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tv   Bloomberg Markets  Bloomberg  October 5, 2016 12:00pm-2:01pm EDT

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scarlet: covering stories everywhere this hour. global bonds are sliding on projects of the european central bank may reduce monetary stimulus as fed officials talk of the chances of higher interest rates in the united states. in a rare interview, we set down with one processor very, the former -- the ceo of the largest they control oil producer, he's planes fly the risk of a peace agreement falling apart is not material to the business. a big of what he was rarest gems and diamonds. -- pink diamond. they are one in a million, they were revealed that invitation only doing so we have a preview today. halfway into the u.s. trading day, julie joins us with the latest.
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the ecb discussion of possibly tapering markets -- through markets for a loop. federal reserve officials saying a rate rise is likely to you have that an economic data that came in better than estimated. durable good, factory orders, and the isn nonmanufacturing. the measure of the services economy coming in at an 11 month high. that is where you saw the leg up this morning. seeing on the two-year yield, 0.85%, at its highest since june 2. we see the change in perception again about what could happen with rates this year. that is reflected in fed funds future and the probability priced in for rate hikes before the end of the year. after back up at 61% falling closer to 50% several times and it was below that even as recently as august.
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we are seeing those perception increases with yields going up, we have seen financials benefit. bank stocks have rebounded today again, jp morgan, citigroup, wells fargo, they have moved not necessarily a one to one correlation with what has been going on with yields but one of the things that has been benefiting the financials more often than not even as we see it put pressure on the interest rate sensitive groups like real estate and telecom and utilities. the overall averages, let's bring it back to that. stocks rising about to the highs of the session, the s&p not very quite as well because it is being held back by interest rates sensitive groups. the dow and nasdaq each up about two thirds of 1% or more. on oiled to check prices, not just today but over the past couple of weeks. five of six trading sessions we have seen an increase in oil prices. a 10% gain over the past couple of weeks, most recently today,
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the weekly inventory reports coming out with an unexpected drawdown in inventories, the fifth straight week analysts had been looking for a built in inventories and there was a drawdown instead. something helping oil prices climb. matt: one of the things that has been helping stocks climb. let's look in on the first word news desk. more from the newsroom. wife beltre prosecutor said two police officers have been stabbed in brussels. of the terror related, the man allegedly stabbed one officer in the neck and in other in the abdomen. the suspect was shot in the leg by other officers. delta on high alert since 32 people killed in suicide bombing attacks on the brussels airport and subway system in march. mike pence may have helped slow down the donald trump's slide. he and tim kaine faced off in their debate last night at longwood university in virginia.
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governor pence fended off senator kaine's attacks and went after hillary clinton's performance as secretary of state. governor pence: after traveling millions of miles as secretary of state, america is less safe today than it was the day that barack obama became president of the united states, that is an arguable. -- not arguable. tim kaine: we trust hillary clinton with the most important thing in her life, we have deployed overseas in the marine corps and we trust hillary clinton as commander in chief and the thought of donald trump as commander in chief scares us to death. >> according to a cnn poll, 40% say mike pence -- 48 present; it's one the debate and 42% say -- ruth red afro out of from thebbean and sports --
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physics taking the arrival of the navy, army, high-speed catamaran vessel for use and possible aid missions. the age of self driving cars is having another goal, zero traffic deaths and injuries within the next 30 years, the transportation department outlined those plans today. the first ages promoting efforts as is increased seatbelt use in addition to campaigns against drunken and distracted driving. ♪ 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: bloomberg has learned that a consensus is building in the european central bank to graduate rain in quantitative easing. investors also weighing a growing chorus of hawkish comments from fed officials. for more on this talk of tapering and tightening, let's bring in the cohead of global fixed income strategy at wells fargo investment institute.
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two of the world's most accommodative central banks, not just the ecb but doj starting to think of ways out of their quantitative easing, their bond buying binges, how big is this of a shift? >> lawrence, they are moving from it easing faced way tightening face potential he. although they have been very accommodative, we will see budget was starting to move away. we have done that in the u.s., moving all quantitative easing and toward rising rate cycles in a potentially seeing an inflection point with ecb, a very big move and a very big and decisive change of events. for the is a good thing global economy that we are getting to a point where two of the biggest central banks in the world are going from accommodative to -- still accommodative but less? >> moving less and we do think that is a good thing. we think it is important for us to get out of crisis mode from
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how we are from lower interest rate and affect negative interest rates overseas. continuing quantitative easing to a point where we can move back away from that. scarlet: does it mean necessarily that the next that may be tightening? >> that is a bit far off. now, the ecb starting to get into -- they have two mechanisms , one is guidance and medications, the other is action, what you are starting to see now is a little shift in the guidance. before you see more action. matt: as a fixed income investor, your biggest fear is any kind of short sharp or long sharp shock in interest rates. it is more dangerous than a lot of fixed income investors know. if rates rise, right? >> yes, the idea of the inverse relationship when yields go down prices go up but the opposite happens. when yields go up, prices go down. conversational with
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clients about taking scenario analysis within their portfolios and seeing what happens they persist future interest rate policies and how that impacts their portfolio so they can visually see that, it is oval. scarlet: alan greenspan spoke to bloomberg earlier today and here is what he said about whether rates will move soon independent of central banks. if you lookan: across the spectrum, especially the developed world, output per hour is productivity has slowed to a halt. and rising standards of living which were so general in the post-world war ii. of time have largely been put on the shelf. we in the united states are barely growing. no one else's. -- no one else is with rare exceptions. very few countries in the world growing about 4%. -- above 4%. scarlet: the fed speakers have
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been saying we are set up for a rate increase in december and perhaps get it over with before seen that staying at that level longer. >> they are laser focused on price stability and focused on full employment, from full employment perspective, great progress, the price stability, no sign of inflation and growth is -- if we start seeing it go up in inflation you will see more rate rises. to your point, matt, prejudice a more so than we anticipate. that is not the best case scenario but that is what we are focused on now, the inflation side. matt: what do you say to clients, what kind of debt do they want to be looking at? if you look at the best bloomberg acquire the barclays indexes, we see that go, everything is down month to date, except for high-yield. it is the only winner in the last few weeks.
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>> people with low interest rates taking extreme that's on where they want to take the risk whether it is further on the curb or whether from a credit perspective. the good idea to dial down some of the risks and to neutralize them across the board. we like the intermediate part of the curve, a two-week time where we saw ten-year treasuries move up by 20 basis points, it does not take much of a move to have a significant impact. that causes a 2% decline, less so come in the tenure part of the curve. however, the 30 year part of the curve was negative 4% at the same time frame. the intermediate part of the curve is the sweet spot where you get the most bang for your buck. the best income and less risk. from a quality perspective, we are moving up. we recommend investment-grade corporate, specifically within the financials. we like tips, the idea of keeping a close eye on inflation , we do not think there will be significant pickup but any slight pickup could increase.
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the latestlk about investor survey showing optimism at a nine-year high, how do you fold that in with where do you recommend investors should be? >> a conflict with investor optimism with high -- highest since 2007 but at the same time they are concerned about volatility and risk within the surveyed, 61% or more said they wanted to take little or no risk in the portfolio. that filtered into how they invested their money, specifically we saw 19% of their holdings in cash. 11% in cash like surrogates, money market funds, cds, 30% in cash is a very heavy weighting. from that perspective, we are concerned that people will not 50 long-term goals if they are invested -- hit their long-term games if they are significantly invested in cash. matt: what part will investor demand for debt securities play and the politics that allow
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central banks and treasuries to issue those? everybody -- and a lot of people will like, the demand is high for safe investments/ . >> you have seen demand from the government, from quantitative easing, from the institutional side, from pensions and insurance and from the individual side. as the government switches away from -- we have moved away from the qe and removing it in europe at some point. you will see tremendous investor demand. you have 10,000 to 11,000 people retiring every day that need the income. you will see pretty high demand for they sent him. -- fixed income. matt: coming up, jeff curry, goldman sachs will explain gold's relationship with interest rates and how that is challenging, but might be changing, this is bloomberg. ♪
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♪ scarlet: you are watching bloomberg markets, i'm matt miller. scarlet: i am tokyo, goal rebounding after a 3.5 month low on tuesday and many investors think the downward pressure in prices will continue as the fed considers raising interest rate for the first time in several years. the moves and goals are not exactly best exactly acting in a textbook fashion. onfrey currie appeared bloomberg surveillance to explain why gold has a life of its own. real it is trading against interest rates lockstep, you have a huge repricing of real rates yesterday that led to a substantial decline in gold prices. since september, we have seen a sharp rise, upward trend in real rate and that is put more pressure on gold.
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tom: a sustained level of gold much higher than typical, bring up the chart, this is real gold inflation-adjusted gold back since time began, nixon and the gold,- the release of the 30 five dollars per ounce, up we go in the 1980's, belsky was too young to remember, when the vikings one. -- vikings won. coming about the sustained level of gold. jeff: look at the real rate cycle, where were the lowest real rate in 1980, where was the deacon the 1980's at that point. where were the lowest real rates over those current cycles, 2011 and that was the peak in gold prices. i do not think there is mystery in terms of how it is trading relative to the macro. when you ask what is that long-term value of gold, you have to ask you question, what is the long-term value of real rate? we see real rates climbing higher as we see an improvement in the underlying macro environment. that is likely to sustain gold prices of a relatively lower
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level. tom: when real rates move but is it a real rate growth in the economy or a new inflation overlaid on real growth? >> a great question. tom: my only good one here i am done. >> when we first came out of this model, if the amount of questions from client, gold is up because of inflationary concerns come up this week because of deflationary concerns, it cannot be both, price level does not drive gold which is why it is a a real rate trade-off. if you debase your currency, real rates go down and the value of real assets have to go up which is why get a negative correlation between real rates and gold. tom: if you get a real rate left, is recalling four dollar strength? do we have a large dollar movement or not? something not brutal? >> a lot of it has been priced in. we saw the damage it does to trading partners around the world. you have to be careful in terms of what kind of strength you see in the dollar.
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gold,t: taking a look at it has extended is the klein. resuming the selloff -- extended the decline, resuming the selloff off by a quarter of 1% at 126660 an ounce. matt: it is off more than $50 a troy ounce for the week. time for the business flash, the biggest business stories in the news. the world's largest feed company monsanto forecasting lower than expecting earnings for fiscal 2017, the customers running under pressure from low crop prices which have depressed farm profits. that has led to aggressive price cutting by monsanto and other seed companies. there is a new twist into the investigation of lending club, the online lending platform, u.s. regulators want to know whether lending club's founder advocated for the company to prop up shares without telling the board of a possible conflict of interest.
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that is according to people familiar with the matter, lending club founder has not been accused of any wrongdoing. the mall of america, the nation's largest shopping mall is taking a stand against the growing trend of banks -- thanksgiving shopping, it will close on the thursday holiday. it is based in bloomington, minnesota and has been open index giving since 2012 by mall officials say they want to offer workers time at home with their families. the mall will reopen at 5:00 a.m. on the friday after thanksgiving. ♪ that is your bloomberg business flash. scarlet: still ahead, an interview with the finance member of -- former colombian finance minister, we will get what is next for their -- ♪
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scarlet: your uncertainty looms -- matt: uncertainty looms in: beer after voters for peter a peace accord negotiated by the government with the revolutionary armed forces otherwise known as the farc. juan carlos echeverry is the ceo of the state-controlled oil producible echoes retro and served as colombian finance minister from 2010 to 2012. he spoke with a bloomberg's erik schatzker about the impact the no vote will have on the businesses in columbia including its struggling energy industry. >> the international and domestic companies and -- in colombia have dealt with difficult conditions. the last 10 years and six years have been very positive. we have advanced four and agreement so the present is much greater than the past. and the future is greater than
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the present. we see our partners, oil companies from the u.s., canada, europe, brazil, they have not even given a single call to us this. for they know colombian institutions and that the future is better than the past. ik:l -- ero -- >> the problem with wall street, we have presented our investor. ,or the next four years expecting flat price of $50 per barrel am a conservative price. we expect to grow from 715,000 barrels today to 760,000. we can go about 800,000 barrels per day. invest between $3 billion and $5
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billion per year and all our investors believe that offshore and entre columbia we have great opportunity. the reaction we have gone from wall street is positive. we see conservative, solid robust package. if the peace agreement comes to expect, ason, as we we said, this is calculations based on very sober view of 'olumbia --vonnie: --colombia teacher in gas and oil. : your current plan calls for you to reduce oil at a faster rate than you can replace it right? >> we can extract 240 million barrels of oil per year. the idea is that our exploration people can be able to replace
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part of that and our production people, our mature oilfields generate new oil. between both of them, we should equalize or surpass the structure and rate. -- destruction rate. is going toality look better than the forecast is what you're telling me? >> hopefully but our forecast is serious and hopefully we can secure a profit for shareholders. and security very solid company. hopefully we will surpass our forecast. erik: why raise production when having more reserves would make it easy to finance activities over the longer-term? >> it is a delicate balance. production is our source of cash and we need with that cash, we do exploration and production that replenishes at least.
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it is a delicate balance for the next four years. matt: that was an inclusive interview with juan carlos echeverry. scarlet: coming up, if you're looking for an apartment in new york city, prices are down 20% from one year ago. with an miller joins us look at what is driving these prices down. this is bloomberg. ♪ ♪
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louisburgive from road headquarters in new york, i am scarlet fu. matt: and i am matt miller.
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mark crumpton has more from our newsroom. unanimous --. has unanimously agreed that the portugal former prime minister should be the next secretary-general. he served as the high commissioner for refugees until last december. the council will meet to formally approve guterres and recommend his candidacy to the -- for final approval. he may releaseys his 2016 tax return with a report that his comments were reported by nbc after last week's presidential debate. he said he would release his current returns as soon as they are complete. he had asked for a six-month extension, they would be due october 17. a survey released finds the -- hillary clinton is better like then donald trump in china.
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it was a survey conducted by the washington dc based research center. 22% saw donald trump favorably and 35% off clinton unfavorably. more than 80% of respondents said they consider the u.s. a threat to china. global news --global news 24 hours a day, powered by more 2600 journalists and analysts in over 120 countries. crumpton. this is bloomberg. matt: now at the buyer's market apartment sales plunged 20% in the third quarter compared to a year ago. according to a report by miller samuel prudent joining us now is the ceo, jonathan miller and before everyone is finished signing their check to -- to correct what we said earlier, prices have not fallen 20%. prices are rising, it is just the number of contracts closed
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has fallen by a fifth. jonathan: on a year-over-year basis sales are down 20%. a year ago sales spiked, so the decline was exaggerated. we have gone from a white height -- white height/-- white-hot market to something more average . sales activity is almost 20% higher than over the last decade. this isis --scarlet: very much supply driven? jonathan: absolutely. i covered many markets and we see the same pattern. been ons in housing has the high end of the market where new supply is coming in whether sales or rentals and prices for the pressure on the market on buyers is tighter. the demand is shrunk her. i described the housing market here soft on the top and tighter
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through the middle and entry-level. matt: so for my kid brother looking for a place for her to thousand dollars or $500,000, he bids on 10 places and never gets one. jonathan: those conditions still exists although there is less of a bidding war. a year ago 31% of transactions in manhattan sold above list price come in a bidding war situation. now it is 17% which is still almost three times normal. matt: that is across the spectrum. you say, if i want $10 million someone comes in and says i will give you nine point $5 million and you say i will take it. jonathan: it is a highly segmented market. talked toatt and i amanda lang about canadian housing and how the government is trying to cool down the property market. to what extent is that spilling over into the u.s.? matt: they are worried about a
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bubble jonathan:. they have been talking about the bubble for about 10 years and it is a different scenario. i think what is on everyone's mind is where interest rates will go and what that will do to the housing market. the sentiment is if rates go up it will be at a very small degree. in a market like manhattan about 45% of the market is a cash market and when you move north of $5 million it is an 80% cash market. scarlet: so the foreign chinese buyers, are they coming into new york more because they cannot go into canada or are they separate markets? arethan: i think they separate markets and i also think the international influx is not what it was. it is still there and the high end, but not what it was two or three years ago.
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matt: not the british, i am sure. jonathan: we are also in a situation where the dollar is wrong and that deters, even with the best intentions of foreignng wealth out of countries to invest in places like new york, it is not what it was. classic six room apartment that say a couple in their 30's with two jobs in a couple of kids would want to buy to raise a family, what kind of price are they looking at in manhattan? scarlet: they should have really good jobs, by the way. million. $2 million-$5 somewhere in that range. that is the market. it is interesting we have had new development that certain markets that were the anchor of the housing market here like fifth avenue, park avenue, are not what they were. a lotre actually seeing of impact from the new
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development we had seen. new development has become a direct competitor to the older prewar buildings. scarlet: extrapolate what this means for the high end property market in new york city next year or in five years. jonathan: as you move to the top sales market there is activity, just not nearly the supply anduse of also because when you start seeing a lot of supply, on as we did a couple years ago investors are like, let me wait and see how this plays out. there is no sense of urgency and i think at the high end plays out for a long time for many years. matt: how about middle-class? i feel like more and more people are gentrifying neighborhoods, obviously brooklyn, but in queens and the bronx and into westchester and long island. does that continue to flow out? jonathan: it is actually happening right now in a big
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way. the outlying suburbs see record sales activity. when you look at year-over-year numbers over the last four we see sales activity 1-3 is multi-decade or decade highs. a lot of that is closer in this city, -- in the city. they are seeing just what the city is seeing. matt: very interesting for us to talk about because we live here, but also fascinating from an economic standpoint for the rest of the world especially when you talk about the currency issues. they do not seem to have affected the high end market as much as you expected. jonathan: i think people assume when the dollar strengthened that it would be like an on off switch. it is just the degree of the inflow has been reduced. there is still demand from outside of the u.s. matt: jonathan miller, thank you
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for joining us. jonathan miller from miller samuel's. scarlet: we have all three major levels.at the best the s&p up .5% and the out up 121 points. let's head to the nasdaq where abigail doolittle is standing by. abigail: we are looking at a recovery rally for the nasdaq you raising the two day drop behind the strength we see a reversal for many of the mega cap names. two include amazon and microsoft and another boost for the nasdaq netflix up nicely. higher by 3% here. this is not a typical. 2% or greaterird for netflix over the last seven days, there has been a background up takeover chatter.
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apple, apple could potential he partner with netflix and investors may like that. we have luke capital initiating a new buy rating on netflix, david miller is saying the second quarter subscriber miss was likely a bump in the road and he expects the company to return to corgi -- quarterly reports of meeting or beating estimates. this is a bullish call considering they have had pump -- bumpy quarters in the past and they will be recording in less than two weeks. we have seen this bumpy road in a left -- roughly one year chart. investor hope is up and down on the messy quarters and recently the stock dropped below the 200 that isng average downward sloping and some consider that to be bearish. on the recent bullish action i was talking about we have the stock trading above this range.
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is this a bullish? it could be. we saw it earlier this year as well. we would need to see netflix put in a higher high above 112 to his arm it is not a false start. scarlet: that is an interesting move. yesterday you were highlighting one apple supplier skyward, you have another apple supplier upward today. broadcomwe have slightly higher. initiatingnstein with a new outperform, he is citing the recent acquisition saying it is a game changer and he believes there is upside potential for the shares of broadcom based on the fact that valuation is compelling. as for the upside, stacy thinks the stock could move higher at 20%, a stock already up 20% this year.
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it could be a big winner for the nasdaq. scarlet: thank you so much, abigail doolittle live from the nasdaq. matt: twitter investor lowercase nottal founder chris does mince words and has been outspoken on the future of twitter and continues to be so now that it appears to have many suitors. emily chang caught up with sacca at the salesforce dream force conference yesterday. is an incredible story of underachievement at potential never realized. i would be really excited for someone with product division to go in there and take chances. we know it has the most valuable body of information in the world. there is stuff in there for every person on the planet and they have failed repeatedly to surface that in an easy to just -- to digest way. emily: are you disappointed with jack's product leadership and
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hoping he would bring in someone else? chris: yeah, that is why we put jack cominghind back. has that she is the one that has always had leadership in the country. he may not be the kind of guy who wants the keynote on the big stage, his ideas have always been a couple years ahead of the market. four years ago he was bounding the table that we needed to get into live video and i don't think anybody understood the urgency and now it is obvious that is the evolution. emily: why didn't that happen? chris: i am not sure, but it has been a disappointment. delivered on the revenue side to the extent he can without user growth. i would like to see this go to a partner that has distribution to grow it organically using other platforms and at the same time
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say, we have got the best data and we have it faster than anybody else out there, why aren't we making it easier? emily: he thinks twitter can still be an independent company, with the you think? chris: i do not see how it gets materially better over the years . i do not hear there are any twitter 2.0 or 4.0 in the works and i have not heard anyone talk with passion about what is coming down the pipe. emily: do you hope for an acquisition or a new ceo? chris: i hope for an acquisition. i have been saying this for a long time. i think it is a natural complement to at least three or four companies out there. emily: who would you like to see? chris: it is an obvious google fit and i think google underestimated the company for a long time because it is not scientifically hard to pull off
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in the same way google underestimated blogger for years . to a computer scientist, it is a front end, but it is a canvas on which humanity places incredible thoughts. it -- that is what twitter is, to a scale blogger never achieved. facebook has tried to copy this company for a long time, but i think they could bring some great vision to the cure ration of the tweet. managing director chris sacca with emily chang. scarlet: we have a newly redesigned website. you want to head to bloomberg.com/technology or check us out on twitter. this is bloomberg. ♪
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♪ vonnie: you are watching bloomberg. i am vonnie quinn. cehic.and i am nejra their techanding business. jra: we look at the fight over who owns the south china sea. vonnie: the british economy is still showing resilience in terms -- in light of the brexit vote. the central bank had cut interest rates and reinstated asset purchases.
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jra: goldman sachs is sounding the alarm on chinese real estate and they say the property market is at risk of overbuilding and rising speculation. goldman warns that a downturn would lead to problems for metals, especially iron ore and steel. l.a. elite will buy health products from a german company. is the 10th since 2007 4 lili animal health business. vonnie: time now for our quick take where we provide background and comments. tiny islands in the middle of the ocean are being fought over by china and its neighbors because of should teach it significance. here is a look at how disputes are escalating and what the implications are to peace and trade. ♪ >> these islands do not look like much, but they are at the
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center of a simmering dispute about who owns them. seven countries have overlapping eased to islands in the and south china seas and there is one common player, china which has been jostling with neighbors over maritime territories for more than a century. a tensions have threatened to boil over potentially drag link -- dragging in the united states and even talks about possible war. here is the situation. china claims more than 80% of the south china sea within a border it calls the 9-9, the legitimately -- legitimacy they say is proved by a 1940's map. about a decade ago country started making new claims over u.n. rules. china got the most attention, it started to build islands, installing runways and that led
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the philippines to challenge the claims in an international tribunal. the philippines won the case in 2016 and china's reaction, it is null and void and has no binding force. the reaction of the u.s. >> the united states will stand with allies and partners. >> beijing says it has no intention of preventing commercial traffic, but is simply protecting territory. 1000 miles north in the east china sea they are also locked in a dispute with japan over another rocky outcrop. the u.s. does not take a formal position on this, but in 2014 president obama vowed to defend them. so far the dispute is confined to positioning of ships and aircraft. incentive forig
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countries like china and japan to stay safe -- friendly, it is trade. boosts $5china sea trillion in trade every year. given how quickly china has been building its military position and how nervous that is making everyone, some analysts say there is a significant risk of armed conflict, perhaps even as a risk -- result of a miscalculation or mistake. the u.s. responded by upping patrols of warships and surveillance planes. greater resolve may mean greater risk for the u.s. and for the region. vonnie: you can read more about china in -- and all of our quick takes on the bloomberg. had to bloomberg.com for more stories. ♪
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♪ matt: hank diamonds argyle diamond mine in western
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australia are considered to be the most exquisite colored diamond in the world. joining us is rio tinto's head of diamond sales, patrick opens from london. think -- let me ask about colored diamonds. i know people pay more for them. our pink diamonds for some reason better than just your regular clear diamonds or white diamonds? rarerk: they are a lot compared to white diamonds where they get their value from the absence of color, with colored diamonds you have the opposite, it is the presence of color that determine their value and they are extremely rare. rio tinto is the only mine in the world that produces them in that represents about 90% of the world's pink diamonds and that represents 0.01% of the total mine output. they are incredibly rare and beautiful. matt: these are naturally
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colored because i know there is a process by which you can color diamonds if you like, but they come out of the argyle mine like this? patrick: yes they do. they are natural, untreated color diamonds which makes them incredibly rare and they are fabulous flukes of nature or if they are not supposed to come out of the ground like this. i am sureing at them in real life they are more stunning. do people buy them as jewelry pieces or are they more of an invest in right now? bothck: it is a bit of really. there has always been a strong element of collectibility and value for these rare diamonds and what they do is they evoke enormous emotional appeal. people talk about investments of passion and people say they connected the diamonds and they talk to them and bond with them, yet we -- yet we have seen strong growth on the investment
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side of colored diamond buying and that is the result of very strong track records on value and price appreciations over many years. matt: so you have been a tour for the past few weeks and months, how are people reacting as far as demand? patrick: incredibly enthusiastic. we have dubbed this collection the chroma collection because it has so much color and it is the best collection we have had in decades. there is a norm is interest and enormous competition. it is a stunning collection. matt: thank you so much, rio tinto's head of diamond sales.
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♪ york, good00 in new afternoon i am scarlet fu. matt: and i am at miller, welcome to "bloomberg markets." ♪
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matt: from bloomberg run headquarters in midtown manhattan we are covering stories from san francisco to berlin, assets, and tokyo. two of the world's most accommodated central banks are starting to think about ways out of the bond buying mays and global bonds are selling off. what happens when quantitative easing runs out of runway? and should deutsche bank tank the justice department to court rather than settling for $14 billion, that is what fund he saysis calling for, asking for $14 billion is extortion. more highlights from that interview this hour and, the new york mets have already notched a big victory outpacing their crosstown rivals the new york yankees on tv for the first time
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ever. we sit down for the -- with the president of sports net new york, steve raab. julie hyman is here to look at some of the market's current streaks. we see green across the board and we have seen ups and downs. equities are going strong. julie: they are pretty steady. we have the dow and nasdaq outperforming the s&p up .5% and energy stocks have been helping to lead as we see oil higher. we have streaks to note. let's talk about a down street, a losing streak for utilities. we have central banks talking about pulling bank a little bit so we have seen bond prices fall and yields go up and that has been bad news for interest-rate sensitive groups like utilities which now have fallen 7% over the past two weeks. on a nine day losing streak
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which is the longest losing streak for this stretch in 14 years. what is bad for utilities is good for banks. in the bank index is higher up best 1.9%, having the single day in two months as we continue to see yields in the u.s. move higher. real estate is another one of the losers from higher yields. it is having a five-day losing streak that is the worst year to date and much like utilities down about 7% over the past five days. also bad news for the telecoms which are at the lowest since may 25. this goes back to may 25 and you can see letter changed since then, a made sort of around trip. there is also talk about the acquisition strategy for a company like at&t with the recent purchase of directv. bloomberg news has the story today. our and -- are investors content
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with that strategy? the yen -- the dollar against the yen is having the longest winning streak going back to march. you see it is up about 3.2% again on the changing landscape for what central banks are doing around the globe and what that means for the dollar versus the yen. at least for now it has been going higher along with the prospects of higher rates before the end of the year. scarlet: thank you so much julie hyman. let's get a check on bloomberg first word news. nikki haley says the national guard is mobilized as hurricane matthew approaches the state. she said the storm is slowing and that it will be necessary to evacuate some one million people . instead residence in charleston and beaufort are being ordered to leave today. republican vice presidential
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nominee mike pence is back on the campaign trail less than 24 hours have to his -- after his debate with tim kaine, he held a rally in virginia. governor pence: there was a lot of taxes about -- talk about taxes last night, my counterparts under like a broken record and i told him all you need to know about taxes is simple, hillary clinton is going to raise your taxes and donald trump and i are going to cut crop -- taxes across the board. won praisenor pence for a calm performance, k -- president obama is calling for more diversity at the central intelligence az -- agency and other security agencies. the president suggests a number of actions to improve diversity including better collection of data on workforce diversity and
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providing employees to more access to professional development opportunities. the israeli military is carrying out airstrikes on the gaza strip after a rocket landed in a southern israeli town. it marked a rare incident of rocket fire penetrating israel's aerial defense system. since 2014 a cease-fire is held, militants in gaza occasionally launch rockets toward israel. three european scientists won the nobel prize for chemistry in their work in the likelier machines. machines.ar they may be used to develop new materials, sensors, and energy storage systems. the scientists share a $930 million reward. global news 24 hours a day, powered by more 2600 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. should fighte bank
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the department injustice in court rather than pay the u.s. $14 billion to settle a residential mortgage-backed securities investigation according to the investment ceo aveda sarah. he was also asked if credit squeeze and deutsche bank if either one or both need to raise capital. suites not think credit -- credit suisse needs to raise capital. maybe after they shrink massively. right now they do not have a liquidy problem. they do not need capital. they had five coming up. should be between 4 billion and $5 billion and the doj may add a foreign premium to get more money for new york state, but let's say $6 billion. >> you really think a foreign
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premium gets applied? >> absolutely, i think it has been totally outside proportion and that is in -- in the ultimately itcase is the u.s. law. this is a country where law is upheld. in the apple case we are asking apple to pay 12% tax in ireland and they have been selling in france, germany, where the tax is 40% of we are not asking the 40% which they should pay. here in the states, it is a fine equivalent for other u.s. banks to be between $4 billion and $5 billion. asking $14 billion is extortion. >> you are saying that john cryan should effectively raise his middle finger at the justice department and say i will see you in court? >> yes. >> really? why has every single ceo not
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taken that option? >> if you are a u.s. ceo you do not have the option. if you are a foreign ceo you do because you can always walk out. >> is that what he is going to do? >> pricing they are ready to litigate and i think eventually with the administration leaving in the next xt days and it -- it is in everybody's best interest to settle. >> so the prosecutor can put the trophy in the case? allf course, before they lead. as you know, new election, new circus. the probability that a settlement happens is high. deutsche bank has a powerful argument, they never made any money in the u.s. in the last 20 years. they do not need the u.s. and the u.s. does not need to bank. >> that is our john cryan says. >> of course because you want to keep your dollar funding and your dollar base. >> he also says the largest
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v-pool in the world is the u.s. market. >> if the fine were to be so hard that it -- high that a crippled the institution -- fine there is that sort of and suppose they take it to court, if they just pull out of the united states they still own money. the action happened before they left so they do not get to say we go home and do not pay anything. >> i agree, the issue is how much you pay. you pay what is fair. in a single court when it gets in the public hearing -- right now we do not have the details. on public disclosure, which is what we know and in similar cases, the range should be $4 billion or $5 billion and that is why the market is puzzled. if you were to go to litigation all of that would become public and then it would become the action of the doj will be of the
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-- in the public eye and scrutinized. >> that was davide serra. scarlet: with matthew on a collision course are oil rigs in trouble? this is bloomberg. ♪
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♪ you are watching bloomberg markets, i am matt miller. i am scarlet fu and we are keeping a close eye on hurricane matthew which is on track to hit the east coast and that is the deck because we couldn't see it hit the commodity complex. look at the bloomberg, i am tracking the hurricane when it was first forming in the caribbean when the first advisory came out wednesday and
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there have been a ton of advisories. i am clicking through different advisories and i can see how the past has shifted. it is currently a category three storm with top wind at 115 miles per hour and let's move this up so you can see it. forecasters strengthen -- forecasted to strengthen back to category four before he gets to the coast and you can see the cone of uncertainty which has moved off a little bit. it was projected to come along the east coast and hit the northeast and mid-atlantic states. it looks likese it will impact the coast of north carolina and south carolina and then veer off and at that point it will be a category two. scarlet: it will slow down by that point but it could delay fuel cargo by four days because a lot of ships will stay in port. that could have effect on prices down the road. matt: it will also impact your vacation if you are headed to
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the bahamas. scarlet: next week my kids have two out of three days off because of columbus day. matt: that will be a problem for air travel around the country, even if you have just an issue in miami and charleston and charlotte, it will be a problem for new york and o'hare and atlanta. what i have is a look at bloomberg intelligence did a piece pointing out the impact of hurricane matthew could be good for some retail outlets. for example, home depot and lowe's could sell a lot of material people tend to stock up on. people couldath end up going to buy things that lowe's and home depot to fix up homes. this is home depot and lowe's sales from bi go going through
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to the third quarter. we will see the fourth quarter come soon and that is when it would impact because they are both on calendar years. it could have negative impact on a number of stores i think fema had the story, she was talking , sot beauty supply stores for a for example, anything you do not necessarily need could be impacted negatively. any home repair and also walgreens, walmart, target, people willes, always stock up on things when they think a hurricane is coming their way. scarlet: the other thing is home , restoration hardware, bed bath & beyond, anything you go to spend time. people are unlikely to leave homes so they will want to buckle in an chill and netflix. matt: unless it is a restaurant
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.n a really sturdy building have you seen the restoration hardware in greenwich? it is amazing and i don't think -- i do not think a hurricane what impacted negatively. scarlet: the projections have it going off the coast. go we have incredible details. matt: you can also see tankers in the path and oil rigs in the path of the hurricane and that will drive commodity prices if we get an impact negatively on those assets. scarlet: the new york mets are back in the playoffs. even before the game versus the san francisco giants they are ready have a huge victory out drawing the yankees on tv for the first time. the president of the cable home will join us next created this is bloomberg. ♪
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♪ matt: welcome back to "bloomberg markets." time for the bloomberg business flash. the supreme court seems reluctant to place limits on attempts to crack down on insider trading on wall street. justices suggested it violates the law even if the insider supplying corporate secrets to a friend or relative does not receive anything of value in return. yahoo! is disputing parts of report it designed a software to scan tester e-mails for u.s. intelligence agencies. they call the reuters article "misleading." reuters said yahoo! obeyed government orders to scan
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hundreds of millions of private e-mails for the nsa or fbi. there is a report that a galaxy on an phone exploded airplane. to a source it happen on boarding, they say the phone overheated. that is your bloomberg -- business flash update. scarlet: we are live on bloomberg television and bloomberg radio and i am scarlet fu. the mets success on the field translated for big numbers for the cable network. steve raab joins us now. you earned huge bragging rights here in new york and nationally, what does it mean for the business? can you quantify it? steve: there was a break -- great year to be number one in the number one market in the country and number one across local broadcasts in major league
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baseball and it boils down to relevance. relevance for our fans and viewers and greater relevance for our advertisers and distributors. scarlet: do you see sponsors migrating from the yankees to the mets? patrick: we see some of that andeve: we see some of that we see new ones coming in and renewals and the commitment that sponsors want to make. scarlet: so you are leveraging being the number one cable sports channel? steve: for sure, everybody wants to be with the leader. if you look at sny's structure, the joint venture of comcast and time warner charter, do you think this is a validation of the business model? steve: for us it has been a right move. it is majority owned by sterling entertainment, the family that owns the mets and then comcast and then time warner
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hold the minority positions. for us it was a way to come into the market and they gave us their homes at launch. i think success for us and our business model has been our entire ownership group has really mandated that sny be run for the benefit of sny. so what we have gotten out of that is the support and encouragement and sometimes services from charter or from comcast, but really it is about us driving sny to maximize the asset sny and that has been the greatest benefit. scarlet: what kinds of services? back: they could be office, legal services, consulting services on distribution. being able to leverage their expertise and their motivation for sny to benefit sny. has beenone thing that trending across live sports as the decline in ratings for live
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sports much to the chagrin of many. the nfl for instance, the basketball finals. there are a lot of theories as to why this is. what do you think is going on? steve: it is not something i pay as much attention to regionally. in the regional is this our ratings have gone up, we are up 10% year-over-year and up 40% over our previous five-year average. for us it is about team performance and local team performance. why it is happening nationally, think the nfl is too early to tell and i think in other leaks agues you- in other leq see regional disparity. has beenso sny insulated a bit from this reality? steve: it has certainly motivated our fans to make the relevant.ny more
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we have seen tremendous growth. scarlet: one theory as that cap -- is that people are migrating to digital platforms. what kind of effects have you seen from the advent of cord cutting? steve: we are not seeing it with the same impact as the headlines might suggest. we see adjustments, but at the end of the day live, local sports is great content and content that our business is king. we see small adjustments and we are trying to figure out how much we need to adjust to kind with the changing landscape, but we are just not seeing it at the pace and the impact that i think some headlines suggest. scarlet: nevertheless i am sure you need to prepare for leaner times ahead when the turn may come. what are you doing in anticipation of that? steve: this is our 11th baseball season and we have seen the mets
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in good times and not so good times and for us it is really about every year being better, operating more efficiently, finding distribution weren'tities that maybe there in the past that are showing themselves. for us, the good times on the field, we need to be prepared to capitalize on those. we are pushing ourselves forward to matter what is happening on the field. it is really, will we be there in the years weather is success on the field so we can capitalize and when there is not the same success because at some level you cannot make the playoffs every year, are we really minimizing the downside and i think we have done a nice job of that? scarlet: speaking of the playoffs tonight is a do or die game for the mets versus the san francisco giants. if they advance how will sny's october coverage maximize the exposure? to broadcastble the actual game so how are you
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monetize the on the field success? steve: mets fans have come to expect that we will super serve their appetite and come playoff time that appetite is huge. last year it was 14 games and a 28 day ron and we were there 28 days whether it was supposed and pregame coverage on game days or off days what is happening and what is the lineup for the next day, what are the injuries for the next game and we will be prepared to be there. we will have the entire evening from city field plaza. scarlet: good luck to the new york mets and thank you to steve raab. this is bloomberg. ♪
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matt: getting a live shot of midtown manhattan on a nice
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autumn wednesday afternoon. scarlet: let's get you started with the headlines. the security council has unanimously agreed that portugal's former prime minister should be the next u.n. secretary-general. he served as the refugee chief until last december. to council will meet recommend his candidacy to the general assembly which must give final approval. belgian prosecutors say the scope -- two police officers have been stabbed an incident that could be terror related. the officers wounds are not life-threatening. last month, there was another knife attack on two brussels cops. belgium has been on high alert since 32 people were killed in
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suicide bombing attacks on the brussels airport and subway system in march. president obama has received a briefing on hurricane matthew. it could hit the u.s. in a matter of hours. at fema headquarters, the president had this message for residents in florida and the carolinas. >> this is a serious storm. it has already hit haiti with devastating effect. it is now in the process of moving through the bahamas. i want to make your everybody is paying attention to your local officials. if there is an evacuation order in your community, you need to take it seriously. mark: matthew is blamed for at least 11 deaths in the caribbean. matthew will remain a powerful storm at least through thursday night. just one month before the election, the battle for the u.s. senate is not an net -- neck and neck.
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to beats are on track opponents in illinois, pennsylvania and indiana. republicans look poised to retain seats in ohio and florida and remain ahead in new hampshire and nevada. 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. matt: after a two-month drop in the worldwide surge in negative yielding bonds, they regained strength last month, now looking at $12 trillion of negative yielding debt, up 6.1% from the month before. joining us now is simon lue fong . we appreciate you dropping in on your way to the imf meeting. what do you think about the hunt for yield right now?
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is it back on or are people starting to freak out because of this taper tantrum story? you have seen a big rally since then. it's connected with an improvement in fundamentals in emerging markets. at the same time, you see the currency stabilize and then start to rally. big returns in local currency, up to 16% or 17% this year. $2.6 billion this year. tell us about these inflows. simon: it's a mixer of institutional and wholesale. the aspect of searching for yields is across many different types of investors. to that extent come everybody is searching for yield and the safest possible way. scarlet: why is that? because you are looking to be more risk-averse than others?
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we have been one of the first to have a dedicated emerging-market local currency fund. we have a good track record. at the end of the day, people look at your return to benchmark -- we've done relatively well. matt: your to date return is good for fixed income -- the year-to-date return. -- only ones that get above if i show a spread on the bloomberg between the u.s. dollar denominated emerging-market debt aggregate ggs thend the u.s. a main benchmark, they've outperformed considerably. is it ready to take some money off the table here? simon: the fed tightening cycle
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we are in in the moment -- there's a difference between december of 2015 when the market got nervous. we are in that cycle already. image, to that extent, we are prepared for that. as long as the e.m. fundamentals remain on a reasonable track, growth is picking up in certain areas, i think we will see people sticking with the trade. matt: would fed tightening throw a wrench in that stability? simon: the first one had people worried. they did not know how much or when it would be. now, we expect there to be another one this year. scarlet: we talked about the inflows. is it difficult to deploy all that new investment?
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a lot of people worried that the easy gains have been made already. we will see 16% or 70% returns this year because part of that was the fact that we had sold off significantly last year. that's 16% or 17% returns. we could see 7% to 8% in the next 12 months. matt: howard marks is in distressed -- when he races billions of dollars, it's not easy for him to spend all that money. you have raised a ton of money this year. do you keep a lot of it in cash? there's not enough supply out there? simon: there's been enough supply for us out there. we have managed to invest that into the markets without any increasing spread or transaction costs. aboutt: what do you think
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the u.s. election and how that factors into how you deploy your cash? now is hinged on what the fed does in a macroeconomic environment. the fed says it is not political but the fed will not do anything in november before the elections. simon: if you try to decompose -- returns in fixed income such as the fed or the upcoming political elections here. our process is robust enough to cope with that. we have the part of our process called the top-down. will be watching this closely and adjusting the portfolio carefully. candidate orne another be better for the stability of emerging markets? simon: it's bigger than either candidate. the macro tailwinds in is bigger than any
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single individual. recently, weexit will see financial markets get a little nervous coming into it. you have some reaction after the result and then financial markets will return back down. in the emerging-market world, how do you see political risk playing out in places like latin america? simon: in a positive way. what we are seeing in latin america is a move from less socialism into more centrist, pro-reform -- you see it in brazil. the big one would be to see some normalization in venezuela. matt: really great to get some time with you. inc. is a much, -- thank you so much, simon lue fong. he's on his way to the imf meeting.
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christine lagarde joins tom keene and francine lacqua tomorrow at 9:30 a.m. eastern time on bloomberg television. coming up, wells fargo shares joining today's bank rally. analysts are not feeling so bullish about wfc. this is bloomberg. ♪
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scarlet: this is "bloomberg markets." matt: julie hyman has the chart of the day and the subject is wfc. i thought for a moment kfc. i was more excited. julie: no, it is wells fargo.
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we are talking about analyst confidence or lack thereof in the stock right now. the celebrating behind me here. ell rating behind me here. the highest now since the eight sellrisis -- ratings now on this stock. stumpf has been hauled before congress a couple of times. his salary has been clawed back and analysts say this will affect the reputation of the bank and potentially will be material. seeing the stock rise in
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line with other banking stocks today come up 2.4%. case sincet been the going back to the early september -- regulators were looking into the cross-selling practices. since then, the stock is down by about 10%. that has had an effect on its market cap. this is looking at wells fargo versus jpmorgan. smaller on a market cap basis then jpmorgan. this is the five-year chart, the spread between the two. going above the zero line and now, jpmorgan growing larger than wells fargo. at least by that particular metric. just the cost of what has happened on the stock price and sells byct on
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analysts. matt: kfc coming out with earnings after the bell. , the owners of kfc and pizza hut. stock is up 20% come almost 25% year to date. the yellow line is the analyst target price. it has been raised and raised and raised even though there is and two sells.ds scarlet: switching gears to cuban has not been shy about voicing his political preferences this election season. emily chang caught up with mark cuban at the salesforce dream
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force conference yesterday. mark: hedging some things just in case trump goes further along. hedge, justlwind derivatives, if the market starts to head down come of the size of my head grows. emily: how do you think clinton versus trump would impact the growth in general? ,ark: when you have a president let's say trump wins and you don't know what he's going to say next, that is the ultimate uncertainty. he hasn't been able to control himself when he's this close to the presidency, it is not going to change. and northlous comment korea dropped a bomb on japan. one comment about the nub libya's about the world and putin invades ukraine. aboutut being oblivious
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the world. social unrest is the ultimate uncertainty. you can have a say in trying to -- if somebody is oblivious to what's going on in the world -- look at charlotte. open, itness can't doesn't matter what the tax structure is. society really takes a turn for the worst. hillary clinton understands powers in the world, she understands the relationship between china and north korea and japan and the whole asian area and she understands the russia and the surrounding countries.
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he doesn't. he was asked about the change in ,bama's first strike approach he did not know what he was talking about. that is the scariest thing ever. this has become less about his politics, less about what he's trying to propose as policy -- as president, you make one comment that is offensive to an unstable world leader, that is all the excuse you need. allyomb dropped on a nato one incursion on a nato ally, we are in a different world. i look at probability and risk assessment. is it a greater than 0% chance that trump would say something stupid as a president that could cause north korea to take action? yes. ?s it a greater than 10% chance
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it might be greater than 75%. there's no amount of policy that offsets that. that makes them completely unfit. the crazyue about stuff that's been said about hillary clinton, she is pragmatic, she is smart, she understands the turns, she knows about the nuclear triad -- she understands deterrence. when he tried to explain ciber, he did not know what he was talking about. emily: you have blasted him for not paying taxes. mark: nothing is wrong with him using the operating losses to carry them forward. if i was out there saying i'm the world's greatest business person, i would admit my mistakes. if i had a $915 million loss, i would tell you why. engineer a financial
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and i'm ashamed of what i've two, if you are about investing in people, say i took a big chance come i thought i could create this company with take thebs -- you will benefit of my knowledge and failure. there's nobody that's been successful that has not admitted failure. let us mark cuban from the salesforce dream force conference in san francisco. we just announced the launch of bloomberg technology can our newly designed website covering technology. head to bloomberg.com/technology. from fear toup, fatigue, why some investors remain skeptical on greece's turnaround. this is bloomberg. ♪
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scarlet: this is "bloomberg markets." there's been a recent string of good news for greece. the country's budget execution is on target. greek bank deposits rose in august and this week, the top economy official says the greek government has stepped up on economic overhaul to keep international aid flowing. some investors are not buying the greek turnaround story. we spoke with an economics perforc professor at nyu. >> i'm still pessimistic. greece is still under capital controls. severe constraints on economic growth. the reforms that could bring greece out of the present situation have not happened yet. just looking at the fiscal numbers, might look good from the european point of view, but does not look good from that for
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the whole economy. there is a need for reforms and the need for a structured program that will bring greece out. it needs to reduce the amount of primary surplus required. >> what would a structural reform look like? people are always in favor of structural reform. specifically for greece, what is actually needed? >> the most important thing that is needed, a restructuring of the state sector. ,he state sector is huge there's lots of people employed without doing much. we need to make sure that the right functions actually work. additionally, it has to become smaller. the expenditure is so huge that it drains the resources.
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matt: now joining us is joe weisenthal. i've been teasing the show all day long. that's talk about gold instead of chicken. yum! brands is coming out with earnings after the bell. >> gold has been getting clobbered, down 4% in the last three days. yesterday was one of its worst days in a year or more. tried to stage a bit of recovery today but got smashed down. strong0 a.m., we got a many fracturing report -- manufacturing report. that good data confirms a higher rate story, confirms the typing story. -- tightening story. recovery, central not so inclined to ease policy --
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matt: rates could go up, inflation is nowhere to be seen. >> overvalued and he made the point that positioning has been offside -- gold got off to a great start this year. one of those things that was clearly winning. one way to think about gold is to put it in the context of the general unwind safety trades. a selloff at the long end, decline of consumer staples. now, lately we are seeing consumer cyclical rise. despite the selloff in gold, future prices, investors are holding on to etf's.
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highest sincehe 2013. joe: you want to look at those etf flows and etf holdings and sometimes they corroborate what the underlying is doing, but they are one of the indicators to look at. up, we will speak -- that's at four clock p.m. eastern -- 4:00 p.m. eastern. this is bloomberg. ♪
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david: it is 2:00 p.m. in new york and 7:00 p.m. in london. vonnie: welcome to "bloomberg markets."
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we are life at bloomberg world headquarters in new york, covering stories out of san francisco, washington and south africa. concerns about fed tightening and ecb tapering hitting the bond market today. more investors anticipating a rate hike in december after comments from charles evans. oil is climbing, approaching $50 a barrel after data showed u.s. crude stockpiles dropped for a bit week in a row. jack dorsey took the reins of twitter a year ago but many of the problems he was brought in to fix are still there. we look behind the scenes of the company as buyout chatter grows. julie hyman joins us with the latest. julie: stocks

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