tv Bloomberg Markets Bloomberg October 3, 2016 10:00am-11:01am EDT
vonnie: we will take you from washington to new york and australia, the u.k., and the middle east in the next hour. first, we have breaking economic data. manufacturing moved into a stationary territory in the month of september after coming in at 49.4 back in august. expecting aere lower reading than that. still 53. exactly the same as the previous months. in at 55.1, song that's a good sign.
economists who were looking for improvement because of things like the louisiana letting and wildfires which depressed the data for august. reconstruction spending month over month was a disappointment and came in at a -.7%. economists were looking with that to be at a positive figure. we will break that down in just a little bit, but i want to have a look at the markets now as well, but you up-to-date 30 minutes into the trading session. the majors are lower. the dow is down by hortense of a percent -- by 4/10 of a percent. eight point 22160. -- to 2160. autsales not helping either because we had some misses although you would not see that on the share prices. general motors up 1.25%.
ford also just really missed. down 8.1%. analysts looking for sales to be down 8%. again, i would say all of these carmakers had bad months down. we did get an improvement from nissan and tesla. mixed day for the carmakers. we have a deal to talk about today. elliott associates succeeded in pushing for a deal between cabela's, the outdoors with equipment maker, and vast row. it was a 19% premium with shares under $23. 65.50, so price is
that is a good thing for shareholders of develop. the credit card portfolio rose to capital one. in oil, we are seeing wti freight 2/10 of a percent -- trade 2/10 of 8% today. 6/10 of a about percent. are 90here in europe, we minutes to the close of trading so let's have a look at where equities are now. we are pretty much unchanged on the equity markets, with the german markets are closed. if we look at the volume of trading, it is below the 30 day looking and what we are at here is stopped unchanged following a third decline. if we take a look at the function, a little bit of a
mixed picture. a few more gaining than declining. consumer staples of 5/10 of a 5/10 of 8%.p in terms of the stocks we have been keeping a close eye on, it is the biggest gainer on the stocks 600. henderson group over two days is up six. it has risen almost as much as 20%, having its biggest jump in seven years. this after it announced a merger to create a $320 billion money manager. both companies looking to boost profits and assets in the face of rising competition. i have been keeping a close eye on sterling. when we got over the weekend was theresa may saying article 50 will be triggered by the end of march, 2017.
sterling had it lower at the moment. it is heading for its weakest levels since july 6. that is what did hit a 30 year low. at the moment, it is down against most of its major peers as well and has fallen 14% since brexit. i want to show you this chart which shows the quarterly change for sterling. we have just seen the worst quarterly run of losses since 1984. att is all the way back here this straight quarterly run of losses. vonnie: thank you. time to check in on bloomberg's first word news. >> voters in colombia have raised the prospect that the country can again fall back into war with marxist rebels. colombia's narrowly rejected a peace plan to end a five decade civil war. rebels were also guaranteed
seats in congress. colombia's president plans new negotiations and says acs wireless they in effect. bombings struck in the central city of syria have killed two and wounded 12. the city have been relatively quiet in recent years and is firmly under control of besar unless a -- bashar al assad. a suicide bombing in baghdad has killed at least 16 civilians. injured.people were it happen in an outdoor market in a shiite dominated neighborhood. no group has claimed responsibility for the attack you afghanistan's leaders will go to brussels this week looking for billions of dollars in a as the -- aid. the president and chief executive hope to secure pledges totaling about $3 billion.
they have a conference on tuesday and wednesday. in oppositions parties want more details from theresa may on transit. over the weekend, she says she will start pulling the u.k. out of the european union in the first quarter of 2017. she said she will introduce a bill to convert all of the eu laws into legislation to provide certainty for business. global news 24 hours a day powered by more than 2600 journalists in more than 120 countries. i am corny collins. this is bloomberg. -- i am courtney collins. this is bloomberg. radio and reasonably with 320 billion u.s. dollars in assets under management. earlier, henderson ceos spoke with bloomberg and gave his view on the future of money matters. >> is no such thing as a loan
were walking -- lone wolf working on the own. it is being able to collectively grab a collaborative approach, and that is the future and what the future is held at henderson and janice. for more, we are joined by our guests from bloomberg news. is this what we come to in active investing? there is so much pressure on the sector that managers have to combine in order to make a marginal margin. peggy: yes, we will definitely see more of this. what is happening is the rise of passive investments putting pressure on managers so one of the things this deal hopes to accomplish is to be able to provide more scale to both companies and allow them to distribute their product more easily so henderson being based in the u.k. and janus in the
u.s. can expand their client base in a way they can run funds and keep their fees and remain competitive. vonnie: this happened before the roosevelt. brexit vote. do they get on to them now? maybe they can arrange to have them at their u.s. headquarters now. peggy: i was speaking to the janus ceo and he said the talks between himself and the henderson ceo started before the brands it vote -- brexit vote. the ceo of janus will move to london. not a shift to the u.s., but more to london. they will sit together in london and move the business to a global force. that is their plan. nejra: i do understand the logic
behind merging. i spoke to luke alice last week, and he talk about the pressure on passive funds as well. , $251 billion pulleds were basically this year after $1.2 trillion were pulled in 2015. is this the right time to be announcing this sort of deal? peggy: from their perspective, it is because of the pressure on the industry. the competition is rising so much that they really feel like this is the only way to stay competitive as an active manager. both ceos are still passionate about active management, but this is one way to basically get to scale in order to stay competitive globally. vonnie: what can we expect next?
what is the timeline? peggy: the field, i don't know exactly when they plan to close it, but they are moving forward. shares of janus our moving positively. as you said, the shares of henderson are up the most in seven years so the market is reacting positively. vonnie: not only does he do great reporting, but there is a column by chris hughes that talks about how this is in the interest of both money managers. you say it is very simple. they are co-ceos. you say that will not last. peggy: i asked the ceo of janus that question. he said they will be together and they get along very well which is one of the reasons why they did the deal, but it is a tailor-made custom situation, and they expect questions from people about this. if they were starting the
company from scratch, they probably would not have a co-ceo situation, but because of this the strength- of of both companies, they will stay that way and it easily new will decide to run the company. vonnie: thank you. janus up 14%. join us tol discuss that merger later today. thank you. pound flies as theresa may and her cabinet chart a road ahead for the u.k. more on the latest ahead. this is bloomberg. ♪
♪ >> what a gorgeously sunny day in london even if it is not that warm. vonnie: i am vonnie quinn. you are watching "bloomberg markets." it is time now for our latest bloomberg business flash. the dutch companies is in talks with global management. earlier this year, they planned to sell the business for $2.8 billion because of regulatory concerns. bass pro shops is buying one of its rivals in the outdoor gear business. it will pay $5.5 million for cabela's, a 19% premium to cabela's closing price friday. take overe will
cabelas credit card operations. jobs overto cut 5800 the netherlands and belgium over the fiv next five years. they are cutting costs to invest in financial technology. that is your latest bloomberg business flash. nejra: keeping a close watch on the pound today. it has dropped near a 31 year low. it certainly has done that after uk prime minister theresa may said she will trigger the price of leaving the eu before march. we got clues on the uk's fiscal future from philip hammond. >> as we negotiate our exit from the eu and our future relationship with it, this government will fight for the best possible deal for british business and british workers, the best possible access to
european markets for our manufacturing and services industries, and the best possible freedoms for our entrepreneurs and our global exporters. nejra: the chancellor is breaking with his predecessor's policies and stressed the need --manage you can find inches to uk finances. thee will no longer target end of this parliament, but make no mistake, the task of fiscal consolidation must continue. nejra: i just wanted to show you a chart on the bloomberg here. i showed you the spot price of sterling, the fact that is near a 30 year low. this tracks the pound against several major peers. you can see how it had a lower level thn where it was - than where it was post-brexit.
yesterday. ofjust $11.6 trillion as september 30. that is up more than 6.1% from a month earlier and here to discuss is paul thompson, the managing editor for bloomberg news. let's start with japan. how important is the doj's policy? monetary >> boj has been a crucial factor in pushing bond yields low and keeping them low. the japanese bonds market is being ground zero or ground subzero for negative yielding bonds. that is where the biggest element is at the moment, but because japanese investors want to get their hands on higher yields that they keep pouring out into the european debt markets and the u.s. treasury market as well. the latest development that we the had from the boj,
decision by kuroda and his fellow policymakers to try to government bond yields 20% is only adding to that and seems to be putting a cap on that for the time being. nejra: is is having an impact in terms of this chart i have here showing it coming increasingly expensive to treasuries? paul: this is an interesting development. it has been widening. euro area debt has the yields continually pulled lower and lower by the ecb. it has got to the point where some people say either the ecb may be one up buy quite as many bonds as we think in 2017, or maybe the fed will go a little bit lower than the market.
now to treasuries and bonds, but there is a chart that focuses on other peripherals, and we have a big event in december with the italian election. you want to pull up that chart? >> i have it right here. the spread since 2014. we are singularly underperforming spain in terms of bonds by the most in two years. paul: yes. interesting dynamic. italy.orrying one for sudden because of the way the ecb bond bank has people aremarket, looking at info periphery spreads. in the past, they treated pretty close together. nejra: i want to pull up a
bloomberg chart myself. 3956. high-yield outperforming both investment grade and the s&p 500 this year. cannot sort of thing continue? and more negative yield we have, the more people will pull into high-yielding debt. paul: the mornings have been coming. a couple of weeks ago, there was a real wobble for the longer maturity bonds, all those sorts of things. people were worried if we were heading to some sort of a shift in monetary policy. for now, the news is whether the boj seems to have studied the steadied the ship a
little bit. the pricing for the fed moving in december, it is actually -- there is a stronger likelihood for this december as opposed to last year. ultimately, the fed raise rates in december last year. >> i have a lovely one here. perhaps a bit overwhelming, but it is showing 10 year yields are grinding down across the g7. are we seeing more convergence? continue?rend likely to paul: for long as central have this on the 10 year boj,s, especially with the certainly for the major economies on your chart. you have italy as well which is going up to the top of the pile, but for the vast majority, they are trading more and more in lockstep with the collapse of volatility.
nobody expects anything to go anywhere for the time being. >> we certainly see that drop in volatility particularly in treasuries. thank you so much. what a great summary of what is happening in global bond markets. vonnie: just to give a rundown of where we stand, the last 10 year is at 1.6%. the german 10 year at -10 basis points. at italian at still 1.22%. ahead, u.s. manufacturing data came in better than expected, but construction spending fell short of estimates. this is bloomberg. ♪
let's check in with the bloomberg first word news this morning. courtney collins has more from new york. courtney: donald trump supporters are firing back at the report the republican presidential nominee at his texas. is as he posted a $960 million loss on his 1995 income tax return that may have allowed him to eliminate his tax bill for over two decades. rudy giuliani shows donald trump is a genius that knows how to make legal remedies to help a company survive. hillary clinton hence the campaign trail in ohio today with an m.v.p. endorsement. lebron james says she is a champion for children and their future. he says she is running on a message of hope and unity that is needed to address violence in black communities. he details his support for clinton in the akron beacon journal. the national transportation
safety board says it is still hoping a second data recorder from the train crash last week in new jersey was functioning. investigators believe it is on the under a collapsed section of the train station roof. investigators say the train engineer has no memory of the crash. a shift in spanish politics may toally allow mariano rajoy seek office for a second term. the party booted its longtime leader, pedro sanchez. he had been blocking rajoy's attempt to make a new government. global news 24 hours a day powered by more than 2600 journalists in more than 120 countries. vonnie: at the top of the hour manufacturing came in at 51.5, an improvement from the prior month. better than improvement
we were looking for. michael is here, the economist at j.p. morgan. thank you for joining. in exactly just came the same as last month. should be read anything about inflation into that? prices paid is one of the subcomponents that did not see any expansion from last month. is that something you would zoom in on? mike: it is a bit of a disappointment. what we saw today was a lot that being repaired so we have asked where we were in june and july, which is not very handsome levels.- expansive it is slowly getting back on its feet, by would not call it a robust thing we are looking at vonnie: we're looking for any igns of sc
improvement. it is not likely we will see that much of it. what are you looking for in terms of inflation and wages on friday? michael: we are looking for an increase in average hourly earnings. most wage measures we are looking at right now are in that 2.5% range. that is what we think we will see on friday. we are seeing generally some improvement in wage inflation. it is not high by any means, but is improving. a year or so ago, it was steady around 2%, so we are seeing it move in the right direction. nejra: at the moment, the ofkets pricing in about 59% a fed rate hike in december. we have three jobs reports before that decision. what sort of pace of job growth will we of
a fed rate hike need to keep the potential height at the end of the year still on the table? michael: if we are averaging 150,000 per month for those three months, we are in pretty good position for a hike by december. if we slid below 125,000, it becomes a little more in doubt. about 150,000 would give the people on the committee confidence that jobs continue to betweenve that trend 75,000.and nejra: so we have fairly steady jobs growth. you highlighted before the fed's preferred gauge of inflation coming in at 1.7% at the moment. fairly close to the target. what do you think can hold the fed back from hiking this year? are you expecting a hike this year? michael: yes, we are looking for
wanting december. what would hold that back is a big disappointment on the road side of things -- growth side of things. in september, she said the bar was a continuation of the types of numbers we have been seeing over recent months so we do not need to see a big acceleration, falter thesaw growth way it is at the beginning of the year, that was sent them back. vonnie: you're not looking for another rate increase until next june. how healthy is the u.s. economy? vehicle sales today look to be a little disappointing so far. where are you when it comes to u.s. consumer and u.s. economy in general? michael: we have had ups and downs, but the economy still continues to grow around 2%, which seems to be above trend. and after put downward pressure on unemployment rates. enough to put downward
pressure on unemployment rates. the economy is doing what it has always been doing. quarter, we are looking for 3%. down a littled bit to 2%. what will keep the fed slow is while theyressures may be moving, they are not jumping, and we see expectation numbers that are pretty contained and global price pressures keeping the dynamic pretty slow. it is not a matter of the u.s. economy being all that disappointing, but inflation seems to be slow coming about. vonnie: how what are you willing to change that outlook given what other central banks and other economies are doing? i am thinking brexit and the bank of england and the bank of japan. michael: sure. brexit has not been as bad as we feared. you are right that the global picture is one that is very
important for the fed. we and the fed have been learning that over the past two years how important some of the global factors are. for now, we think the fed can raise rates moderately as other central banks are easy, but that will depend on how quickly the rest of the world except. we saw encouraging news overnight in some of the global -- we areere is looking for another hike by june. vonnie: thank you for joining us today. later at 3:00 p.m. eastern, kathleen hays will be at the federal reserve bank of cleveland with an exclusive anterview with loretto mester. nejra: some quick breaking news on auto sales.
agreed to buy janus capital, creating a massive capital money managing business. vonnie: sales picked up in the third quarter. is this mean the company can stick with its ambitious sales forecast? nejra: oil prices are once again on the move after the opec meeting. we will explore the forces behind this trillion dollar market with a quick take. vonnie: a big takeover in the money management business. henderson decided to take over janus. the combined sale will have a market value of $6 billion. henderson's the ceo spoke to bloomberg on the deal. >> i do think they will look at this and say they wish they had done it. they will have to make sure they have an online strategy and culture to achieve it. i think it is the most appropriate thing for our clients, employees, and
shareholders, and that is what made it such a compelling an easy decision. deutsche bank is close to an agreement with labor leaders to cut about 1000 jobs in germany. most affect back-office that as part of an overhaul and of the year ago. deutsche bank is trying to eliminate 9000 jobs, about 9% of workforce. tesla motors delivered more electric cars than expected in the third quarter. the company shipped more than 24,000 vehicles. mitsubishi may delay the delivery of japan's first domestically made passenger jet. the company may have to make technical modifications. the japanese airline and had a is scheduled-- ana to received the first plane in 2018. vonnie: time now for our quick take we provide context and
background on issues of interest. oil is a force even bigger than a trillion dollar market as they would become a strategic asset, and a maker and spoiler of fortunes. oil began to plummet in 2014. prices dropped 75% over the next 18 months. techniques such as the one originally and fracking paid off -- as deepwater drilling and fracking eight off. and into the oversupply, iran began ramping up exports. idlecost drillers had to rigs while chevron to michelle, and halliburton cut dozens of workers and billions of dollars in spending. opec nations reached a delay to cut supply for the first time in eight years in september. oiloup of multinational
giants dominated the market. cartel's members use their power for political and economic ends. the development of futures exchanges gave basis to newmarket crisis. it is a blessing for gasoline guzzling consumers and a curse for governments and countries like venezuela and nigeria, whose fortunes are tied to energy sales. some industry watchers are worried it will begin a period whicherinvestment in oil can set the stage for another surge in prices. you can learn more on the bloomberg. go to bloomberg.com for more stories. nejra: as we just mentioned,
deutsche bank is preparing to cut 1000 jobs as the ceo tries to reassure investors he is able to boost profitability. chandler and luigi were asked how volatile the european banking system is right now. showed how weak the deutsche bank is overall as it only takes to create tension in the european banking market, and credit tohat we at raise substantial amount of capital and saw the early week positions as well. >> how can you say how little it takes? it is 10 billion more than analysts were expecting. we were expecting a $3 million fine, and the doj came out with 14. is not a given that it will put a great under pressure? --werst of all, i think
know the bank of america paid $16 billion and jpmorgan dated $12 billion, and deutsche bank was the last one to settle. market wast if the stalled but the number was so low is because the bank -- you have seen this before. ethically everybody jawbones until they must -- everybody jawbones until they must do something. >> they got capitalized whether they needed it or not. ongoinghas been an
issue with banks that have cut repeatedly and violated the law, repeatedly getting five. bloomberg reported deutsche bank is the most fined bank ongoing since 2008. these are pre-existing conditions. >> how do you fix it? i know it is easy to say look at the u.s. clearing debt more quickly and have a business model that works, but the u.s. went through huge amounts of pain. >> yes, that is the thing we have to avoid now and europe is making it harder because this new directive that confines and limits the ability of governments to bail out a state without unsecured shareholders and subordinated debt holders. >> you said something brilliant, you said whether they needed it or not. this is what we are going to do, and they did it. we had someone with us who said we have not been negative rates
whether we needed it or not to society. we pigeonholed negative rates to a very small set of institutional effects. is that what we are going to see in the next year, a running out of the effect of negative rates, whether we need it or not? >> banks are very reluctant to bring negative rates. >> what about politicians? >> politicians do not decide or at least we hope they do not decide. the more you deposit, the more we charge you. people start to take the money somewhere else. we know historically it has been very important, and banks are afraid. that this was squeeze is the profitability and that is what contribution to the instability in europe, just one of the many causes. i think it is a fundamental instability there before, and with that, any little thing
subject, and he joins us now. it has been a fiery season so far, and you would not know it if you look at the marke. to what do you attribute this? >> markets since the beginning of the year have been anticipating a continuity from the obama administration to what comes next, and that presumably is a hillary clinton. there has been no perceptible rend.e in that tu what is striking about that is umult thatf the t has come, the markets have been calm. vonnie: it is fascinating. is it the idea that hillary will win or even if donald trump wins , there will not be much he can change about the status quo given how congress is? matt: as i said in the column, try finding someone who believes that. that is hard to see given what he has proposed.
.e is so dramatically different it is hard to see markets would treat everything he said with complete indifference. saw another interesting story and chart on the bloomberg that was stuck by the fact that if the s&p 500 records a positive return from the end of july to the end of october, the incumbent party stays in power. isthe moment, the s&p and september slightly below the july close are all ring on october, or is it? matt: that is hard to say. fromwe are able to deduce that the rehab is that the markets this year has been climbing irregularly higher. you look at the s&p. is not steady, but is irregular. at the same time, the volatility is dramatically reduced.
if we look at a lot of data going all the way back not just this year, but decades, there is more of a parallel it one wants to find one with some previous elections. the wind where you would see the closest correlation is actually the one we just had, 2012, when barack obama was reelected. interestingly in your column, you do not just talk about stocks and bonds, but you talk about another asset that tos seem to be fairly tied whether donald trump will win or not, and that is the mexican peso. matt: absolutely. if ever there was a direct correlation with everything that donald trump has done and how he has done in the polls, it is the peso. that is pretty understandable when you think about it given that so much of the mexico trade
since theted states north american free trade agreement, which would into effect in 1994. donald trump has proposed to essentially nullify nafta. that being the case, every time he rises in the polls, the mexican peso falls. every time he stumbles in the polls, the mexican peso gains a little. 19 and 33 today so beloved of strengthening for the peso but it almost reached 20 and it has not been below 19 much in the last couple of months. postelection? matt: if you go on back to 1939 which is probably when our data was just beginning to be whenled, it shows that republicans win, there is an immediate gain in the market.
when democrats win, it takes a little bit longer, and it is a little bit longer-lasting. the reality is in election years , regardless of who is running, regardless of which party, democrat or republican, election years are generally good for the stock market. vonnie: always cheering for good news. is the bloomberg editor in chief , and you would not know it by looking at the stock market today but the dow is down by a quarter of a percent and the s&p is down as well. nejra: let's take a look at the european markets just before the close half an hour away. this is bloomberg. ♪
in the trading day in europe. i'm nejra cehic. vonnie: i'm vonnie quinn. you are watching the european close on bloomberg markets. nejra: we will take you from washington to paris and cover stores at a wall street, the u.k., and the middle east. here is what we're watching. shares surged to most in seven years after it announced a deal to buy janus capital. we will hear from the henderson ceo on what the $320 billion money manager will look like. is said totsche bank have planned a thousand job cuts as the ceo heads to the u.s. for a possible settlement talk with the department of justice. the british pound falling back