tv Bloomberg Markets Americas Bloomberg October 31, 2016 10:00am-11:01am EDT
vonnie: we will take you from washington to london and cover stories out of new york, venezuela and japan. hillary clinton's allies escalate attacks on fbi director james comey in an effort to stem political damage after the reopening of an investigation into her e-mails. is this latest october surprise enough to change voters minds? the fed and the boj are expected to hold steady. we will also look at policy moves at the bank of england and questions around governor mark carney's future. general election combines with baker hughes creating an industry giant with
a broader suite of offerings amid the ongoing slump in crude prices. we are 30 minutes into the u.s. trading day. julie hyman has been keeping an eye on the first 30 minutes of trading. julie: we have a mixed picture. little change overall today. we are seeing more movement in oil price is. .efinitely seeing some movement below $48 a barrel as we are still not seeing any progress at that opec meeting in vienna even though earlier alix steel spoke to the director general of opec some encouraging signs. to tumble.l continue we are also keeping an eye on the dollar today. insumer purchases climbed
september by the most in three months. incomes grew. disposable income was little change. we are seeing a divergence. by .2llar is higher percent but we are seeing a two-year basis point decline in the 10-year note. usually they would be moving in tandem. we are also watching the big deals this morning. general electric agreeing to combine that oil and gas business with baker hughes. ge will loan 62.5% of the combined company. it will be publicly traded. contribute 7.4 billion dollars in cash to spend a special dividend for baker hughes shareholders. baker hughes after rising earlier is now little change. the shares rose on speculation that a deal was coming. we are watching a deal in the telecom industry.
, $34 billion in cash. this is a company that is going to be a big player in handling heavy internet traffic for businesses. seeingve where we were level three trade last week. there was talk of the deal coming last week. level three gains about five. went back oncks the weekend so it's 2:00 here, not 3:00. equities on gmm go global. since february. on track for a second monthly drop as well. the longest losing stretch since february as well. yields have been hammered this month.
it could have been an entry in today's botc. it's showing that they get assets of fed on the global basis in october. the worst performing currency against the dollar this month is the pound. the pound is down by 6.3%. look at how global bonds have fared. on track for the worst month since 2010 as expectations for a fed rate hike increase this month and as inflation expectations rise as well. the country world index is also down by 1.77% this month. it is still on track for a second monthly drop in the commodity index is the best-performing asset class just up by .3%. best run since april.
three out of four asset classes actually felt this month. shares of why 3.7%. it's the world's biggest advertising company. third-quarter sales rising today. sporting events and the u.s. election boosting agencies like ogilvie. it has expanded into digital operations. as we focus this week on central banks with the bmg and the fed mark carney will deliver the quarterly inflation report this week. global inflation is the blue line. it is falling. the white line is china ppi. important because inflation in china tends to lead inflation for the entire world. a pickup in ppi in
china. will we start to see a pickup in ppi across the world? it has been deflationary. will it be inflationary? lovely chart. forie: many candidates battle of the charts. let's get to the first word news with alisa parenti. >> the latest news about hillary clinton's e-mail appears to be having some impact on her support. to an abc news poll clinton holds just a one point lead over donald trump nationwide. to 45%. last week the same poll had clinton with a 12 point lead after fbi director james comey said the bureau had discovered files that may pertain to its investigation of clinton's use of a private e-mail server while secretary of state. managerrump's campaign
says he won't make the fbi's new e-mail discovery the centerpiece of his campaign against hillary clinton. he used the development to hammer at his opponent but kellyanne conway says he plans to focus on health care, islamic and ethics.reation, italy's prime minister is promising to find temporary housing for more than 15,000 people displaced by a series of powerful earth weeks. 6.6 rocked the same mountainous region still reeling from quakes in august. no one was killed but it destroyed scores of buildings. in venezuela president nicolas party met with operation leaders -- opposition party leaders. demanding a recall election before the end of the year. they also wanted the release of political prisoners.
i'm alisa parenti. this is bloomberg. vonnie: it has been a big week for central banks. it's going to be a big week for central banks. the bank of japan, federal reserve and think of england meeting. at has toestion mark do with mark carney's future. let's turn to the federal reserve. economist at an the fed under ben bernanke and janet yellen. he joins us now from hanover new hampshire. anything newto get this week in terms of economic outlook for any of the major central banks? >> let me focus on the federal reserve. inclined to go
ahead with the rate hike in december so i think they're going to try to signal that in their statement this week. they did something similar a year ago. meeting weour next are going to be considering a rate hike very seriously. similar language of year. markets will understand a rate hike is probably coming barring unforeseen circumstances. majors none of the three are meeting their inflation target. you see just how far from those 2% targets all of those major central banks are. action on get some the easing side for the bank of japan and maybe the ecb. at least messaging or signaling of easing. >> this is the story where the u.s. economy has been running
pretty well over the past year. payroll growth has been pretty strong. there has been some very modest signs of u.s. inflation starting to head upward a bit. the federal reserve has a 2% target. the measures of core pce inflation is now running at about 1.7% just a tad below the target but not dramatically so. a key question for fed officials is is that slow upper trend going to continue over the next year? you mentioned china could be a factor. hand if the fed hikes while other central banks ease that could put pressure on the dollar which tends to push down measures of inflation. it's a complex environment the fed is facing right now. stronger dollar
comes tighter financial conditions. some have mentioned january dollar levels on a trade weighted basis. is there a level that would concern the fed when it comes to the dollar if conditions continue to tighten. levels.ot at january where not at august 2015 levels. could we go back to those sorts of levels if the dollar keeps rising? >> the federal reserve has a dual mandate of price stability and maximal employment. they don't focus on the dollar per se. inputs to their judgment about how effectively they are meeting the dual mandate. they have to take into account all of these different factors to assess current inflation and the inflation outlook. let me mention one factor that has not gotten much attention. deeper measure of
core inflation that only uses market-based prices. that is running at 1.5% and it has been pretty stable. it's possible that u.s. inflation will get down over the next few months. that is usually what happens. pce is usually the indicator. are stories where the fed hikes this december and then doesn't type again for quite a while. there are other scenarios where u.s. inflation continues to head upward and they need to do another rate hike in march or june. mark: i have a chart here. and shows u.k. inflation expectations which have risen steadily. up to the highest in three years. it leads to the question if the boe releases quarterly inflation
report -- to what extent will central banks allow inflation to run hard? and carney said he would last week he implied maybe he won't allow inflation to overshoot as much as many had thought. are we getting a rethink on allowing inflation to overshoot by central banks? isi think the key point here central banks need to do risk management. you cannot focus on a single benchmark. they need to think about alternative scenarios on risks to the forecast. what we have seen many times because central banks releasing a forecast that turned out to be incorrect. the issue for the bank of england and the european central bank and the bank of japan and the federal reserve is to think carefully what are the material risks and what's the appropriate risk management strategy? the bank of japan might
be in the most precarious position this week even though they don't concentrate on currencies. what does the bank of japan need to do in order for the market to just ignore tomorrow's meeting? >> that's a great question. i think the underlying issue for each of these central banks is the credibility of the inflation goal. these major central banks now has a clear inflation goal for the u.s. and the bank of japan. it's 2% consumer inflation. the ecb frames it slightly differently. it's essential for their policy that people believe they will take action to foster that inflation rate over time. that keeps inflation expectations anchored at the goal. inflation expectations have been
well below that for the last 10 to 20 years. for the boj to convince the public and the markets and businesses and consumers that they are really serious about hitting the 2% goal that's the challenge they face. vonnie: thank you professor andrew levin. 2:00 new yorkt time bloomberg television will have special coverage of the fed rate decision. scarlet fu and joe weisenthal will hold break the news. you can catch all of that on bloomberg tv and radio. mark: another twist in one of the most unconventional presidential races in american history. washingtonlive to with the fallout on the fbi decision to once again investigate hillary clinton's e-mails. this is bloomberg. ♪
from london and new york, i'm mark barton. vonnie: i'm vonnie quinn. this is bloomberg markets. the fbi is reviewing files related to hillary clinton's e-mails and it is already having an impact in the polls. 46 to 45 leada over donald trump nationwide. she had a 12 point lead earlier. correspondent in regular times. these are not regular times. she joins us now. don't we know that we shouldn't take too much notice of polls anymore or can we trust them? >> the candidates always say
they don't pay attention to polls unless thingy to pay attention to polls and they all are right now. in thatpoint fallout abc poll is kind of thehi-end of what could be possible in the closing days of this campaign. the real question is not is the race tightening. of course it is having an impact. it is how much is the race tightening. as in aonally so much handful of key battleground states. north carolina, florida, arizona, maybe ohio. those are going to make the difference in whether or not these revelations -- it's not even revelations as the questions that have not yet in answered. much is that going to affect the turnout in those key battleground states? says thehris krueger
margin off hillary clinton's lead that it won't make a difference. he also says it will help gop whoout among republicans are disheartened at the top of the ticket and perhaps pick up a few undecided independents. this is about the down ballot vote. >> it helps explain what harry reid was so frustrated about when he writes to jim comey saying he may have violated the law. they could make all the difference if she has any window to enact any agenda of her choosing. what's the strategy when it comes to hillary clinton and donald trump? yesterday went back to traditional themes. she left it to her allies to attack comey.
donald trump has had a bit of a campaign reset because of this. how do they go about the next seven eight days? >> this is all about messaging to democratic voters, not to undecideds. that's why you saw in her initial response this very aggressive immediate push back because that is what democrats want to see. they don't want to see her go into the bunker as she did early in the e-mail controversy. the minute the campaign was able to rally surrogates and top aides they believe the best thing for clinton to do is move y out ofhat, take come the spotlight and returned to talking about her criticism of donald trump and the policy agenda she wants to enact. that is their tactic in these early days. talk is not going to go
into a microphone, why should she be talking about? we going tore discover if these newly discovered e-mails are pertinent to the probe? by theing is said election and hillary clinton wins doesn't she start her presidency with a dark cloud overhanging her? is the otherthat half of this equation. even if she is able to pull this perhaps dogs her into the transition if she ends up being the president-elect. theher and donald trump date to watch is very much november 8. they will deal with the rest of it when it comes down to it. you see donald trump raising as possible right now. initially the thought was there's no way the fbi can get through these e-mails. now the fbi is committed to doing as much as they can to get
vonnie: this is bloomberg markets. i'm vonnie quinn in new york. mark: i'm mark barton. time for the bloomberg business flash. citigroup says the ftc is investigating trading and clearing of interest rate spots by banks. it says it is cooperating with the probe. early this year city agreed to pay 420 $5 million to resolve a claim that it tried to rate interest rate and marx.
blackstone group is acquiring team health holdings. $43 a shareill pay in cash for the health care staffing firm. that's 33% more than the closing price on october 3. one day reports -- before reports of a possible sale sent the stock soaring. u.s.nal spending in the rose. consumer purchases account for 70% of the economy. up ifwill have to pick spending is going to increase much more. that's the latest bloomberg business flash. stay with us. this is bloomberg. ♪
i've spent my life planting a size-six, non-slip shoe into that door. on this side, i want my customers to relax and enjoy themselves. but these days it's phones before forks. they want wifi out here. but behind that door, i need a private connection for my business. wifi pro from comcast business. public wifi for your customers. private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. vonnie: live from new york and london, i'm vonnie quinn. mark: i'm mark barton. this is bloomberg markets.
alisa parenti is in our newsroom. former u.s. attorney general eric holder is strongly foricizing james comey reopening the investigation of hillary clinton's e-mails. holder writes that he has ofeashed a torrent conspiracy theories and misrepresentation. he says he respects him but that good men make mistakes. officials in oklahoma say the search for a man accused in a string of violent crimes has ended. he was killed by a state trooper. he was wanted for allegedly killing two relatives. chinese state media say 33 miners are trapped after a gas explosion. china is the world's largest .roducer and consumer of cold it has announced plans to close
more than 8000 outdated minds. prosecutors have dropped fraud charges against the finance minister. he was under investigation over the early retirement of a former colleague. prosecutors say gordon didn't intend to act unlawfully. the charges politically motivated. the chicago cubs avoided elimination in the world series beating the cleveland indians at wrigley field. game six tomorrow in cleveland. global news powered by more than 2600 journalists in more than 120 countries. this is bloomberg. julie hyman is taking a look at some earnings movers. start with the conglomerate run by new york's tish family which also owns 90% of cna financial.
it's largely on the strengths of those earnings that led lowe's earnings to meet estimates. almost doubling. there were some declines in energy-related units. costs buten cutting also benefited from higher sales. both of those are trading higher. also looking at roper industrial company. even after the company came out and narrowed its earnings forecast its third-quarter numbers beat estimates. the company said its revenue growth was led by medical software and water businesses which more than offset continued weakness in energy and markets. cardinal health bouncing back after analysts said its forecast cut was not as frightening in magnitude as what we heard from the chess and last week.
week.esson last cardinal also cutting its forecast. not as bad as had been feared. shares were down almost 10% on friday. biomed it tumbling by more than 13%. that seems to be responsible for the big dip. let's get back to a massive week for central banks. the bank of japan federal reserve, bank of england all meeting this week. us onal strategist joined bloomberg daybreak. he was asked how action or inaction would affect the u.s. dollar. >> the driver of what's happening in the dollar is the other end of the yield curve. let's assume the date of this
got the federal reserve meeting and the labor market report on friday. by the time we come out of the get that would only sentiment of a few tenths of a percentage point from where we are now. it's not a big shift. u.s. yieldsrise in is what the underpinning the dollar more than anything else. if we continue to see that the path of least resistance is still a stronger dollar. what happens with the other central banks is equally unsurprising. it is significant to me that what the bank of japan has done cap japaneseis to government bond yields. u.s. yields are moving higher. giving the room for dollar-yen to move higher.
goldman sachs offers a different look. take a look at the bloomberg. the idea is we are back at levels that we saw in the beginning of 2015. we are near levels we saw in the beginning of the year. financial conditions are tightening. does this change the monetary divergence thesis? >> at some point if we go much the fed wouldnly be concerned if they got too much of a tightening in policy as a result of a stronger policy. they would rein in their expectations of what to do. i don't think this prevents the rate rise in december. thatinforces market belief it's one this year. the consensus in the market is
this is the central bank that's going to go once a year. the stronger the dollar the harder it is to argue for the second rate hike next year. if you take a look at probability of interest rates there is nothing priced in for next year which means the markets can no longer get any more dovish. does that mean no matter what happens next year the dollar has to grind higher? the dollar is helped by having so little priced in. what the dollar needs to go a significant leg higher from here is a sense that the economic cycle has more legs. almost the most interesting number out this week might be the unemployment rate in the u.s.. if there is a solid gain in isn't goingnd it down because the labor force is growing again i'm going to get
more optimistic that maybe those four years left in this economic cycle as opposed to this is an economic cycle that is old. that's almost more important for the dollar now than anything really short term. we will have special coverage of the fed rate decision. you can catch it on bloomberg television and on bloomberg radio. what a big week. vonnie: jobs friday. ge agrees to combine its oil and gas is this with baker hughes creating a 32 billion dollar giant. what it means for the industry as it faces a continuing slump in crude prices. this is bloomberg. ♪
vonnie: you're watching bloomberg. i'm vonnie quinn. mark: i'm mark barton. centereal in the energy as general electric merges with baker hughes. canada and the european union have signed a free-trade agreement. how collapsing oil prices and high inflation have had a devastating effect on the economy of venezuela. vonnie: general electric has agreed to merge its oil and gas business with acre hughes. it will contribute more than $7 billion to a fund with special dividend to baker hughes stockholders. >> we see tremendous opportunity
for customer productivity. here we can leave. this is the right time in cycle to invest. there are betting they can compete more effectively with the world's top oil field services provider. the three biggest shippers in japan are creating the world's largest box carrier. the industry has stepped up consolidation because of global turmoil. all of those japanese shippers predict they will lose money this year. there's a report that's offering a different take on breaks its impact on the london financial industry. it says the uk's biggest financial firms could gain an revenue4.6 billion of after britain leaves the eu due in part to the end of regulations. it is from a pre-brexit group.
and the eu have signed a free-trade agreement that was delayed by a small region in belgium. justin trudeau was in brussels for the ceremony. the agreement will cut tariffs to eu manufacturers more than 500 billion dollars a year. time for our bloomberg quick take. subsidized oil and other benefits long bought venezuela influence abroad. collapsing oil revenue along with corruption allegations and widespread violent climb -- crime has put hugo chavez's legacy at risk. nicholas maduro is locked in a power struggle with lawmakers. this accelerated in october when the national electoral suspended
opposition efforts to gain approval of a recall vote on maduro. there is widespread discontent with the economy. in june there were major food riots. hyperinflation are appearing with the imf predicting prices will search more than 700% in 2016. electedvez was president in 1998 and revolutionized venezuelan politics. he nationalized thousands of companies, reducing venezuela's economic capacity to produce anything but oil. he maintained a deep connection with his supporters frequently pulling up a 50% and winning reelection three times. majuro has struggled for popularity. that he so argue thoroughly bungled management of the country it's time for him to leave office. those who are skeptical of the
opposition point out it's made and has noparties single plan or later. nor do they have a mandate. you can read more about venezuela and all of our quick takes on the bloomberg. let's get more on ge's deal with baker hughes. joining us now is bloomberg industrial reporter who spoke with ge's ceo. what did he say? >> if there is really one point a made it was that this is good deal for shareholders of all the companies involved. for baker hughes shareholders this allows them to really take technologicale's capabilities. for ge shareholders this is a deal that will create a lot of
synergies and allow them to benefit in the coming years. mark: how did this deal come about? i know they were looking at the halliburton. that of course fell apart. was that the precursor to today? >> actually it was. one of the things that just told me it was the day that deal fell ge oil andthe ceo of gas sent an e-mail to baker hughes expressing interest. the talks really evolved from there. vonnie: he must have been licking his chops. what are the financial implications for ge? why would it not have made sense before halliburton made the deal >? ge wanted to make a big splash and really be able to expand their oil and gas business. to takeows him
advantage of the opportunities and really play a possible rebound without having to do a full acquisition which would have meant a rather large outlay of cash. 62.5%, now they will own they will have most of the control. how will that play out? >> some of that remains to be seen. this is being positioned as a baker hughes ge company. see this as their oil and gas business going forward. of course it has baker hughes culture. it's a combination. it spent about 10 billion on acquisitions. how does this fit into the ge's broader transformation? >> they do have a transformation that has been ongoing. they are really trying to get back to their industrial roots, focus on making heavy-duty
equipment. trying to add digital capabilities to these. this really fits into that because they've been getting rid of consumer facing businesses and a lot of their finance businesses so this really deepens their bet on the energy markets. mark: are we going to see more m&a rakes between oilfield contractors? been a number of partnerships that in some cases have been precursors to deals. they're certainly looks like there is going to be more of that going n as these companies look to navigate the slump and figure out how best to play a possible rebound. vonnie: any danger that there will be regulatory implications? at this point it really doesn't look like that's going to be a huge hurdle. that's what derailed the baker hughes halliburton deal but in
this case there's a lot less overlap. the businesses are more complementary. taking companies that are smaller in the industry as opposed to strengthening one of the real giants. you are now creating a new one that can take on halliburton. vonnie: ge shares are unchanged year-over-year. what does it say about the stock price? >> he doesn't necessarily address the stock price directly. he's really bullish on the company's future and a lot of their decline in the stock price will he was really as investors questioned whether they can grow in a generally sluggish economy. if they do deals like this that can maybe help where they might not have been able to generate organic growth. mark: thanks a lot. good to see you. thisll get more insight on deal from baker hughes chief
executive martin craighead and ge oil and gas eeo. you do not want to miss that. vonnie: you will want to read rick's story as well. areng up next, if you looking for something different for your next hotel stay how about a room in a luxury treehouse? we look at why they are becoming popular. this is bloomberg. ♪
industry, luxury treehouse hotels. where does this spring from? there have been treehouse is at the or treehouse hotels for a little while. they have been kind of few and far between. there is one in the arctic. there is one in the u.k. countryside. a bunch are opening. it has to do with the idea of immersive travel. wanting to feel he deep connection to your sense of place. really breaking beyond the cookie-cutter resort. vonnie: what are they typically like? this is definitely more secluded. you tend to share the amenities of a full on resort. you still have concierge. elevator not so much. they are really luxurious. they have en suite bathrooms. some of them have private bathrooms. there are quite over-the-top. in one in south
africa many years ago. i learned very quickly you had to keep your windows closed because the monkeys would jump in through the window and steal all the food. once the monkeys got into the room it was impossible to get them out. know that you are going to find monkeys in these places. i can see that being a problem when you are on safari. --se are in congo, bali cabo, bali. mark: that was in south africa. it was amazing. where else can you find these luxurious treehouses? in tropical all areas. we found quite a few in mexico. one really incredible property been anica that has beautiful luxury resort and
recently added a bunch of treehouse is. there's one in bali opening in january. sunny tropical warm places perfect for a winter getaway. vonnie: are there any chains yet? >> not yet. the drops of these properties is how individual they are. vonnie: are they more expensive than a regular hotel? >> there are treehouse is for $200. there are treehouses for thousand dollars. there's one in bali that i'm quite obsessed with. that one is about $700 a night. the tree houses are where you take tea and have your coffee. that is more of a traditional resort with a treehouse component. there are these amazing suites in copper and dominica. attempt to winn back those who might be tempted
to go to those airbnb properties? there probably aren't too many treehouses. is this an attempt to wrestle those types of travelers back? >> i don't think so entirely because so many of these locations are outside of airbnb's bread-and-butter zone. that you are describing is kind of a traveler's instinct to go for places that are really individual and resist the cookie-cutter chain feeling. i think this satisfies that side of the airbnb traveler. these may not be competing directly with airbnb. think you save money on that because you didn't have to pay and see the monkeys. they came to you. recommend it. south africa. wonderful stories. for more, check out your destination for the finest things in life.
up, how markets are bracing for the fed's next move and how they are bracing for the u.s. election. all of that with oppenheimer's john stoltzfus. it's 3:00 p.m. in london. we are down for the sixth consecutive day. we have not fallen for six consecutive days on the stoxx 600 since february. we are also down for the second consecutive month. we haven't dropped for two months since february. everything comes back to february. this is bloomberg. ♪
vonnie: we are going to take you from new york to johannesburg to cover stories of the united kingdom, washington, and vienna. national polls between hillary clinton and donald trump. we will get and investors take. growing lists of opec members seeking exemptions from a plant supply cut is seeing future fries -- future price drops. mark: south african prosecutors withdraw fraud charges against finance minister. tensions within the government subside for now. vonnie: