tv Bloomberg Markets Bloomberg September 19, 2016 3:00pm-4:01pm EDT
vonnie: live from bloomberg headquarters in new york. covering stories at a san francisco, chicago, dublin, and tokyo. it's been an up-and-down day on markets, giving up gains. will the bank of japan make a surprise announcement this week? wells fargo ceo faces congress .omorrow, allegations that retail news banking executives have the least. marketead over to the guru. it julie hyman. stocks back in the ring
today. a bit of his zigzag kind of day. it has been in a relatively tight range. a lot of traders are waiting on the central bank news later in the week. if you take a look at the s&p 500 over the course of the day and the intraday move we have seen, we saw sort of a zigzagging move. down&p 500 sort of going earlier in the morning and going down. strengthening into the close of trading. we get some financials and real estate stocks. this is the first day it is trading alone. assets,ou look at other we're not seeing much change in the dollar and the 10 year. we're not seeing investors place
bets, using proxies for that action. we do have some supply constraints in libya that has clarityecting pricing -- pricing. because these are heavily weighted, they are contributing to the rebound we are seeing in the s&p 500. news, dealeaking reporter.com is saying that this company is getting close to finishing a sales process. and this report mentioning potentially bass pro shop, private equity as being the successful buyer of this company. right now, about 3%, we will give you any development we have about where that company is in the sales process. david: let's check headlines.
mark crumpton is in the newsroom. man wanted for questioning for bomb explosions over the weekend is in custody. he was arrested after a shootout with police in new jersey. two officers were wounded, but they were not believed to be seriously hurt. taken from the scene on a stretcher. the associated press says bar owners saw someone slumped in his doorway. say they pulled the gun and shot the officer wearing a bullet-proof vest. it ended with him wounded. new york city officials discussed the arrest and the police response going forward. >> we will have a very strong
presence because of this incident. because of the united nations general assembly. mark: congressional leaders have reached funding, it could be fundingas government fights the virus. taking action against other member states have failed to honor their burden for refugees. they issued id checks after asylum-seekers00 including from syria and iraq. sweden accepted nearly three ases as many applications did germany, whose population is eight times larger.
powered by 2600 journalists in over 120 countries. this is bloomberg. the top competition regulator is standing by the decision to demand $14 billion in tax repayments and may investigate other companies. a u.s. leader, she faces praise and criticism. more probes could be coming the top competition regulator is standing by the decision toassociated with the s roundtable and sent a sharply worded letter to the heads of 28 eu member states. in the interest of all countries that respectable of law, this decision must not be allowed to stand. also a former republican governor, thank you for being here today. lay out the case against this happening. >> thanks for taking this topic
up. , thought to states be in charge of their own tax laws. decision isoners that they decide for the american audience, having a tax law that encouraged headquarters to make investment in a new plant. was on out washington the phone saying, not so fast. what happened to the country of ireland that has tax laws, and those were reversed. was joining in this case, apple, to protest the decision made by the european commission. basically saying that it doesn't matter what tax companies pay. pay the regular corporation tax. it was already an advantageous
tax. >> there is an argument for the u.s. fixing the tax code. single mostis the important gameplay this country could do to get the gdp growth accelerated by 1% or more. we should do that. it would alleviate some of the problems that companies face around the world. be parked outside the u.s.. is, thereality nationstates of the eu, those countries are fought -- thought to be put in charge of their own tax law. and they are being told they are not. why fightingnie:
this case on behalf of sovereign nations in europe? >> the sovereign nation makes the law and it is u.s. companies and we have 200 of those companies that were part of the business roundtable. if i go to any country in the eu and i follow their law, do i have certainty that is where it stops? or do i have the exposure at a later date. someone could come in and say, we disagree with the interpretation and we are assessing you liability that you did not plan on. and frankly, never thought you were going to be subject to. >> you must have a lot of anecdotal information. the meeting this week, a lot of concern about when rates will rise. i wonder what they are saying.
>> we don't try to do the fed's job for them but there is a sense that we have this time of low interest rates and it hasn't been stimulative to the u.s. economy the way that some of the policymakers would have hoped. look at is the overall economic growth agenda for the nation. it is clear the accumulation of policies, whether they are ,onetary policy or tax policy regulatory policy in federal that the-- accumulation of all of that stuff has yielded us the slowest recovery we have ever experienced. 3% gdp growth, but that is not exactly something to be excited about. >> why should they position
themselves here? >> companies are headquartered here, many of them are started here. day in the world whom we face global competition, one of the challenges you've got when you are this large u.s. competitor and they are offshore. you are putting yourself at a significant disadvantage. some of that gets made up because people are patriotic and they want to be here. minute, can wea keep market share? and we have seen some companies literally have to make very hard and painful decisions. the obvious answer is to fix the tax code here. we should help ourselves, we should not be trying to figure out how to work around the u.s..
we thought many of the governments were trying to create jobs locally and be on the side of those job creators. not looking at revenue raising activities. your letter to on glum merkel. is there a textual release their about the campaign going on now? its talk about the u.s. and mexico. concerned is it something that is of concern to them? >> we have such productive capacity. use all the services we provide. we want to be able to be engaged
globally and sell those products and services around the world. we have been very supportive in the past of trade agreements. quentin with president to help get it passed in congress after they were negotiated by the first president bush. there has been bipartisan support in the past. senator hatch talked about the tpp agreement. we would like to see that. we want fair trade agreements. but we cannot possibly succeed economically if we withdraw from trading with the rest of the world. we are a globally integrated world. we would love to see trade be better. we would like to see trade flows be more even, but we don't get there by withdrawing. thank you for joining us from washington, d.c..
have more on wednesday at 12 noon eastern time. be sure to tune in for that. vonnie: coming up in the next 20 minutes, the wells fargo ceo will testify before congress tomorrow about the banks retail branches. what did he know and when did he know it? david: and the bank of japan gets ready to make its latest decision on monetary policy. any surprises up his sleeve? minutes for the closing bell. 39 points there. and the nasdaq is now unchained. this is bloomberg. ♪
vonnie: this is bloomberg markets. david: time for the bloomberg business flash. at some of the biggest stories right now. fortis pushing back for moving work to mexico. they say the business is up 59% after shifting production to an ohio factory from south of the border. michigan plan currently building them. the biggest process food maker is working on a planned initial public offering, according to with the matter. the ipo could value and $5 billion. atro today unveiling a drone a new dimension to venture filmmaking is sparking a rally for the flagging stock.
priced at $799. that is your business flash update. wells fargo stock was hit hard after scandal created by 5300 employees. the ceo will face the senate banking committee tomorrow. to say what went law rock -- what went wrong and what he's doing to fix it. they will be taking a leave of absence. the bank did not elaborate. ,oining us now from washington bloombergs congressional committee. why is it still in operation? a chancenate will get to ask them that tomorrow, for sure. likely to be a tough day for republicans and democrats.
are going to want to know more specifics about what the bank knew about this alleged fraud. ae timeline, why it took 5000 ploy ease being fired to conduct this investigation. they will also have questions about culture. whether or this incident is indicative of broader problems. there will be quite a bit of time talking about executive pay. they want to know about what steps wells fargo has taken to consider klein back pay. theexecutive in charge of bank where the alleged misconduct took place. the bank did not elaborate on this executive taking a leave of absence. we can talk about about the role that it plays. what kind of relationship does it have with congress?
>> the bank has been doing damage control on capitol hill. number of a executives, including tim sloan who is the bank's president to meet with lawmakers and staff. to explain and to give an overview of their investigation. what they did to remedy this. it is interesting. if wells fargo has a much smaller presence in washington than some of the other big thanks. they have tried to craft an image over the past few years even as the bank has grown to be one of the worlds biggest. to maintain this sort of small community hometown bank feel. it sort of backfired this week. first and foremost, the firms that they had in staff, here to help them, it's much smaller. they have definitely been overwhelmed, per se, about the level of congressional districts missed.
abouto raised questions one of the ways that we try to distinguish themselves, focusing on specific businesses. differentiating themselves, a us-based focus bank, they aren't as big and investment banking order evidence. something that has traditionally been risky like a derivatives training. it is not helping them at all this week. david: you'll be hearing testimony and they will appear before the senate banking committee. than 2 million unauthorized
vonnie: this is bloomberg markets. time now for options insight. julie: joining me is jim serco from them cam holdings. on this quiet day leading up to the central bank meetings that are happening later in the week. you have been hammering this theme of the return to volatility in the fall. something we haven't talked about as much is why.
why do we tend to see this? people are going back to work and back to school. what are some of the reasons behind this typical return to volatility? >> one is seasonal affective disorder. believe it or not. nos thursday is the at him equinox. less light during the day and a relationship between that and an increase in risk aversion. we have had many financial market shocks. >> we will see what the risk aversion trade looks like come wednesday. with this sort of movement into the fall, we get retailers to try to create events. single day. still a month and a half away.
>> one catalyst we are looking at. it is up about 70% from the february lows. stock and we characterize those earnings as stellar. it is about much improved monetization. the price to average consensus price target has moved up about 10%. a lot of momentum in this story. said, singles day where last year, they sold almost $15 billion in merchandise in a single day. there is some interesting seasonality there. volatility tending to be higher. what is happening with september into the singles event.
we go to mark crumpton for the details. mark: the ambassador accusing the islamic militant group of the diverging international aid to its terror infrastructure. called on the un's to create a way to and the practice. he says how mosses infiltrating humanitarian organizations in gaza. and using operatives to divert funds. there has been no response yet from hamas. bodiesrs recover 18 after a heavily loaded boat sank in a river over the weekend. a dozen others are missing. it was carrying more than 100 muslims on holidays. chris christie, his top allies were involved in a plan to divert traffic new the george washington bridge to punish a local mayor that did not back his reelection.
that is according to federal prosecutors that began laying out their case. they both face federal charges in connection with the 2013 lane closings. race in georgia, they traditionally vote republican. leadingey shows trump 45% to 42%. libertarian party candidate gary johnson getting the support of 8% of likely voters. johnson may trail in the polls but he is way ahead when it comes to fitness. men's health magazine says the 63-year-old johnston has on the highest mountain on each of the seven continents including mount everest and completed 17 marathons. also finished for ironman world championship triathlons. thanl news powered by more
2600 analysts in 120 countries. matt, can you keep up with mr. johnson? matt: i will do my best with your help, mark crumpton. the nasdaq where abigail doolittle has the latest. abigail: the big story is the return to volatility. the last six trading sessions. that, the worst week since february. on an intraday basis. still down slightly right now, but again, behind a lot of this action is apple. shares have been higher in the morning. they turn sharply lower. it was premature.
it could be consolidation. they had the best week in five years. could be consolidating the 11% move. 33 -- 3641, excuse me. this is a longer chart. pointing to the recent spikes higher, none compares to last week's parabolic move. the important thing is that stock is well above the down trend of the last year or so. that is bullish. ,ven if the stock drops a bit it can be positioned bullishly. that helped explain why it has been volatile today, but who have been the perpetual winners?
>> the stock is up for its best pace. dystrophy drug did receive accelerated approval from the fda. this is a big relief concerning that the drug had been early this year. not so pleasing to the investors, part of the 33% bearish short interest, for sure. they had shares of the equipment maker. they see some good stuff. anders could be moved up what is probably most impressive , this stock is up 62% this year. the bloomberg intelligence analyst told the team recently that it has a lot to do with intel not going with the newer chip design. and this momentum is likely to continue. matt: thanks for a much. joe: markets are bracing for key
.olicy decision they largely ruled out the federal reserve hike ends of temper and economists are split if the bank of japan will boost stimulus. called money, the art of living. he manages an investment in london. thank you for joining us from london. this week. a recent backup. we have the fed and the boj decision. >> it is a fascinating time and monetary policy. i am less focused on the specifics of the decisions, but i am more interested in the broader context. we are entering the endgame. and it is very unclear what the bank of japan is going to do.
is, wet i mean by that plausibly exhausted conventional tools. or the lower interest rates, we have exhausted those because we're starting to see the negative consequences from them. i feel like i have been hearing hedge fund managers with the endgame for a long time in regards to monetary and fiscal policy. what, specifically, is different right now with the bank of japan that, in your view makes it a pivotal moment to watch? >> may be the easiest way to think about that is i don't know what good news is. in the past, from a risk standpoint, if you had a monetary policy meeting, you knew what easing looked like and what good news for the market was.
it was maybe more quantitative easing. we have reached a point in the japanese case. the first quarter move to negative interest rates. a lot of market reaction is what you associate with monetary tightening. when i say the endgame, we have of what haspoint become the conventional tools of monetary policy. they're having detrimental side effects. the side effects mean that not only are banks under pressure, but you have the elderly, which is politically influential, rebelling against the effects of that. what does that mean for the ability to surprise? it seems to have been a tool in the policy toolkit. >> you are absolutely right. one of the key point is not only is this damaging for the banking sector. one has to stand back and say that if share prices are falling
, it's not a sign of economic health. the fact that the policy measures are starting to become very negative for banks, it is undoubtedly a concern. clear that lower interest rates here are stimulating consumption. they may be increasing the desire to save. you could be getting the opposite effects that you aim to achieve. into thented to go bloomberg row quick, i have a chart showing the nikkei index. it relates to negative earlier this year. you see the steep falloff in bank prices right after that. banks are getting pummeled. they will have to try to get
back to some sort of policy, right? >> this is what is fascinating about it. they are in a bind and it's not clear that the current tools are going to work. the early success that they had was largely in exchange rate effect but they haven't boosted domestic consumption on a sustainable basis. he is now in a fix where it's not at all obvious that if he accelerates qe, that he has any better chance of obtaining his objectives. matt: how about mario draghi? they are not achieving the results that they want, right? they are not able to boost inflation or even cut their normally thest? fiscal authority.
>> they can't do that. that's the problem. this pertains to the fed as well. the asset price response of monetary -- this is causing them a problem. have already seen two events that are really not events causing significant asset price volatility. the bank of japan said we will review the monetary policy and you settle for the long end of the curve which is a pretty brutal price move. mario draghi does nothing and you saw asset price response. the debate was happening in jackson hole. what is plan b? are there other things we can do? i think we have to be pressed on
the news right now. and ontario-based startup that lets people use gestures instead of mouse or keyboard has scored a major funding round. they raised $120 million from amazon, intel, and others. an armband interprets electric signals and muscles to counteract or interact with computers hands-free. cole's place a higher more than 69,000 additional workers. the department store operator it expects most will be filled by the middle of november. several retailers and businesses have started ramping up hiring for the holiday shopping season. hire more than 70,000 people. smart is unveiling a phone app to organize travel. says it suggests , but users will not be able to book activities are restaurants from within the app store. that is your business lash update. with author of the book "money, the art of manager and hedge fund in london. as such, you have a lot of interaction with customers, clients, and colleagues who are
wondering where they can make their money safely and where they can get more yield. do you believe in this starvation for yield? >> there is a real challenge for savers inking about retirement and people using rules of thumb. they want a reasonable level of income. this is a challenge for pension funds and right at the heart of what is happening in markets currently. and there is doubt that there's a big charge. yield characterization is not the best way to describe what is going on. a big part of what we are seeing should be characterized as volatility of version?
>> if you take the two extremes, and you think you have cash at one end and you have equities at if you imagine a , it is almost designed to lose money where there is an almost certain loss. about 20% or 30% losses. it you have no volatility. if you look at the global equity market, you are getting very reasonable implied real returns. you've got to live with the degree of seat -- sleepless nights. one of the most striking characteristics of markets at the moment is the price you will .ay
it is considerable. >> how do you guard against that. >> i think people have to be we haveto embrace it evidence like the flash crash by the spread of what i would say is conventional risk management. has created this kind of obsession with obtaining volatility. a fact of life that if you want to generate returns, you have to tolerate volatility. >> we saw this this year. pouring into strategies that they perceived to be safer. you think that there are
opportunities embracing the volatility nobody wants? think one has to be very careful because we are at one of those junctures. we have a real change in the interest rate. may wellstrategies just be a sample bias. have proven,ou statistically, that a strategy works, it's often the most dangerous time for that strategy. i would urge a lot of caution. if you look at valuations have volatility if you want to generate returns. joe: how much is a function of essentially postcrisis scars? stuffw much of that other is hurting people?
>> i think it is probably a combination of both. if you have been a global equity era,tor, the post tnt you've had a very volatile path of return. you had the worst returns when you need it the most. equities have performed very poorly. the experience has been much more pleasant. beenost crisis regime has one where, because of central bank policies like forward guidance and qe, you get this kind of amplified asset price volatility in response to what are really tiny changes. matt: we have had times in the recent past where they are not willing to wait through volatility and they pull their money out. you have to be willing to put your money on the line.
>> we run multi-asset firms as well. investors in the funds that we run and they are all aligned. if you think of the history of hedge funds, you talked with soros or jones, those guys had huge volatility. they try to contain drawdown but they have big volatility. i think there has been kind of a created which is largely the accident of the correlation between equity that says you can have those equity returns without the volatility. that is a pipe dream. fascinating stuff, really appreciate you coming on. is not the only
it is time now for our chart chat with less than 10 minutes to go. i want to start with tech stocks because they have been the star performers up 11% versus the s&p 500 2%. it is more than just apple. it is all of tact because we have the equal weighted tech index. apple has the same weight as diamond offshore, for instance. it indicates tech stocks are outperforming the broader market. since thexed it there low on may 4 up about 11%. that suggests the bread this
broad-based. because you have the 1% gain in the ratio, we will look at apple. , it's across the board for all of tech stocks. looking at the fact that market expectations for shows thees, this number of fed hikes that are expected over the next five years. back in december, the market was pricing seven hikes and we had the really volatile january and february. important.y let's say we get another bout of volatility. that can't keep coming down. it is down to three and could go down to two or one or zero. they are running out of implied forward cuts to defective oez in the event of another bout of volatility.
this is a sign it is gone. the decisions of other central banks, i have been going through a number of signals today that show you the market doesn't really know what is going to happen with the bank of japan and, to some extent, with the fed. thought we knew with more visibility what was going to happen this year. and back then, volatility and emerging-market currencies fell to a one-year low. now we are shooting up again. outcome is a bit certain now. the volatility in emerging-market currencies.
presumes there will not be a hike but there will be dots and a press conference from janet yellen. even though most people assume there is no move on the horizon, it should still be pretty. matt: there is no wolf, but they may cry wolf again. what did you miss and the market close is next. take a look at the major averages. the dow and the s&p, little changed as we head to a week in which the fed and the boj will give their latest interest-rate decisions. this is bloomberg. ♪
♪ scarlet: u.s. stocks closing this afternoon buoyed by rallying commodities. joe: but the question is, what'd oyou miss? scarlet: we look ahead to the fed and boj rate decisions on wednesday. joe: and the colorado gold forum. fedex reportstt: earnings tomorrow. the charts you can't miss ahead of that release. scarlet: we begin with our markets. the dow and the s&p finishing higher, just barely, while the nasdaq closing -- we just ticked over and all the indexes are in the red. a little change for the major indexes. this is positioning as we get ready for the fed and boj position come wednesday. the you look at the rest of world, global equities are higher after a two-week slide. joe: