tv Whatd You Miss Bloomberg October 11, 2016 3:30pm-5:01pm EDT
stumbling last month and suffering a coughing fit at a campaign event. it was revealed later that clinton had pneumonia. the trunk campaign said the will run int battleground states. secretary clinton holds a nine state lead over mr. trump in a four-way race among likely voters. the democratic nominee tops the republican nominee 47%-30 7%. the survey was conducted three days before and after sunday's debate. gets 8%, the green party's joel stein gets 2%. food andisturbing supplies in haiti, isolated parts of the country effective by hurricane matthew need help immediately. of everything, including antibiotics and painkillers. there is also no power and water and food are scarce. the human humanitarian agency appeal him --ncy
saying people will need life-saving assistance and protection in the next three months. president obama wants the u.s. to take a giant leap to mars. an op-ed says the u.s. is partnering with private -- private companies to send humans on a position -- expedition to margin -- mars and back. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 companies. this is bloomberg. alix: i --
julie: i'm julie hyman. joe: i'm joe weisenthal. julie: the selloff in treasuries are deepening. joe: the question is what did you miss? fresh concerns over faster inflation. u.k.tability of the currency rocking the markets today. shortly on the selloff. facing one of the toughest passes -- more of his interview is coming up. apple is higher today. we will look at the withers and the losers of the samsung shutdown. >> yesterday, equity markets
subject to a dangerous combination. vulnerable.ts are you have earnings expectations, pretty high. andhave 30 high valuations levels of volatility which are low. look around the world and levels have an economic policy and uncertainty that is very high. a dangerous combination right now. >> the next guest says skepticism is understandable. is the global adviser head of research, tom lee. you have one of the highest for cat -- forecasts, known for being bullish that that is for a very long time. thiss the current bout of unfounded?
>> any different than every 2% selloff this year. every time the market stumbles a little bit, everyone stumbles for the next route. and of the day, we have got people nervous about the earnings. if you cannot rely on things like this. the overall picture, things look pretty solid still. is valid thatk it we could see the markets follow little bit? >> it is a fair question parity think about why you have crashes or big corrections, it is position squaring. people have uncomfortably long equities and i need to de-risking their positions.
all year, margins have been falling. every sentiment reading has a negative. we speak to our clients every week and they are still really cautious. going to havely to position square here. i just do not inc. is a deep pullback. something we have watched today is the correlation between pounds and stocks. if you want to look at my bloomberg, i called up the s&p chart.raday that is yellow and the pound is white and they have moved almost in lockstep. i wonder if it is not so much the pound but rather the u.s. dollar. we have seen the dollar come back a little bit lately, it seems to be breaking out of its range. the point't get to where u.s. companies have to worry about it? fair and a true relationship that makes logical sense.
i do think there is probably a realization that brexit is not a fairytale, but the interesting takeaway to me is the u.k. 10 year yield, 60 basis points at a time when the ftse made an all-time high. thele would say, if you get basis points back, we would get a crash. it may not mean anything. the dollar and 97 is not posting any risk. it is in a lot of ways in response to a lot of uncertainty. the dollar is your safe haven trade. >> we also have the political campaign in the united states. in politics, is it finally coming to the markets? >> is civil. it is politics, we will just have to wait until november. i think the polls have such a strong story in may be less about presidential uncertainty and much more about the house
for instance, or the senate here maybe that is fair to be worried about. does it change what happened? i think it makes no difference. >> we are just throwing things out there. the pound and politics. i will throw another thing out there. a chart i have been looking at. this is a chart, the s&p 500 in the light. you can see when the chinese volatility surged back in february, and the s&p 500 fell. looks like that is picking up a little bit again. it is now at the lowest levels it -- against the dollar since september of 2010. not talked much about china. at the beginning of the year, we talked more about china then we have. could that be coming back in the picture? >> in some ways, the chart reminds us of stuff our clients are asking.
people are trying to understand. it is raising questions about market structure, liquidity. consequence, i think people are de-risking. again, i think if we were really concerned about global growth, we should see commodities really weaken and the credit should be widening. credit has been rallying. roles according to credit is very different. high-yield is having a great day. that is one of the reasons you're looking at that you think stocks will catch up with high-yield? >> that is right. every investor needs to keep in mind we get michigan weather in new york two days later. >> i like that one. >> high yields telling us it may not be priced to perfection but things are going in high-yield.
things you like that rally. the strength in the high-yield. >> i think earnings will be really good this quarter. here are the facts. two thirds of companies will report positive profit year-to-year. the reason the headline number is not positive this energy is still getting massacred on earnings. contribute a dollar and earnings. just back to the midpoint of the 15 year range, mid-swing in profit, one sector. >> people usually lowball earnings. the estimates do not tend to be correct. a chart with that yesterday was over the past five years, analysts underestimated s&p earnings. if you extrapolate that to the quarter we are about to get, then things could be positive
for this quarter, rather than negative as projected. >> not only when i agree with that conclusion, remember that s&p revenues are up and earnings are down. the diversions of positive rest -- revenue a negative earnings is not because earnings are fake because the top line is recovering. classes that because we finally see the economy picking up or because we picked out so much of the bottom line? >> you cannot grow by just taking from the bottom line. the growth is authentically the shock from a commodity thing fading, plus, underlying economic growth, plus the dollar not acting -- it is essentially organic recovery. will have you back after the break. it more, tom lee. this is bloomberg. ♪
>> we're back with the global advisors head of research, tom lee. we were talking during the break and you said people do not realize how very negative the sentiment is. asked you, isn't that the way it is supposed to be? we like it when we climb the wall of worry when joe kennedy says buy stocks, that is when you want to get out. >> in is a lot like people believe the world is now flat and you could never prove -- never convince them it is round. that is how strongly entrenched a bearish view is today. whatever we knew pre-2008 will never come back. we even had clients getting fired by their investors in 1999. getting -- they are getting fired by the same people today.
it feels to me like a big turning point, but not negative. setting out to be -- people shed that negativity. >> you do not see anyone in the economy that could be the surprise to change the sentiment? since 1900, in the 1950's, it was cold war and nuclear annihilation or the cold war. a mistake investors can make today is circumstances are even more dangerous in the deafening the past. >> all of this said, as you make your argument to be not as negative as people are, where are you looking to be not as negative? >> the playbook changed this year because market has clearly shifted toward intrinsic value
over p or growth. have had to own in the last seven years will now get you fair -- get to -- get you fired. moreow really have to buy like industrial tech, energy i think thatd shift is catching people by surprise. we still like the idea of buying small caps, cyclical, especially tech, but also financials. tech,n you talk about take a look, we have got the groups in the s&p 500. this is year to date through june 27. tech week is the second worst performing group, down 6%. looking at brexit now, it is the top performing group. already this year, we have started to see some of that rotation.
is tech still broadly appealing to you? >> keep in mind if the rotation is taking place, these are three year 25-year terms. ok,have to think of it as, the market re-rated toilet paper to 25 times earnings. we will re-rate semiconductor chips to 20 times. --rosoft and intel and send 20 times and there are huge stocks from here. joe: i want to go back to the broader sentiment question. 1999 is a time when markets were surging and almost everyone was exuberant and there were a few holdouts who got fired by their clients for not taking it in. the difference now seems to be a market has been doing great and we are close to all-time highs with volatility notwithstanding, but no one believes it and they have not for a while. going back through history, is
there another time that you can think like this we are sitting near all-time highs but there is a deep reservoir of skepticism? >> it has happened numerous her 1952,istory to the market had gone nowhere in years. investment spending in the u.s. was at near great depression lows and the fed had suppressed interest rates low from almost a decade. that was with a 17 year bull market in the s&p going from 15 times 225 times earnings. 1990 is the exact same set up. all-time high an but an eight year bull market in bonds slowed in 1990 and japan crashed into a huge wall in 1990, went to zero growth and people started to say, eight years of liquidation event it is, 82-90. the market went to 99. history shows this happened multiple times in our lifetime.
>> you mentioned the elephant outside the room at the federal reserve. kevin market rally live with higher interest rates and get a boost? what happens? think of ite should from the economy side. you have to say, how many long-term investment projects can be justified when you expect 1% inflation and 3% total return per year? thenlittle gets funded and you say, ok, what if it is 5% nominal rate of return, revenue growth, you know, suddenly you can fund 100% of all projects? inflation rates really changes the math behind long-term spending and that is not happening in the u.s. i think it would be fairly bullish for -- for and housing. >> will last you again. tom lee, thank you for going in today. thank you. let's take a look at
where the major averages stand for we get them pretty much trading at the lows of the session here. the biggest decline for them in about one month. it is a far cry from when the nasdaq 100 close that record yesterday. let's go live there to abigail doolittle. what is the damage? abigail: we are on pace for the worst for nasdaq in more than a month. nasdaq today, the dropped a 50 day moving average, some would consider that to be bearish. then paying right from the start, biotech, the index now on pace for his third weekly decline. having its worst declined today since the brexit all the way back in june. the sector is considered to be often is a tell ahead time of risk off sentiment for the broader stock. it is important to keep an eye on that.
within the biotech, the biotech giant did the announced to the downside think there are asenues would disappoint sales plunged 26% year-over-year. that biotech is leading some of the other stocks, this had been the big point earlier today but now that top drag is microsoft. facebook,ve amazon, intel. it is very important to watch. as for whether the volatility take a look ate btv, 4003, this is a one-year chart of the nasdaq 100. basically, gauging volatility. a 100 it is back above day moving average, perhaps trading to work the top of the range, suggesting we may see the pullback continued in days ahead. julie: thank you. we appreciate it.
>> i am looking at losses in u.s. stocks accelerating it what is the correlation between the two? we take the chart back and look at the past five years of the s&p 500 to the british pound is in the top that blue -- in blue. the s&p 500 has rallied and the pound has fallen, particularly in the wake of the uk vote to exit the eu since the beginning of the year. the 100 20 day correlation going back for years.
the correlation between the two is the highest it has been since the end of 2012. it is not that high of a correlation. the s&p and the pound move in the same direction, a little more than half of the time. see the trend has been rising and the correlation has been rising between the two. this has to do with what we were just about with tom lee, the fact not so much of pound weakness as of dollar strength. perhaps not being great you'd -- great news for u.s. stock. it is interesting, the correlation between the two spirit you are at the pound alone, also a fascinating story. fascinated by how fast the pound has been falling lately. down 1.9% today, down at 12130. it is down about 9% over the last month alone. strategist are trying to figure out where does this thing bottom out? theresa may last week and suggested a hard brexit was
coming and that sent the pound tumbling and we had a flash crash friday. today, bank of england policymakers suggested they expect the pound will continue. the pound goes through resistance points. it hits resistance points, goes through and stocks -- stocks are triggered and people start selling and it loses more ground and momentum. you see right there at 120, we are grinding down -- grinding down just over 118. he got us low as 12090 today and that could either next target you will see. plus the number as we continue to trade through the night into tomorrow, particularly when we get into asian trading where liquidity is not as great. that is where we saw that crash last friday. joe: i am looking at a travesty to the u.s. economy and we talked about the u.k. and china.
one thing that is taken for granted is the fact that u.s. economic conditions are pretty good. there may be some yellow lights on the horizon. comes from a new york fed survey out today of consumer conditions and expectations about the finance. look at the last couple of quarters. percentage or number of consumers who are worried about perhaps missing an instrument -- interest payment. maybe they're worried their debt payments are getting a little too big for them, the real leveraging the private sector that has gone a little too far. dramatic yet, but you know consumer re-leveraging has been one of the positive stories about the connelly and our fear is people cannot make the payments, that is something they are worried about. keep an i on the uptake and consumer expectations about the own -- their own debt situation. a possible negative sign going forward. >> it will be interesting to see
>> we are moments away from the closing bell. "what'd you miss?" suffering the worst slide in a month, sending currency from the british pound to the south african currency tumbling. i am julie hyman. joe: i am joe weisenthal. >> welcome, for the first time ever, our audience members tuning and live on twitter. you can now follow our closing bell coverage on twitter weekday from 4:00 to 5:00 eastern. >> pretty cool. >> we begin with market minutes as we see stocks plunging within the s&p 500, only 23 stocks higher on the day. a lot lower in the s&p 500 and across the board, the nasdaq doing the worst today. corporatea lot of
news pushing things lower, there were concerns back in the market about the fed perhaps raising rates in december, although we sort of knew that. it is fascinating, the recalibration of risks. >> health care in particular, really week today. materials ticking ahead as well. but as you see, all of the industry groups lower on the day. all of the subgroups, that we'll iscompletely -- wheel completely red. when you look at the movers, aluminum, the worst performing 25%k in the s&p 500, down after the company said it was worse than estimated after its high-speed genetic sequencer. problem withttery defibrillators.
abbott is set to purchase saint jude medical. news.in the this is their last earning report before it is supposed to split into the aluminum producer and finnish products. they were supposed to be doing better, but that was not the case. joe: let's look at government bond reports across the world, japan's 40 year yield is higher. this is where it all got started, the government bond yields arising. it started with japan in july. keep an eye on that continued upper pressure. yearouth african 30 intraday, the finance minister is facing legal trouble, that really smashed it. but it was a pretty solid jump in the 30 year bond yield.
and you can see south african bonds are hardest hit. and a quick look at the two-year and 10 year u.s. bonds. they were closed yesterday, so it is a bit of catchup. up 1.77%. the currency of the day. michael: let's talk about the chinese yuan. reserve a basket october 1, it has gone in one direction, down. this shows the onshore and offshore yuan the dollar. down to a little over six dollars. it breaks through the 7.2 level. onshore, a six year low. the people's bank of china. interceding to
keep it steady. they set the daily reference rate. overall, depreciating for seven months. maybe donald trump is onto something there. because of this move, they are hammering other currencies. kiwi down 1.1%. the korean won is down. the philippines peso, we do not even want to talk about that. the latest since september 2009. a big day for asian currencies. yesterday we saw oil surge, giving a little back today, down 1%. one big loser on the commodity front, zinc. demands, concerns, this is general and sink took at the hardest, down 3.3%. julie: those are today's market
minutes. let's take a deep dive into the bloomberg. you can find all the charts using the function at the bottom of the screen. i will start with small business. you were talking about small borrowers and how they were doing. we got a business survey today, they come in without much change over the past several years. we are looking at inventories, which are the lowest since 2010. at the same time, failed expectations by these small businesses are actually picking up at the highest this year. even though these small businesses are more optimistic on their sales prospects, they still are cautious enough to keep those inventories lean. they will not build them up in anticipation of that sales bum. another way to slice the small business' confidence. they're are concerned about taxes and government regulation. joe: as mike was saying, that is pretty common to be complaining
about taxes and regulations. which to go to the yuan, has weakened to its lowest level in six years. and the chart of the rand in blue. when it goes up, that is the dollar yuan, which means the chinese currency is weakening. it is hard to find any explanation for why bitcoin moves. one popular theory, it circumvents capital control. it is one way people get their money out of china because they can be done digitally, no easy way to block it. it can circumvent the banks. bitcoin also had a big day, one of its a gift and a long time. it hit its highest level since to like. you can of them, the dollar yuan and bitcoin, taking off recently. if you're looking for a reason digital currency might move, china is considered to be it.
if you look at this chart for one week or one day, you see a connection. julie: there is no way to tell bitcoin breakdown by country, is there? joe: you can see the different nodes where it is traded, and it is huge in china. some ampyra gold data to this correlation. aboutl: we talk a lot correlation, here is graphical representation of what happens when you get regulation. you do not often see it as starkly as this. bigriday, sec will require institutional funds with fewer constraints on their investments to have a floating net asset value. no longer one dollar a share. when the sec announced that you can see what happened. the risk is up so a lot of people are getting out. they are pulling their money out of those unconstrained prime funds and putting them into funds which invest only in government securities because those are not going to be required to adopt floating.
they can keep the net asset value of one dollar a share. a big impact in money market, it is affecting marshall paper, and short-term government paper. i will pull up another chart that shows you dramatically how that has been happening. this has been going up significantly since this happened. sincenow at the highest 2009. and that was during the financial crisis. they are tied to a lot of lending throughout the economy. so it may be affecting you, or maybe not. for more on the impact of this money market i want to bring in our guest, he is at rbc capital. you say, do not worry, once we get past the day this regulation takes affect, natural market arbitrage will take that rate lower. >> somewhat lower. some will be permanent. we had a captive investor base
that will be gone forever. but we think that two things have driven up these costs. one is the shrinkage of these they money funds, and two, do not know how much cash they will lose. so protect against outflows. if they do not have cash on hand during it will flow, they have to ask for it from a dealer. so what we see is these people keeping their investments. we get past october 14 as a reform day, they will creep back out and curve. that will help and flatten the curve and bring it lower. let's look big picture. we saw this selloff today. one concern is that central banks around the world will not be accommodative as they have been.
we see rates picking up in japan, germany, the u.s.. how much further is that to run? many say risk access could not do well in that environment. >> we saw a microcosm of that today. in the bondweak market, which causes pain inequities and other risk assets, which stops a selloff. i think we have a period where there is downside risks. but this money market reform you are talking about, that has impacted rates further up the curve. what has happened, a lot of overseas investors like to hedge the foreign exchange risk. has increasedibor the hedging costs. if you see the dip back down in libor that i'm anticipating, it will make u.s. assets cheaper to those overseas buyers. we will see a pickup in that buying around the thanksgiving
timeframe. there is a window of risk but it will get better. julie: and we have seen a dramatic move in yields recently. has about 16ield base points this month. if it keeps him a track, it will be the biggest since june of last year. it sounds like you think that will reverse. given this rising perception the fed is indeed going to raise in december, what is an appropriate level, looking across the curve? that a 16epressing basis point move is dramatic, which it is these days. but long-term, it is not a very big move. the long-term trend is higher in yields. we will continue to back up. it will continue to steepen a little bit so the tenure will be worse. the fed will not tighten that fast. horizon,ink over this it will be a slow grind. when you look at the equity
investors, what they are worried about is not so much that slow grind, but will it be a taper tantrum? i do not think we are on the brink of that. michael: what about inflation? the fed is promising it, but we are not seeing that reflected. evenssee break givens -- rising in the last month. i think we have seen core inflation run-up. we are getting towards the top of that increase. headlines will continue to overshoot because when you look at oil markets year-over-year, you had a big drop last year, you're comparing to a lower and lower number. not true inflation, but a base. joe: why do you think we are getting toward the top of the core? >> some of the drivers of that -- we will get not any big increase in housing. that will be a slow drift.
core wouldal risk to be if we had significant change in trade policy. michael: if you look at services, that has been getting 11% forever. you always have inflation there. what held you down is goods inflation. what held you down is goods inflation. barring a big trade, in terms of trade change, i do not think we will see any change in the goods prices. >> we talk about the fed normalizing rates, we saw term toeads and they fell microscopic levels, inflation gets priced out. when do we see something you would call a real normal market price for a treasury security? >> unfortunately, that is a long way away. it is not just the u.s. central bank having a distortionary
effect. we have gold driving down yields there. even though qe stopped here -- one of the problems with qe is, qe supposed to cause people to buy risky assets within your country. what we have seen instead, a lot has drifted cash outside. we are seeing a lot of flows from europe and places like that into u.s. markets. rbc's head of capital rates strategy, think you very much. julie: the question is, "what'd you miss?" billionaire hedge fund tells us about insider trader investigations any impact it is having on his firm. fallen everyn has single day since entering the currency basket. and come trump unshackled. the build the -- bitter divide in the gop with just four weeks
mark: i am mark crumpton, let's get the first word news. a federal judge has extended registration for voting by a day because of hurricane matthew. republicans sued after governor scott reviews. they will see tomorrow if a longer extension is needed. 14afghan official says people, including 13 civilians, has been killed after an attack on a shiite shrine in the capital of kabul. a say the attacker was shot and killed by police. german chancellor angela merkel met with the ethiopian prime minister.
they are under a newly declared state of emergency, one of the world largest posts of refugees with hundreds of thousands having fled from nearby somalia and south sudan. 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. joe? joe: "what'd you miss?" billionaire hedge fund pioneer leon cooperman stands accused of insider trading by the securities and exchange commission earlier today on bloomberg television. he reiterated his stance that he did nothing wrong. he made his case today. >> we had very competent counsel, excellent in this area. they look at our trading records two years ago. the comments from the lead partner on the case was, i know insider trading, and it is not here. so why do you give somebody eight cents or $8 million or
$800,000 if you have done nothing wrong? give them the money, get off my case, and leave me alone. i said, that is not my genetic makeup. maybe i am wrong, who knows? >> at any point in this investigation, this stretches back to -- >> 2010. , 2010.es you ever consider turning omega into a family office? this hit 32% of the capital. starting next year, 50%. i commend investors, this is a blessing for them. believe, nott, i one i have more respect for than , he hast, -- warren outperformed the s&p. they look for a manager that has
50% of the money on january 1 from their own capital, a small sum of money -- you have to divide your great ideas, and we have outperformed the market for 26 years. manager, buted the the problems to some degree in the last five years has been that the big guys have gotten too big. we have to see how that straightens itself out. >> let's talk about your partners and associates at omega. you said in a statement issued earlier today that this case has genetically impacted opportunity for them. what do you mean by that? >> two things bothered me. painting on a $7 billion canvas, your earning opportunity is greater than if you are painting on a cheaper canvas. there is a reduced economic
opportunity. if i have a 2% position in a stock, and it is 2% of $4 billion as opposed to 2% of $7 billion, obviously it is less dollars. my people worked extremely hard and are extremely capable and deserve a good future. it took me 50 years to get here, they want to get there. britishnd thing, in the system, the losing party pays. you bring a suit against someone, you lose, you pay the cost. there is no cost to the government. they bring a suit like this, i spent a fortune defending myself, but the government enjoys a sovereign immunity. you cannot do anything about it. joe: that was leon cooperman, chairman of omega advisors. julie: and to be clear, when might -- when i made my joke, i was referring to the king of the jungle, let's be clear about that.
julie: samsung galaxy note 7 shut down could test their lead in smartphones. we will take a deep dive into the bloomberg in some areas affected by the recall. not just a recall, but getting rid of the phone entirely. let's look at the supply chain. when you have a product that goes away, it affects not just the company. samsung is in the middle, suppliers on the left. i know it is tough to see, but you have applied materials here,
qualcommland research, -- in other words, just like when you have apple going up or down because of the perceptions about it products, you have a lot of other companies. joe: their business is, in large part, dependent upon samsung business and its various components. julie: exactly. these are some of its biggest suppliers. these stocks went down today. we saw a big selloff in technologies and these companies were a part of it. michael: i can draw that out further with a really simple chart. samsung's shows market share, consumer electronics is not their biggest share. it is not mobile phones, but tvs, refrigerators, those things bring the most revenue in. phones and the mobile communications area -- there is a question of the ripple effect,
particularly as julie was talking about, semiconductors and qualcomm. those people suffering today may also have a problem within samsung over that. it may have an impact on the rest of its platforms besides the galaxy note 7 smartphone. the tablets and the things inside those could also suffer because they killed off the whole line. julie: it is hard to imagine that someone upset about the alaxy note 7 would not buy refrigerator or television. joe: what about exploding refrigerators? i want to show a chart the details perfectly the revenue for samsung versus apple. in the see briefly middle of the chart the orange line above the white line. orange is samsung smartphone
revenue, white line is apple. for a brief moment in 2013, samsung past apple in terms of selling more phones. thiswas a lot of talk, was the final moment of android dominance? the apple ios would go its way of the original apple operating system when he got wiped out by windows, but that is not borne fruit at all. has ag smartphone revenue little. apple just chugged along. it is funny, consumers are disappointed by apple, but the revenue speaks for itself. michael: what tells you the difference between the two, nobody lines up around the samsung store when they have a new product. julie: here is a fun fact, all the tech stocks that went down today, apple went up, its highest of the year. michael: samsung's loss is apple's gain. julie: seems that way.
mark: i am mark crumpton, let's get the first word news. hillary clinton and al gore hit the campaign travel in hurricane-battered florida. she enjoyed her first appearance with her husband number two to talk about environmental activism. mrs. clinton: we cannot send climate defeatists and deniers to the white house. mark: they hope the climate change activism will convince young voters not to support third-party candidates. inn mccain might write
senator lindsey graham for president. he revoked his endorsement of donald trump after the video surfaced of trump talking about groping women and making other vulgar comments. hurricane nicole has reformed in the atlantic and is threatening bermuda. the storm has maximum sustained winds of 75 miles per hour. officials say nicole poses a serious threat with possible hurricane force winds hitting the island late wednesday. the pentagon says it is considering what military response it could take against yemeni rebels who may have launched two missiles an american warships in the red sea. pentagon officials say iranian launched it at the uss mason and another ship. withoutinto the water incident. global news 24 hours a day, powered by more than 2600 journalists and analysts in over 120 countries. crumpton, here is
bloomberg. julie, back to you. a quick recap of today's market action with a sharp plunge in stocks. health care shares leading the line we saw, only 23 stocks in the s&p 500 closed higher. nasdaq off the most, by 1.5%. asot of big declining stocks we saw it was very negative today. joe: a negative start to the day, interesting macro moves from the british pound. oil not able to continue its gains. nowthing we will talk about is the onshore price of the chinese yuan, it dropped to a six year low. this after their foreign reserve shrunk to the lowest level since 2011. they are supporting the currency before it joins the imf. with me to discuss moves and , ouryuan -- in the yuan
guest. down to its back lowest level since september 2010, i believe. what you see as the key driver here? the interesting thing about this year, we started with a lot of talk about china. then people forgot about it. but it is starting to get people's attention. what is your read? they read it now is that move this week is largely a function of something we discussed earlier, the big move in the british pound. the euro is also down a bit against the dollar. china is now managing its currency with reference to a sdr or basket of currencies. -- moves implies against the dollar. as this week in particular,
it is more stable against the basket and the dollar. is this a market driven action? the other, it is a politically-driven action? it is certainly an issue on the campaign trail. >> this is, in some sense, neither. politically-driven action would be to hold the yuan stable against the dollar to make sure it is not a political issue in the u.s. campaign. a fully market-driven move is has to determine because it been so managed for so long. bet onthe movement as a what the market things chinese policymakers want more than anything else. let's think about it. they got attention earlier this year, a lot of concern about outflows and its fundamental problem of the pressure building on the currency by the fact people wanted to get their money out of the country. official measures of chinese
reserves seem to be stable. is that pressure still there, hasn't abated? >> it is a complex story. the pressure has come a relative of last fall, last january, it has abated. get money desire to out, a function of the fact people's the currency moving down. therefore, they expected a further depreciation. in the second quarter of this year, you saw a reduction in pressure. a pretty significant reduction in pressure. there are some indicators that in the third-quarter it picked back up. julie: when you extrapolate what people are doing with their yuan in china, whether they are trying to get it out, and you look at the current status, what does that say to you about the chinese efforts to stabilize the economy there? is it in fact more successful? havethink the chinese
succeeded in stabilizing their economy this year. in my view, the chinese economy was going much more slowly than the official data laughter. -- official data last year. growthlled their true levels back up to the official growth levels. obviously, the fall against a basket of currency and the dollar has also helped. joe: i want to talk about that against the basket. here is a chart i looked up this morning. there is a one-year pound chart from the dollar, and the yuan against the dollar. there are some y axis shenanigans. but it appears this reflects exactly what you are saying, that any time you see broad moves or sharp moves in one of the currencies in which it is now reference, you see up hike in the dollar.
>> that is a china manages its currencies in the basket. whether china is managing for stability against the basket or managing for a stable pace of depreciation. joe: going back to a year ago, there was hype, the chinese premier came to london. allon was going to come wanted to become a big offshore hub for chinese trading outside of china. that is probably dead, right? >> there is obviously still some trading that goes on outside of china. joe: but the vision they had for london to become a huge source of chinese trading? >> i think everyone got a little bit ahead of themselves. china was not ready for full financial capitalization then. they are not ready for it now. that needs to be taken into account. let me ask you this in this chart i pulled up, this is
the basket of currency -- this compares the currency the basque -- china uses. china would like us to use the basket -- bottom line, we may be using -- looking at the wrong thing. when you look at the chinese yuan, the goal line, it has gotten weaker. do people focus on the wrong number? >> yes. but i do not think it is people outside china so much as inside china. arectations inside china still determined largely by moves against the dollar. that makes the pbo sees -- pse -- pboc's job much more difficult. michael: it seems that they are affects,t the trade they're going to have an impact. but that is not really the case.
i am not sure i agree with that. there has been a move against the dollar. there has been a move against the basket. appreciated alongside of the dollar significantly between the middle of 2014 to the middle of 2015. since then, it has depreciated both against the basket and against the dollar. and that is leading to questions about what china's true target -- policy target is. you talk about, china still has a long way to go until they countady for a realization. from a reform standpoint, what are the road markers we should be watching or -- watching for? >> i do not think it is a priority. look at financial sector recapitalization. balancebanks taking on sheets their off-balance-sheet activities? do they have enough capital to
write down loans that cannot be recovered? second, i think there is an ongoing agenda about market liberalization. third, i would put emphasis on reforms to social insurance. i think china's underlying problem is that chinese citizens save too much, and that is onating an underlying drag the economy. they need a stronger system of social insurance. crucial, is also wealth is in the enterprises. from has to be a transfer that wealth to the household sector. would you describe at the same way, that is where social insurance funding has to come from? >> lighting that is part of it. state enterprises do not pay dividends. so there is no mechanism for recycling the profits of the small subsets that are very
profitable. but i do not think that is enough. china needs a broader reform on its system of taxation, collecting more income tax, for example. they should use that to fund a stronger social safety net at large. joe: great stuff, thank you very much for coming in. coming up, donald trump all that declares war on the republican establishment come up blasting house speaker paul ryan for his criticism, and vowing to continue his campaign as he sees fit. ♪
at biggest is this moves. ofata will narrow its choice businesses to two. the companiess have the backing oftakata's steering committee. they will meet with advisers in new york at the end of the month. u.s. supreme court justices question whether apple should be $399ed to keep all of its million patent award in its suit against its rival samsung. if they accused samsung of the iphone. suggested they may return it to a lower court for more hearings. they said they were not sure how a jury or judge should decide how much apple should collect. not willing to offer us stake or
holding control of a company. say they will not give up control of cbs or viacom. alibaba says it is cracking down on counterfeiters. says it has tightened the company policies against copyright infringement. forchanges make it easier complaints and requests removals of items on its platform. and that is your bloomberg business flash. joe: "what'd you miss?" with less than one month to go before the election, gop has dissolved into open warfare as donald trump pledges to continue his campaign, unshackled from party leaders. far more difficult than crooked hillary, he says, they come at you from all sides. they do not know how to win, i will teach them. let's get the latest from washington.
the images here, some of the reporting is that donald trump is holed up there alone in tower out of -- in trump on twitter. >> and he says he is unshackled. joe: what was the holding back before? [laughter] >> definitely buckle in. any sense of decorum he may have shown in the past, he is throwing that to the wind and running the campaign he wants to run. tops already attacking republicans, igniting a civil war within the gop. he is attacking the speaker of the house, paul ryan, calling and ineffective. we are likely to see donald trump take on anyone he wants to fully embrace himself as an outsider and take on the washington establishment. whether that is hillary clinton or the -- his own members of the republican party.
so stay tuned, it appears donald trump is ready to go rogue. michael: what about reince priebus, he seems to be standing with him as he does this? >> he does not have much of a choice. his job is to make sure republicans when the white house , and they have already chosen their nominee. there is no way to get rid of donald trump. he is not volunteering to go anywhere. he does not have much of a choice. right now he is torn between his leader, paul ryan, also from wisconsin, and the top of the ticket with donald trump. right now he has staked his claim with donald trump and has said there is no daylight between him, the rnc, and donald trump. they will continue to invest in the presidential race even though it seems donald trump is a struggling. a new poll showed him down nine points to hillary clinton with just about four weeks until the election. julie: do we have any sense how this latest tweet storm is playing with voters?
the subtext of the campaign thus far has been that the marriage between the traditional republican establishment and trump was an easy. and now it is more out in the open. one would think that would please the hard-core, devoted trump voters. but what do we know about how undecided are reacting? >> definitely, trump has the support of his core supporters who have been with him since the very beginning. they are enthusiastic, not going out there. tapeafter the leak of the where he talked about groping women. he does not seem to a fixed and in his base, even with the debate on monday. he seems to still be struggling with expanding, as people, specifically women voters, independence, minorities, it seems like he has struggling to expand beyond his base. the recent polls have them at about 37%.
he is not getting beyond that base. joe: when they have a leadership shakeup at the campaign, manna for left and others came in. trump seems to have settled the ship. the takeover officially of the campaign we are seeing? >> definitely. his comments are much more in line with what you might see on breitbart.com. saying he is going after paul ryan, something right part t has done since ryan became the speaker. trump is now off script. we're seeing him changing his tune. joe: fascinating stuff. michael: coming up, part of an exclusive interview with bmw's ceo on electric cars and
michael: "what'd you miss?" the ceo of bmw says electrified cars could make up to 25% of its sales in a few years. we have an exclusive interview with harald krueger. can you guess how many products we will offer and how much they will see in the future? 15%,ght see a range of 20%, 25% in the next 10 years, in terms of the electrified vehicles. >> i hope so. is famous for its alignment,
we do not want to see it go away. driven for the ultimate driving experience by the driver, or it can drive itself. is this the kind of thing we will see startingis this the kie will see starting in 2021? >> yes, we will see the first idea, which is beyond 2020. it will be connectivity of the future, interior of the future. we will see this coming with the next generation of motors. and you look at this car, one thing is for sure. at bmw, the driver will always decide if he goes autonomously if he was like to
have fun and drive and enjoy the ride. we let the driver decide. i'm sure we have a very emotional, passionate products, there is still room in the future when you can jive by yourself on perfect roads, like in california. >> i hope so, or like the autobahn in merle it -- berlin. -- ran a division briefly can you gain an advantage by first having the motorcycle business as well as the car business? are you able to increase mobility solutions that way? >> yes, we have the electrified urban concept for a motorcycle. this is using a battery. with the range extension we know a rangean offer extension. is battery concept and
electrified life claims. were are many things exchange in terms of knowledge between motorcycles and the other divisions. that is the key advantage. we can offer fully integrated concepts. maybe for the last five months you go with a motorcycle. ita city like paris or rome, is difficult not to stand in a traffic jam. urban motorcycles, a electrified, it can just overtake the cars and be quicker or faster. ceoael: that was bmw's harald krueger. joe: what you need to know for tomorrow's trading day. ♪
julie: it was a risk off day for the markets, with the u.s. equity averages falling the most in the month to read sold off, as well. the dollar caught a bid as we saw the pound fall on the session. don't miss this. forre looking tomorrow opec's monthly report on demand and other stats. official isia an getting a roadshow. trying to gauge interest for the country's first international bond. officialthey will be meeting wh potential investors in london tomorrow. i will be looking at minutes coming up tomorrow afternoon for that september meeting. lots of questions about inflation and how they see the u.s. economy and international conditions impacting the fed. we will dive into that tomorrow. michael: another bailout charge this week. greece?the outlook for
john: i am john heilemann mark:. and i am mark halperin, with regards to his surrogate ben carson, we will say it again, you had one job. was growing up, people are talking about their sexual conquests and try to make themselves appear like they are casanova. i am surprised you have not heard that, i really am. >> i have not heard it and i know a lot of people who have not heard it. dr. carson: maybe that is the problem. ♪