tv Whatd You Miss Bloomberg September 13, 2016 4:00pm-5:01pm EDT
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. matt: even apple could not save
us. similar market action to friday. everything was up yesterday by a lot and today, the big to klein. take a look at the indexes. they are down. i don't want to exaggerate too much. i am going to correct myself as far as ford. not down 30%. they are down about 5%. just to correct that. we see drops of more than 1% on u.s. stocks. 200 50 points. the s&p down 1.5%. take a look at apple shares. up at least 2.5%. verizon falling. t-mobile comes out and says they are doing great with apple iphone 7 sales, but it doesn't help verizon or the other telecom stocks.
the biggest drag is oil. exxon mobil down. exxon is the biggest weight. joe: let's talk about government bonds. the action is on the long end of these sovereign debt curve. -- of the sovereign debt curve. yield curve about 1.7%. that is a continuation of a in the u.s., but international. german 10 year yields, further into positive territory. you can get paid seven basis points a year to hold german government debt. i want to go back to the u.s. to look at the dose code 10 -- the 210 spread. the short end is not moving up nearly as much.
what is not driving the show is fed policy. bigger, global thing happening in the long-term policy expectations. scarlet: the search for yield continues. let's look at how currency is faring. the dollar had its biggest advance in 2.5 weeks. oil plunged. part of the dollar strength was the pound falling the most in five weeks. we know the sterling plunge has caused a jump in input costs. all of this before the boe meeting on thursday. commodities worth highlighting, the dollar gaining versus the mexican peso. australianquote the dollar, it is losing 1.4% versus the u.s. dollar. joe: on commodities, oil getting a hit after a report pushing back expectations for when the
global oil market is supposed to get into balance. that will not be until sometime late next year according to estimates. a 3% decline in crude oil starting in the morning. .et's look at precious metals those give an indication of how things are. people are dumping these two, even with the risk off environment, no appetite for -- no place to hide. find at thesean charges using the function at the bottom of the screen. one place to hide, dividend stocks in europe. here is the snapshot this year. the white line is the stoxx 600 index. the blue line is the morgan stanley index that tracks high and sustainable dividends. the two differentiating around april. morgan stanley index is down
13%, more than twice the decline in the stoxx 600. what has changed? the backup of bond yields driven by speculation the fed will raise rates sooner rather than later. investors switched out of defensive and moved into cyclical. the shift from monetary to fiscal stimulus that people are looking to will occur more slowly than investors may be pricing in. you may want to go back to dividend stocks as a result. joe: i want to get an update on the work function. it shows what the market is pricing in. it is pricing in 56.8% chance of a hike are the end of the year, a 22% chance for the september meeting. if we go to yesterday, we see it little bit higher.
57.4 yesterday. not seeing big moves. today was not driven by something big. a week ago, a little bit of a change. we have gone down significantly. odds of a hike for the year, higher than -- a little bit higher. interesting stuff that has gone on with short-term expectations thanks to various speeches last week. the action isme not really about what is going on at the short end of the curve. we are not seeing big enough swings that would justify the kind of big moves we are seeing in interest rates around the world. matt: or these futures. we are seeing investors act react differently to certain information. people helping to price that much more sophisticated and sensitive to
what the fed says. people who trade equities and bonds read signals from the fed different ways. joe: we have a great function on the bloomberg. it shows you the world equity indexes and you can look at the breadth of the move. the s&p 500, you can see, it takes a few minutes for all stocks to close. we are still waiting for today's data to come in here. gainig green spike is the we saw yesterday. the red spike is the loss we saw on friday. almost no stocks gained today. only about 18 stocks gained today. it was the opposite. we are seeing volatility and big swings because the market is
♪ joe: an ongoing story. last august, greece secured its third bailout and there is little sign of progress. -- theiday, the prime finance minister said greece needs to do more. alexis tsipras called for a completion of the bailout program and a decision on debt relief. that would pave the way for greece to return to the bond market. this is set to end on friday. for next on what is to expect for greece, let's bring in nick malkoutzis.
he joins us now via skype. have you back. every time we have you back, it is on news that is on issues with the greek bailout. where do things stand? are we heading towards another nailbiter at some point about whether greece qualifies for more money? it is another episode in the drama. perhaps not as dramatic as in previous episodes. hassituation is that greece these milestones to complete. 15 of them. these are the reform targets that were set when the institution of graces -- g reece's lenders or last year. greece has only completed two of the 15. it is a race against time to complete them by the end of the month. the greek government is saying
by the end of the month, the latest by october will be done. can that is done, greece obtain its next bailout. the hard deadline in this is the europeantober with the stability mechanism which holds tos money, saying according the agreement, if these milestones are not completed by october, this money disappears. t dangling inarro front of the greek government. the other thing is the bailout reviewed, lining up the next set of reforms that need to be done. scarlet: i feel like we have heard this before. alls like groundhog day over again. alexis tsipras delivered an economic speech on saturday. what did he say, and more
importantly, what did he not say? not that much, to be honest. a couple of years ago, alexis went to the place he delivered his speech on saturday , but as an opposition leader, and promised to move heaven and earth to tear up the bailout, to write off a big chunk of the debt if he became prime minister. we all know what happened subsequently. this time, he kept expectations low and the one message that came through is everyone has to hang on for economic recovery to come. 's economy contracted year on year by .9%. a quality basis, it grew by 0.2%. next year, we will see strong growth. 'se institutions, greece
lenders believe it could grow by two point 7%. it seems ambitious. if convincing growth comes, alex that, hislieves with political fortunes can be revived, as well. matt: we talk about companies that care about revenue, but never come to profitability. as far as the countries are concerned, where does greece fair? - greece fare? is everyone collecting his or her fair share? an issue at the moment for the government. revenue has slacked off. they missed their target by a few hundred million. that prompted concern that there is a feeling that the greek population, individual businesses have been taxed out.
the latest round of tax increases was a bridge too far. people cannot or will not pay because they feel it has become too much. they are watching this closely because the biggest concern for the greek government at the moment is that it will veer off its fiscal targets. greece has to produce the primary surface of .5% this year. it is achievable, but if revenues are not where they are meant to be, it could mean the target is missed. that will then trigger an automatic mechanism, whereby further cuts will be made. in the current environment, this government, which has lost so much support in the last 12 to 18 months, that would be politically toxic. joe: how popular is alex suppress right now? -- alex suppress right now?
tsipras right now? nick: his party is five to 10 .oints behind the problem for the opposition is trying to capitalize on this unpopularity, around 75 to 85% of greeks say they are dissatisfied with the government, that they are not for thesatisfaction opposition party in convincing numbers. this will give tsipras a window of opportunity to try and turn the momentum around. joe: thank you, nick malkoutzis. mark: the founder of linkedin is the latest selection valley mogul to give his money to politics. he will donate as much as $5 million to veterans if donald
trump releases his tax returns. mr. trump has said he is not releasing the returns because he is under an irs audit. ncaa will relocate seven champion events for the division i men possible ask about turn it. british business secretary confirms the u.k. government is on the verge of deciding whether to go with a nuclear power plant. the decision will be made shortly. there are concerns about security. the chinese company would provide a third of the financing. they are concerned about the cost. the dalai lama is calling for talks with islamic state turmoil into end the iraq.
the dalai lama insists islam should never be linked to terrorism. global news 24 hours a day, powered by more than 2600 journalists and analysts in over 120 countries. the biggeste of money managers are gathering at the canada fixed income conference. will join us to talk about his plans to deploy more than $3 billion into lending. this is bloomberg. ♪
and well. what is weighing on investors minds is the meeting next weekend, whether central bankers will budge on their globe -- there grow slow response to rising invest -- rising interest rates. daniel, help us understand what is going on. what is driving the backup? is it linked to whether investors will move the federal move into september? daniel: it is linked to what the fed is going to do, but it is more global than that. it is what people see as the expected economic growth .lobally there are worries about asia and -- into the of it fixed income markets. interest rates are at low levels on a nominal basis. we talk about is
the correlations between everything, bonds, stocks, commodities. very few places to hide. they all go up or go down on a day. a portfolio manager, how do you deal with those challenges, especially for someone trying to look at long-term obligations? daniel: we look at diversification. we diversify away from public markets spirit we have the bulk of access -- assets in stocks and bonds. jpmorgan assets are government bonds with negative yields. that is not attractive to us. billions ofsted dollars and we are ramping it up. we look at different asset classes globally on the private side.
we are doing private equity, infrastructure and national resources. matt: when you buy bonds, you buy to hold them, because with negative yields, you could have made a lot of money. theml: we buy them to own but we trade actively in the market. we want to look at countries where we have a co-adaptation we going to maintain. we trade around the hedges, but we don't want the full allocation to be traded, especially the negative yield. talk about your activity in the private debt market. how do you go about that? how do you connect with the borrower. we set up a subsidiary in the u.s., an office in the heart of new york city. we hire a lot of experienced people. that is how we end up investing
in private debt. we did some large transactions that were very profitable for us. you get the -- on issue and the discounts on the first issues. that is how we ramped up private debt here in the u.s. we are opening the private debt business in europe based out of london. scarlet: you hired people here to do so. talk about the risks to investing in these loans to u.s. companies. daniel: you need to be very good at credit. it is not going to be a portfolio with -- names. you need to be perfectly good at credit selection and you need to do your homework, meaning you look at the credit, you analyze different scenarios and make sure the debt you are buying would cope with negative scenarios. rely on s&p for
their assessment of company's credit worthiness? look atof course we that, but we do our own homework on these zones because these companies and loans, because of the importance of the asset class for us and the importance of the commitments we make to these companies. joe: they have had trouble and they have had the price of the commodity come down. to invest in this as a chance to get a piece of your national industry as well as get an asset at a distressed price? daniel: you need to maximize returns. a -- angle to look at these things. even though i am canadian, i
don't have a crystal ball. invested heavily in that sector. have youwhat extent had to adjust your return targets because of this low rate, low growth environment. daniel: that is the good thing about being patient capital. the long-term target return, it is more of a challenge, but the way we have adjusted, we have adjusted our asset mix. we spend a lot of time considering different asset classics. that is how we got into private debt and how we are reaching out geographically and by asset classes. you just have to work hard at it and it will not be the plain transactions that people see usually. , we daniel garant appreciate your time.
newst's get to first word former chinese president hospitalized after suffering a stroke. is sedated and under -- he is able is born israeli statesman. senior offices in israel over a second -- seven decade career. he worked toward an interim peace agreement with the palestinians. the cease-fire in serious civil war appears to be holding. monitoring groups say there have been only monitored -- only mino r violations. that truce was brokered by the u.s. and russia, and will hold
seven days. a syrian warplane struck decisions after a shell hit the israeli control position. antiaircraft missiles were fired at its planes, but missed. u.s. investigators say a delta a runway atoff laguardia airport because the pilot used to much reverse thrust and lost control. there were no serious injuries, but the ntsb chairman says it was "a very close call." spacex is planning to have another rocket blasting into orbit by november. that's after it lost a rocket in a launchpad explosion 12 days ago. investigators still trying to determine the cause of the accident. facebook plans to use and israeli manufactured satellite to improve internet service across parts of rural africa. ♪ global news 24 hours a day powered by more than 2600
journalists and analysts in over 120 countries.i am mark crumpton , this is bloomberg. scarlet: "what'd you miss?" high-speed electronic market firms breaking into currencies. volume has tripled in three years to almost $200 billion per day. joining us now to discuss the our owne is correspondent. 200 billion zones like a lot of money, but it's a drop in the bucket when you consider this is the oldest financial market in the world. >> fx markets are $5.1 trillion per day. while it is a small slice, it is very significant. the high-speed firms have really capitalized on opening that banks have left. as banks get more regulation and their balance sheets are restricted, the high-speed firms have jumped in to make markets. joe: with high-frequency stock trading, we've love people seen -- we have seen a lot of people go for regulation, brokers
talking about how it makes the market rigged. are we seeing something different and fx? >> it is surprising because the fx is different. there was a rating scandal -- rrigging scandal in which the banks work fined a lot of money. banks are more pragmatic these days. if a bank cannot do it, maybe i will be live this firm a shot. of the bigger firms which seem more trustworthy or more established can get in. hft has a pourable reputation -- has a horrible reputation as far as the public is concerned. are they doing something to change their approach? i think they are trying to sell themselves as reputable dealers in this market.
they are trying to convince that they have a better reputation than what flash boys have said. marketve been a volatile -- very much providing liquidity when it is needed. their argument is, put us in your pool, and if we don't follow through on pricing, turn us off. their customers are giving them a shot at this stage. joe: very cool. you can check out her stuff on bloomberg.com. thanks so much for joining us. "what'd you miss?" in the modern world modern -- modern world manage disruptive technological changes? that's the key question being asked in the book "the wealth of humans" and the author joins us now. thanks very much for joining us from washington dc. tell us what your book is about and tell us why you needed to write about the nature of the
labor force. ryan: it is an interesting time for the labor force. we have interesting things happening in technology, new kinds of work being brought in to the economy. we are seeing distressing figures on things like wage growth and inequality. the book is an effort to put together the different friends relating to how work is evolving in the world of digital technology. joe: one of the big anxieties is that fewer and fewer of us are going even going to be able to work, or apply our brains to productive enterprise, because artificial intelligence and robots will make us all obsolete. what is your research show on this topic? ryan: we are beginning to see the potential to replace large numbers of jobs in the workforce thanks to the improvement, machine intelligence, which can be used to drive all kinds of
vehicles, carry on service conversations. what i don't think we will see over the next two decades is mass unemployment. the reason for that is that everyone has to go for a roof over their heads. if technology displaces workers in one field, they have to accept whatever way jamaican in order to put food on the table. that will be a source of social pressure. inwhatever way they can order to put food on the table. joe: as you point out in your book, this is the first time society dealt with huge technological changes that disrupted the workforce. for example going from a farm-based economy to postindustrial. huge changes in the nature of the most people work. what's the most interesting thing you learned about how society cokes with the evolution copes with the evolution of technology, in
terms of creating work? ryan: what is most interesting is that it is hard. it takes several generations to work out what societies need to do to make work work for these people. era, you hadrial to make cities livable places so that people were not die in of cholera. you needed new forms of education so that people were getting instruction in reading and writing so that they could be useful. you had to change the social safety network, so that when a recession wiped out factory jobs, people were not dying in the streets. similar to what happened in the 19th century, we will see the same kind of social evolution as we work out what has to be done to make the company in a digital era work for the typical worker. that will be a huge challenge. joe: you get to write books for a living. i get to look at the bloomberg terminal all day and play with charts. i could probably do with 24/7.
i find it a very fun. i could do it forever. tell us about this cultural thing that's happening. some people have jobs that they really don't want to step away from, that they find to be immensely satisfied in. workill that kind of shrink? ryan: right. what has been interesting over the past couple decades is that life has been incredibly good for people in certain white-collar professions with a lot of knowledge work. in the sense that they have been rewarded with rising wages, and the work has become more edifying -- we get to do more stuff we enjoy, work with other people we enjoy being around. at the same time, people at the other end of the workforce have stock paychecks and --stagnant paychecks and find their work to be less edifying. the problem will not be what
people do in the highly skilled professions coming up with new ideas, it's kennedy -- can we thatup with institutions provide something to the blue-collar worker that has not done so well? i am not sure what that will be. i don't think that is a hands-on factory job like it was 50 years ago. joe: one of the hot debates gs isn up in the econ blo the way to which technology has made leisure time much more appealing -- video games, social networking -- essentially reduce the need to get out of the work. what do you make of this debate going on? do you think that working is not a such a great substitute for leisure as it had been before? ryan: keep is happening in two
different ways. one, wages are not going as rapidly as they have in past generations. the pull trying to get young people under the house is weaker. at the same time you have incredible wealth of entertainment opportunities, from video games to social networking. that makes it much more attractive to have fun in your parents basement. in both ways that is encouraging people to stay at home. the entertainment side is only going to get better. we going to have virtual reality that makes these worlds even more emerson. -- more immersive. i don't know, maybe that's how we deal with this crisis -- we create a synthetic world so that it doesn't matter to these people that don't find fulfilling work. talk about this decline in the labor force participation rates. even prime age labor force participation rate, even those that are retiring -- that is generally down among men.
in your work what you find is the most compelling nation for the trend? ryan: i think it's the difficulty in transitioning in old economy job either replaced outsourced or been to foreign workers brought into the global economy. this is not easy to learn a new skill, even for knowledge workers. intel peoplet will impel people will to do that is the prospect of good training. there is no incentive, we should not expect people to do that without some kind of knowledge from others. others.of udge from and they have not gotten that nudge. unless we work as a society and work from one sunset industry to another, we are going to continue to see this trend
i guess we hear from bill clinton and president obama that hillary is getting better, and it was "just" pneumonia, which to me sounds pretty serious. but she will be back soon? >> obama is the best surrogate that she has. that speech in philadelphia was a real farm burner. -- it went after donald trump for his tax returns, for his charity, it really laid into him. >> isn't it more important to get out and campaign? it's 2016, can you run a campaign by tweeting and posting on facebook? do physical events matter anymore? [laughter] >> wow, that some out-of-the-box thinking. joe: it just seems like it's so easy to make news by doing something online. of course all the reporters are on twitter update. as soon as you tweet something they will probably put it across
cable news. at least donald trump seems to do that. -- being onthe idea the road given a speech seems antiquated. >> yeah, donald trump is giving a campaign that is mostly of tweets and facebook posts. and he is only four points behind. joe: but there are rallies, he is there. you have to be out in person. people want to see that or else they will not vote for you. >> you do need to be out in person, yeah. scarlet: do we have any word on what that's can i happen? when her first appearance will be? what it will consist of? and what her priority is? >> you are asking a lot of information from a campaign that waited till she collapsed to disclose that she had pneumonia. i think her campaign felt it was important to take a couple days off. surrogates and advisers are to be believed, she is ready
to get back out. joe: is there any evidence yet -- we keep talking about hillary's bad weekend -- when we can see that show up in the polls? >> i think soon. there might be a bloomberg poll coming out tomorrow that will reflect some activity since her bad no good weekend. scarlet:, trump has his own surrogate, his daughter, who is immensely popular. cable treatment talking about the childcare plan that she first brought up at the rnc. there are not many details in terms of how she will fund that, are there? >> no, he has not specified how he will pay for it. it is a generous plan for people like us that can take advantage of many childcare provisions of -- that can't take advantage of the many childcare provisions that would make all childcare
tax-deductible. taxes, youize your could write off everything you spend on day care. >> there is a shortage of bonds worldwide. i think paying for it would not be a problem. but winning the white house may prove more problematic for him, right? a great story out today about the bible states that he has to win. ates that he has to win. >> michigan seems out of reach. oakland three clinton has to do -- all hillary clinton has to do is gather her face. -- gather her base. it is hard to see how trump can win it all. joe: thanks for the update. >> coming up, ford stock is failing to respond since the ceo took over in 2014. we will dig into the company's numbers.
fallen sinces have mark fields took over as ceo. he hopes to reframe his strategy at a investors meeting on wednesday. let's dig dig into that for today's "the numbers don't lie." the red line is where alan started as a ceo. you can see the stock did well in the 10 years 32,014. then he left, and mark fields took over. the green line signifies that point.
you can see the steady price decline. that is not a fair way to look at it. fields was a dominant presence. and he still is pursuing the fo ford strategy with some success. you can see ford's following stock amid the rebound in a net income. the company missed analyst estimates, but since then has been very upfront about concerns, even warning this summer that a stolen u.s. auto market threatens the company's alling u.s.- a st auto market threatens the companies full-year sales. rising after the recession, up at the 18 million mark, but possibly hitting a peak. that is what people are concerned about. not just for ford, but the entire industry. august sales reflected a big miss in estimates.
the big problem is light truck sales. light truck sales in general have been outpacing cars for many years, creating this gap. , cars andks in white orange. is one ofes for ford the top-selling in the u.s., almost for four decades. those sales declined six percent year-over-year last month. that is a worry for foreign investors. outside of lagging sales, there is fear of tech giants like google elbowing into the business. over the past month, fields has tried to combat that with announcements of autonomous vehicle by 2021 and expanding its mobility with the purchase of a shuttle van service, and issuing bikes in san francisco. it has partnered up with a ton of cities.
so far investors are not convinced as for shares trailed both gm and the s&p 500. in orange.e, gm it is a concern. wednesday fields will take another shot at convincing wall street that the 113-year-old automaker is worth the badge. i talked to him last week and asked him if he is worried about the decline. >> we don't manage the business on day to day stock changes. we are just staying focused on the ford drivers that value creation in a company. that is about a growth, reducing and, reducing returns, about providing rewards for our shareholders. >> i am joined by scarlet fu. one of those things that joined auto sales to a record. we saw that peak up to 18 millions, that is starting to be industrywide, not just for ford,
a bit of a concern. scarlet: and that chart shows the steady growth in credit. that blue line is the value of auto loans. the top $1 trillion made last year, a steady increase over the last five years. that yellow line tracks banks and other lender's willingness to offer or demand higher credit scores. you can see it has been pretty rocky. but they are getting more picky. you have a net 1.6% loan officers demanding a higher minimum credit score. that is certainly can of the initial. during the financial crisis, people were willing to walk away from their homes and mortgages. after the financial crisis, people were demanding secure auto loans. the thinking was that people would never walk away from their cars. joe: in america, you don't walk anywhere. scarlet: people needed their cars to get to their jobs.
scarlet: we have jim and industrial production tomorrow at 12:30 a.m. for the month of july eastern time. joe: i'll be looking at u.k. labor data. early.ies get up that watch my dvr of eurozone industrial production, 5:00 a.m. eastern time. scarlet: that is it for "what'd you miss?" we will see you tomorrow.
nicole: i am the cole wallace. if you want people to notice, you need a clever name. -g --weng like water will come back to it later. the show tonight, hillary clinton takes a second day off the campaign trail to recoup from her bout of pneumonia. she was able to call in decent subs to fill in her shoes. president obama