tv Bloomberg Markets Americas Bloomberg October 21, 2016 12:00pm-3:31pm EDT
welcome to -- i am david gura, welcome to "bloomberg markets." we are covering stories from san francisco and hong kong this hour. microsoft shares surged to a record high today after first quarter sales and earnings topped estimates. a series of upgrades at mcdonald's global rotations -- global locations boosted sales. maker is try to make the product less intimidating to millennials. let's go to julie hyman for the latest. julie: there are so many possibilities, i hope you ask if cognac can be paired with a big mac and fries, bringing all of the stories today. we have little change once again although stock seven bouncing off of the lows.
the stocks have shifted off of the earnings, it is may be a fast yield friday because we have so much yield speculation that is bubbling up and affecting stocks. in the fact -- in the past few news, out withrg the latest scoop on the developing story of at&t potentially making a bid for time warner saying they are pushing for a deal as soon as monday. there have been other reports of the timing of the deal over the course of the day. they are reporting -- they said the deal. sped up by bloomberg news initially reporting they were in talks yesterday and they said according to people familiar with the talks that at&t is said to be concerned that companies like google or apple could come in and make a bid. you can see time warner is surging by 13% and at&t of the lows of the day off i more than 3.5% and we will continue to update you on this developing
story. also in yield news we have a potential big tobacco deal, reynolds american getting a bid from british american tobacco for the remaining stake and reynolds american that bat doesn't already own. $47 billion for the remaining 58% of reynolds american. you can see reynolds american popping today, british american tobacco going lower. we also have headlines coming out on a company called rockwell automation according to street intel fromis getting schneider electric that it may be valued at $18 million citing a source claiming knowledge of the matter. rockwell shares up and snyder shares lower in french trading. we had a report earlier today from a financial blanche -- blog saying that burberry might
beginning a bid from coach or they might be considered merging and reuters reported it was speculated. nonetheless, burberry shares rose in london training -- trading and coach shares are off of it. unusual volume of deal and deal potential news for a friday. vonnie: and some potentially fascinating combinations. thank you. let's check in on first word news, mark crumpton has more. mark: hillary clinton has a double-digit lead over donald trump in virginia. clinton tops 45% to 33% according to a christopher newport university survey. gary johnson gets 8% and independent presidential candidate evan mcmullen gets 3%. 2% while 1% are undecided. "name 500 different examples of
conflicts of interest including some involving former president bill clinton" according to e-mails hacked from the account of hillary clinton's campaign chairman and released by wikileaks. doug band originally wrote in late 2011 that he was required to sign a conflict of interest statement as a board member of the clinton foundation of age -- initiative, but that bill clinton did not have to sign one. the divisions between the u.k. and the rest of the european union began to take shape as armany warned britain here difficult path. theresa may spoke at the conclusion of the first summit at the helm. >> the u.k. is leaving the eu, but we are not leaving europe and we are not turning our backs on our friends and allies. we have not formally started exit negotiations, i have been --ar that my aim is that it is to be a close party --
partner of the eu. mark: they would be free to make issues -- decisions on issues like immigration control. typhoon haima making landfall in china after brushing past hong kong where trading was canceled. schools were closed and airlines have suspended flights. the cyclone is expected to remain in force for much of today. global news 24 hours a day, powered by more 2600 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. ared: microsoft shares hitting record highs after the software giant reported first recording -- first quarter shares and estimates that the estimates. let's bring in corey johnson who is in san francisco and shannon phone.she is with us by do you have a buy rating on
microsoft? we see investors party like it is 1999. tell us a bit about your rating. shannon: they have a really interesting balance of targeting revenue growth doing well in cloud and there is and if it from a pc refresh and they are moving their business more to a subscription service. they are hitting on a number of different areas, they have dynamics which is competing with salesforce. there are things they can bundle together and sell to customers and there is demand for their services and enterprises are open to working with microsoft given their brand and reputation . at the same time, the top -- the company is focused on maintaining discipline around operating expense, which i think is well-received by investors and returning cash to shareholders. ?onnie: is it a zero sum game
nobody goes in if microsoft gets more market share or can the market expand? shannon: the market for clout is expanding and microsoft is growing quickly. they indicated they are not really seeing google at this point in their bids, but google is coming in. it is a balancing act because basically the hardware guys, whether hpe or dell face pressure from a hardware perspective which is why when people talk about where the cloud is going, most companies on hardware side and microsoft are talking about hybrid cloud which is a mix between having your data center in your company and also using public cloud infrastructure. it is kind of a win-win right now because there is shifting in the data centers and a lot is
spent. long-term it will pressure margins across the board for basically data centers type services. shana: shannon -- david: was talking there about all he has done to expand the company, he is been spending a lot of money on expanding data centers. cory: is a huge deal for these guys. ex is a huge deal for these guys. as we shift to the focus in the cloud they have a much better and important pc business. when you look at earnings yesterday you see the tale of two companies. you see success in the cloud and struggles in the pc business. still over $9 billion in the corner, down 1% year over year. that is troubling for the company. without cloud growth they have nothing so you can see why the
shift is important and you can see struggles in the cloud business and the difficulty of spending in the cloud business that comes with that and clearly a reason they want to grow because they see incredible growth. of the least of which over 120% year-over-year. vonnie: what does it do about the pc component of the business? does it by something else that gives it more heft, does it walk away from it? they manage itk and they are managing and along with how hp and dell are managing the pc shift. the three oems are they sickly tried to take share and stabilize business through that and putting out new form factors which benefit microsoft because if somebody tries to buy a higher asp notebook they will pay more to microsoft. that is ongoing and at the same time i think microsoft is moreng at locking more and
people into subscriptions, office 365 and other services they provide which will go over pcs or other devices and effectively provide a recurring revenue stream. david: i know you do not cover at&t so i will put this story to cory of bloomberg. pushing for a deal to acquire time warner and we get new news that there's a push to accelerate the deal in part because of the story bloomberg broke yesterday. talking -- talk about why time warner would be attractive to at&t and what that could mean for the industry? cory: with verizon and yahoo! they are looking at a place for growth with wireless companies into advertising and media. we look at results were you can see the slowing growth of the wireless consumer and price pressures on their. a second revenue stream starts to look interesting because they
are not seeing the growth they have seen in wireless that is really been the wind behind their backs. will continue we to watch, at&t pushing to get a deal by time warner done by monday. corey johnson of bloomberg and shannon cross of cross research joining us well. vonnie: mcdonald's fueling the turnaround of fast food giants. this is bloomberg. ♪
at&t is pushing to get a deal to acquire time warner done by monday according to a person familiar with the matter. the talks accelerated since bloomberg broke the news yesterday that executives met to discuss potential business combinations. part of at&t's concerned that other potential bidders could get in. walmart is investing $50 million in new -- a chinese grocery and logistics company. 25 million than registered customers and delivers to more than 300 cities. elizabeth moran sent a letter to the department of justice settlementmylan's over medicaid rebates for epipen theygy shots she said underpaid rebates by an estimated $530 million and she fine lessoj imposed a
than what they made by defrauding medicaid and medicare. that is your bloomberg business flash update. vonnie: the power of all-day breakfast, mcdonald's should know. their third quarter earnings beat estimates. they contribute their boost to tech upgrade that international locations and the introduction of healthier fare. michael halen of bloomberg intelligence covers the industry. it was a running joke that mcdonald's stopped at a certain time, why did it take them so long to serve breakfast all day? michael: that is a good question. there was some pushback from the franchises, they thought the sales power that it would bring. that was probably the main thing, but in hindsight 2020, you look back him a great idea you turned around the entire trajectory of the sales in the
u.s. and in overseas markets. david: you are looking for innovations like all-day breakfast, is this a short-term trend or will of the long day thing? we see if it appeared because of the immediate success, does it have longevity? just one stepis in what is going to be several different initiatives to continue to build on the improved sales. i pointed out this morning in the u.k. they have been ahead of the u.s. in terms of turnaround. they got started from many quarters before we did in terms of improving sales and they are continuing to put up strong same-store sales comps and that is the technology piece, investing in the kiosks are you can type your order on the screen without interacting with the person at the counter, they are also employee handheld
ordering and pickup areas dedicated in the store. technology piece has given them a second wind and we should expect the same thing to becoming here in the united states and build on the momentum that all-day breakfast has given the chain. vonnie: company operators work around 65% of franchises, are they happy with that, is it best for profitability? revenue split, store wise franchises generate lower revenue. 83% franchise and they are going up to 95%. this is a very big deal. franchising stores gets the operations into the hands of good, strong, restaurant operators and allows them to cut sg&a and it boosts cash flow and earnings. it is a big-time time of transportation because they are going from 80% and now 83% and all the way up to 95% franchise and it lets parents focused more
on marketing and the menu and coming up with new innovative items, maybe hamburgers or french fries or other items to boost sales. attribute much can we to steve easterbrook who came in and attributed a number of these changes and moved the headquarters to downtown chicago? our people happy with his leadership at this point? michael: they should be. there have been doubters, but he continues to prove them wrong and he has been aggressive from the start. he was aggressive with the capital structure and the re-franchising, being aggressive with value price points come all-day breakfast, and they are constantly testing new items in all different markets all across the world. you have to like how aggressive at how fast moving a really have been. he grew up in the mcdonald's system, was he really the guy to turn the ship around? , it seems tothis
as a gop leaders worry about an erosion of republican majorities. what would this bill look like and what would it take to stop it? let's ask nancy orgnanovich. let's start with what led to the birth of the godzilla omnibus bill. we have a washington increasingly reliant on short-term spending bills and continuing resolutions. nancy: right now they have one continuing resolution that only covers them until december 9 and they are one bill of 12 spending bills done before they went off to campaign again, so they have to deal with all of the other 11 bills when they got back and that would be the foundation for a large bill that would move in the lame-duck congress. vonnie: it has been a particularly sobering election cycle, when it comes to the lame-duck session will congress men and women want to show electorates they can get
something done? nancy: the leadership would know that in terms of leverage they will never have more leverage than it would have in the lame-duck if the majorities are going to be a lot smaller in january or if the worst happens and they lose either the house or the senate or both. republican leaders would want to do the bills why they have the most control and say over the contents of the bills. they will also deal with a very dispirited possibly body of members, many of whom may have lost and just want to go home. they have that pressure on the other side. i think they will come back trying to do the so-called thatlla and put in godzilla as many bills as they can and that may improve -- include tax bills. david: let's talk about what could be in it, we are not talking about a stopgap resolution, it could be all kinds of things. what would be rolled into it? nancy: all of the spending bills
to cover the government through next fall, the full fiscal year, the things they did not do before would be the starting point and then they might add another package of tax extenders like last year so it may not be as big. beyond tax and spending all the other committees have got bills that they have not gotten through committee -- have gone through committee but not to the floor and they would like leadership to finish those. one of them is a biomedical research bill called the cures act. intelligence an reauthorization bill which renews authorities for all intelligence programs that are controversial and might come on their own run into trouble say on the senate floor. like last year that would be a candidates roll into and on the best. vonnie: what would be a shutdown inclusion and what do you say on the possibility of a shutdown? nancy: that is always out there
and if speaker ryan is having trouble with his conference like he has had before and some members of the house freedom caucus do not want to go along with the omnibus, they might try to stop it. that could run out the clock and you road the interest in doing it and then they might have to resort to a continuing resolution again to carry it through until next winter and there is always the threat of a shutdown. it is the politics that i think are the main hurdle here, but there could always be some of those provisions that create a huge fight and we do not know for sure what democrats might have to face this fall in order to get these bills finished. laughter they had to accept the repeal of the ban on oil experts and in the end they went along with that. david: walk us through how the sausage is made.
i picture a lot of these chairman was say that they are ready to roll the legislation into a bill like this how quickly can they do that. nancy: the groundwork is being laid right now because you have cans negotiating what they negotiate when the lawmakers are out on the campaign trail. when they get back to give them a status report and there are staff cannot that take care of and that means leadership has to get involved. in the meantime ryan and mcconnell have listed bills and they are ready for those. david: thank you so much, nancy orgnanovich. vonnie: we will talk investing in emerging markets with the head of global macro -- this is bloomberg. ♪
vonnie: i am vonnie quinn. let's start with the headlines from first word news. mark crumpton has more. mark c.: as u.s. election day draws near, the trump and clinton campaigns are spending lots of cash. inmp spent double his amount august. employees roughly 350 and consultants, saying that september was the best fundraising month for both candidates. majority of voters, nearly 70%, say the loser of the white house race should accept the results. say loser should challenge the outcome. in northern iraq, more fighting today after militants armed with hostages ines took
kirkuk.und care cook -- three militants stormed a power plant, killing 11 workers before blowing themselves up. the pulse nightclub is open for the first time since the shooting rampage. left 49 people dead. it is the worst shooting in modern u.s. history. by -- globalowered news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. vonnie: thank you. a quick check on u.s. stocks. the dow is down 46 points.
the dow is higher at the moment. and verizon dragging on the server. the nasdaq is up. let's figure out why. the nasdaq do have up ever so slightly. a little bit of a reversal. the nasdaq is also on pace to finish higher. the dow right now is on pace for a very slight weekly decline. if it closes and negative somethingit will be to pay attention to in terms of weekly divergence. as for what is happening here today, all about tech knowledge he. we do have a tale of two stories.
trading higher. , thef the biggest drags 100. these companies are thought to be in talks to merge. it was reported that according to their sources, two companies ofe agreed to a deal price 110 per share. the reason qualcomm could be higher on this, some had really thought that an xp would hold out her share. qualcomm could be seeing this as a bit of a bargain. both stocks are actually up quite substantially. what are analyst saying?
could that continue in the case of a deal or no deal? abigail: that is a great question. often, you don't see strength in the acquiring company. in this case, we have qualcomm up in a significant way. when we look at the bloomberg, it could go higher. this is a three-year chart of qualcomm. it was one of the worst-performing stocks last year. this year, it is one of the real bright spots. the reason it could continue higher, in the rectangular area, is a pattern called island reversal. this one happens to be confirmed. this is the pattern that 113.tly took apple above this chart suggests we could see them straight back to their hives. perhaps they will trade higher
in month ahead. vonnie: abigail doolittle at the nasdaq, thank you. david: asia is still an attractive place to invest. mcfate outlined why he thinks and emerging-market currencies have bottomed out and why it is a good time to get in. into are about 72 months emerging markets having terrible performance. >> what goes down and eventually has to go up. >> number two, i think you're starting to see a bottoming in emerging market currencies. emerging-market equities have given you more performance. when you adjust for currencies, it is actually minus five. some of that is related to the pass.ving a dovish many emerging markets it's have
tightened their rates. if you think about brazil, it is not growing, but you are starting and easing cycle whereas in the past, it was tightening. a similar story in the asian markets as well. >> let's take a shot as a subset of emerging markets. why did they look attractive? >> there are couple things are interesting. number one, b take india, indonesia. they are large consumer economies. in a world of frexit, when people are concerned about trade -- >> you think that is a legit concern? >> i do. one is a political component where that is creating some tension. plan iswo, china's game significantly different. they are trying to build their consumer domestic economy and are less focused on heavy rock material usage. that leads to less money coming
in and out of china. around 2007,peaked now is starting to head down. that is kind of what is changing on the not so good side. on the positive side, there are consumertake asian economies, particularly india, and indonesia, where we have an more active hearing with the rising middle class, you can participate. the way i think about it, in asia, you think about global trade and manufacturing, traditional consumers, and value added services. of the number of companies that we own in asia, we're heavily focused on the third bucket, the value added services. ,ocus on protein, health care food safety, water safety, environmental safety.
>> to criticisms historically has been, on the one hand, they don't think globally. on the other, they are risk adverse. has that changed? >> i don't think that has changed so much, but there are two macro factors at work. one, i mentioned earlier, which is the slowdown in china. the second, a lot of these companies are now going abroad. ironically, even though china is one third of global growth, it represents about 25% of global m&a. i think that is significant. they are trying to export some excess capacity, and also of the value added curve. optical, other areas where they are not traditionally known. it is not just emerging markets
in asia. i would highlight that we have been very active with japanese companies, taking some sort of their products abroad. you have very cheap financing and japan and links that have massive deposit bases that want to lend. the fed is saying don't do any leverage lending. there is probably, right now, certainly less flows into deposits. >> what is the best way to get exposure to this upswing that you see happening. is it through equities, credit, something else? actou have to take a step and see the greatest the is rising gdp per capital. how do you access that? sweep.u need a broad institutions,or
we obviously do a lot of private equity. we have been more focused on growth companies than gdp per capital. some of those have been getting expensive. we have been helping big companies grow globally. there's also a lot going on in private credit where a lot of the banks are jammed. they had had that on their books. they don't have the capacity to lend. one of my big takeaways from india is a lot of companies just added multiple divisions during the boom, and now they are stock. they either want to sell off the subsidiary or merge one. you are seeing shifting structures. that is obviously a good environment for us to read over all, from an asset allocation standpoint, you never want to the ranch on one thing. g i would caution, a
lot of the emerging-market indexes are heavily weighted towards data and enterprise. if you want to be long health care in asia, i think it is less than 5% of most indexes. you do want to be thoughtful sometimes. asia may be an area where -- >> be careful >. >> yet, perform better. on the institutional side, there is private equity, credit, a pretty broad sweep, growing. david: time now for the bloomberg business flash to look at some of the biggest business stories in the news. we start with ericsson, wrapping up a disastrous third quarter by reporting their first loss in four years. there are no plans to sell the company, at least according to the engine -- interim ceo. >> as far as i know, the company
is not for sale. the company is very largely supported by longtime owners. we have a presence in over 181 companies, lots of great companies. we had a challenging quarter. we have to manage that in a good way. david: the company's net loss, the first from 2012, was more weredouble what analysts expecting. senator has sent a letter regarding mylan. she says the doj is to find what $55 million less than they earned by defrauding medicare and medicaid. a 50-year-old woman who died in a car accident last month is the to takata due
global market like you kate and canada. vonnie: a ceo is planning to step in as chairman of mr. nhtsay motors -- mr. itsubishi motors. nissan has completed their acquisition of mitsubishi motors. the person who is already chairman of the sun and renault says he sees the alliance turning around. >> i hope i will do everything to reestablish, but in a re-shaped kind of recovery, .ormalcy for operations
if everything is done, you can expect the company to very quickly.self indonesia lowered their seven day repurchase rate yesterday, the sixth reduction yesterday. the index indicates stimulus in the economy. mark b.: china's overheating housing markets tightened last month. new home prices rose in 63 of the 70 cities attract. policymakers are trying to reverse damage without killing what is a main teller of growth. donald trump third-quarter revenue was markets
$6.4 billion beating the estimate globally. comparable sales rose 3.5%. vonnie: time now for our bloomberg quicktake, where we provide context and background on issues of interest. 3-d printing has evolved in recent years to an exemplar of digital age innovation. here is the situation. a new generation of faster printers may open the way for wider use of 3-d in mass production. objects ranging from cars to bionic ears have already been printed. ge made offers on to european 3-d printer companies totaling more than $3 million of
investment. they are forecasting 40,000 jet engines. here is the background. the technology behind 3-d printing was developed 30 years ago. the technique has been used for rapid typing. years, cheaper materials have awakened it potential. 3-d printers can print dangerous objects. weapons, keys, all sorts of dangers items. counterfeiting could be a problem. the dangers of 3-d printing are just as liable to the potential
david: remi martin once millennials in the u.s. to drink cognac. .e spoke to the bloomberg >> i think it is beyond age categories or beyond the whatever. it is people who are looking for a story behind the product. then, the millennials is the biggest drinking age category. it is a very important time for us. >> when i think a millennials, i don't necessarily think of cognac. beers, wine,
vodka. how do you educate them? >> you are right. we have a lot of insight to appeal to millennials. about offering them a sensual experience, to let them know what our products are made of. that is one way. it is a global approach. is we have a campaign that we launched two years ago to generate this connection with them. life.bout living a richer you can be many, white be one? i think this is typical for these people who don't want to
be reduced to one single activity. they are saying, i am a banker, but also a court, or an artist. >> here in the u.s., it looks like you are pushing more upmarket. in china, it seems, especially because of the anti-extravagant initiatives, it is more middle-market. talk to me about the divergence of strategy. >> even though it has been down trading, it is still a very high market. , it is beyond the choice. it is a constraint that we have. we have limited quantity. party, it is a top that we leverage the higher end qualities. we are working on the product to
be most perfect. it is very important for us. also, communication tools, education is key, and tasting and sampling. for me, the two best ways is to educate. the other way is sampling. once you taste the product, you become familiar. >> looking ahead, of course we're coming up on the holiday season. you have any offense that you will be holding to push sales? >> we have a limited edition that we will release. for the first time, we have that works an artist with communication, movement. he will be there tonight. this limited edition goes through the whole range.
ascourse, sampling is key well. a commercial people are on the floor. how important is the holiday season to overall yearly sales? >> very important. i would not be able to comment on the u.s. specifically, bobby see the month of november and december accounts for -- david: that was our colleague ramy inocencio. vonnie: this is bloomberg. ♪
vonnie: from bloomberg world headquarters in new york, we are covering stories from toronto to new york and tokyo and aleppo this hour. stocks are mixed as a batch of disappointing forecasts from general electric outweighed microsoft's surge to a record. we break down the moves. donald trump and hillary clinton trading the boxing gloves for humor at the al smith charity dinner last night. the candidates appeared on stage together one night after facing off at the third and final debate. from the instagram ceo about he has learned from facebook ceo mark zuckerberg. we are halfway into the trading david let's get to julie hyman with the latest. stocks are not doing much
of the moment. mixed picture with the nasdaq little bit higher, dow the worst of the three major averages today. s&pf the is off as well -- is off as well. once again the market is driven by individual stocks, many of whom are out with earnings. microsoft is trading close to a record. it touched a record earlier today. unclear whether it will close at that record level. this is after strength in the cloud business helped overall earnings beat analyst estimates. updonald's with global sales 3.5%. honeywell numbers dropping year-over-year. however, it still beat analyst estimates. the shares are hanging onto again. not the case with general electric. it cut its forecast because of what it says is slowing global economic growth.
microsoft, there are a few stocks to mention with strength. one of them is paypal. the company affirming its forecast for the three-year plan. some investors have been concerned about a new deal the company has with credit card company's and whether that would cut into its profits. this is reassuring them. its stock is on a record as well. verisign -- this doesn't have to do with earnings for the fact that verisign has extended its registry pack with the internet domain registry service through november 2024. this means the company keeps the dot-com registry. it is the sole registrar of that domain. and then there is a big potential merger story we have been following today. bloomberg news reporting that at&t is in perhaps the final times of talks to acquire
warner, pushing for a deal as soon as monday. bloomberg reported this story yesterday that the two were in discussion, and in part because of that story, the 2 are pushing for an early conclusion, rapid conclusion of their talks together. time warner, as you can see, down off its highs of the session but still gaining nearly 10%, as at&t drops by nearly 3%. other media stocks are being affected by the stock between the companies as well. discovery is up to 6%. scripps as well. amc networks getting a boost of 4% along with that time warner gain we are seeing today. david: appreciate it. julie hyman with a check of the markets. now for the "first word" news. mark crumpton has more. mark: new york cardinal timothy dolan says there were, in his words, touching moments between donald trump and hillary clinton at last night's alfred e smith charity dinner that was otherwise marked by stinging comments from both candidates. oneinal dolan told nbc that
point, trump told clinton, "you are one tough and talented woman." ,olan says clinton responded "whatever happens, donald, we need to work together afterwards." three of 8 election swing states saw unemployment rates rise in september. nevada and new hampshire saw declines the jobless numbers were unchanged in florida, iowa, pennsylvania. the figures reflect broader trends that were evident in the latest jobs report that hiring has slowed from last year's healthy pace. top human nations rights official is calling for an investigation into what he says are war crimes being committed in eastern aleppo. airstrikes by the assad government are blamed for civilian casualties in the syrian city. security issues prompted the u.n. to cancel plans to begin medical evacuations. new hampshire-based internet
firm says services have been distort -- restored following a cyber attack. the company, which us with the loading of webpages, says the interference was a "denial of service" attack. andter, spotify, reddit, "the new york times," among other sets, were reported to have been disrupted. 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. vonnie: and u.s. stocks are mixed right now with the s&p 500 index paring weekly gains over concerns that a stronger dollar will dampen corporate earnings. our next guest says the s&p 500 is capable of making a new all-time high in the weeks ahead. joining us is that the tig chief technical strategists. what is the level you are looking at? the s&p 500, break out
what occurred 50-day moving average. that is where momentum picks up and you have confidence back in the market. you have a very minor final resistance level around 2194. the market is in a consolidation phase that reflects uncertainty ahead of the election. maybe we need to get through the election for the removal of that uncertainty to get up to new highs. i think a bullish bias is appropriate. david: when i look at your note you mentioned three measures of breadth. >> i look at a couple of measures, some key militant in nature, some isolate -- oscillating in interviewed the also letting measures are quite oversold here. the one i would highlight would be the percentage of stocks above the 50-day moving averages. that has fallen under 35% of the s&p 500, which is the level at which we tended to see the s&p 500 make short-term loans.
we have seen a loss of momentum over the last few weeks, but within that context we have not seen a whole of breakdown. the s&p 500 has held up around this 2115 support area and certainly a course -- of course about the 200-day moving average. vonnie: i just want to break in with some breaking news on portico, which we have been waiting just waiting for. -- we have been waiting for. it has retained its investment grade credit rating. it is pretty low, triple be, but nevertheless --pretty low,, bbb, but nevertheless retained. says it reflects the progress in reducing the fiscal deficit and proactive measures to strengthen the banking sector. one to take a quick look at portuguese yields. they were trading around 2.20. of course, the bond markets would be closed in europe.
hey, let me ask you about sectors in specific. you are looking at transportation closely. katie: the transport people sometime trying to foreign sources of leadership to give them extra confidence in the uptrend in the broader market. instances where transports tenderly the market in turning points. if we were to see them underperform or reversed down, that might be worrisome. but we have quite the opposite. transport as a group has been not only rallying but outperforming the broader market. if anything, it is a positive, bullish comment on the major indices. vonnie: talk to us about u.s. yields could we are seeing the .0 year trade around 1.75 mark there has been a bit of fluctuation, but trading and arrange to some extent. katie: the 10-year yield has note long-te downtrend channel
but we've seen momentum shift quite a bit could we saw the 10-year yield get above the 200-day moving average recently and test some resistance around 177. to me when we get a breakout that is decisively above that level, that is when we look at targets above 2%. this could be the beginning of a turnaround. right now it is an fullback mode. that is likely temporary given the momentum shift we have seen. david: i'm cwt i trading around 57 -- i am seeing the vti trading 5070 a barrel. wti, what areat you seeing? katie: wti has broken out of an important resistance in my work. a widely focused on level, just being a number like that. also it marks some resistance on the target was cleared decisively. even to the extent we had the short-term overbought condition going into the weekend, we have seen wti hold up quite well.
to me it is very positive action. we are seeing what could be a new uptrend in wti. david: on that note, what do we see in the energy sector when we look at equities? katie: energy has started to outperform not broadly but slightly lovely -- but selectively, and we can make the case that breakouts are real with the wti having broken out, including natural gas as well. we are seeing some relative outperformance in there. it is not the same kind of outperformance that we are seeing in the established leaders like technology or financials. but a lot of turnaround plays that are somewhat compelling. vonnie: katie, what are the metals you are watching for any cap of flu as to what would happen income related assets? metals have pulled back, including gold, which is all the focus right now. it has corrected. $1200 per ounce. it is quite oversold there and
this would be a natural place to resume the uptrend. below that 1200 it starts to look like something worse than just a correction. it did see a short-term breakdown. there is more significant resistance for gold to plow through. starting around $1300 per ounce. vonnie: katie stockton, thanks. david: coming up, we will hear from the instrument ceo about what he has learned from mark zuckerberg. this is bloomberg. ♪
i am vonnie quinn. david: i am david gura. at&t pushing to get a deal to acquire time warner done by monday. the talks have accelerated since bloomberg broke the news thursday that executives had met in recent weeks to discuss the potential for this opportunity. part of at&t's concern is that other potential bidders such as google could jump in since at&t's interest became public could walmart is investing $50 million in china's largest online grocery and logistics company. it is an extension of its pact with jd.com, china's number two e-commerce site. it delivers to more than 300 cities. mcdonald's third-quarter revenue was helped by international markets like the u.k. and canada as well as the expansion of all-day breakfast in the u.s. billion -- $60.42 $6.42 billion.
comparable same-store sales rose 3.5%. and that is your business flash update. vonnie: bloombergs "studio 1.0" returns this week with season five and the greatest influencers shaping media technology, including former microsoft ceo steve ballmer. in this week's episode, emily chang sits down with instagram ceo kevin systrom for next visit interview at facebook headquarters in california. four years ago, facebook bought app four $1haring billion and mark zuckerberg pledge to let the team work independently. we start with whether he lived up to his promise. kevin: mark has been true to his word and then some. still to this day marks interaction with the company basically is through meetings with me. i have learned a tremendous amount from him about our transition to advertising, and transition to a more global community, strategy.
he is one of the most interesting strategic long-term thinkers i've ever met. think of it like having the best board member in the world. imagine how many companies would love to have mark zuckerberg on their board. that is what we get. is independent, but also you get amazing guidance and amazing counsel from someone who has been able to build a tremendous company. emily: how open has he been to your ideas? kevin: i would love to ask him that. [laughter] kevin: no, i think for sure, sometimes iss instagram's focus on community and craft is fairly different from a lot of talk committees at the time, and facebook has this mantra on the inside, and a lot of that came from instagram's focus on the consumer and focus on making our community great. i would like to think that we influence facebook, but it is kind of hard to see that for sure. we would have to ask him. emily: what have you learned from him?
kevin: some of the things about strategy and understanding your place in the ecosystem. i think our transition to advertising was an interesting one. i was of the believe that if we had fewer advertisers they would be of higher quality. it actually turned out to be the opposite. if you had more advertisers and ray able to bring in an entire ecosystem where they compete against each other, you get higher-quality advertisements. that is something i did not realize at the time. i thought the exact same way when we introduce advertising and it turns out there is this other thing. i was able to learn a lot from him there. emily: how do you see instagram taking advantage of some of the more futuristic things that facebook is working on, like virtual reality? our vision is to make you feel it you can travel anywhere in the world in a fraction of a second to imagine a day when you can put on a headset and be at a cold plate concert -- be at a c oldplay concert, see protests and riots anywhere in the world,
or something as simple as up one's wedding. virtual reality will play a critical role in seeing that come true. emily: how about artificial intelligence? kevin: we use that today. it powers advertising. emily: do you see more of it in the future? kevin: for sure. one thing i've learned from the history of instagram is the more personalization you have, if we can have an experience that caters to you, we know your interests and what you can engage with, you can lose machine learning and artificial intelligence to make a much, much better experience for you on instagram. vonnie: that was emily chang with instagram ceo kevin systrom . sunday at 9:00 a.m. pacific, 1:00 p.m. eastern. they: the latest polls say are in a connect in the traditionally red state of georgia. this is bloomberg.
david: this is "bloomberg markets." i am david gura. vonnie: i am vonnie quinn. trump and miller clinton came together then to debate but also to tell jokes. the offer e smith dinner is a charity event famous for humorous speeches. -- alfred e smith dinner is a charity event famous for humorous speeches. mr. trump: michelle obama gives a speech and everyone loves it. my wife, melania, gives the , 10 people getch on -- and people get on her case. isnie: joining us now bloomberg politics editor steve
yes you know -- steve yaccino. such a strange affair. the candidates are at each other's throats and then it, try to laugh it each other strokes. -- laugh at each other strokes. that: this is a tradition every year the candidates do this and poke fun at each other and it is the city good-humored and good-natured. when it comes down to it, this is a hard-fought campaign, we are competing, but we are likable people, we get along. last night was little different than you normally go pick it didn't go very well for donald trump. vonnie: there were boos. steve: he got heckled at it and it was a nastier tone than we have seen. it it said with a narrative of the campaign so far. donald trump doesn't really get the audience is the basic takeaway he gave a little too much of his stump speech some of his jokes were over the line. hillary clinton's were negative,
too, so he wasn't the only one. the grand scheme of things, last night doesn't matter that much. it is just not a good headline for donald trump. there is only so many days left in the election. 2 days ago donald trump was on the debate stage and having trouble there. yesterday he tried to fix that and made it worse. at theght he goes on dinner and make headlines again and then at the headlines he wants to be making. david: donald trump is in north carolina today, almost a distraction from the business of campaigning. steve: they are all on the campaign trail and hitting the normal key swing states. trump is in a north carolina today and clinton is in ohio. those 2 are really important states, states that donald trump cannot lose if he wants to reach the white house, states where the polls are relatively close. david: georgia here, we are
seeing donald trump with 44%. -- "atlantanal journal-constitution" poll. steve: georgia is an interesting say because that is not supposed to be in play at this point it the obama campaign was looking at georgia is a possible reach state for them for years ago and eight years ago. but they didn't think they could get there. the fact that clinton is this close in the polls this close to election day -- david: and they are investing in the state. steve: they are. two are three states in particular. arizona, georgia at the top of their list. the reason is hillary clinton -- not just about winning anymore and she wants a decisive win. she wants to say she was elected across the united states and even in states where republicans usually win. that helps her with a mandate if she goes into the white house. donald trump, it is important because donald trump has to defend these states.
vonnie: do either of them have to worry about districts? does donald trump authority about that at all? hillary clinton, even? more reliant on state party operations than any candidate in recent memory. he needs the state parties to get out the vote for him, and he doesn't have his own ground game, at least not as much as hillary clinton does. she has senate candidates coming to her saying help us out. donald trump is relying on the state party and that night is because the state parties are responsible for turning out -- helping to elect house candidates, senate candidates can even county candidates. i talked to a county chairman in arizona a couple days ago. he is totally for donald trump, but he admits that we are working for the same direction but our goals are a little bit different.
my job is to turn on every republican, and sometimes that doesn't always mean trump supporters. not as targeted as campaigns want them to be. that is not great for donald trump. vonnie: thank you. david: up next, we will hear about where deutsche bank goes from here and why the market is due for some sort of correction soon. this is bloomberg. ♪
let's start with "first word" news. markup it has that from the newsroom. mark: the london fire brigade says people are being evacuated from city airports a range of specialists were called in after reports of the chemical incident. there are also reports of a number of passengers not feeling well. an estimated 26 people have been treated at the scene. 2 have been transported to local hospitals. we will continue to follow this story and bring you further developments as we get them. donald trump and hillary clinton are now connect in the traditionally red state of georgia. 44-42% amonglinton likely voters according to a poll from "the atlanta journal-constitution." libertarian gary johnson has 9%. the green party's jill stein is not on the ballot. hillary clinton is scheduled to meet with black lives matter activists today in cleveland, ohio. as part of her campaign platform
she has pledged to work on race relations and criminal justice reform could clinton has faced criticism over the 1994 crime bill that was enacted while her husband was president. critics say the lot resulted in mass incarcerations that affected african-americans disproportionately. in japan, a powerful earthquake with a preliminary magnitude of 6.6 hit the western part of the country, knocking out power to thousands of homes. but there is no risk of a tsunami. the japan meteorological agency says the earthquake occurred along the sea of japan about 430 miles west of tokyo. 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. vonnie: mark, thank you. good to bank shares are back -- deutsche bank shares are back at the level they were before the department of justice slot to the bank with a fine. it is all part of an investigation into mortgage
backed securities. we don't have the number on that fine just yet. on "bloomberg surveillance," algebris investments founder davide serra says he expects a settlement in the end and has connections for the shrieking security business. he will look after the interest of the company long-term, chicken, cut costs, and ultimately, deutsche bank is needed for german corporations to do business abroad the nationally -- internationally. it will further shrink the balance sheets of investment banks. i expect them to shrink 30-40%. tom: this is really important, folks. you will rip up the script here. i would suggest, davide, that the single the station here -- i would give a major shout-out to james gorman of morgan stanley -- is cyclic mass acuity. guys whereare mass
they see within the framework of the institution the dynamics and the need for change to make those dynamics work. doesn the massiness, how he get others who are not like him, not as acute as him, to make the structural changes? , first of all, for deutsche bank, they have the capital businesses which are very profitable. , gooderman operation asset management, wealth management. did do have some pillars the issues investment banking has been oversized. they're what you have to do is go in what i would call a ubs and morgan stanley-type of diet. , not toctly, but davide interrupt, but i think this is really important. how does cryan give an entrenched deutsche bank management the courage to make those decisions? davide: i don't think they have
any choice. cds,un cbs, -- their own 250 basis points above u.s. peers, basically tells deutsche bank they cannot be in the business long-term. infused -- deutsche bank abused, in my view, is gone. david: that was algebris investments founder and ceo davide serra. later he said the markets are due for a correction but not a hard one to he thinks the currency market is not the only non-manipulative market right now. davide: i think the reason investors are using currency is that is the only known many related market right now. -- known many related market right now. percentage of -- known manipulated market right now. they are on strike because they don't have a say. their vote has been taken away.
as a result, what happens is everything goes through the currency markets, because that is the only fairly traded market right now. affectedn a way, has -- is affected by the loss of cooperation right now, borrowing 1-2% for the next 20 years. and clearly the average global corporation is making a return around around 9-10, and when you can borrow, to get lots of share buyback. >> are you concerned we will get a correction at some point? davide: i think we are in for a correction, in my view. >> hard correction? davide: no, soft correction, 10-50% range. eventually we are coming out of qe sometime in the next 6-12 months. u.s. normalizing monetary policy, and central banks -- [indiscernible] what is the level
of financial instability right now? i can't figure it out. a lot of dampened markets. stories moving around. is the dampened and quiet within markets -- is that an indicator of the financial instability to come? davide: i think it is -- there is no financial instability if you look at cross-asset classes. what you have is financial instability in a few institutions, and that is something different. it cbs,see deutsche bank paid overall, if you look at financial and civility right now it is very limited. tom: do you see more restructuring in next year, a more rapid pace of major restructuring? davide: yes, and the reason is because in a way, central banks will have to, you know,
high-grade of the short end of the yield curve will stephen and go back to something which is almost normal. tois not normal for you invest $10 trillion and negative yields globally. on a 10-year view. as a result, when it happens, financials start making a bit more earnings. , europeanentally banks need to go on a massive diet. they need to shrink. tion has arrived. when you look at how many branches are in the u.s., europe needs to shrink the branches. we will talk about the banks later in the program, davide, but mario draghi trying to two to about this. he needs to give the markets confidence he's fighting inflation while not hurting negative rights. did you do a good job? -- did he do a good job? davide: i think he did a
job it if you go back 12 months ago -- i think you did an excellent job. if you go back 12 months ago, ask the global investor, will europe grow more than the rest of 99% would have said no way. and actually, it did. in true honesty and fairness, you look at the numbers, europe is going ahead. bumpy road, but still going ahead faster than people expected. i think there is no scope to on going ahead with 80 going dollars a month unless you are -- $80 billion a month unless you are putting this money into the real economy. i is it possible blind glencore -- how is it possible buying glencore bonds? same with verizon commission bonds out of luxembourg. the system is being gamed. sme'snd less money,
stress in the market don't appear to be working as they usually do. one of them is the yield curve. here it is on a chart behind me. traditionally when he saw the flattening of the yield curve, it was a very viktor of you -- it was a predictor of u.s. recessions. you could see it happening when we got close to the red line. you could see the recession occurring, these red bars here. touching the red line come into the recession. although we are not all the way down the red line, it has been directionally going that way. -- yet no recession in many and many economists don't think there will be one, at least not in the immediate future. the relationship your has broken down. the is the spread between treasury,d two-year central-bank action and the distortion created in the markets. we arethe distortions seeing reflected is in libor.
even though on the basis it is much lower than it was in 2009 it is still cribbing up towards those levels that we saw back then. this is the london interbank offered rate could this is the rate at which banks lend money to each other. one of the things that has distorted this to some extent is new money market rules that have been affecting a markets. about $1 trillion from funds that by short-term debt from banks and corporations and into those that invest in safer securities like u.s. treasury's and bills, for example. that is one of the reasons we see these lending rates go higher. swap spread is a little more esoteric way to look at something like this. here, too, you see the swap spread going lower in this particular case. and here, too, is distortions that are created by these changes to money market regulations. this is a more vanilla one that we tend to look at quite a bit. the vix has become a little more erratic here, in particular,
we've seen increases in volatility but overall it has remained relatively low. one of the things that has distorted the vix is the profusion of etf's. we are not seeing the same kind of reflection of volatility in the vix that we did once upon a time. these are tried-and-true ways we had measured warning signals in the market. to, headst with talked of macro strategy at green capital, says his concern is if there is indeed a flag that something is going wrong in the market, that there is another financial crisis, some kind of flag on the economy, it is not going to be one of these signals. it will be something entirely different than of course we don't really know what to anticipate. and that will be the problem. vonnie: all right, julie, we will try to keep an eye on it. julie hyman at the markets desk. david: time for the biggest business stories in the news right now. british american tobacco wants to buy the shares of reynolds
american it is not already own. it would cost the maker of lucky strike cigarettes $47 billion. is valued athare 5650. the premium of money percent for the last closing price. u.k. company owns 42% of reynolds. is coming second was in the u.k. capital according to people with knowledge of the plan, saying the bank as opportunity 300,000 square feet in its tower. the government's tax collectors had to be looking for a new east london office. carol burnett is close to return to television. the comity legend has signed a deal with disney's abc and a sitcom project to be produced by amy poehler. burnett is 83's old has had a six-decade run on stage, films, and especially television. that is your business flash
update. vonnie: the new betty white. david: there you go. withe: an historic deal canada entrée appears to have collapsed. -- on a trade appears to have collapsed. it would expand eu canada trade by about a quarter. bochove joins us from the toronto bureau. we are so close to the british line and it appears dead in the water. danielle: what we know is that freeland has walked away from the table. the talks have become impossible. that is canada's side of things. on the eu said, a little bit more murky. belgium whichr of managed to discover this deal, effectively blocking rest of
belgium from backing it, says they regret what happened today, that may be talks can be read open at some point, but the prime minister of belgium says their position is increasingly radicalized. it doesn't look good. i don't think we can say for sure it is dead in the water but from the canadian perspective they have walked away, drawn a line in the sand. i guess the overwhelming mood is one of uncertainty at this point. david: what is at stake for canada and europe? danielle: you talk about how much this deal is potentially worth. there is the trade side right off the top that would have seen industrial tariffs removed, would have immediately opened europe to canadian companies, number of canadian companies and we would have seen a flood of european goods come immediately into canada. in broad strokes, the class is seen as bad for the auto industry in canada, bad for agriculture, where 90% of duties would have been phased out.
but it goes beyond trade. issues like procurement, government contracts. there are issues of intellectual property. patents would have been extended for european companies, for example. presumably that has an impact on big pharma in europe. we will be watching closely as well. not everybody was a fan, of course. canadian dairy farmers will be cheering today. whether you love it or hate it, nobody doubts this was meant to be a transformational agreement. now it is in jeopardy. vonnie: you know, why was it so hard to push through, do you think? danielle: i think a couple of things. obviously, the complexity of negotiating a deal with the eu is one 27 out of 28 countries backed this deal, but it took five years to get to that point. then you get so close to the finish line and one corner of one country manages to effectively veto it. but i think it is also partly
the climate right now for these sorts of deals. you think about the dialogue going on in the united states right now around after with donald trump. naftais around-- around with donald trump. there is an update localization move -- anti-globalization movement that is creating an environment around these deals. and certainly coming on the heels of brexit, it can be seen as a double whammy. justin trudeau, our prime minister, has said in the past that if this deal falls apart, it will really question the viability of the eu. david: announcing this money it will cut 7500 jobs, 10% of its workforce. sizable amount. danielle: does not been a good day for canada and this is a story that has impact on europe because a lot of the job cuts will be in europe as well. 7500 jobs on top of 7000 cuts
announced in february. about 1/5 of the. -- 1/5 the global workforce. some jobs are going to be added as part of the transformation but we don't have a lot of details on that yet. even if they happen, we are to be looking at 10,000 net job losses. 2000 of them are coming from canada so it is bad news here and 15 hundred of those are coming from québec, which this year made a sizable investment into supporting bombardier. it is not good news for canada and as i say, not good news for europe, either. vonnie: thank you. david: coming up on "what'd you miss," the deutsche bank chief national economist with his thoughts on the fed, inflation, at 4:00 p.m. wall street time. vonnie: and coming up, will wall street make it through 2017? this is bloomberg. ♪
david: this is "bloomberg markets." . am david gura i spoke with "bloomberg businessweek is what economics editor about why so many financial crises have happened in years that end with the peter: picking that up from the international monetary fund, and the positive short-term trends would include somewhat stronger commodity prices from which helped some developing economies that sell a lot of export commodities. easy moneyme sign of in the developed markets. if you are a developing economy and suddenly rates are going up
in the rich world, there were me that money is going to get sucked out of economies in the united states. the u.s. has kind of health back on some of the interest rate increases. raised is going to get a and there's going to economies. then -- that is the short-term, relatively good. not the crisis that might've been six years ago. the medium-term is still problematic. these are things we talk about decreasedme, like the public support for free trade. these developing economies really need free trade. they need to be part of the world economy. they need to have markets for their goods. ding fiscalst ero
balances, the cost of supporting the social infrastructure and so on. debts.orporate china would be a great example of that. we can talk about china more if you want. debt is something that may not cause a conflagration in the immediate term, but it is always there like a dried ginger. -- tinder. david: how worried are people about get right now? as you look at what might be to the next crisis or recession, it is high on the list. peter: it is high on the list for an obvious reason. debt makes an economy or company or household brittle. ices your growth, because you don't have to put up all the money for your investment. house, classic example. you borrow money, the price goes up, you are so happy because you go 10% and you keep all the gains. what happens when the price goes down?
it is the same thing for an economy. you still at the money even if your wherewithal has decreased and you become brittle that way. mounts, and it is mounting, household and corporate debt as well as yournment debt worldwide, become more vulnerable to any kind of downturn in her ability to pay. inid: read peter coy's story "bloomberg business week's" your ahead issue. vonnie: coming up on "bloomberg markets," thanks have exceeded expectations so far this earnings this season. one of them is reporting strong third-quarter results hit the ceo joins us next. this is bloomberg. ♪
-- i am scarlet fu. we are live in bloomberg world headquarters in new york over the next hour and covering stories for you out of san francisco, washington, london, and brussels. a deal for at&t to purchase time warner could come as early as monday. bloomberg broke the story just yesterday that the sides have held meetings. talks have accelerated on the chance another company could jump in with a bid. in just a moment, the ceo of citizens financial will join us to discuss the bank's progress and what comes next. plus, donald trump hillary clinton trade in the boxing gloves for humor at the al smith charity dinner last night, but it's back to work today. both campaign in key swing states. u.s. stock markets close in just under two hours. julie hyman joins us with the
latest. a mixed day to end the week. julie: i think because people are looking at individual stocks. this is not uncommon during earnings season. i feel like a broken record, but it's true. we've been talking a lot about earnings today and a lot about potential deals. let's talk about something else -- what's going on in the commodity market. natural gas is having a rough day yet again as we continue to see mild weather in the northeast and the forecast for it to continue. some of the companies that produce gas are doing quite poorly. southwestern energy, chesapeake energy -- many of these companies, the stocks tend to be quite volatile and that volatility continuing, but southwestern in particular taking a hit. it being friday, with also get the weekly rig count. on the the number
terminal, so this looks at the weekly change, and it has now been 17 straight weeks without a decline. that, of course, implies more production is coming back online. that is also one of the rings that is weighing on commodities to some extent. the dollar is measured by the bloomberg dollar index. sinceup for the highest march. finally, as we see little change for stocks this week, we look at the vix and what we has in has been a sort of steady line downwards. back below 14 on the volatility index here to those at the week. scarlet: thank you so much. let's get your check on the bloomberg first word news this afternoon. mark crumpton has more from our newsroom. mark: london city airport was evacuated and more than 200 people treated for breathing difficulties after what emergency officials called a
chemical incident. police and fire officials were investigating the cause. it is the smallest of the british capital's international airports. hillary clinton has a new ad featuring the father of a u.s. army captain killed in iraq. he was empirically criticized by donald trump after speaking at the democratic national convention about his son and tout mr. trump cost proposal bar muslims from entering the united states. he asks at the end of the ad, "mr. trump, would my son have a place in your america?" does not want jurors at a trial concerning trump university to hear statements he has made concerning the rival presidential nominee or those made about him. trump's lawyers asked the judge to exclude his speeches, statements, and tweets.
attorneys say they are irrelevant and would only prejudice and inflamed jurors. warned britain faces a difficult path. theresa may spoke in brussels at the conclusion of her first summit as british prime minister. will bendicted kingdom a fully independent sovereign country, free to make our own decisions on a host of issues such as how we choose to control immigration, but we still want to trade freely in goods and services with europe, and the u.k. will continue to face similar challenges to our european neighbors. we will continue to share the mature,ues, so i want a cooperative relationship with our european partners. minister alsoe said that while the u.k. is leaving the eu, it is not leaving europe, saying her intent is to cement britain as a close partner of the eu once brexit happens. global news 24 hours a day powered by more than 2600 overalists and analysts in
120 countries. back to you. scarlet: thank you so much. u.s. stocks have lost momentum this week is a mixed earnings reports, better than forecast results at banks proved to be a bright spot. citizens financial joining the club reporting solid third-quarter results. -- the ceois these of citizens financial. thank you for joining me. i wanted to get your thoughts first on the outlook because i know your net interest margin will likely be stable from the third quarter, and in general, things seem to be rolling along fairly well, but we have heard a lot of ceo's this earnings season say there's not a lot of visibility and there's a lot of uncertainty because of the election. do you see that from your clients? >> i think we have some things going in our favor. we have a turnaround plan we are executing fairly well. we are doing a good job in terms
of choosing where we play to protect our margin. we have invested in our sea-based businesses, and we're starting to see traction there. for us, it is just more of the same. just continue to execute well and we should continue to put up good numbers. the bankinghin sector along with the theme of better results this past quarter, we were also looking at the fallout from the wells fargo fraudulent account scandal. we have heard lenders saying that they undertook internal reviews to make sure there is not anything inappropriate going on, not any kind of cross-selling type of issues. have you done similar things? >> we have been doing this all along, so our approach starts -- we have a need-based approach to the customer. we are running something called citizens checkup, which is similar to an annual physical, where we invite customers to come in and talk to us so we understand their needs and their
situation in life and their objectives. we look to see how best we can help them. we also have i think a very strong tone at the top. around somedrails of the incentive payout structures, so we periodically review that, but we feel pretty good about where we are situated. scarlet: got it. in terms of credit trends, i wanted to ask about energy. nonperforming loans will total 1.05% compared to 1.01% largely related to commodity increases. are we at the bottom in terms of these soured energy loans, or do you see more coming in the next couple of quarters? >> i think things have well in theuite oilfield patch. basically, the higher prices, we have been trading in a range of $40 to $60 oil and a bit higher on the natural gas side. i think the energy sector has made the necessary adjustments
to stabilize themselves, so i think where we are right now is pretty stable. scarlet: with consumer lending a bright spot for a lot of the banks that have reported in the third quarter, i would like to hit more about your specific initiative to drive growth. >> the consumers quite healthy and we are very focused on where we see pockets of opportunity. one has been education refinance loans. we offer a very good product to aftertudent borrowers they have graduated and have a good job and a good credit rating. that has been a big grower for us. we also offer personal unsecured credit for folks to help consolidate revolving credit card balances, again at a lower interest rate. we have our partnership with apple that is progressing well. there's a number of areas where in student or personal unsecured mortgage we are seeing pretty good growth on the consumer
side. >> another area where you saw growth is the number of wealth management financial consultants . what does that tell you about the broader economy and what clients want to do with their money and where do you see that number going? been underpenetrated, very under scale the opportunity we have. we are away at the bottom in terms of wealth revenues, fees, and overall services where delivering to customers, so what we're trying to do is scale up. bring the right kind of people in, offering morphine-based products as opposed to commission products. so it is a process, but we are making very good traction. there's lots of financial consultants who like our vision, and more importantly, they see the opportunity, so i think you will see good things ahead for that business.
scarlet: could it top 400 in the ? xt year or so >> yeah, it is certainly possible. scarlet: thank you so much, the ceo of citizens financial joining us from stamford, connecticut. we are less vented about was away from the closing bell and we will look at the day's biggest movers. microsoft cost shift to the cloud clearly paying off. it is up to almost $50 a share. this is bloomberg. ♪
but it does not look like it will close at a record high. it is up 4.5% on the strength of its cloud is missed driving the company's revenue. it looks like $.76 a share in earnings is $.10 better than analysts had been anticipating. clout margins also grew from 49% to 22%, and its cloud product in constantercent currency, so investors definitely greeting that by buying the stock. i want to take a step back and get some perspective on where we have seen the stock. microsoft going all the way back to the.com bubble and bust -- the dot-com bubble and bust. many investors called it a so-called value trap. in other words, a lot of folks that the stock was a good value,
but yet it never sort of went anywhere, at least until the new ceo took over in 2014. since then, we have seen the stock take off anymore decided action. daveis interesting is wilson points out in his chart of the day today, there have been only a few large technology omocks that survived the dot-c bubble that posted big gains following that and microsoft is one of them. sort of legacy companies that have come back and then some from the ruins of that bubble bursting. scarlet: thank you so much. it is time now for a look at some of the biggest business stories in the news right now. , whichn with qualcomm has agreed to a deal likely to be announced next week. thursday, bloomberg reported
reviewing am is deal with nxp. massachusetts senator elizabeth warren sent a letter concerning for rebateslement concerning the 10 shots. .he says they underpaid flashat is your business update. coming up, shares of verizon as it went into tough competition -- shares of verifone have plummeted this year. we will hear from the ceo next. this is bloomberg. ♪
if you pay with plastic at the checkout line, chances are you have seen the logo of verifone, the biggest maker of payment kiosks in the u.s. and the second biggest in the world. for more, let's hand rings over to our colleagues in radio, cory johnson. your stock ticker tells it all. you guys have been through and a norman's transition this year with the advent of the chip card technology. what that meant for your company? how long has that been coming? >> sure, first of all, thanks for having me. it has been absolutely instrumental. it has given many merchants, large and small, the ability to rethink how they engage with their consumers at the point of
sale. it is really more than just chip cards. it includes encryption and just the cure ration the shopping experience. that has really been what is very exciting about the payment space today. cory: i wonder about the status of and the age of the typical payment system, cash register for lack of a better word. >> the u.s. is the most fragmented and largest payment system in the world. its infrastructure goes back earlier than just about anyone else's. i think what you have is a real in theri of difference ability, the quality. cory: which is to say a lot of merchants have the latest and greatest and a lot are sitting on ancient stuff. >> yeah, there are casio cash registers which are really old
but still worked great. y: has the emv business driven the cycle unlike anything you have seen in a while? >> without down it was one of growthgest drivers of that we have ever seen. i would say that about 90% of tier one merchants in the united states are able to take a chip card. the rest of the segments of merchants have been slower to adopt, partially because it is such a fragmented environment and there is such a bottleneck for certification, and that has created headwinds for terminal adoption recently. cory: you guys have lost market share recently, at least according to one nielsen report i read. what is your view on holding market share versus holding
profitable market share? >> we do not participate in nielsen surveys, so i'm not sure where they get their numbers. in all of those markets, we are a core infrastructure provider for payments. we see ourselves playing a bigger, more important role in what our clients aspired to do, which is increased security -- massive issue everywhere in the world. the second is they have to compete against what is going on in the online world. when you go on a website, that website knows everything about you. there's a cookie and if you are buying something online, they know your whole transaction history. you walk into a store, nothing has changed. they still do not know you. they cannot cure it or have a specific conversation about your
needs, and merchants all over the world today are looking to a company like ours to get them to that next stage of evolution to drive growth. : does it also provided difference of revenue stream for you because the customer is more involved over time? >> without a doubt. if you look at our history, most of it was about shipping terminals. today, most of the conversations we are having are not about the terminal. it is about the solution that is built around it. gateway services, value added solutions, and it is a much deeper and much more of an annuity revenue relationship with have. paint for me a picture of the ideal futuristic transaction that takes place on the retail level with a small business. into the store, and the small business owner will know who you are before you
even get to the checkout counter . i know how you like your coffee, i know what you have taught here in the past. let me offer you something i think will meet what you're need is, but let me get you to try something else. that seamless, frictionless experience is where payments and commerce converge, and companies verifone are pushing the envelope to get there. the key thing is it is not just technology. it is understanding the environment, understanding with the merchant is trying to accomplish, being able to link what happens in their online channel -- maybe they have a web store -- to what happens in their store. the fact that today, the data is in still fights -- we need to interconnect it so that we walk into the store, the merchant knows everything you have done with them in the store, on your mobile device, and online, and
they use the data to make your shopping experience as good as what you get on amazon. who will own that data? is it something you own? is it something the merchant owns the iphone >> the only way this will ever scale is if the merchant retains 100% ownership of their data. create a tremendous amount of activity to capture that data . they have to keep inventory. this is really important. that is the crux of it. if you look at companies that have attended to take the data and sell it back to the merchant, it has not worked very well. i think what you need to do is take a technology approach to the data. cory: the advantage would be to across manycustomer different experiences to get to
know them better. >> that is step two. step one is that within the data a merchant keeps, they can turn it into action and whatnot. cory: thank you very much. appreciate it. scarlet: thank you so much. we're also kicking off season 1.0."f bloomberg "studio in this episode, emily chang sits down with instagram costs ceo. >> mark has been true to his word and then some. till to this day, his interaction with the company is basically through meetings with me, and i have learned a tremendous amount from him about our transition to advertising, our transition to a more global community, about strategy. he is one of the most interesting long-term strategic thinkers i have ever met. think about having the best board member in the world.
imagine how many companies would like to have mark zuckerberg on their board. that's what we get. it is independent but also you get amazing guidance from someone who was able to build a tremendous company. y: how open has he been to your ideas? >> i would love to know that. he said instagram plus focus on community and craft was different from a lot of tech companies at the time. i would like to think that we influenced facebook, but it's kind of hard to say that for sure. we would have to ask. scarlet: you can watch the whole episode this sunday. this is bloomberg. ♪
a look at some movers, starting with oil. wti clawing back some of its losses from yesterday as traders wait or more development on that opec production cut that was announced last month in algiers. let's stay with energy and look at gasoline. it was a big mover. gold little changed right now, fairly quiet, but it's about to close out its first weekly gain in four, and want to stick with gold and take a look at a chart you can pull up on bloomberg. investorsline is holding gold etf's is rising, the highest since 2013. the yellow line is money managers had their net long positions. you can see the line going down, which means they are starting to bail on their long positions. interesting rallies on the
'etal, partly due to the feds caution on raising interest rates. at some point, those lines need to converge. is just a matter of which one goes which way. mark crumpton has more from our newsroom. mark: the london fire brigade is nowlondon airport safe after 500 people were evacuated after what emergency services called a chemical incident. a number of passengers reported feeling sickened. investigators said 26 people were treated at the scene and two were reported -- were transported to a local hospital. as election day approaches, the clinton and trump campaigns are emptying their war chest. trump paid roughly 350 employees
and consultants. september was the best fundraising month for both candidates. according to finance reports, 100 million dollars and clinton, $154 million. scientists at the european space agency say the experimental mars probe crash landed and exploded. pictures sent back to earth show a black spot on the planet's surface. justice ruth bader ginsburg is looking to rule over the stage. she debuts next month in the productionopera cost of the daughter of the regiment, in a night only appearance non-singing role in included exclusively for justice ginsburg. global news 24 hours a day powered by more than 2600 in oversts and analysts 120 countries. back to you.
scarlet: thank you so much. let's turn to one of our top stories -- shares of time warner soaring today once again as movingrg reports hmp is to buy the company by monday. of the team part that broke this story a few days ago that indicated senior management at at&t and time warner were in discussions. it was still fairly early and they were discussing different strategies, relationship building, and now we are at a point with her could be a deal announced by monday. >> that's right. it feels like a few days ago, but it actually was only last night. thisompany's have had strange engagement where they have been talking about what alld make sense, but it was sort of management to management, and we talked about this in our story, described to
us as being relationship building as opposed to a straightforward merger discussion. we started to make a lot of calls. i think everyone went into slight panic stations, and it sounds like the progress has been drastically accelerated in the past few days. could try toe they really get something announced early next week, which if you think about it in terms of a timeline is just phenomenal. scarlet: it is. this is a massive deal. most of these deals take weeks to complete. you are the telecom expert. what is at&t's rationale for -- timeom warner warner? >> it's not immediately obvious. you need to look down the road and ask what they are seeing. they are looking at a world that is rapidly digitizing, a core business that is maturing rapidly, and their initial response to that was to buy
directv, which was not a bad move. scarlet: but they have not even fully integrated that purchase yet. >> they haven't. a veryuld for at&t be risky move in many ways. not necessarily a bad one, but a risky one in the short-term, again because they are integrating directv right now and would he presumably driving up their leverage ratios, which they have been trying to move in a different direction. complicated from that standpoint, but again, you have to manage to a vision if you are a ceo, and i think the vision ane is we are moving to all-digital world. content is king, it always has been, and i think content on her ship this dish content ownership is where you want to be 10 years from now. >> we talked about this yesterday on the show as well -- at&t could have gone about this
in a piecemeal way, much like verizon, where they buy smaller assets. they could have done that and spent the next 10 years doing is a monstert company and they need to do a very big deal. this is probably the best asset for them to go after. people have mentioned netflix as a possible alternative. that is a very expensive assets, and i also think there would be a lot of competition. like comcasteems has figured it out. as a strikes me again defense of deal. they look at comcast and nbc and say that it's working well, and that is where the world is headed. we have to be there and be there with a crown jewel asset before it gets snapped up by someone else, so i think there was a bit of a competitive element behind that, too, because time warner is not family controlled.
i believe it is the only media asset out there that is not of that size. scarlet: that is a good point. >> the other thing that is crucial with time warner is just because you turned down a bid from this company to figures he has been proved right. i think he has indicated to people that the right price, he is a seller, not some sort of entrenched guy. he is willing to do the right for the company and shareholders. you have a highly motivated seller but someone who is open to a deal and has kind of said as much. it makes a ton of sense for at&t to go after them at this point in time. scarlet: thank you so much. asia is still an attractive place to invest. and in interview with bloomberg's erik schatzker, he
gave his recipe for finding success in asia. >> china's game plan is wildly different than when you and i first met, which i think they are in sourcing a lot of goods, trying to build their domestic consumer economy and less focused on heavy raw material usage, so that leads to less money going in and out of china. if you look at global trade as a peakedage of gdp, it around 2007 and now it is starting to head down. that is kind of what is changing on maybe the not so good side. on the positive side, a lot of the big asian consumer economies, particularly india, and we have been much more active in indonesia recently where domestic consumption is still a big part of the economy and with a rising middle class, you can participate. the way i think about it is in asia, you have global trader manufacturing. and thenthe consumer,
value-added services. i would say of the number of companies we own in asia, we are heavily focused on that third luckett, which is value added services, so focus on protein, health care, food safety, water safety, environmental safety. >> two criticisms of asian companies historically have been that on the one hand, they do not think globally, and on the other hand, they are risk-averse. has that changed? >> i'm not sure i think that is changed in the sense that it takes time to change ceo mentality, but there are macro factors, one of which be a the slowdown in china. is a lot ofhing these companies are going abroad, sardonically, even though china has got a lot of global growth, it represents about 25% of global m&a. one out of four dollars globally
as a chinese company going to acquire something in europe or the u.s. that is significant because they are trying to export excess capacity and also trying to move up the current health care services, optical, other areas where they are traditionally not known for. it is not just emerging markets in asia. we have been very active with japanese companies, taking their products, either health care or some type of services, abroad. 11% of global m&a, so that is a very big number as well. you have very cheap financing and banks that want to lend in contracts with the u.s. where the fed is saying not to do any leverage lending, and the head is probably right now, certainly less flows into deposits. >> what is the best way to get upswing into this asian that you see happening? equities, credit? is there something else? tothe first thing you have
do is take a step back and say globally, the biggest theme is rising gdp per capita. i think you need to have a broad sweep. for the rest of individual investors, that would be through public equities or through liquid credit. for institutions, we obviously do a lot of private equity. we have been more focused on growth companies and gdp per capita. some of those are getting expensive, so we have been spending more time helping asian companies growth globally. this also a lot going on in private credit right now where a lot of the banks are jammed. they have bad debt on their books. not sure they want to write that off, but they do not have the capacity to lend. one of my big takeaways romm india is a lot of companies just added multiple divisions during the boom time, and now they are stuck, and the banks are saying they want them to narrow their focus, selloff a subsidiary or merge one.
"bloombergis is markets," and it's time for a look at some of the biggest business stories in the news right now. mood is says federal officials are planning a lawsuit over its ratings of mortgage securities. critics contend they were inflated to win business in the years leading up to the 2008 financial crisis. movies says it expects the of
department of justice to file a civil action on the matter in addition to unspecified attorneys general. a showdown is set up between industrial giant and billionaire paul singer. slm management joined general electric in urging them to accept the offer before it expires monday. and news corp.'s dow jones unit is offering buyouts to wall street journal employees around the world. the editor in chief said in a memo to staff obtained by bloomberg, that the newspaper has started an extensive review of operations. the paper wants a substantial number of employees to take the buyout. employees have until the end of the month to volunteer. and that is your business flash update. turning now to politics, donald trump is planning to barnstorm the country in the final weeks of the presidential campaign. he told a rally in north
carolina today that he wants to end the campaign with no regrets, win, lose, or draw. bloomberg news political reporter joins us now. when he goes on this barnstorming rally/campaign for the next couple of weeks, are we talking about battleground states, or are we talking about places where he already has a of support? >> donald trump has been good about focusing on battleground states, states he needs to win. he's done a lot of time in florida, ohio, north carolina, where he was today. is talking about he wants to leave it all on the table, give everything he has got and whatever happens election day, he will at least feel comfortable with what he has done. going back to the start of his campaign, his strength has always been rallies. he gets big crowds he loves to talk about and they tend to get a lot of coverage and make a lot of noise and drama, and his supporters are very passionate,
so i think this is his way of saying he is going to leave it all on the field. scarlet: speaking of drama, the al smith charity dinner was held last night. i know that is held every campaign season, but my question is who is the audience for these? >> is televised. i do not think the average voter does but anyone paying attention to politics will. certainly the us a book elites and donors to these charities are definitely paying attention. past dinners of this sort have been between republican and democratic nominees less intensive. the animosity between these .igures is so that -- so thick there was nothing like this between president obama and mitt romney in 2012, between then senator obama john mccain. the jokes did not cut so deep.
you do not have the kind of brewing. for instance, donald trump joked about putting hillary clinton in jail. she went after him really hard, to hear it was a manifestation of just how ugly this campaign is, and that's what we saw last night. scarlet: there were a lot of unprecedented things about this campaign that continued at that dinner. in terms of the outlook for the democratic and republican parties, no matter who wins the election, people in the party are looking ahead to who they can count on as their leaders. in the democratic party, hillary clinton still ranks pretty high when we asked democrats who they would like to see if the top of the party. how does it look for republicans? >> not that good at the moment. her starters, i should say the democratic party is divided on who it would like to see as leader if hillary clinton loses, ed tohey are not fraction
the same degree as public as. some people want someone like paul ryan. some people want mike pence. some people want donald trump. you have the trump wing of the party, which is a nativist, nationalist wing, and you have the paul ryan wing, the pluralist conservative, and our polls found a majority of republican voters prefer his vision,o paul ryan's which is a real blow to the limited government wing of the party. what is certain is we will see a lot of recriminations unless this is -- there is a massive turnaround and chop somehow pulls it out, but if polls are right and trump ends up losing apparently by a significant margin, we will see a lot of blame to go around and republicans will have probably something like a civil war on their hands. we will see how this all plays out, but it is not looking good for them at the moment in less
things turn around pretty dramatically. scarlet: what is hillary clinton doing in terms of rallies he echoed is she still sending out surrogates to stir emotions up, or will she take more of an active role in campaigning now that debates are overreacting quick i think we will eat her campaigning more than we have a last few weeks. she did mention at the dinner, taking a shot at donald trump, that she does have a debate tactic, preparing. -- i think we will see her campaigning more than we have the last few weeks. she is taking full advantage of the surrogates at her disposal and they are happy to help because democrats are very eager to hold on to the white house, of course. scarlet: thank you. washington with the latest on political developments. coming up, we will look at why
scarlet: we want to turn out to real estate and the sprawling country estates of greenwich, connecticut. the big mansions seem to be falling further out of favor as homebuyers seek cheaper, more affordable residences closer to the center of town. joining us now is bloomberg news' real estate reporter. >> caused a big freak out in the .rokerage community
he is emblematic in that he had an almost six-acre estate and tried to sell it for almost two and a half years. there is a lot like that, and a lot of homes that are multiple acres, multiple millions of are just notthey going anywhere. owners are clinging onto certain prices and buyers are just not buying. scarlet: there's only certain people who may be interested in buying those homes. >> tastes are changing. you buy a couple more bedrooms than you need now, think about a way that bills in
maybe you did not come of it are changing. you want to live near the train station, downtown, near the waterfront, maybe not 20 minutes on a country road. scarlet: exactly. the other thing was that the tax rate in connecticut was a big reason why this was the case, why greenwich perhaps was less attractive. up until 1991, there was no income tax in connecticut? >> he stated that is a reason he moved to florida. he now declares his official residence in florida. just one tax. is to plug an income tax lot of deficits when they need to. there are other could trauma of the hedge fund
industry -- other accoutrements of the hedge fund industry are suffering as well. for instance, cars are not selling as well. >> $50,000 cars are flying out the door. the $250,000 mercedes just is not. under $2 million rose in a second. under $3 million as well. but under $4 million, it's just sitting there. scarlet: thank you. if you have not read her fories, go to bloomberg.com a fascinating read. investors gauge the health of the corporate sector. we will speak with an investor next. this is bloomberg. ♪
i'm scarlet fu. welcome to bloomberg markets. are live from bloomberg world headquarters in new york for the next hour. we all are -- we are also andring stories from london japan. a disappointing forecast from general electric to dime are outweighed at microsoft's record levels, sending stocks lower. actually, they are higher right now. in fact, the s&p is at session highs. turning around mitsubishi. we are going to hear from the ceo on the turnaround plans for the japanese automaker. and a tobacco company is offering to pay 47 billion dollars for the rest of reynolds american. julie hyman is here with the itest, and the direction, should say, for the s&p and dow
is higher. julie: they were lower for most of the day. it's only in the last few moments that they have turned, and even then, it's less than a point. little changed overall for the u.s. averages today. the s&p is higher. still lower for the month of october after two down weeks. this is the first up week in three. the focus today is on individual stocks. s scarlet mention,rle beat estimates. mcdonald's reported as well, 3.5 percentose by globally. honeywell has some weakness in the aerospace business, but the numbers is still don't meet analyst estimates. we also have been talking a lot
of dealnews today. biggestst, and probably of these, potentially, would be at&t buying time warner. according to people familiar the the situation, companies are in discussion for some kind of tie up, even if it's not necessarily an acquisition. time warner rising 7% as at&t pulls back. there's also the big tobacco deal that scarlet just mentioned. reynolds american selling the rest to british american tobacco. shares up 14.5%. this is a london trade on the stock. it doesn't trade in the u.s.. finally, one more notable mover today, the u.s. dollar. the dollar index is rising today.
not seeing a huge gain, but it has been a beneficiary of the euro falling, particularly this week. bloomberg dollar index at the highest since march. julie hyman, thank you so much. let's get a check on headlines with mark crumpton. mark: the london fire big aid says the city airport is now reopened and declared safe. -- fire brigade says the city andort is now reopened declared safe. 500 people were evacuated because of reports of a chemical incident. a number of passengers reported feeling second. officials say 26 people were treated at the scene. two were transported to a local hospital. donald trump says he will be packing his schedule with events between now and election day so he want have any regrets. he never once to look back and think if he had only held one more rally, he could have won a.
he spoke in north carolina today three rallies. mr. trump: we are in a divided country now. there is going to be love. there is going to be love. this is a campaign about rejecting the cynicism and elitism of our failed political establishment. lose, ormp said win, draw, he will be happy with himself. shutdownemporarily websites for internet users along the east coast today. experts said it was a coordinated attack on new .ampshire based internet firm it was off-line again around noon is another attack appeared to be underway, also affecting the west coast. hisfilipino president says
remarks about separating from the united states don't mean severing ties, clarifying comments made in beijing. he said separation from the u.s. refers to foreign policy but does not -- and that does not dovetail with america. when asked about an alliance saidchina and russia, he it could be economic or military. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. scarlet: it could be a december to remember for the markets. widelyeral reserve is expected to hike rates at its december meeting. joining us now to commiserate on what investors will do until then is a chief investment strategist at tia which manages about $900 million. global leaders are in wait and see mode.
where does that leave investors? i think it leaves them waiting. if you asked people what the major policy of that would be in the fourth quarter, they would have said the election, but now it looks like it will be rates. we are expecting an announcement about what ecb will do with quantitative easing, which is expected to expire in march. they are not talking about it yet. and they are not going to end the program altogether. it will possibly be an extension or some kind of taper next year. scarlet:they are not talking wif central bank push, where do asset prices go? >> i think regardless of what central banks do, the catalyst is going to be earnings. we are seeing the market behave in a relatively healthy way. we had seen the market climb a lot this year compared to where earnings have been, which is in recession for a few quarters now.
but now we are seeing the companies with better than expected earnings are being rewarded. being pushed up, which had not been particularly good year to date. that should be the driver. we will probably see earnings catch up a bit more to the equity markets. scarlet: a lot of ceos are pretty quiet when it comes to visibility. they won't say very much. they are blaming a lot of uncertainty on the election. >> that's my biggest concern for next year is that the consensus numbers for earnings, broadly speaking in the u.s., are still too high. it's not unusual to see them come down through the year, but we don't know what kind of trajectory we are on in the united states with all these earnings reports. the rise in the dollar distorted earnings for companies that have
a lot of overseas businesses. once those effects washout, are we on a 3% trajectory or a seven point 8% trajectory? that's going to make a big difference to how markets perform next year. earnings recovery is something people are looking ahead to, but it's uncertain whether that will actually come to fruition. we don't get the earnings everyone is anticipating right now, what does that do for prices? do we really expect them to fall? >> i don't know if it sets us up for a correction, but certainly, where we have been for the last few months is because of earningsty about outlook. i don't think we fall 10% or 20%, but i think it's going to be tough to make gains. that hasone thing
broken out our european banks. bankis europe's stoxx 600 index. it has moved above its long-term trendline. this week, a move decidedly above that line. bank of america merrill lynch upgraded the sector for tactical reasons. there are still long-term it'srns, but they said time to look at this sector. >> we are also looking at european nationals at tia. where they started from was not without regulatory risk, but in the last couple of weeks and you read reports on bloomberg and elsewhere, they are starting to talk about maybe stopping quantitative easing, maybe going through bank of japan. market yield curve. >> that may be a possibility, and that should be good for banks. not good for business.
as this becomes a possibility or even a probability that we are about to see the beginning of the end of quantitative easing in europe, that should be helpful to the banks. i was a little surprised yesterday. they said we did not talk about the taper, but they still lead the market. i think maybe the fact that we are having this conversation at all is encouraging for banks, especially since they have been coming up from such depressed levels. scarlet: deutsche bank's reporting next week. deutsche bank really triggered the selloff. there are italian banking issues as well. when deutsche bank reports next week, are we going to hear anything that adds more fuel to this rally, or is this going to remind investors of long-standing issues that still plague the sector. >> in general, reports from the united states have been better than expected. i think the most important thing
isn't necessarily the one off regulatory or headline risks we see. it's what is the outlook for profit -- profitability for these banks? you can try to stimulate the economy by keeping rates low or pushing the yield curve down, but i think it's still a question of how effective negative interest rates have been. if you're hurting banks, you're hurting the economy, because that's the lifeblood of credit, and if that's not growing, your economy isn't growing very fast. japan,: whether it's europe, or the u.s., especially this the ecb signaling week, what do you think will happen? >> i think we could see the curve, but bit more than it has, but i don't think we will see a severe steepening any time soon. it will depend on how quickly
is bloomberg markets. i'm scarlet fu. time for a look at some of the biggest business stories in the news right now. at&t is pushing to get a deal with time warner done by monday, according to a person familiar with the matter. the talks have accelerated since bloomberg broke the news that executives had met to discuss
potential business accommodation s. enterprise software company in four is considering an outright sale according to people familiar with the matter. ontners are working preparing offers. the closely held company has an enterprise value of at least $10 billion. minority seeking a stake in the company just last month. study commissioned by plaintiffs in securities litigation found the jpmorgan overstated how much it's structured it notes were worth feesailing to account for s accumulated during pay out on the security. million inesting $15 chinese groceries.
data has more than 25 million registered customers and delivers to more than 3 million cities. that is your business flash update. staying with corporate news, long-time nissan leader carlos is adding a new challenge , turning around mitsubishi. mitsubishi has cleared the way for him to take over as chairman. he spoke to bloomberg from mitsubishi headquarters in japan. >> i am chairman of the board and chief executive officer of the company. i would be here to support him, supervise him, guide him, challenge them, etc., but i think the challenge for mitsubishi today is to establish trust and resume normal operations. well twoi was doing
years ago. veryusly, 2016 is negative. provisions they had to take for the consequences of what happened. i would hope that in order to reestablish normalcy of the , we will recover in 2017. lastly, there are synergies between mitsubishi on one side and nissan on the other side, which have already been quantified and they are massive. donenk if everything is and we have a clear plan, the company is going to reestablish itself quickly. >> in places like japan, you may have redundant capacity.
as part of the plan closing some of the production lines going thisrd question my >> operation is happening at the right moment because frankly, today, we don't have redundancy of capacity. we are in full capacity in north america. northern europe is full. we have some ability in japan, yes, that we are using it mainly for exports. i don't think capacity as a real problem today. i don't think cost is the real problem. the real problem is trust. second is gross. .- growth there is plenty of growth that we are going to be tackling together. >> let me change the topic to brexit. he recently met with prime minister theresa may. what did you discuss? >> maintaining the competitiveness of our plans in
u.k. and our presence in the u.k. in general. have a chapter with about 1000 people in the u.k. we have a big presence in the u.k. we are a large seller of cars in the united kingdom. happens, the what competitiveness needs to be preserved if not reinforced. as long as we agree on this and everybody plays their part in the game, what we agree on is central. we don't have to worry about the governmentas will make sure that nissan continues to be competitive. the lifecycle of a car is about six years. every six years, we have to make
decisions. and we are on the eve of this decision. but if you don't take care of competitiveness, you lose. that's why it's important to continue to work diligently while building and maintaining the company. ahead, shares of nike are the dog of the dow, falling 17% this year. we will explain in today's options insight. this is bloomberg. ♪
it's a bit of a model, isn't it? muddle, isn't it? stocks are sideways. what going on? what your take away? we have been training for many months within this range, but at the higher end. markets are not going down much, but we are not going higher either. the vix has sold off. to finish,going looks like in the green after two weeks of not. we are going to try to look beyond the immediate. i like the fact that the markets have remained solid and positive on the week. julie: constructive, perhaps. when you say you are looking specifically is a
long horizon call. you are looking at things that are at most a few months out. you are looking at a nike trade for next june. talk me through it. >> nike has been the worst performing of the dow stocks. walmart are two stocks that were long forgotten and have now come back. i am looking at nike long-term. options in this particular stock, you can buy a june option for a dollar more than january. why not? a 45 call for june. nike hasn't been down to 45 since june of 2014. .e are seeing bullish diversion a number of things need to be positive.
and buying more time is also a way to reposition for the market in the long term. has been you say, it trading between 50-60. superot that you are optimistic about nike, it's just that you don't think it's going to go down much more. >> right. the 45 call is deep in the money. it's going to act like a stock that is trading at about eight dollars. it's seven dollars in the money, so the breakeven is about a dollar 50 higher. if it does move up to the 60 level, this option will nearly double in value. ant is the power of buying option with a 45 call. put in a stop loss at half, so if the market moves the other way or you run out of time, you
can clear out and be done with it. julie: in this market, have you been doing more individual options as opposed to the sp why? >> is very difficult in these market conditions as a trader. we are not getting much movement. move andhe market to identify direction. we have seen stagnation. it's a matter of being patient. where wearkets tell us are going next. we are just slogging along. julie: well, happy slogging to you. scarlet: thank you, julie. what did you miss is next. we will get an outlook on inflation. this is bloomberg. ♪
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traditionally red state of georgia. you and neck- are in the traditionally red state of georgia. top official at the clinton foundation said he could "500 different examples of conflicts of interest involving some with former president bill clinton." that's according to e-mail hacks released by wikileaks. he wrote that he had been required to sign a conflict of interest statement as a board member, but that the former president did not have to sign one, despite receiving expensive gifts and payment from sponsors. militants attacked targets before dawn