green lighting new projects this year. are you done or are you considering anything else? >> we have some more that we will do? >> would you thinking about? >> a big project in the gulf of mexico, a big project in india. we are moving more towards natural gas away from oil. part of that is the long transition for carbon energy, but we have a lot of opportunities. the timing is right and the cycles have been low. it now is the time to get the projects working again. >> where you greenlight mexico and india this year? >> india is possible by the end of this year. around coming has
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up and we will have to evaluate that. we have sanctioned the big project in indonesia for gas in asia. we have to be very selective about our capital, so we are not spending on things that we do not think our not highly perspective. could have exposure to one part of the world and one type of production, what would it be? natural gas where there is a reasonable margin, a local market and maybe an export market. we are investing a lot in egypt right now which has needs and natural gas, but we will look towards exporting later. >> what about shale oil? >> for bp, the obvious place for shale oil is in the permian in the united states. pricey those prices are for bp right now, so we have a
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lot to do around the world. >> you would like to own more there, but not at this price? but we haveght, lots of other things to do around the world card -- the world. >> what about the best teachers -- divesting? haverst quarter, we will time,ed $65 billion over so we have gone through a portfolio and like what we have left, so we have some things to divest, and we will do that, but it is not a major investment program. >> we need to talk about oil price. drilling is picking up in the united states, what impact without have? the supply and demand balances are just about at the so ice point right now,
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think we are in balance and i think of we could see the price to get dollars for the rest of the year towards the end of the year, and in 2017, a little bit about that in the 50's, but there has been more than a trillion dollars in projects canceled. there is demand growth of over one million barrels a day in china, europe, and north america. as long as that demand continues, i think you will see a tightening of the market. will it take before those canceled projects catch up with the oil supply demand balance? >> minimum several years. in talents today, there are in over stocks that need to be draining, but that will take some time. we will see what happens with demand. people believe you can turn the shale and the united states on and off, but it is not that easy in our industry. , but easier than the gulf
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in some opec countries, you thet turn it on and off, so number of briggs in north from 13-1400gone , so it's0-range today not like it was in 2014. , itell me what you think wanted to get around to iran and the nook oil contracts that iran is issuing. and arethink of those, they attractive enough that you could see bp producing oil in iran? history of bp goes back in persia, but the terms are not clear enough to be able to say. hypercompetitive world for capital, it's not something
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you say that is a place we would invest. we also have to be mindful of sanctions and rules. foras to be competitive scarce capital in this world. >> i'm glad we had a chance to squeeze in something. it's a pleasure. vonnie, julie, that is bob bp, optimistic about argentina, and as you heard him say, very close to making the commitment of additional investments. vonnie: wonderful interview. almost got the announcement right there with you, erik. that was bob dudley with erik schatzker. one hour from the close of trading. let's go to the markets desk come where oliver renick has more. oliver: still in the red today as we get closer towards closing up the session. basically what you are looking at is kind of the same. we have flatlined a little bit on the major averages.
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s&p is down 150 basis points. a little bit of strength when you look at the nasdaq. some help from the tech sector, holding on by a thread. big jump in apple today and yesterday as well. let's look at volume. volume on the way down is pretty strong. basically, when you are looking at, the bigger the section, the more contribution this has to the overall blame on the day. financials a big part of trading. even though you are seeing mild strength in tech areas, the s&p is not able to get lifted out of the doldrums. financials are big part of the market and today they are not doing well. you look at energy as well. a big chunk of the volume from
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the energy space. as far as market cap goes, not a giant part of the s&p 500. finally, you can see what is happening because of oil across the energy stocks. crude oil down about 3% on the david hasn't been doing well. ei saying we will see a glut going forward. not good for these big energy companies -- exxon, schlumberger, chevron. you take one, they are down across the board. julie: another thing that has been a factor in his most recent selloff is that stocks and bonds are selling off at the same time. a little unusual historically. oliver: right. today we came in, bonds were kind of flat, stocks were not doing so hot. honestly, that was not the story on friday. here is what is happening in the last couple of hours. the u.s. 10-year treasury spiked up in yields. not doing too well.
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you have got to go back to brexit to see move like this. has he really accelerated the stock moves. things have been generally pretty flat the past hour. this is something to watch. that has been a big part of the market, the correlation between stocks and bonds. they have been going up together and guess what, might be going down together as well. julie: we will talk more about fixed income in a minute. thank you so much, oliver renick. let's get to "first word" news. mark crumpton is in the newsroom. mark: the cease-fire in syria's civil war appears to be holding. there have been only minor violations. the truce was brokered by the united states and russia, and the goal is for it to hold for seven days. israeli warplanes struck syrian artillery positions after a shell hit the israeli-controlled part of the golan heights. israel says antiaircraft missiles were fired at its planes but miss. singapore's is the number of
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lovely cut it zika cases is rising. in 2 patientsnd in singapore was not from south america but was similar to one in the region three decades ago. witnesses ordered to testify before a house committee investigating hillary clinton's use of a private e-mail server asserted their fifth amendment right not to testify. a former state department computer specialist who allegedly set up the server failed to appear. the former employee told the fbi there were no successful security breaches but there were several failed login attempts he called brute force attacks. the u.s. supreme court is refusing to block a congressional subpoena seeking information on how classified screensal backpage.com ads for sex trafficking.
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a senate panel has sued for more than you lower courts ruled against the website. global news 24 hours a day powered like more than 2600 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. julie, back to you. julie: let's get back to the markets now. it is not just stocks down today. bonds are selling up as money managers have been shifting money into cash. the 10-year treasury yield is reaching the highest level in three months. joining us is the portfolio manager at fda income fund. thanks for coming in. meeting, buta fed are we going to get any more clarity at the fed meeting? anytime a set member opens their mouth to speak, it has been a different message. >> it does appear to be somewhat confusing. no come i don't think you will
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get much different than what you have. it will talk about some growth and some concerns that something -- i don't think you will get clarity. we really haven't, anything about the fed, for quite a while gotten much in the way of clarity, about what is their direction what they are trying to accomplish. julie: that makes your job kind of tough. >> it does to a degree. more difficult for a bond investor's job -- let's be honest, go back in history, greenspan was never very clear, either. a lot of the fed not being clear is not necessarily new. it is not the u.s. in negative interest rates. europe has negative interest rates, japan has negative interest rates. money flying out of this markets coming to hours and distorting activity here. vonnie: this is why the bank of japan is talking about moving out of the maturity rates it will start buying. you have to have 65% of your portfolio in income generating instruments.
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that has gotten more and more difficult. where is the income to be had? >> the difficult thing we find at the end of the days you sit down -- this is for all fixed income investors. you need to have a discipline you stay with. ok, iill then tell you, will get some income, more income, or less. long-term, you are fine. short-term, ok, i'm going to probably have to accept fairly low levels of yield for a period of time. not only to i have that restraint, 70% of my assets and high-quality asset, something with a rating of a or better. vonnie: what gives you conviction that over time it is going to right itself? visit growth, inflation -- is the growth and inflation, the path to normal, whatever that is?
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according to lael brainard that is zero now. >> i look at things and maybe a common sense manner. i realize that for long periods of time you will not be able to lend money to someone else and then pay them to take the money. that is unsustainable. in essence, what the negative interest rate policy is. at u.s.ealized looking with more of a zero interest rate policy and go, ok, that is in conflict with a significant portion of your proposition who has aged. vonnie: but what makes you think it is not common sense it wouldn't continue? >> well, our view of not continuing is i look at the element of persons doing the borrowing and i'm left with really it is the government that is doing the borrowing more than the individual or the corporation. i look at that in total involving vs. -- in borrowing vs. gdp. i looked at the government continuing to borrow money.
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i will probably not get the central bank to buy it or somebody in europe to buy it. the saver is probably going to want more than a 10-year treasury -- 175. 150 150 mother so ago. years, probably not a lot of people who will let into the was government for 175 for 10 years. you look at that and go, ok, once you get to the economic -- probably want to have a higher yield to do it. at the same time because yields have remained so low for so long, you have had to make adjustments to your business. explain to us how that has worked. >> we have 2 objectives we are trying to accomplish. we want to get a positive return in a 12-month period of some sort and get cpi plus 100 basis points.
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that is what we are striving to do. in an environment where i have a central bank policy that wants to run very low rate or negative real rates, zero interest rate policy. accomplishish -- to one of those objectives i have to take on more credit risk. that is not what investors hired me for. back to the discipline. peter discipline the same. -- keep your discipline the same. thing to do for my client is to reduce my feet. vonnie: top allocation, mortgage backed securities. 80%? >> 80% of the portfolios in some sort of structured products. most is an asset-backed. automobile loans, equipment loans -- what else do i have in
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there? commercial insurance premium loans from those types of things. vonnie: we thank you for your time. portfolio manager at the fpa new income fund. coming up next, exquisite venue here with president morsi macri of argentina. this is bloomberg. ♪
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julie: this is "bloomberg markets" i am julie hyman. vonnie: i am vonnie quinn. erik schatzker sat down with the president of argentina, mauricio
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macri. he asked why companies should invest in argentina after so many years of the government being unfairly to business. president macri: we have started a new political stage, a new argentina, based not in the government. based on majority of the citizens of argentina. we have learned, we understand our talents,ion to outage natural resources, we add rule of law, to be predictable. we have to clean up our economy and have clear rules and stable, and that is why we believe that having learned that working together inside argentina, with all the conflicts we have internally, but also with the rest of the world, you cannot find another country with such an outside like argentina around
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the world. in spite of all this conflict i described, for 400 million people, 10 times more the citizens we have in argentina, we can -- in five years. -- we can double that in five years. a huge revolution of investment and production we can add value to the production. supermarket of the world. in addition to that, we are importing gas and oil, thanks to horrible policies. one of the few shale gas reserves in the world -- huge show guest reserves in the world -- huge shale gas reserves in the world. argentina can be, again, a very important player. talking about traditional
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energy, nontraditional energy, renewables, agribusiness. now i add mining. the second lithium reserve of the world. miningrecast demand it product for the future years -- all the batteries, what is going to be the future. in all these three or four sectors, i can show you all the opportunities that we have. in addition to that, very good services,dded value to be produced here in export to the world. we compete with every country in -- world -- ibm, accenture coming to establish and increase the amount of people hired to produce the type of services. erik: i admire your optimism.
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it doesn't surprise me, but i admire it nonetheless. i along with everybody else recognize the potential this country has. but the people who are going to commit capital to argentina need to see results. of course, you have accomplished much in your 10 months in office. you have to root for some trade barriers. you have liberalized -- you have removed to some trade barriers from you have liberalized the trade regime. but it is not quite enough. i want to know what more you can do practically, realistically. what can you accomplish? what is with insight? -- within sight? president macri: we are working hard to continue to reduce taxes. we have launched most important infrastructure program in our history. there is another opportunity there. we need roads, trains, ports, energy -- erik: pipelines. president macri: pipelines.
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we are starting to build them. we need to connect a huge country like argentina. we are working closely with all the leaders in the country, political leaders, unions, companies, to work under productivity problems. reduce our costs? how can argentina be competitive? we are all working on that idea, improving our ways of production. improving our education system. erik: what is your top priority? something you hope to achieve in the next six months? president macri: nexus months -- next six months? erik: what is at the top of your list? president macri: top of my list, i have three main objectives. reduce poverty -- erik: i'm talking about policy. you cannot remove poverty in six months. president macri: no, no can know, that would take decades.
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decade finish with poverty in argentina. erik: no poverty in a decade? that is an ambitious goal. let's go back to the six months. president macri: we are working hard to build strategic alliance with different countries around the world. we have one with china. we are working on one with japan, korea. we're working with european proposals,ange-first having a free-trade agreement. throwing out a very severe crisis. our principal partner. infrastructure program, another priority. julie: i was our exclusive interview with -- that was our exclusive interview with mauricio macri, president of argentina.
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time for the biggest business stories in the news right now. bayer proposing an increased offer in talks with monsanto. bayer is raising the price per share to $129. it is raising its antitrust break up free offer to $3 billion. the advisory board is scheduled to discuss and potentially approve the proposal by tomorrow. allstate says there's no better opportunity for wealth creation than in the transportation sector. the ceo spoke today at a conference hosted by barclays paid he says the company is betting on inevitable changes in the sector in which he described as "highly inefficient." he says moderate increases in efficiency can raise household income by 5% each year. julie: a short seller is betting against the tesla solarcity $2.6 billion merger. the founder added his name to the critics of the proposed
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marriage, describing it as crazy and walking insolvency. he estimates the combined company would burn through $1 billion each quarter and depend on continued access to the capital markets. flash" your "business update. still ahead, options inside. oracle -- shares of the software giant are up 9% this year. vix's highest since late june. this is bloomberg. ♪
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vonnie: this is "bloomberg markets." i am vonnie quinn. julie: i'm julie hyman. time for "options insight" with oliver renick. oliver: joining me is the momentum stock strategist, joining me from the cboe in chicago. i wanted to take on what is
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happening in the markets. friday it looks like a selloff that had a clear impulse to it and now today, the contour of selling and stocks looks a lot different fundamental thing, technical thing? what is happening? >> i think it is technicals, but first, and goodness volatility is back in the market. we're finally rocking and rolling again here. these guys were screaming in my year like crazy couple seconds ago. alyssa was a north korean nuclear missile -- all it took was a north korean new blue test and hawkish fed comments. i think it is all technically based. i've been playing this market based on a big fib level -- i don't mean lying level, but fibonacci retracement. 3.2% retracement was supported 123.6 extension was resistance of the all-time high. on friday we came down to the june highs.
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it seems like those levels were defended against yesterday's low. oliver: david, when you talk about volatility being that he meant, being -- being bad, one thing i thought was interesting as you look at the vix curve. how come we are not inverted at this point? david: you know, it is just -- when you come from such a low period in the front month, it will take a little bit for that to go through the rest of the curve. that is a big part of the reason, we're still -- we got to bake it in before we can smooth out some of that. oliver: let's jump to trade. you are looking at article. tell us what your trade is. trade here, icle will be bearish on the call spread. call, andthe 40, 50 $.30 at risk.
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really, what i'm thinking is this cloud momentum that oracle has baked into the price, and when you have seen the reports from several weeks and months ago, all been baking this thing and pushing it a little bit higher. i think it is done. i will be on the short side and capture a little bit of premium. julie: you go -- oliver: got it. bearish on oracle. thanks for joining. back to you, vonnie. ahead, however risk our high dividend stocks he said -- if the fed raises interest rates? this is bloomberg. ♪
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scarlet: from bloomberg world headquarters in intent manhattan, you are watching "bloomberg markets." i am scarlet fu. joe: i'm joe weisenthal. matt: i'm matt miller.
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scarlet: mark barton has headlines. mark: president obama is on the campaign trail for hillary clinton. he rejected the idea that donald trump is favored by working-class voters. trump wouldn't let you all on his golf course and suddenly this guy is going to be your champion?" he also said that trump is "not really a facts guy." saying he is not in the name-calling business, republican vice than financial nominee mike pence -- right -- republican vice presidential nominee mike pence refused to say whether he thinks david duke is deplorable, the word that hillary clinton use last week to describe some trump supporters. i would drawe: no more conclusion from that man's expression of support than from the fact that a terrorist to kill americans was at a hillary clinton nominee cheering
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her on. that governor pence added we live in a free country and people with bill motives can associate themselves with politics. former israeli prime minister shimon peres is hospitalized after a stroke. is a polish-born israeli statement that he has held virtually every senior political office in israel over a seven decade career. he won a nobel peace prize for his work in reaching an interim peace agreement with the palestinians. edward snowden says president obama should pardon him. guardian"lls "the newspaper he has benefited u.s. citizens. contractor is facing at least 30 years in prison for leaking government documents in 2013. snowden now lives in moscow but says he is confident of returning to the u.s. one day. global news 24 hours a day out
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by more than 2600 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. matt: thanks very much. markets close in 30 minutes. let's go live to the nasdaq, where abigail doolittle has the action. abigail: 30 in a row big volatility for the nasdaq is index trading down sharply on the day. third 1% or greater move in a row for the longest stretch since late june. this is reversing yesterday's recovery rally from the big selloff on right. -- on friday. the question is whether the bearish action on friday can continue. interestingly, small caps may have the answer. you look at the terminal. in white we have the nasdaq composite index.
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in orange, the russell 2000, small cap index. russell 2000 is below the lows on friday. well below the 50-day moving average, suggesting that perhaps the nasdaq is going to follow the greater declines on the russell 2000. all of this being said to him there is one big bright spot in the nasdaq and that is apple. shares are up for the second day in a row, the biggest longest winning streak, today winning streak, since july 28. today, the list comments from the t-mobile ceo, who tweeted earlier, saying "iphone 7 preorders are the biggest in history." ,, as a bit of a relief to investors in apple -- it may come as a bit of a relief to investors in apple. yesterday, gene munster of piper jaffray said that he thinks the iphone 7 is completely on track to be similar to the numbers of the iphone 6, if not better. there is consistency there. just to give 100,
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you an idea of how broad the selloff, handful of stocks trading hybrid 2 of them are apple suppliers. another standout winner, paypal. the stock is up sharply after a deutsche bank presentation this afternoon. matt: an apple is like 4% of the entire next to abigail --of the entire index. abigail: a little bit more, actually. matt: a huge stock like that is gaining. what is the big loser? abigail: interestingly, lots of the megacap names -- amazon, facebook, microsoft. one standout loser among those mega caps, netflix. down sharply on a downgraded to underperform. and analyst says he sees " hidden issues" for the company, including rising content costs. he also thinks amazon will be a big competitor. all of this could cause
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subscriber numbers to disappoint in the near term. stockwnside on the stock, that is already down 6% on the year. something that may support this netflix hast 3500, been stuck in a range all year. lots of uncertainty about this story. right now in the recent weakness it appears that the stock is dropping back out into the range, right towards him nolan's price target of $85 per share. would be -- could be some more downside ahead. matt: abigail doolittle at the nasdaq. joe: how safe are high dividend stocks? with interest rates starting to creep higher, particularly at the long end, some of these popular strategies are coming under threat. our next guest says investors shouldn't worry. here to explain is jonathan gold , chief market strategist at rbc capital markets. thanks for joining us. dividend, bond-like,
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has had an amazing year. we have seen a lot of these strategies get crushed, whether it is the safety trade, utilities. do you still like -- >> first of all, i'm not a huge fan of these high dividend stocks, utilities. but what is interesting is given how much they have run and given this threat -- you saw this in the last week -- the interest rates, they rise you would think they would absolutely obliterate. we were getting all kinds of calls from clients saying it is time to short these names or get out of them, what have you. say weome research to are going to make the case on why these are lousy investment, and we look at the data and we said, wait a second, these are nowhere near as bad or concerning as we thought. in fact, in a number of ways, really attractive. that was the epiphany.
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joe: before we walk through why they are so attractive, i'm intrigued by how you say you got a bunch of calls and clients. when you get these kinds of things, is of the kind of thing where thursday there were no calls and friday all the strategies were smashed and they ring you up? jonathan: um, yes and no. i would have to say that we probably we started getting those calls a couple weeks back. end of the summer, what do we do next, what is the market go? at the end of the year they are looking at dividend stocks. you do get these big fat clumps. that is one that has been happening right now. arelet: ok, tell us, why dividend stocks in better shape than he thought? jonathan: the first thing is if we look at how well they are doing, a lot of people think they should go down because they went up a lot. they've been a baton this year. -- been up a time this year.
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in terms of the longer term trend, they really weren't all that stretched. that is number one. not the five-year period, the performance, but the earnings growth was faster than the market. if you look at how much they went out, relative to the market, wait a second, these became cheaper. people were confusing the recent market run with a sector that is actually -- not a sector, but a group of stocks at a discount. and was probably the first more importantly the people were not reading the data the most important thing from what happens when interest rates rise? do these get obliterated? we looked at 25 years of data and we found that normally it is not good, but when the interest rates are super low, the yield is so overwhelming
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that people go into these stocks even as interest rates begin to rise. there is a cut off at around 2.5% of the 10-year before people start saying, with a second, rising interest rates -- scarlet: we are a long way off from that. jonathan: mind you, it is not mean the last three months -- next month will be like the last 25 years, but it is as good a guidebook as you can find. matt: you think we can add another 100 points on the s&p -- 22, 25 is your target. what fuels the extra growth there? jonathan: first of all, i don't think, matt, we will have future earnings growth. the general trend is 3, maybe 5. ok but definitely not inspiring. i know it sounds boring story. companies in this environment are managing cash incredibly well, generating a lot of free cash flow, and returning it. if you look at dividends and buybacks and measured it as a
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yield, 4.8 right now. in an environment where you cannot get -- you know where the bond numbers are. i think it will be a situation where the growth is uninspiring. the economy continues to be very lackluster. starks keep writing higher -- stocks keep riding higher and investors will find this very uncomfortable because they want to see growth moving the market. scarlet: how extreme or one-sided is the positioning in these names? jonathan: you know, i don't think it is. think of a professional investor come hedge funds are people managing mutual funds. unless you are managing a dedicated portfolio of high dividend stocks, investors don't like these things. who is holding them? a lot of it is mom-and-pop who are holding them in their own portfolio, were somebody going into a fund for the income. what is different, though, is the low-vol names.
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the staples from they are more dangerous, they are more crowded. it is very different story. carlet: 100 question for you, -- one final is in for you, jon. when you see these names rally, does that give you an indication of how we are in the rally? jonathan: this cycle is so different than anything we have seen before. i just don't know how you can measure it. you must have to say that if we are in an environment where it is 1.5 to 2 and you have interest rates at 175 basis points, white wooden people continue to death why wouldn't --why wouldn't people continue to ride this higher? joe: jonathan golub, thank you very much could scarlet: coming up, the bank of japan is losing market confidence. more monetary policy insight from harvard economic
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heavyweights. this is bloomberg. ♪
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scarlet: this is "bloomberg markets." i am scarlet fu. time for the biggest business stories in the news right now. wells fargo ceo says he is ready to testify before congress over the phony accounting scandal. he tells " the wall street journal" he is ready to "share wells fargo's story" at the hearing next week. its salesy altered goals to include discipline and remove risk. canadian prime minister justin trudeau plants reprove at least one new oil pipeline project in his first term. that is according to people familiar with the plan. they cite the trans-market
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expansion as the most likely candidate. the bestill improve neither approve all the products under consideration or reject them all. samsung shares have dropped since monday following a worldwide we call. -- recall. that is following reports of the galaxy note 7 overheating or exploding. rivals lg and apple may have benefited from samsung's problems. apple sold millions of iphone 7 units over the weekend. rogue banks in russia may need to look over their shoulders. president vladimir putin says it is a good time to start a crackdown on executive sling prosecution. he is ordering the government and law enforcement to study asset stripping fleeing abroad. but he said there is a need to put -- balance the needs
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with the limits on personal freedom. matt: the bank of japan is considering tweaking or abandoning its guidance on the amount of government bonds it buy. to that is according to people familiar with the discussions who say that policymakers want to give him some greater flexibility as they continue the massive debt purchase program that got going on. rather today on "bloomberg saidillance," ken rogoff that even with all their efforts central banks have not been able to generate inflation. >> i think they have lost confidence in programs going forward. they're not ahead of it, that is clear. they must be worried about it. tom: this goes to -- to the bloomberg folks, bring up the chart. we have shown it so many times, green rectangle, where they want the yen to go. kenneth rogoff, can policymakers
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tell the markets in any way, shape, or form what to do? kenneth: certainly not. they can tell themselves what to do and what the policy is going to be. it does depreciate your exchange rate, but it is not something that last forever. it started a few years ago and hasn't continued. some of it is coming back. exchange rates are very hard to explain. almost impossible to predict. tom: let's look at a trend that says this time is not different. the idea of a mexican peso. we use these charts when ken rogoff's onset. some real success by the mexican ofernment, the leadership professor parsons and others. when you see fragility like this from what is it signal to ken rogoff to see the pace of near 20? kenneth: i think there is
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concern about risk and emerging-market with china slowing and the global economy, and emerging markets always respond much more volatilely. question ime asked vice chairman fisher, same as 1994 or particularly 1998? kenneth: oh, i don't think it is a 1994 or 1998 situation necessarily. that said, i wonder if there is in a go races after countries have their emerging crisis. so far we have not seen that, maybe because exchange rates are more flexible now and that provides a cushion. joe: as for the fed, the fact that the fomc is now you to raise rates is not lost on harvard university economics professor marty feldstein. martin: i think the f one for excuses not to raise rates. they did that at every meeting
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all year. stan fisher at jackson hole had the same message, the time has come to start tightening. the people who don't want to tighten don't see the adverse consequences of running with zero rates all along the curve. >> let's talk about the adverse consequences. where are they right now? martin: 2 things. one is inflation pressure. no doubt that inflation is rising. if you look at the core cpi, not the fed's chosen number, but if you look at the core cpi, it is up 2.2%. if you look back a year ago, it is something like 1.7. it is beginning to tighten because the labor markets are tight and product markets are tight. >> but as a practical matter, if you are the fomc, it has been a long time you had a really low rates you have not had -- 2.2% inflation historically is not a problem.
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isn't it rational that what they risk, if itymmetric is raised and inroads the economy, it will be blamed for it? martin: absolutely. they don't want to take the risk. it is a political risk for them. i think their strategy is to keep rates very low. even if they raise rates by 25, are75 basis points, rates still trying to be exceptionally low and will continue the upper pressure on inflation. i think they are having intentionally for the higher rate of inflation so that once they have gotten to, say, 3.5%, theyate of 3%, can jack up the short-term rates. why do they want to do that? if the economy turns down, they can cut those rates. right now they have no ability to lower rates if the economy goes soft. joe: that was harvard university
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economics professor marty feldstein. scarlet: coming up, investors have been relentlessly putting money into emerging market bonds following the brexit vote we have a chart showing $20 billion of inflows. this is bloomberg. ♪
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scarlet: this is "bloomberg markets." i am scarlet fu. time for a look at the market trends illustrated through graphs. i want to start with oil because it is a big weight on the market today. energytional agency forecast that the global supply will last longer than what had been anticipated. if you look at the one-year chart comparing the price of what's texas intermediate and you can see oil's big recovery off the february lows. it has lost steam into the summer. it has gyrated and we couldn't
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get above $50 a barrel. stockpiles, the orange line, has been coming off a little bit. at the very end, a tick down. that is because a storm disrupted imports. now the late imports are arriving and it is leading to expectations there will be a big important in inventories. the forecast makes things difficult for opec discusses this month and in november. that is according to a bloomberg oil strategist. he says it suggests that supply cuts and not just freeze are needed to rebalance the market. definitely some thing for everyone to keep an eye on. matt: very interest in, considering we had a pipeline breakdown with gas into new york. we had a bottleneck and when that opens up this weekend, you could see prices drop even further especially for distillate. i have a chart that i stole from hillary, our morning charts group -- guru.
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flows into emerging market bonds continue to rise and don't really stop. the top shows you inflows or outflows for the day. the bottom panel is what you want to pay attention to. the cumulative money flow. a continues to climb. people are buying emerging market bonds, today and yesterday. there is been a selloff in the market -- i see that on joe's chart, actually. joe: we are looking at quite as selloff not just in the debt market or equities. really, everything. i love looking at the gnm function on a day like today to demonstrate there is nowhere to hide in this market. randomly thailand was up, but that is one of the few spots of green today. dollarly only the u.s. for currencies. sovereign bonds basically all weaker. sovereign cds commodities -- corn down nearly 5%.
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palm oil down nearly 2%. hide fromno place to falling markets. ony similar to what we saw friday with the brief respite on monday. scarlet: that does it for "bloomberg markets" "what'd you miss" and the market closes next. a lot of red on the screen. take a look at how the net's is are faring with less than four minutes before the close. by 230ustrials up points. this is bloomberg. ♪
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scarlet: we are moments away from the closing bell. i am joe weisenthal. matt: and i am matt miller. ♪
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scarlet: u.s. stocks closing lower. the dow at its lowest level since early july. the s&p 500 resumes. we see how investors are slinging risks across asset --. a large pension fund about the global environment. matt: the co, mark fields set to take the stage to convince investors they are wrong. scarlet: we begin with market minutes. the s&p 500 resuming the selloff. the dow losing more than 200 points. all major groups declining. to gain the only member was apple. it was not enough to hold the loss.

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