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tv   Bloomberg Markets  Bloomberg  September 28, 2016 2:00pm-3:01pm EDT

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we are live at bloomberg world headquarters in new york. covering stories out of canada, washington and zurich. coming back from losses during most of the session, stops hovering around the flat line -- janet yellen said the majority of central bankers see a rate hike this year. whereore on her testimony she revealed that the central bank is taking a close look at the biggest banks. we will hear from maxine waters later this hour. duke energy wants to bring natural gas to pennsylvania, ohio and west virginia best how the company plans to make it happen. markets close in two hours. julie hyman is here with the latest. julie: and you are flat line for
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the major averages at the moment. -- a near flat line. we've got oil prices now on the rise, we had that janet yellen testimony, we had durable goods orders this morning. crosscurrents in the markets today. let's talk about oil. it pushes higher by 3%. oil having some wild swings over the past week. -- algeria itself proposed a cut in production. they may sign onto something later this year. look at how this has played out in the various groups in the s&p 500 today come energy doing the best today, telecoms doing worse. a downgrade to at&t at ubs. industrials are one of the areas in the green.
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for augustds orders were unchanged. the estimate was for a decline of 1.5%. we've seen the industrials, durable goods orders desk durable goods -- durable goods companies rising today. ,e're watching the drillers almost bringing together durable goods and oil. we are seeing them rise as well. baker hughes and weatherford international. another company in that semtechals index is death they raised their full-year earnings per share guidance by 5% -- revenue grew 8%. ntas raised their full-year earnings per share guidance by
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5%, revenue grew by 8%. oliver: let's check on the first word news this afternoon. mark: the united states is sending 600 additional troops to iraq to help reclaim the city of mosul from islamic state. train and advise iraqi's on the plan to retake the town over the next few months. the u.s. has roughly 4600 troops in iraq. paul ryan he does not expect congress to address the hotly debated transpacific partnership trade agreement in the upcoming lame-duck session. speaker ryan said the proposal needs revisions. >> the last thing i want to do, just for the sake of our allie'' relationships is to bring up an agreement only to see it fail. this has to be improved and fixed. that will not happen in the next couple of months. mark: he's increasingly
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confident that the house and senate republicans will maintain their majority after the november elections. john warner of virginia is asning donald trump disrespectful to the military and woefully unprepared to be commander-in-chief. he is endorsing hillary clinton. he says he is "distressed by trump's comments that the u.s. military is in bad shape." a wildfire south of san jose, california is threatening hundreds of structures after burning through three square miles of dry brush and timber. at least one home has been destroyed. a heat wave has made the fireworks, forcing hundreds to evacuate. -- made the fire was. -- made the fire worse. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. vonnie: at the beginning of the
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year, three c's dominated the global outlook. china, commodities and central-banks. no comments about the three p's, policy -- >> we've had disappointing pace of growth in the u.s. economy and productivity growth and output per worker is exceptionally slow, .5% per year for the last five years, maybe twice that over the last decade. low in historical terms. that is critical to living standards and investments of all sorts. vonnie: joining us now for an .xclusive is joachim fels pimco just released its outlook. do you see one of three quarters
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for developed markets in general -- how do we get to a stable growth rate of that nature? joachim: the main reason is that bad stuff that happened over the past year has stopped happening. what we've seen over the last six months since the volatility we had in january, we've seen markets much calmer. the central banks have sedated the markets. financial conditions have improved. they have eased. we get some tailwinds for the economy in the u.s., the inventory correction is behind us. we can probably see something like to come and maybe even 3% over the next two quarters. oliver: is that going to be enough? an improvement, but will it be enough to sustain where
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investors have been putting -- inmoney and banking banking to get corporate earnings to rebound and get some of these companies balance sheet in better order? joachim: markets are already anticipating better growth. otherwise, they would not be up here. they've been propelled by central bank support an expectation that we get some rebound, particularly on the earnings front. the dollar appreciation is behind us. we should see some rebound. we worried about what lies beneath the surface. valued asset markets and some risks that may come to the ball. we're worried about the buildup of debt in the corporate sector. does it matter if rates stay the slow? -- this low? joachim: it's a decent chance that we get some rebound and productivity and that could make
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the fed more willing to adjust rates higher. the broad consensus in the markets that rates will stay low forever could go. you say some chance we might get a decent rebound and productivity. what would get us there? joachim: we need to see an end to the politically induced uncertainty. once we get past the elections, you will see some that has been held back so far because of the heightened uncertainty. good chance that on a global basis, fiscal policy will become more expansionary. we are seeing more fiscal stimulus in japan. a good chance we get some fiscal easing here in the u.s. next year come after the election. that could lead to some improvement in productivity over time. oliver: when you look at some of
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the asset classes have done very well in this slower growth , u.s. equities have done well, we are at new highs, treasuries and bonds thosed, how long can all be rallying together and which is having the most risk? joachim: the way i look at the environment is that we will continue to have periods of calm where all asset classes do well and then we get volatility caused by whatever the next shock is. lower oil prices or worries about negative interest rates. we will have these regime switches. the most vulnerable asset at the moment are equities, particularly in developed markets. valuations are lower their. theres. is wrapped in
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as well. we prefer credits. we want to be in assets that may when we get the next bout of volatility. they won't break because they have low default risk. it makes sense to position more cautiously, especially when calm as theys are now. oliver: thank you, joachim fels. vonnie: coming up, one of the most influential bankers in the world. a conversation with the ceo of credit suisse. this is bloomberg. ♪
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oliver: welcome back to "bloomberg markets." now 12 our global coverage of the most influential summit. satceo of credit suisse down with francine lacqua earlier in london and discussed everything from brexit to bank consolidation and capital concerns. tidjane: under most foreseeable scenarios, we don't need to risk capital -- that would not be wise. a comfortable there was a lot of debate last year over whether we should sitting at 11.8 today, i felt it was the right decision. when i want to provoke, i say
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i'm not smart enough to run the bank at 10%. you need to have perfect knowledge of the future and perfect execution and i have neither. it's good to have a buffer is you can operate and manage. we sell too close to the wind -- francine: do we need consolidation in european bank industry. i was interested by mario draghi's comments saying there were too many banks in europe. look at wells fargo and bank of america and jpmorgan, i was involved in one of the largest mergers in america and those banks have been created largely through mergers. costs, extrapolate
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synergies and cost cutting is very significant and you create a more diversified, more stable organization. the differential impact of jpmorgan's number in equities come activities is disproportionate. clearly in europe, that has not happened. francine: do you believe europe is over banked? tidjane: i think it could benefit from consolidation. there would be a lot of upside. right now, every institution is be on a very restrictive diet and shrink on its own it's much easier to do when dust -- oliver: oil rallying on the back of what appears to be a bit of a decision made at the oil summit. years --ing in out
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algiers. julie: there has been some kind of opec deal here. a production deal here. to "writers."ing -- "reuters." oil up nearly 4%. it did not look likely there would be a deal. we saw negotiations go back-and-forth between iran and saudi arabia. algeria had proposed a production cut, a daily production cut of more than 750,000 barrels. it was not clear if that was going to gain any traction. look at oil prices in tandem with the s&p 500, oil in yellow, s&p and white. it's only trading higher here by about .2%. definitely moving in tandem with
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these headlines that just came out as the energy group is now gaining ground. it's been one of the standouts throughout the session today. right now, that is indeed what's happening as we get these headlines. you see individual energy stocks are certainly benefiting as well. exxon taking a leg up along with these oil prices. this meeting is supposed to be an informal one. it was unclear whether we were going to get some kind of agreement. we will keep track of it and let you know what we find out as the meeting goes on. vonnie: thanks for that break down. on the bloomberg and you can see what each country contributes. on the follow along
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bloomberg. it's also impacting equities. the dow up .3% on the news and the s&p 500 up .2%, having been lower earlier. denny a little's congress the central bank is taking a comprehensive look at the biggest banks following the wells fargo scandal. we will speak to maxine waters. this is bloomberg. ♪
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oliver: this is "bloomberg markets." vonnie: timeout for the latest bloomberg business flash. andit suisse and barclays talked with the justice department to resolve an investigation into toxic mortgage bonds. the credit suisse deal could be
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announced within several weeks. the government has already secured $46 billion in penalties , compensation and consumer relief. viacom and cbs will be asked by their controlling shareholders to explore a merger. is expectedsements to send letters to both media giants as soon as this week asking their boards to establish independent committees to consider a combination. reportedly dust to protect users' data. the newspapers as the company resisted investing and security solutions and marissa mayer focused on yahoo! mail and developing new products over
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making security improvements. the login information for 500 million users had been stolen in 2014. recap some of those headlines now. crude oil futures ticking higher . on a report that we do have a deal approved by the algerians. i'm looking at top live. is moving equity markets with the energy group of more than 2% now. this has been back in the spotlight with equity markets here. earlier this afternoon, we published a story on bloomberg about what was being proposed. algeria proposed opec cut production by 796,000 barrels a day. a 2.4% drop in the level last month. we don't know whether that is actually close to the number,
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far from it, but that is the number that was on the table. any kind of agreement will be some kind of accompaniment. hillary clinton is campaigning with bernie sanders at the university of new hampshire today. she plans to persuade sanders supporters to vote for her in november. obama and the president himself are also hitting the campaign trail for clinton this week. now. bring in ben brody clinton still needs to win over some sanders supporters. or does she? will be a much tougher road for her to do it without sanders supporters or young supporters generally. the kind of people who buffered the obama coalition.
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and largely went for bernie sanders in the primaries. -- damage from that primary she is still lacking that vote. these people don't feel engaged, they don't feel they have a candidate that they like. they don't feel motivated to go out and vote. this will be key for her to motivate these people. assess whetherwe or not this pretty supporters polls in -- are there which they are targeting millennials? when can we get some conclusion about where these people are moving? ben: it comes from a variety of sources. we look at age breakdowns in some polls. it also depends in state-by-state. at --ing they are looking the vermont senator swept new hampshire. would you still vote for sanders theou were in the race --
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number of people who would not accept her as a substitute is going down very slowly. it may never get down to the level that she would want it to. slowly but surely, it is coming down. she got a couple of interesting endorsements today, including one from the "arizona republic." saying donald trump is not qualified. do these do anything for voters who would not typically vote hillary? >> endorsements matter a lot when it comes from the local paper or local union. these endorsements statewide might not do anything for her. on the other hand, the play into a larger narrative. donald trump is not acceptable through traditional establishment republicans, especially those concerned about
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national security. in that sense, it may give her a bit more of a boost. it denies these endorsements to donald trump. catch-up, him playing trying to move a lot of former republican officials into his camp. of bloombergrody politics. oliver: janet yellen tells congress the central bank is taking a comprehensive look at the biggest banks following the wells fargo scandal. we will be to the ranking democrat on the house financial services committee, maxine waters. ♪
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oliver: from bloomberg world headquarters in new york, this is "bloomberg markets." vonnie: let's check the headlines on the first word news.
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mark: the u.s. senate has voted to advance the stopgap funding bill needed to keep the government open past midnight friday. earlier today, house speaker paul ryan and minority leader nancy pelosi agreed on a measure to pay for the contaminated water crisis in flint, michigan. the measure now goes to the house where it might be approved tonight. the bill would fund the government through december 9. james komi says at least five people have been granted immunity during the agency's investigation of hillary clinton's use of a private e-mail server. the number of immunity agreements is not unusual for a complex investigation. director komi also repeated --ticism from republicans michelle obama is using a hillary clinton rally to denounce donald trump's role in the birther movement. hurtful, deceitful questions
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deliberately designed to undermine his presidency. questions that cannot be blamed on others or swept under the rug by an insincere sentence uttered at a press conference. mark: the president has answered the birther questions "by going high when they go low." the first lady says the next president cannot lash out rationally. vigorously defended his stimulus policies while reaffirming the urgency to step up structural reforms. met with german lawmakers who want an end to record low interest rates for the euro area. decreasedhe rates incentive for eu countries to make economic reforms. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries.
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i'm mark crumpton. this is bloomberg. oliver: does go big hearings this week in front of the house financial services committee. pf.orrow, john stum today, janet yellen appeared before the panel for what was supposed to be on regulation but devolved into harsh questioning on how political the fed is. >> was that a conflict or not? if they are having direct negotiations with either political party to ask for a job next year while they are a sitting governor, do you see that as a conflict? i would like to have an answer. will he be asking the governor's whether they are engaged in such activity?
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oliver: joining us from capitol hill is the representative who called for him to yield, congresswoman maxine waters. thank you for joining us today. clip,e just playing this where do you stand on this debate that has begun to emerge about the politicization of the fed? congresswoman waters: he was unreasonable. he did not allow her to answer. and he didterfere not really want a real answer. it was a message he was trying to send out there that somehow wrong innistration was and thatith ms. yellen ms. yellen was somehow too closely tied to the
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administration. notalked about whether or there was some attempt to get a job -- how is ms. yellen to answer that? she does not know whether there's been any discussion at all. she was not aware of it. she advised him that they are covered -- there are some things that are not covered by the hatch act. don't think mr. garrett had a credible point. he was politicizing our committee. vonnie: were you satisfied at the answer of fed chair yellen when it came to your question about the enormous failure of risk management at wells fargo? congresswoman waters: here's what -- i complimented her because she has used her influence and her power to make regulatory changes. we've been accused of
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one-size-fits-all and she made it very clear that she was willing to do that but she would continue to use her power to examine the management of risk. she would do whatever is increase, including the capital requirements on institutions. way southd she in any you -- did you hear any answer their? -- any answer there? congresswoman waters: she doesn't have the supervisory responsibility like the consumer protection bureau. if we see this kind of that has been revealed to us with all these accounts being created, does that signal that there is mismanagement and what will she thehen they bring information from the living wills before her?
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will this give her an opportunity to say something is wrong here and we need to do something about it? vonnie: mr. stumpf's before congress tomorrow. should he lose his job? congresswoman waters: it's a matter of finding out who did did hehen did it happen, know about it, was he truthful about what he told the senate? it could be that he should lose his job, it could be that the whole bank should be broken up. anxious to dive into it, for my members to get into it. i wanted to get your reaction to a point from the trump-clinton debate on monday, the issue of guns and violence that you've been a leading advocate for gun reform. trump pointed out that african-americans are living in hell and that their communities are being decimated by crime.
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mrs. clinton said this is a dire picture of these communities. where do you find the answer there? is that indeed a dire description of what's happening? congresswoman waters: mr. trump has no credibility in talking about the african-american community. he has not been connected to it and whenever he was, it was because charges were being filed against him for discrimination. i take whatever he says with a grain of salt. i know hillary clinton has been , criminalout reform justice reform. she's been talking with the mothers of some of the slain men who were the victims of violence, whether there was violence in the community, violence because the police ended up shooting and killing someone. i stand with hillary clinton because i know she understands
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what we need to do about prevention. what we need to do about making access to opening up education and jobs and opportunities and strengthening communities and working with families. she has a lot of credibility from the time she graduated from college, working with children, working for the children's defense fund, she has a better take on this than mr. trump. he doesn't have a clue about what he's talking about. up, what is the next step in the clean energy revolution? lynn good, ceoom of duke energy. ♪
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oliver: welcome back to "bloomberg markets." vonnie: commodity markets are closing in just a few minutes. we've got breaking news on the oil markets. i want to give you some news on wells fargo. the california state treasurer has sanctioned wells fargo to pursue reform, suspending wells fargo of the managing underwriter on state bonds sales and looking for wells fargo compensation practices review. once again: the california -- the bank is up .1%, but losing the day's gains. we talked earlier about
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these reports that opec had unexpectedly come to a production cut agreement and bloomberg news is now reporting the same come the new target is 32.5 million barrels a day, a decrease of 750,000 barrels per day compared with august. a bithough we have seen of back-and-forth and forth coming out of opec over the past week, the latest indications were that iran and saudi arabia were not ready to cut production. we this big increase in oil prices. 5% or so advance in those oil prices. we've seen so many swings in the price of oil. have seen decreases, increases, decreases again because of this back-and-forth.
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in the long run, how much of a difference is it going to make? 3858.look at we will try to come up with a priest, never mind, we are not going to do it. , never up with a freeze mind, we are not going to do it. the trajectory has been higher. opec production is at a record. well above were they typically are at this time of year. this begs the question of, even if you do get a cut, long-term, how much difference will it make? i wanted to mention natural gas.
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it is still pulling back, even though it has paired declines. we have some mixed weather forecasts. there is a forecast for the supply got to be worked down to some extent. look at the estimates for --orrow's inventory data typically come and you get a buildup of closer to 100 billion cubic feet. one thing that has been supportive of natural gas prices more recently. meeting was a surprise. oliver: always a surprise when there is some kind of agreement among oil-producing countries. from will be good because the market standpoint, stocks need that. duke energy wants to bring natural gas to the southeast united states. company has partnered with
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piedmont natural gas and dominion resources to build a $5 billion pipeline that will run from west virginia down to north carolina. spoke with lynn good alix steel. lynn: moving to a lower carbon objectivepart of our and challenge as we go forward because we believe lowering carbon is an appropriate thing for us to pursue. mover around early natural gas come also around renewable investment. you slow yourmake pace of retiring those coal plants if you see trump in the white house? were mercury rules that came into effect in 2015. that set the pace for retirements through 2020 and we continue to look at whether or not the investments required to keep these assets running make economic sense.
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those decisions are something we have to make no matter who is in the white house. do you speed up investments if you get a clinton white house? lynn: renewables will continue to be part of the mix. we have been wind and solar investors and also investing in battery technology. those investments make sense economically as the customers ask for more of it. that will be part of the solution. along with natural gas. maintaining that balanced portfolio is something we are very concerned about. it varies year to year depending on what our appetite is and what the market opportunities are. i would say in the range of $1 billion per year is what we been averaging. that will be driven by what we
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see in the market and whether or not we can put that capital to work. atx: utilities are looking 0% growth versus 3% growth come if you want to make more, you have to invest a lot to get the rules lifted. where are you in that cycle? top: electric growth at the line is not as robust as it was in the 1990's. we continue to have customer growth in the regions we serve. 1.5% per year of customer growth. investments while we are also driving productivity and costs out of our business so that we can manage the price impact to our customers come having a portable electricity is important for our communities and for everyone. alix: you look to grow your dividend 4%-6%. what has to go perfectly for you
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to hit the high end? lynn: growth in general. organic growth is part of it. putting investment to work so that we are expanding. we are investing in the atlantic coast pipeline. that will deliver growth. when we put money to work and infrastructure projects that deliver a consistent regulatory return, that is a great underpinning for our dividend. alix: would you ever borrow money to pay a dividend? lynn: we look at how we manage our finances in general. our industry is 50% debt and 50% equity. the dividend is part of where our cash flows go. we are trying to balance returns -- alix: not targeted for dividends. you mentioned piedmont natural gas. you are buying a pipeline for $4.6 billion. lynn: m&a is opportunistic.
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when we been doing in the gas area is trying to build a gas platform. it's important for electricity -- the atlantic coast pipeline is an investment total of $5 billion. piedmont is a local distribution company to a utility to customers in the carolinas and tennessee. we see gas as important to our portfolio. alix: it's the pipeline, not necessarily storage. that's where you want to target? lynn: that's correct. it's more consistent with our risk profile. predictable returns are consistent -- do you still see more value in the gas pipeline world? look at opportunities, deciding what makes sense,
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atlantic coast pipeline is particularly strategic to us. supporting what we believe will be expanded natural gas generation. has --pportunity alix: how is that going? it's been hard to get the land. that ispeline difficult. we enjoyed extra narrow support in the carolinas. -- extraordinary support in the carolinas. we are hungry for capital investment. oliver: that was lynn good, ceo of duke energy. vonnie: coming up, continued reaction to the surprise opec decision to cut output. look at oil prices.
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this is bloomberg. ♪
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oliver: this is "bloomberg markets." vonnie: let's get back to that breaking news in the oil markets. opec has agreed to cut production for the first time in eight years. this according to a delegate familiar with the agreement. it isn't sending prices north of 5% higher now. -- is sending prices north of 5% higher now. toy will drop production 32.5 million barrels a day. will kennedy joins us now from london. agreement -- algeria brokered agreement.
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will: the real country making history is saudi arabia. two years ago, saudi arabia edelman today policies and we have to defeat shale. that ended today. the marketmanaging -- it is a surprise and a big change for the oil market. oliver: we are still figuring out the details. mark wasuestion hanging over saudi arabia, how they would come to these talks. what were the pressure points that could have gotten this agreement to happen? will: what has changed the saudi view is that you are seeing increased pressure on their economy. aey are facing massive budget deficit. they cut bonuses for their lower oil employees,
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prices were beginning to affect the saudi economy. they need prices to be higher. vonnie: russia is not publicly participating. they have increased by 400,000 today. will: it will be interesting to see how russia reacts to this proposal. willpec do a deal and we come to the table to talk about how we might help to balance the market. whether we will see that, i'm not sure. russia has been producing at a record pace. even if they pros production, it frozenot change -- production, it would not change the levels much. who producers come in to fill the gap -- will other
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producers come into the building up? -- in to fill the gap? opec sticks to this agreement, they will bring that meaning higher gasoline prices for all of us. the senate voted to override president obama's biko of a bill allowing 9/11 victims to sue saudi arabia. the first veto override in president obama's presidency. ♪
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>> is 3:00 p.m. in new york. >> welcome to boomer market spirit -- bloomberg markets.
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♪ we are live in new york for the next hour, plus covering stories from london and saudi arabia. oil prices up over 5%. by 32to lower production point 5 million barrels per day. stocks are turning around and are now near session highs. a fresh outlook on the markets as part of our global coverage from the most influential summit. beginning to respond to a criticism of a lack of diversity , the women's conference is a the issue head-on today. james joins us live from that event this hour.


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