tv Bloomberg Markets Americas Bloomberg November 2, 2016 12:00pm-3:31pm EDT
barton. vonnie: in new york, i'm vonnie quinn. this is the european close on bloomberg markets. ♪ nejra: we will take you from washington to germany and cover stories out of london and wall street in the next hour. here's what we're watching. vonnie: european stocks selling off her and a today. investors are getting action before the u.s. election well we also await policy decisions from the fed and the bank of england. politics has new reporting on how the u.s. candidates are faring in early voting. this is donald trump and hillary clinton surrogates hit the campaign trail with just five days to go until election day. we look ahead to the federal reserve and bank of england's decisions. recent data has taken the pressure off the boe to ease
further. let's have a look where european equities are trading now. board.ed across the , spain's ibexown down. the ftse 100 in the u.k. at a one-month low. you are seeing a pullback in the dollar. with that move into the safe haven asset, that brings me to bonds. 10 year yields moving lower in .he periphery , this year's best
performing metal, is down. the stoxx 600 down for an eighth day. that is the longest losing streak since 2014. that's the longest jump since to any 11 -- 2011. we are seeing the swiss franc at its strongest level since june against the euro. also headed for its strongest close in more than a year. seeing the swiss franc strengthened against the dollar today. if we look at what's happening in bond market, october was a bad month for bond.
it was actually the worst month since 2014. we saw the yields move higher. they are coming down today. the german 10 year yield in white. headed for its biggest drop in almost six weeks. blue.'s 10 year yield in very much risk off and concern ahead of the u.s. election. let's get a check on the u.s. trading day. julie hyman has the latest. julie: stocks hovering around the lows of the session. same kind of concerns with regard to the u.s. election. this is really the chart that encapsulates what's been going on over the past several days. take a look at the bloomberg. this is the bank of america market risk index. that's the blue line. it looks at implied volatility
of assets. market perception of risk and risk aversion has been going higher. this is hillary clinton's advantage over donald trump in the polls. been going down we have seen market risk go up. it has also had repercussions on the mexican peso. this is the two day move. we have again in the dollar of 2.7%. macro to thehe micro and some stock specific moves we are watching today. retailer reporting preliminary third quarter sales and profits that missed estimates.
it cited underperforming titles. electronic arts said it's sports titles are doing well in particular so its second-quarter numbers beat analyst estimates. in retail, we have slowing growth in the value of goods moving through its marketplace. this is also down. third quarter sales growth was aided by early shipments which will lead to moderating fourth-quarter revenue growth. vonnie: let's get to bloomberg's first word news. we have mark crumpton. mark: police say they have captured the man suspected in the killings of two officers overnight in des moines, iowa. he is identified as 46-year-old greene. the officers were sitting in their cars when they were shot ambush style. police have not yet determined a motive. presidentialon's
campaign has canceled a rally scheduled for today in des moines. donald trump via twitter says he is praying for the families of the slain officers. analysis has come up with conclusions about the final moments of that missing malaysia airlines flight. australia's transport safety board says the plane may have fallen at 25,000 feet a minute at the end of its flight. investigators who have looked at ay the plane wasn't configured to land when it hit the water. that we can speculation that -- that weakens speculation that someone was at the controls. pakistan has withdrawn six diplomats from its embassy in new delhi. isistani officials say there a network of indian spies at the embassy in islamabad and that expulsions are possible. they have battled over kashmir for seven decades.
, anorth-central oklahoma quake hit. the u.s. geological survey says the epicenter was 70 miles northeast of oklahoma city. the major league baseball cities and ends tonight -- season ends tonight. the chicago cubs have won the last two games including last night's game six to even things up with the cleveland indians. won the world series in 108 years. for the indians it has been a 68 year drought. i'm mark crumpton. this is bloomberg. back to you. global stocks are heading
toward a three-month low as investors crowd into haven assets after a poll showing donald trump gaining ground ahead of next week's u.s. presidential election. where will volatility go from here? i want to bring in stephen isaacs, chairman of the investment committee for our fine capital management -- vine capital management. necessarily happen but as you can see from this chart with volatility expectations ahead of the u.s. election we are seeing volatility across as is. you have the market risk index in white. the move index for treasuries in blue. sx -- fxglobal volatility index is this the
start you are looking for ahead of the election? >> we have short-term issues and long-term. if you look atrm the spikes it is still relatively small scale. we are having to take an opinion on what happens next week. five days to go. it has been my firmly held opinion since the summer that donald trump will shock the markets and win the election. possibly win it quite comfortably. my opinion is that he is the change candidate. i think there is a sense and perhaps the release of the bia e-mails last week for still is a feeling in america's mind of peak clinton. the bush family matriarch said last year repeatedly when the idea that jet bush should stand that perhaps america had had enough of the bushes. i think we will find that
america has had enough of the clintons. nejra: that is a bold call. if we do get that do you see volatility spiking even further? what is the best place for investors to hide? >> your chart shows the big spike over brexit and it is considerably higher than we have seen today. what does donald trump the longer term for market, which can do stuff that later on. i don't think people are positioned for that kind of shop. shock. we have had this sense that things were drifting in the right direction and the central banks had everything under control. growth was ok. the worst of the earnings recession was behind us. there was a bit of complacency foray and we were looking some sort of caps off that is going to break fast here it is. vonnie: maybe. we have another chart which
shows volatility above average. nothing extraordinarily surprising. it is creeping higher. what will the shock be? will it come through the trade channels? that letter with the economists. >> what can trump actually do? some people think the constitution will stifle his ability to do anything really outrageous. tanks on the street and his opponents being arrested putin-style. stylehink this is a 1980 rate in shock. -- reagan shock. massivedo reagan style tax cuts and increase in defense expenditure. very large increase in the fiscal deficit. trump sees the nation's balance
sheet the way he sees his own personal balance sheet. are you positioned for that kind of eventuality and how would you position yourself if you believe that was going to happen? would even ifou you could borrow less than 3% bech -- trump's view would if you could borrow less than 3% -- how should investors position themselves? very cautiously. i would not be buying bonds because i think there's going to be a lot of issues. i would say cash or very defensive alternative assets is the right place to be in the short run. after six months or so we get used to this new world and higher interest rates than i think the stimulative effect on the u.s. economy could be very profound.
could see a very successful market performance for the rest of the trump presidency. nejra: simon john and of m.i.t. -- johnson of m.i.t. said it would lead to a crash and global recession. will be a there selloff of 10%, possibly 20 percent. bestnk trumps policy is fiscal stimulus for the u.s. economy. we are seeing it in the u.k. here as well. populism is coming. trump is the most egregious example of it. fiscal policy is coming to replace monetary policy. already exhausted. the electorate have worked it out that they have no choice but to take this step. nejra: we would love to have you back in six months and see if your call on the election is right and if risk is coming back. isaacs.i six --
nejra: i am nejra cehic. withis the european close less than 15 minutes to the end of equity trading in europe. vonnie: i'm vonnie quinn. early voting is underway in u.s. battleground states. the numbers are telling hillaryg stories about clinton's campaign strategy. where her team is feeling confident and where there is still work to do.
what are these diverging stories? heard president obama come out today on a morning radio show and admit that african-american voters are not turning out in the levels that hillary clinton would love to see them. he is in north carolina today. he's going to be trying to get of the vote there's a lot good signs for hillary clinton as well. hispanic voters are very high. who did not vote in 2012 compared to numbers four years ago are up in her camp. they say that's a good sign. there's some strategy to early voting. there's a lot of voters who are going to vote anyway. the clinton campaign said let's leave them alone and focus more on the new voters. there's a lot ofthey say they ad
with those numbers. vonnie: it wouldn't be a day of the election without a new poll. we have a new one showing trump is actually ahead by five points in arizona and six points in nevada. floridasylvania and have clinton ahead in at least pennsylvania. and nevadans arizona and clinton wins pennsylvania and florida it's over right? >> donald trump needs to win florida. there's very few paths to the presidency if he doesn't. he can spare to lose pennsylvania. butould be easier if he won he can find other ways. florida is key. one of the most interesting things about the poll today is that arizona poll. you wouldn't expect it to matter much because you expect trump to
be winning in arizona. that was a state just a week ago. maybe that momentum has stopped. that's the feeling everybody has right now. be worried but't the momentum she has has used. eased. isaacs isphen convinced we are going to get a trump presidency. map make thatoral possible? >> it is possible. it's unlikely. it is still an uphill battle for him. if this was a referendum in the same way that brexit was where the entire nation was voting that could still happen in these states. by state power.
if trump loses florida or north carolina his options gets so limited. he has to pick up states like michigan where he is campaigning yesterday. this is not impossible but it's much more difficult. i think clinton still has the edge. today clinton is in michigan and trump is in miami. thank you. will hear from german opposition green party leader on germany's relationship with turkey and china. 10 minutes away from the equity market close. this is bloomberg. ♪
nejra cehic. we are eight minutes away from the european close. less than a year until germany's next federal election. migration is likely to remain high on the political agenda. earlier today with caroline hyde the coleader of germany's green a long wayturkey is from joining the eu. >> it's not very realistic to expect turkey to join. i don't see it with president erdogan. turkey is moving far away from the european union. we are talking about the heat, breaking down newspapers. elected mayors lose their jobs because erdogan doesn't like them. this is not democracy. they use the same terms. they talk about democracy and freedom of the press. their definition is that you have the right to admire the president.
in our definition you have to write to criticize and you survived that without that your newspaper is closed. if turkey is an important country, it has geostrategic importance. look at the neighborhood of turkey. plays an important role can only be a democratic turkey. we have to insist on democracy. only a democratic turkey that respects freedom of expression can join the european union. it's an interesting time given that economists are traveling to china at the moment. how much is stepping away from globalization being demonstrated by germany? money coming in from china into germany. is that something china should be worried about or adopting? >> i don't think it's the right way to respond to that. china has to open. we shouldn't close. if we want china to play fair we
should also play fair. would be more convincing if we tell the chinese you want your companies to invest and to buy german companies so please open your market so that we have standards. that is something we should this. i don't believe that germany's closing from the world or turning its back to globalization were some of the biggest benefactors of globalization. that comes with responsibility. nejra: that was the coleader of germany's green party speaking to caroline hyde. let's take a look at where european markets are trading as we head to the close. more than 1% for an eighth day. longest losing streak since 2014. the ftse 100 down almost 1%. you can see the dax leading the losses.
meanwhile volatility is rising in europe and elsewhere. we have seen money flow into the safe haven. that is bonds and the swiss franc as well. vonnie: we are going to take a look at one of the candidates who will be on the ballot next week. there's donald trump in miami. -- ahead of that vote next tuesday. you can follow along on your bloomberg at any time. this is bloomberg. ♪
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european trading. let's take you through all of the market action. we are seeing losses for the stoxx 600, the longest losing 8 days.ince 2014, p forthe volatility rise u his longest jump since 2011. at the stoxxlook 600, it is closing at its lowest level since july, down more than 1%. this is how they are looking at the imap financials leading the losses followed by energy stocks. no surprise with the reeking cr every grouput heading lower on europe's equity benchmark. if we look at one of these stocks we have been giving our on,on, -- keeping our eye it retraced some of the losses from earlier but still closing down more than 7%.
it dropped the most in four months. this is after the world's biggest container line reported a decline in third-quarter profit. that was a mess as well -- miss as well. the shipping industry continues to suffer from overcapacity. even though they have been importing -- they have not been able to keep up. the underlying profit below $1 billion. maersk lower today. i want to show you a picture of what is happening cross asset. spain down 1.8%. germany's dax down 1.4%. in the currency's face, it has been a weaker dollar so we are seeing a stronger euro up to 10th of 1% -- up 6/10 of 1%. we see the move away from equities and moving into bonds.
10 year yields in the periphery and the core heading lower. we have been seeing a bit of a selloff in the industrialas well. looking at theys dollar index, and we are seeing in the weakness. down 15%, still above 97. we have the yen trading at 103.23. it is stronger. look at this. gold has stopped $1300 an ounce. 13$1306. treasuries a little bit of a proxy for how the election is going. 10 year yield here. now, we see that is coming back in again. 1.80 on the 10 year. s&p is down a third of 1%.
the dow is down a 10th of a percent. the nasdaq is down .5%. dekes is markm barton. >> a narrow edge among independent voters for hillary clinton. clinton is ahead of the hong kong 30% to 27%. gary johnson gives 19%. is at 8%. meantime, independent voters who cast ballots early have gone for clinton over trump 45% to 21%. more than half of those surveyed expect clinton to be the next president. says secretary clinton made what he calls an honest mistake by using private e-mail, and it is now being blown up into just some crazy thing. in an interview with the online he offered now this,
his first public comments on revelations the fbi is reviewing more e-mails. president obama: there is a norm when in investigations, we don't operate on incomplete information, we don't operate on leaks. we operate based on concrete decisions that are made. mark: the president says new voters here all the noise and wonder if they should be worried about secretary clinton's behavior, but he says he has absolute confidence in her. in that same interview, the president said u.s. army corps of engineers is examining whether the dakota access pipeline can be rerouted in southern north dakota. the standing rock sioux tribe says the pipeline from north dakota to illinois will threaten its drinking water and destroy sacred sites. angela merkel's cabinet has n additional $2.9
billion this year to address the refugees.flux of they have 890,000 asylum-seekers last year and an additional 213,000 in the first nine months of this year. most were fleeing war and hardship in africa, asia, in the middle east. a senior russian diplomat is urging the next u.s. president to work with moscow to end the war in syria. he also defended russia's military intervention as a fight against terrorism. putining friday, vladimir has ordered what is being called a humanitarian pause it aleppo -- in aleppo. russian group to dismiss the latest offer as a media stunt. global news 24 hours a day powered by more than 2600 journalists in more than 120 countries. this is bloomberg. nejra: thank you so much.
former u.k. chancellor alistair darling says he is more worried following the brexit vote that during the 2000 and financial crash. on bloomberg surveillance he worried against favoring certain sectors in brexit negotiations. >> our membership with the european union, the referendum decision to leave the european union is the biggest single challenge facing the united kingdom arguably since the end of the second world war. we do need to know and have clarity. last week, the government apparently gave assurances to a car manufacturer that enabled her to go ahead and develop a new range of cars in the northeast of england, but they wanted assurance in relation to the single market and the customs union. from what we deduce from that, the government would like to be in the single market, and it wants to remain part of the customs union, but does that apply to the automotive industry, oil industry,
financial service industry? the chancellor has said he wants financial service industry to have access. i think we need to spell it out so we can debate it in this country. we voted to leave by a narrow majority. we have to accept that result, but we have to salvage as much as we can so we do not disrupt trade and don't do wish the long-term -- don't damage the long-term prospects. to deduce that nissan is more important than jp morgan? >> what you can deduce is that nissan happened to me first in the door because they have to make a decision in relation to investment. other manufacturers are saying, what about us? the big thing is even if the u.k. government believes it is important to stay in the single market and customs union, which i agree with him you have to face the fact we are up against
27 other members and we don't know their position either. what i think is urgently required is a statement from the u.k. government as to where it stands, which ought to be debated in the house of commons and parliament in the u.k., but the second thing we need to have ili know there is an feelingl of people taken aback by this decision, but we need to have a grown-up decision between the united kingdom and the european union, the commission, and other member states as to how we resolve this. how do we take account of what the british people voted for? at the same time, there is a lot in a relationship that needs to be preserved and built upon because there are millions of jobs depending on it. nejra: that was former u.k. chancellor alistair darling on bloomberg surveillance. u.k., the bankhe of england announces its latest policy decision tomorrow. the central bank is expected to keep its benchmark rate at a record low and raise its growth and inflation forecast.
large issues loom for the economy, including sterling's dramatic dive last month and speculation of a hard brexit. the to talk about challenges and what boe can do about them is dan. seeare expecting a wait and with those buyers tomorrow? dan: absolutely. we think the bank of england will hold tomorrow, and the main reason for that is the better than expected gdp growth data. the economy is holding up better than the bank of england expected in august. you have a .5 number for q3. they were expecting zero so that is a huge upside surprise. the dovish price point comes back to the fact that we think the bank will forecast the economy's slowing into next year. they want to keep the possibility of easy on the table. they do not want to wipe that off the table at the first chance. nejra: the bank of england has
said before that it is willing to look through higher inflation, but one thing it may not be able to look through so much is low productivity. i have a chart for you. productivityg growth has stagnated in the u.k. since 2007. what kind of challenge does this pose? dan: it is an enormous challenge. it is something that has been on the bank of england's radar since prior to the brexit vote. what that determines is how fark economy can grow without sparking pressure so that is a huge judgment for any forecast brown, but at this forecast it is possible, that a hard brexit could lead to productivity being hampered. fewer technologies and the like, lower migration will affect the trend growth rate of the
economy. that affects the distance the economy can grow without sparking inflation. the bank of england judges productivity to be slightly weaker. that gives them less reason to look through falling sterling and less reason to look through higher inflation. vonnie: how do you think the members of the monetary policy committee are operating behind the scenes? are they forecasting several different scenarios depending on what happens in sterling? how do you forecast? dan: it is extremely difficult. around anycertainty forecast. you can increase that exponentially, the liberal of uncertainty -- level of uncertainty. they will have to play it as they see it so they have to take a view on the information they haven't the time and do the best they can with that.
they cannot try to second-guess what the government will do. that is not in their gift. informed make a lot of decisions with analysis behind the scenes, but what we will see tomorrow is a central projection and the balance of risk they see around that projection. vonnie: the question will remain, can monetary policy even u.k. if thishe turns out to be more difficult, the transition process, than anyone was looking for? have we had this kind of president? dan: the important thing to note here goes back to what i was talking with nejra about that notetary policy can affect monetary policy but only affect demand. if the bank suggests we are facing a big supply shock, which it did to an extent in august, there is not much of the monetary policy can do about that and you rely on policy is structural reform.
the german airline will slow the pace at which it as seats through cancellations. nejra: in today's quick take, we take a look at the complex series of events that led to the rise of islamic state in syria war in -- and civil war in syria. the former u.k. chancellor alistair darling says parliament should debate the brexit negotiating position. he spoke on bloomberg surveillance. >> i think we need to spell it out so we can debate it in this country. we voted to leave my a narrow majority. we have to accept that was ultimately have to salvage as we have to accept that result, but we have to salvage as much as we can so we do not damage the long-term growth prospects of the country. nejra: he said it should not favor any one industry in negotiations, whether it is banks or the auto business. lufthansa will limit capital
spending because of what it calls a difficult market. it is willing to increase seating by less than expected and the swiss unit will take control of fewer jets. it is being squeezed by low-cost carriers in europe and middle eastern airliners on longer routes. vonnie: time now for our bloomberg quick take, we provide context and background on issues. the syrian civil war started in 2011 on the heels of the arab spring. it has seen the creation of the islamic state. this could take looks at how the war unfolded and where the conflict is headed. decade of uninterrupted violence. 370,000 dead. more than 11 million people displaced from their homes. >> it is like the entire state of ohio. there is no end in sight. >> it evolved from peaceful demonstrations in 2011 to a full-blown civil war.
outside superpowers drawn into the carnage. the result, the biggest two minutes or in crisis in the world. since 1966, the minority have syria. power in this despite the fact that they represent just 12% of the syrian population. the sunni muslim population represents 60%. the current president took over in 2000 after the death of his father. cut to 2011 in the arab spring. the worldwatch uprisings in tunisia and egypt toppled their dictators. is fired by these events, syrians took to the streets to oppose the oppressive rule of bashar al-assad. instead, he crushed the uprising using tanks, artillery, and gunships. many protesters responded by arming themselves.
sunnis from other parts of the middle east threw their backing behind the rebels. shiites gave their support to the regime. the islamic state attacked both sides. there are major powers like the u.s. and russia. after a poison attack in 2013, the u.s. and russia cooperated to destroy syria's known chemical weapons, but in general, they are in two different directions on this war. the u.s. is against the charlotte socko and was shot support him -- against by charlotte, and -- against al-assad, and russia supports him. russia blowing other groups opposing assad. devastated by the fighting and destruction, syrians are fleeing
by the millions into neighboring countries, straining resources and creating a global refugee crisis. the u.s. and russia agree on the need to end the war, but not on how. for years, the u.s. insisted assad has to go. meanwhile, russia says it wants to keep syria sovereign and independent by backing him. enough ofde has had an advantage in this war to get the other to compromise on terms for peace. they are not willing to do so for the sake of syria. vonnie: you can read more about syria and all of our quick takes on bloomberg. go to bloomberg.com for more stories. nejra: coming up, we will take a look at how political risk and a looming threat decision is factoring into investors's strategies. battle of the charts is next. this is bloomberg. ♪
it is time now for our global battle of the charts, where we take a look at some of the most telling chart of the day and what they mean for investors. you can access these charts on the bloomberg by running features at the bottom of your screen. you can do it if you go home from being in the car. >> we have 4729. in this chart, it is looking at on the sbrn the puts spider etf. we look over here. we can see this is a really high ratio. it is 2-1. it has not been that way since april, so what we are seeing here is investors are getting really bearish on this etf. tracks the s&p 500, and what we are seeing here is
investors are just so anxious about today's fed minutes and what could happen in december, but also what is happening with clinton's e-mails. so worried about his insurgency. is she going to win? is she not? what does that leave for my investment? vonnie: the presidency and the federal reserve. >> exactly. vonnie: they remain drivers for the bearishness on the s&p 500. thank you for that display. and seean tend to nejra: how you will beat that. nejra: my chart is 4273. we were talking about the bank of england earlier. i want to show you this because you chose the banks index which has rallied twice as much as the broader market since it hit a june low after brexit. it is the white line. you can see how it has rallied. one thing that is interesting is
the correlation this has with the 10 year bond yield. as the yield has gone higher, and you can see particularly in october, it was a bad month, the index rising along with it as well. gains at hsbc has barclays, which account for more than 70% of the index, have helped lift evaluations of the index from his lowest since 2009, but also, it is an update bank of england and about expectations around the boe. basically, the weaker sterling we have had driving into higher inflation expectations, better-than-expected uk data has taken pressure off of the boe to ease further this year. traders are pricing in a greater possibility of a rate hike by the boe in the second half of 2017. we may see this correlation even intensify then as well. vonnie: how the world turns.
isn't that what they say? interesting how things can change in the blink of an eye. alright, i am thinking about it, but i think nejra takes the ground this week. i am sorry, but it is a great chart. you are passing the blame, i love it. decisionuntdown to the at 2:00 p.m. new york time in six a copy of london time nears, we will have special coverage on bloomberg tv and radio. tomorrow, the bank of england decides. we will review that policy decision at noon in london. a look at where european markets ended the day. down. down. ♪
♪ from bloomberg's world headquarters in new york, we are covering stories from los angeles to pittsburgh, toronto, and london this hour. the fed decision day. meetings overshadowed by election years. most investors are pricing in a rate hike next month. encouraging signs for at&t. its acquisition target time warner reporting better-than-expected earnings results face of higher fees from cable providers and box office hits. steel prices have been in your freefall for two months now. the largest producer of metals reporting disappointing earnings results, but the ceo remaining optimistic. we will find out while later this hour. a few minutes away from the fed announcement. julie: they are standing pretty
steady, which is not unusual going into a fed meeting, but we have a little bit of downward bias continuing today that does indeed have more to do with the election than with the threat. witht seeing the polls -- eh fed. witnessing the polls tightening -- we our seeing the polls tightening. our just continued to fall, but this is part of a long as life. it i. -- part of a longer slide. 1.8% down in that. it is the ninth negative day of the past 10. i wanted to look at what has led us here in terms of individual members. some of the worst percentage performers include under armour, edwards lifesciences, southwestern energy company chesapeake energy. much of the down drive as a result of earnings. there are concerns that companies like chesapeake are persistent about energy prices
and these companies's balance sheet. what are some of the best performers over the past couple weeks for the s&p 500? reynolds american, f5 networks and midland. news has been driving these stocks higher, but bias has been to the downside generally. this decline in stops going into the election may not be good news for hillary clinton. at least not if the past is any indicator. bloomberg and bloomberg news highlighted the other day that there has been a trend here since 1984, when the three-month return has been negative, the opposition candidate won. indeed, three-month return going into this election is 2.3%. if that is a predictor, and there are a lot of predictors out there to choose from, if this particular predictor is correct, that would mean a victory for donald trump. indicators,
different ways to read the tea leaves. david: and six days. let's get to bloomberg's first word news. mark crumpton is in the newsroom. mark: a man suspected in the killings of two officers overnight in des moines, iowa, surrendered to a state employee. ed-year-old scott green flagg down a man was the point of presented identification. police officers were sitting in their squad cars when they were shot amber style. the killings took place two miles and 20 minutes apart. police have not yet determined a motive. hillary clinton's presidential campaign has canceled a rally scheduled for today in des moines. donald trump via twitter says he is praying for the families of the officers. chinese state media say all 33 call miners underground in a gas explosion earlier this week have been found that. -- dead.
two survived, but no others survived. china's mining industry has long been among the world's deadliest. a panel of seniorjudges will rule tomorrow on a challenge to u.k. prime minister theresa may's plan to begin britain's exit from the european union. that is according to a lawyer in the case. the prime minister wants control over how and when the u.k. leads europe -- leaves europe. the treaty begins a two-year countdown to brexit. weapont extensive yo system will cost even more.the pentagon will need $5 million to finish the development stage for lockheed martin's and 35 fighter. -- f35 fighter. global news 24 hours a day powered by more than 2600 journalists in more than 120 countries.
i am mark crumpton. this is bloomberg. david: back to the markets now. we are less than one hour away from the fomc decision by the markets will be paying even more attention to the u.s. presidential election, which is now less than one week away. barclays is out with a report that says if trump were to it of the s&p 500 could fall 13% and the u.s. 10 year treasury could rise as much as 50 basis points. joining us more on the outlook .s michael michael, great to see you. first, about your expectations for the meeting today. the statement comes out, what are you looking for? >> we will be looking for any sign of their confidence of a december hike. we are confident they will hike
subject to the data, and that is where they will likely give themselves a little bit of leeway. if payroll comes in week, if the market is in turmoil, then they may want to wait even further to wait to make sure the market is on solid footing. otherwe're confident of a december hike. david: if we do not get a rate hike today, do you chart that up as a political decision? this is a fed that is not want to weigh in so close to the election, or are there problems with the data, things they are waiting to improve? >> nothing is claiming that they have to go. the unemployment rate is about where they want it to be. inflation is still below where they would like it. they are patient here. recently, they have expressed janetatience by indicating they may be willing to allow the economy to go under the pressure mode with
labor markets tightening further in order to get inflation up given the global this inflationary pressures are fairly evident. julie: as always, it is a process of reading between the lines when we talk about the fed statements. what specifically are you looking for that will tell you december has become more likely or for that matter less likely? >> i can, we think they will give themselves plenty of leeway either way just in case, but we will be looking specifically in the first paragraph when they give their assessment about the recent data, where the labor markets continue to tighten or how much further they can allow labor markets to tighten, whether the rise in inflation recently is enough for them, or whether they are actively looking for inflation to move higher in the near term for them to hike. those are the things we will be looking out for. julie: it is by no means unanimous, right, among people who think december is definitely happening?
think we are rbs not necessary going to see an interest rate increase in december. where would you put the probability at this point? michael: the market is priced 70%, and we are still about love the way, a little bit more from the fed high as we expect. that is probably about right. there is plenty of data that can cause them not to go. if that is your camp, you really need to expect the data will come in weak. we don't. we think payrolls will come in close to but just below 200,000 on friday when we get the data. today's adp report was consistent with that, so we are fairly confident but still looking out for the date of the next two months. couplejeffrey lachman a days ago was calling upon the fed to raise rates preemptively here. he is not a voting member until
2018. we have seen a breakdown in unanimity among fomc meetings. did you expect over the last two days just let her eric rosengren, john billings have made the case that they will bring anybody else into their camp, urging them to do more faster. -- faster? michael: it was clear reading the statements and the comments that follow that this was very divided at that meeting. there was really a clear split between those who want to see more inflation, inflation moving more strongly towards the target that,eight growth in and there are those that think it should have already started hiking. if they get that hike in december as we expect, we think some of those go away, and those dovis side are
patient in the outlook for 2017 hikes. julie: we have to talk about the election at least a little bit, right? let's say we are seeing the likelihood of a trump presidency go higher. how much do you have to against that and what you do as a hedge? michael: it is tough to position for that right now given that there is just a lot of uncertainty. the markets have been pricing in the uncertainty of the past week, and that is why rates have rallied or at least in part. on the news, if indeed we see donald trump win, that could cause for the insurgency in a to liquidity of the treasury market, but overturned, we expect the market will price in higher return premium as well as higher inflation and inflation risk premium. more uncertainty on the inflation outlook than we have seen in quite a while.
david: last question here about the price of oil. we have seen that drop over the past few days. give us your sense of how the actors into the inflation outlook now, seeing oil diminish as much as it has. michael: in the near term, it is not that much of a concern as far as downward pressure on the economy because gasoline agers have now fallen -- futures have now fallen by nearly -- not fallen by nearly as much. over the last series, gasoline has barely edged down. as of yet, as long as gasoline holds up, it will not impact the cpi very much. david: thanks very much. thanks to julie hyman as well for journe joining me. time warner'sfor is defined according to the latest report. details on that, next. this is bloomberg. ♪
david: this is "bloomberg markets." the bloomberg business flash from a look at some of the biggest business stories in the news right now. threatening to end its name to the list of major insurers opting out of the federal insurance marketplace, it's as it will quit obamacare in 2018 if its finances under the program do not improve. anthems retreat would mean all major for-profit health insurance including united health, at not, and humana -0- aetna, and humana have scale back. for theike in shares office supply chain. it is accelerating plans to
close down 300 locations. tecrosoft already has a suiot of applications in our offices and is now going after messaging. the new product facilitates conversations in real-time and offers team chatting, private messaging, voice and video conferencing. it was welcomed into the market today with some friendly advice. that is your business flash update. time warner posted third-quarter earnings that beat estimates showing investors why at&t is willing to pay a premium to acquire the company. time warner raised its forecast for the rest of the year as the u.s. presidential election continues to fuel viewership and advertising in his cable news network, cnn. joining me now is jerry smith. how is randall stephenson processing the release out today? what is he looking for a how much did this cheer him in the decision he made? >> it your at&t the you are
pleased to see the results time warner put out today. cnn has been doing really well this year with the presidential elections. the ratings have a very high. warner bros. had a very successful film at the box office, several successful spells, including "suicide squad." hbo is doing well. time warner is hitting on all cylinders right now. david: cnn doing well this year. how much of a concern is it for analysts going forward. you have this election-year went a lot people are glued to their television wanting news about the campaign. how does the it to capitalize on that or keep the audience after november 8? gerry: that is the question. we looked at election cycles before. have seenews, msnbc big spikes in ratings and then after the election, is hard for them to maintain your interest. one of their
strategies is investing and wonder digital and having the digital series in the anthony -- bordainshow =-- b show . it depends a lot on what news is stopping at the moment. it will be difficult for them to maintain the momentum but they have strategies in place. david: at&t's interest was in time warner. how about warner bros. and hbo? what did we learn today about how what we have been doing ? gerry: they have been doing so well. hbo is renegotiating their deals with their tv distributors for several more months. they have an online only service. they would not give us numbers, but they are happy with the momentum hbo now has had. that business seems to be doing quite well. obviously they are
making a lot of shows for the broadcast networks. ," that critics do not like it very much, but a lot of people went to see it in them movie theater -- the movie theater. david: are the beginning to take stock of what he has done, and what have a beginning to say? gerry: there are analysts who feel he is very shrewd in the way he handled this. at two years ago came sign 15 by its, and time warner said basically hold off on that. one of the reasons they did that was because these the distributive like comcast and at&t were in the middle of mergers of their own. it turns out that what at&t finish their merger with directv, they were buyers. is a lotis legacy people feel like he will be remembered as the guy that sold time warner at the very right moment. david: one last question about the regulatory space. the u.s. accusing collusion over
the l.a.. his broadcast. you have that playing out on the coast. in this coast, you have this deal going to washington. any idea what regulatory hurdles will be like? gerry: certainly not good news for at&t. what investors are concerned about is not the department of justice but the fcc. there is still an open question about whether the fcc will have jurisdiction to review this deal. it gets into a question of what sort of licenses time warner owns they'll get transferred to at&t and whether the sec would happy jurisdiction over that -- fcc would have jurisdiction over that. the merger with t-mobile got locked. comcast's merger with time warner cable got blocked. i think investors, and you can see time warner's shares despite having a good earnings report, they are doing very little today, and i think that is because investors are very uncertain whether this deal will be approved in washington.
david: this is "bloomberg markets." facebook is out with third-quarter earnings after the bell today. analysts are expecting a strong result things to increase user growth and engagement. we are joined by bloomberg editor at large cory johnson. how effective is these look at leveraging user growth with marketers? essentially selling that growth, getting money for ads? cory: there are a lot of ways to measure the efficacy, but no more than being able to charge more money for the ads.
fromve seen consistently facebook from day one that as they found new ad format and targeted users, the more and more data, they found the right ad to target the right user more and more. when you look at the facebook user value, you see it is growing and growing dramatically. only 18 months ago it was $3.88 per user in a given quarter. that number has ramped up quite a bit overly up to five dollars $5.80.80 -- numbers, you value can see very dramatically what is happening in terms of the dollars facebook is able to garner for each of its users. david: what are we seeing in the video space? armor for ago, video was remembers future-- i years ago, video was facebook's
future. cory: in the last three or four quarters, the value acceleration, the change in the value, you expect that to flatten out or slow down, but as videos become more of a mixed, the advertiser is paying a lot more and a lot more on a second derivative. i was certainly be looking for to value they were able derive for user, but how much that is going because the pace of growth has been decidedly impressive from facebook. you can see that his playing out whether it is video usage or the data they are garnering from things like whatsapp to widow have any ads or instagram when they have a different kind of ad. the are able to chart a lot of money to marketers. david: facebook took some heat for pledging to video data a while ago. has it gotten better with a sense of what they are doing with video in particular?
cory: that was about how many ads are being seen and clicked on. it is hard for us to tell, prickly, what is happening rankly,the curtain -- f what is happening behind the curtain, but what we are looking for is the value of the ad, the number of views they are adding. users are onhly the site daily also. that number has gotten better and better with every quarter from facebook. renewed gains at this point, but most people on facebook are on facebook every single day and increasingly so. david: every single day and increasingly on mobile devices. this was a company not making revenues at all early on. now they are making from it is one's. quarter after quarter, they are beating analyst estimates. cory: they had zero revenues from mobile.
mark zuckerberg later admitted he wrote his letter to potential shareowners on his mobile device. the monthly act of mobile users are now over 1.6 million users. we expect that to get even better. 1.57 as of last quarter. the revenue that they derive from local, $5.2 billion in the last quarter. we expect that number to be bigger also. you do not see seasonality in that. q4 can skew results. david: thank you very much. we will have more on this when he is joined in 30 minutes time for bloomberg markets on bloomberg radio. ♪
positions along the outskirts of mosul. the first of two visits the president has scheduled in the swing state thisu.s. military ot thed take months to capture second largest city from islamic state. the advance took place a little after iraqwo weeks and coalition forces led an offensive. a senior diplomat urging the next president to work with end the war in syria. also defending the military as the fight against terrorism. haswhile, vladimir putin ordered what is being called the humanitarian cause in aleppo. global news 24 hours a day than 2600 more journalists and analysts in over 120 countries. .his is bloomberg steel lowof u.s. where after the company missed profit estimates and projected a
--s for the year planning citing operational issues. >> this is the best order since 2014. that is a direct consequence of everything we have been working on. we have had a convergence of a of smaller issues time impacted ourat ability to fully deliver the output we have been looking for. a 5% less impact that affected the results. overalloutput, i think it was a coming out oftion the quarter. -- the issues are all
known. as we've reposition her footprint, it makes it difficult to recover. .hey are all known we are on it, and it will be fixed quickly. >> if you look at where your stock is trading, it is down 4%. knownwhat message do you need to deliver? >> we just came out of a very good discussion where we cover all of thesewhat message o deliver? >> we just came out of a very good discussion where we cover all of these topics. everything we do is made to long-term. the fundamentals present u.s. steel with a tremendous opportunity for earnings growth forward into the next year . is u.s. steel prices versus china steel prices. i have charted this in china versus the u.s.. , china toe blue line white line. u.s. steel prices trumped it for a few months. did you miss an opportunity to capitalize on that?
really. the opportunity will come out of .he work the opportunity will come out of the work we have been doing to really establish a fair playing field for everyone. our ability to succeed is there. the overall pricing around the world is beginning to reverse in the right direction. our ability to succeed is there. the overall pricing around the world is beginning to reverse in the right direction. >> part of the reason steel prices surged so much is there were chinese scale that helped producers. the price gain has not disappeared in the past month a half. youro you leverage business if the pricing power is beginning to deteriorate? >> it goes up and down. also intoen moving where thees accentuateds not as
as the base price you are referring to. of things.bination >> how do you run a company that seems to be extremely dependent policy?c that really helps the business. helps local demand. helps your pricing. you address everything you can control. this is about focusing and creating improvements in every aspect of the business model. you really engage with government in order to establish field.r playing field. if the rules are respected, we have no problem in the end. >> we saw duties imposed on china.es like rizzo and
how levered our youtube retaliatory tariffs? >> when we look china. at some of the behaviors of foreign countries, we allow this to bring to the attention of the authorities how they are dumping or creating these conditions. it is a lot of work but i think it is essential if the world is andenefit socially economically from the globalize world that we have. fair ando establish a level playing field in which all of the players play by the same goal. which candidate would support your business more? message to them is about the rule of law. we provided them with the proper in which i think they will have a very sound condition to evaluate what policy make thes can prevailing factor and will give
companies the ability to play for a level playing field. >> it does not matter who is in the white house as long as the older? are >> as long as the playing field was established, it wants really matter. >> earlier on bloomberg daybreak. some canadians are getting involved in the u.s. presidential race. that story next. tonight onairs bloomberg. the ceo sits down with warren buffett, ceo of berkshire hathaway and discuss one of his biggest investment -- investments. >> what was the theory behind buying the railroad business? >> everybody has a bad century then on
some canadians are getting a ball traveling to the u.s. to volunteer. today aboutiece to the u.s. tog volunteer, largely for the hillary clinton campaign. >> our ottawa political reporter spoke to a number of people supporting hillary clinton. these are canadians. she works in politics. considers herself of progressive. why is she involved? she sees a real sense of urgency election. she has been going down to help with campaigning. grassroots things. when she talked to people she compares trump in a way to the late rob ford, who was seen on video smoking snack --
smoking crack but would not resign. for the canadian prime minister. he and his wife canadians. they think it is very important get hillary clinton elected this time around. >> are we seeing any canadians campaign?e trump >> there are a few. we spoke to a dual citizen living in canada since 1987. getin her twitter bio, she hase #deplorable, a reference to the comment about trumps supporters being a basket of deplorables. she goes to virginia. she likes to help in that area.
seeking to expand into web sales. the company has a 1.2 billion dollars valuation. that is your business flash update. julie hyman with a check on the markets. >> stocks pretty much near the lows of the session. the nasdaq doing the worst of the three averages. the s&p 500 down for a seventh straight session. we have not seen a losing streak like that since 2011. stocks have gone down, volatility has gone up. the vix has risen. it touched 20 during the session yesterday but has since fell back down.
the ratcheting up of volatility not just in stocks. getting back to today's session. the nasdaq the worst performing group. a pullback and facebook, amazon, and netflix. facebook notable as the company reports the earnings after the close of trading. the biggest one-day decline in nearly a week. all square, taking a look at oil prices. a leg lower after a show the biggest percentage increase since 2008. oil now at 45.18 per barrel. we have the 10-year note today. watching that as yields have been going well where. 0.81%. the yields are down two basis points.
the u.s. dollar as well bears watching. the bloomberg dollar index down a bit. bouncing off the lows. watch the assets in the wake of the fed announcement as traders and investors go through the statement to figure out what happens in september. david: going back to the top story. today's fomc announcement at the top of the hour. joining us is the editor for global economics. i was talking to the chief economist on bloomberg surveillance, and he said this meeting might as well not be happening. let's have a debate but proxy. >> he has one advantage on uni as he is set on the monetary policy committee. i do not think it is entirely dead. people and i will look for meaning. focus on the third paragraph
where they said the case for an increase has strengthened but we not quite there. the first paragraph that disguise the economic situation, household spending has been growing strongly. the consumer has softened considerably. not entirely dead. it is not super alive either. >> do you expect to see the market strengthen? how much wiggle room? >> two schools of thought. one is, in order to avoid a further dissent, the chair may offer the dissenters something they can hold onto. something that tells people we are still here. then again, do they want to bring attention to themselves
jacob they still have six weeks. there are things that can go wrong between now and mid-december. david: how worried is janet yellen about that eminem and the? is this about making the case to the rest of the committee? >> there has been no dissent from the board of governors. no one has dissented from the board of governors since 2005. they really mean eric rosengren. she had been sounding like that for a while. >> and you mention the gdp figures. if they do not raise rates, how much of this is a decision about
the politics of the moment versus the data? >> a popular view the fed is worried about the election. many of your guests have sought inside the room. pretty hard to find anyone who has said they are focused on politics per se. pretty clear they do not have a partisan perspective. what they may be concerned about is anything that happens to the economy as a result of the election. >> what are the lessons learned? >> what they have probably learned is they need to be more conservative in their guidance. an increase last year showed for increases this year, and we might get one. david: dan maas, bloomberg executive editor.
i want to get into next year. to me, that is the key idea. >> i am curious, what will change the overall expectations? >> i wanto figure out the voters. we have the most divided fed meeting. how does it stand when no one expects a rate decision change? >> michael mckee in washington. it is a very live data check, under 18,000. yields have come in. this is a surprise. this is a big change. dollar weakness across the
board. move down the second screen. this is the kind of data we look at. a two cent spread. one percentage point difference. help me here. mexican peso. >> the only clear trump and clinton proxy. not even clear to me a trump presidency would have ramifications on mexico. >> and eclectic group of guests. joining me as i read jersey. yields come in today.
i believe we have been in the bond rout. are we in the midst of a bond rout? >> inflation expectations have certainly come up. when you look at this a lot since the beginning of december, it has all been through higher inflation. people are not worried about the fed hiking quickly. >> what has changed? there has been pressure building for a while. >> i think it was the market waking up to the idea we will not have disinflation forever. the amount the treasury inflation protection securities are pricing. 1.75%. 2% headline inflation will happen anyway.
that is the way the inflation market sometimes works. >> going back to the decision at 2:00. is politics only reason why the fed will not move? >> i think the fed will move because of softer retail sales and other things. >> the data for labor and foreign inflation. >> so far. we think it will be just good enough to hike in december. >> the idea of inflation. there is like 18 flavors of inflation. joe weisenthal could not in for -- cannot afford it. why doesn't him a yellow was high inflation number? >> the high inflation number have been picking up. goods inflation so weak it has been pulling down the overall
inflation number. commodities have a big amount to do with this as well. they are going to be worried about the next potential shot? >> monitoring the fed's decision. >> michael mckee with the decision. >>perhaps the least destroys and -- surprising decision. no change in rates and no signal that any rate increase is a minute. inflation has moved up somewhat since early this she or. market-based measures of inflation compensation have moved up. other than that, no real change. the fed adds two words to the formulation from september. the case has continued to strengthen, and goes on to note that members decided to wait for
further evidence of continued progress toward objectives. there were two dissents. kansas city's george and cleveland's master. eric rosengren december -- voted with the majority this time. six days before the presidential election, and there was no mention of politics. it does nothing to dissuade investors betting on a move. we will see you december 14. >> i am looking at the markets. not a huge reaction. a little bit of a pop in the s&p. this is not a big change from where we were. speaks to the idea of the dollar index declining. markets expecting this.
a smooth landing. >> they also dropped a line for low inflation. acknowledging the idea inflation is picking up a bit. particularly market-based inflation. >> they are saying consumer spending is continuing. especially since that has been a big driver of the economy. >> third quarter gdp report showed third quarter was starting to wane? >> disappointed, but still on trend. basically back to the same trend we have been at for two years now. >> have people forgotten what normal inflationary environment looks like? >> some people who have always said inflation is right around the corner.
is that the scenario nobody remembers? >> in a perfect world. we are wasting of inflation needing to be 5%. inflation has been closer to 2% than 4%. the fact that we are little bit under right now does not mean we cannot get back to 2.5%. it also means policy rates do not need to be where they are. i think one reason why the fed is keeping policy rates so low is not necessarily u.s. domestic activity, but the risk through the world and how that will impact the u.s.. >> the labor market something the fed is looking at. michael mckee in washington dc, what else do you see to give us an indication of where the fed stands on the labor market? >> the fed is not really changing its view, but maybe strengthening a little bit.
they say the labor market has continued to strengthen along with the economy. job gains have been solid. it could be a bad reading friday. at this point acknowledging things are a little bit better but making no promises. >> going to the job start. we forget the shock of how much we have improved on jobs. remember the gloom at 10% unemployment. one of the hallmarks items is the persistency of improvement in the unemployment rate. >> the fed normally has been hiking. the thing is is they still worry
about things like underemployment. >> we see an increase lately. unemployment has stopped improving. is this signal that maybe there is slowing in the labor market? >> there could be sung, but at the same time you look at the 1990's. four years of unemployment remaining at levels similar to what we have now. maybe we are just leveling off. >> one of the key things is the word slack. in the election who is she managing the country for? is it people still desperate to find a job? >> this is a problem with monetary policy. a whole group of people that may
be left behind. not able to get training. i really think the fed only has one tool. they can leave them here and hopefully get jobs, but the problem is you have not had a fiscal response. you have not had big increases in spending's. >> no real change in markets. the two year yield still lower. >> 10 year basis points that are on the day. >> this is jargon. >> the main risk is deflation risk. for the most part, this will not make that much of a difference
to the economy. it would have an impact on the debt that is out there. >> we have a debate all the time whether the fed rate hike would not be a policy mistake and you wind up with a long-term interest-rate that goes down. i think one hike a year, which is basically what we're talking about. i said we would probably hike for one rate per year. quite frankly going up a quarter is not a hike. >> my question from the beginning, when is this going to change? what would make you change your expectation? >> quite frankly it is not the u.s. and the u.s. economy.
a change in optimism in china, if the japanese economy starts to turn around, and europe quite frankly. >> in particular, the u.s. election coming up that might have convinced the fed not to do anything for now. >> they were never really on track to do anything to kiss this is a meeting without a press conference. obviously the election is a consideration for everybody. i would bet when you look at the transcripts five years from now you will not see a mention of the presidential election. everyone was aware of the elephant. no one really wants to talk about that. they don't need to. they could just leave politics aside. >> i read jersey.
-- i run jersey. too much excitement. we are moving the fed meeting. we are moving the. up to the circle. i will change the color so it is writer. we just cannot get up to the extrapolation or optimism that we wanted before. >> this is the chart of the two-year note yield. one is a definitive upfield. the second is 1% is the type of level you would need to be active the fed would hike twice for a year from now. we are probably headed there. the question is do we had there in december, january.
there is a timing element. nonetheless, we are headed up to the magic 1% number. >> said it 1% as a target. thank you. >> let me do a data check right now. joe mentioned the two-year yield. going through the market. the dow below 18,000 is the election. the yield comes in a solid five basis points. oil salty. certainly it migrates south. a lot with the two-year yield. curve does nothing. dollar index week all morning. >> worth mentioning the s&p 500
us. whether -- wonderful to have you with us. thomas humphreys of the richmond said. i read everything he ever wrote on economic history. could he right now on the system or are we so distorted we're making history? >> we're making history. it -- in terms of history, a lot has changed with monetary policy. bringing credibility's to the fed as an inflation fighter. now we are turning things around in the other direction. >> stanley fischer talks about lower for longer. hsbc has a low yield.
are you prepared for that, and is that something the nation can handle? >> it is certainly possible we will see an environment of relatively low interest rates for some time to come. the whole idea of what the economists refer to as the normal rate being under downward pressure or longer-term history has validity. there is reason investment may not be a strong. i do not think that will be forever. i do not see any particular reason not to believe that will change and weibel be back to something more normal in the medium-term. >> old since saving.
-- a whole new paradox of savings. scarlet: absolutely. eric rosengren voted with the rest of the fed officials. janet yellen resides over an increasingly's wit fomc. the longest proportion since the ball court era. is that significant? >> to some extent it is a signal . it's maybe the case there are fundamental factors that are causing interest rates to rise more slowly. i think part of the division of opinion centers on the issue. i might just comment on terms of the immediate situation.
september meeting we had to distance. this time eric rosengren did not dissent. i do not really think that changes the picture. there is not much news here. there does appear to be a more explicit reference and possibility that inflation may be getting more steam. not a lot beyond that. there has been division in the committee now over the course of
the last year. nothing in this outcome that would suggest the division is any stronger. >> is there anything on the horizon that would get us out of the low and slow pace to make this cycle look like something resembling a historic onor are we just locked into this? >> it could certainly occur. what would have to happen, i don't know if it would be in th3 political arena or economic development. something that would cause people to be more willing to absorb the high savings to put some up for pressure on interest rates. that is what you would have to have to go back to the world that tom and i remember from 20 years ago. at this stage of the game i do
not see the. it seems to me there is a case to be main we will remain in the arena of relatively slow economic growth. interest rates will come out more slowly and sluggishly. scarlet: we have locker, fisher, evans. who will you be listening to, and what will you want to hear from them? >> i like to listen to all of them. they are all knowledgeable and do the job carefully. stanley fischer is the vice chairman. he is very close to chair yellen. locker -- lockhart, the retiring
one of of the reasons the fed did not move is the cousin of the election on november 8. we will likely see more fiscal spending. >> i would say we have seen doubt on that. can we affect fiscal spending? >> my theory is we would see fiscal spend doing -- fiscal spending with trap cuts. if clinton wins and you do not get the democratic congress, it may be gridlock. do we need more fiscal stimulus? unemployment around 5%. is this a solution that has a selling point? >> i don't know. i think the reality is the
business cycle rolls. nine years after the recession started another one is headed our way to preempt that. probably we will need fiscal stimulus. saying what weaponry does the monetary authority really have? so they have a little room to cut. i think it is sensible to be ready to act. they may have to act sooner than you expect. ready to rumble as the recession heads our way, which it inevitably must. >> around the world we're seeing rates tick up. you'd -- germany and u.s.. perhaps due to inflation
pressure. hard to see what is different now compared to six months ago. is this about rethinking of where the central banks are going. what do you see happening? >> the sense i have around the world is uncertainty in the u.s. as the polls appear to narrow. i think brexit really is uncertain. the impacts of that we do not know. so uncertainty around the world has been on the rise. that sort of explains thing. >> help blanchflower out. from the clinton surplus and down we go to a 10% deficit to
gdp. we are at an attractive point right now. everyone agrees we're rolling over quickly. is there a concern about the deficit to gdp? >> i do not think that is at the top of the list. i believe the fed can use some help. whatever the political outcome may be. a growing consensus that fiscal stimulus -- hopefully it will be wisely designed but that would be helpful in bringing about a good result. scarlet: this is bloomberg. ♪\
is the fed decides. >> he joins us often on fed days. does it matter who the president is in the world of richmond? and do you really care who the president is? >> the president of the united states? i think we all care. this will have policies and approach that is a big part of the environment the fed has to live in. i think it is important point. for all of the focus, the
economy has an internal momentum of its own. it has its own paternal. it has a life of its own. the fed is living in that world. keep in mind, the fed has a legal mandate to bring about employment and price stability. it is always measuring where we are against where we are supposed to be. all of that is going on. they are most -- more focused on the things i just mentioned. >> the fiscal stimulus included
repeat to nation of cash overseas. what would the ramification be on the fed site? would that protect -- precipitate in -- a hike of rates? >> it could. this would affect the fed forecast. it would affect how the economy will perform against the mandate . in that context it may have to adjust the policy because of what it expects the change may be. it is really the impact on the economy. this will drive monetary policy. looking at the data.
looking at the way markets react to the initial announcement and so forth. >> what do you think the ramifications would be on the mound terry policy side if we got the floodgates open with fiscal stimulus money? >> it is difficult to follow the president because i basically agree with virtually everything he said. he is right in the sense that a boosts to fiscal policy would mean the strain can come off the monetary policy, which would be a good thing. uncertainty is what happens to the congress, the senate with the planned implemented. if they are, you would politely see -- one thing he did not me of -- did not mention, you would see rates rising. maybe the fed would start to selloff the assets. for example, the first thing is
stop twisting. i agree with him. down the road you would like to see rates rising. you would like to be in a position where rates were really quite high so you could cut them enough to not hit the zero lower bound again. i am in agreement with him. this an opportunity to be taken away. i think we're quite a long way away from that. plans to start doing infrastructure. that takes a while. it will be good to have it in place. we are both on the same view, it will take the strain away. the increased uncertainty is perhaps the worry for the market.
and why the december decision is still an uncertainty. depending on the outcome, i think you will see the probability move. >> the monetary policy just as everyone is starting to conceive it has its limits? >> i am not sure i heard the question completely. >> is fiscal austerity dead? >> the temptation not to spend money on infrastructure? >> i thought we were talking about the possibility there would be less fiscal austerity in the implication for monetary policy. if we went back in the other direction, then i think the
benefits to the monetary policy would come and would have to react in that way. >> thank you so much. greatly appreciated. wonderful to have you. professor blanche flower, if we could continue with you, the blue line is the david blanche while our -- blanche lauer hysteria line. the inability to extend the balance sheet. these are normalized. gives me an update right now on the exit from an austerity psychology. are we there yet lack of that is a really good question. i would pull you to look at the u.k. where new government came into place.
one of the first things was to say austerity is over. over the past week there was a big attack on mark carney. eventually the markets that you cannot do that. we are now turning the fire on chancellor hammond, because the sense is that austerity is dead. this be at which it is replaced is the question. i have been the biggest opponent. it meant the central banks could not raise rates, could not reduce the balance sheet. thankfully i think we are now starting to move away from this.
we will not notice until we know the outcome of the election. who controls the congress and senate? i think it is uncertain, but hopefully we can declare the death of uncertainty. >> how was it significant the announcement from mark carney? >> i wrote a column before the decision was made. i think what was really important is the attack became very strong. they will not have to cut rates because they did it before. i think the signal was the government realized they needed him. he said ok, i will stay for a year.
the are in trouble, because they tried to undermine the independence of the central bank . i did not like it. eventually politicians had to backtrack. the u.k. could not leave -- lose its savior. >> you made that that's in the guardian. michael mckee still with us. as we look ahead, the breakeven rates have been rising. what are the costs of doing so? living above the 2% target. >> no huge cost for a little while. the bank of england will be doing that.
we have artie seen that start to happen. the problem is the boe does not have a lot of opportunity to do that. mark carney is in the position of janet yellen. do not expect anything from them tomorrow. what is interesting is how the views change as we get further away from the brexit vote. >> joe weisenthal, and i liked your conversation before inflation. politics and election. nothing like what we've seen with eight ways to measure inflation.
>> there is so much uncertainty on all sorts of things. >> the french election. overall market do nothing that concerned about any of it. >> the one place you do see this is in the currency markets. >> this is absolutely critical. cubs or indians? >> it is tough, because you feel for both. >> how dramatic. -- diplomatic. >> we will see you at the end of the hour for final thoughts on the nuances. again, help me.
in today. decades of work on wall street. i consider him a great synthesis out there. your foreign-exchange world with trump and clinton. bring up the chart now, the idea of the peso. amazing that we have migrated back on the trump rally. help us with why. why is this the measurement? >> general concerns about the dollar. i think under president trump. you can do this unilaterally with nafta.
certainly that is the sentiment. when you look at the dollar, we find the dollar was undervalued relative to the widening interest rate differential. not just mexico but the developed world. what we are seen is this just completely disappears. i think this have to do with something of the fact that the polls widened out again with hillary clinton. what is interesting is the dollar has come down very hard against major currencies. come down hard against major currencies. that is an international concern about the fact the polls have tightened when i think the international community is concerned about what will happen.
>> i have a chartier. looking at the dollar frank. you see a significant weakening of the dollar. what about the other classical safe havens? we look on the peso side to see which currencies would get hit. are these the currencies you would expect to see in the event? >> i think live a little movement in the end, but no one wants to be too long the yen in this environment. a lot of this is concentrated in the swiss franc. one is the weaker dollar. i think within the foreign currencies base, the swiss franc would be the leader in that kind of an environment. >> why are foreign currencies more sensitive to the perceived
changes rather than fixed income or equity? >> foreign is probably the biggest global market. it is where they can really reflect florin -- four and expectations and concerns. it is really foreign investors. >> post-brexit, we talk about the post pound. is this the emerging market of the developing economies? now we are doing this with countries like the u.k.. is this a signal or steady downward state in the political stability of the developed market nations? >> i think that could be part of it.
what is interesting is if you go back five years ago, they are usually involved in the foreign-exchange markets. they are not involved in the equity markets. now they are heavily involved in the fixed income markets. that is the one where you see a lot of shifts play out. >> this is a place where you go short sterling and hope is to carney helps you out? >> it probably gravitates toward 130. this will take a couple of years. >> we are not life. we are taping this. did you say sterling could migrate to 130?
>> i think it is hugely undervalued at these levels. >> does that mean the bottom is out at 190? >> tomorrow morning we see the inflation report from the bank of england. i think it will be more interesting than the policy announcement. the question is, how quickly do we think it is increasing? the other thing, the fed decision will be announced tomorrow. >> eight big figures. >> 12-18 months out. there is a big risk premium in the pound. that is as things settle down there whether value is closer to 130.
scarlet: this is the fed decides on bloomberg television and bloomberg radio. i am scarlet fu. robert lynch still with us. what was your big take away from today's fomc announcement? >> my colleagues say the fed today is a bit like the groundhog. he would like to pop out and then disappear for another six weeks. i think the fed has clearly left the door wide open. one thing i am not sure they
focused on what the international environment. if you look at the past couple of days, they have decidedly moved higher across china, europe, the rest of asia with the exception of south korea, which has its own problems. after a big inventory correction, we are going through improved manufacturing activity. that is also taking away one of the concerns the fun of had. >> this is the expectation of what the sterling will do. everyone is loaded up to. we heard bob cinch today, the antithesis of the bank of england, the united kingdom, and everyone adjacent to them.
a remarkable call. scarlet: thank you for joining us today. for giving us your call. we also want to check in with michael mckee, still standing by to give us his final thought on today's decision. >> you walk away thinking janet yellen is still able to get this job. the fed avoids a november surprise, and the fed does not surprise the markets and leave everyone set up as they were 24 hours ago for what might happen in december. this may be years from now the meeting where we look back to say this is where we started talking about an inflation problem. >> my final thought, the election. every time politics is in the
news. reiterating the labor market has strengthened global economic activity. that wraps up this shall session. much more coming up on bloomberg television. speaking about the outlook for the steel business and why the company is projecting a loss for this year. thank you so much. this is bloomberg. ♪
welcome to bloomberg markets. ♪ ♪ we're live from bloomberg world headquarters in new york for the next hour plus covering stories in london and moscow. here is what we are watching. no surprise from the november fed meeting as the rates are unchanged. stocks are rebounding off the lows but still staring at a seven-day losing streak. a new bloomberg poll shows hillary clinton holding a slim advantage with independence with less than a week to go. clinton avenue more campaign stops while trump rallies supporters in miami. have been in free phil -- freefall for two months. disappointing earnings but the ceo remains optimistic. here his remarks coming up.
ofare an hour from the close trading. julie hyman is here with the close of latest -- the latest. is the s&p 500 is in a seven-day losing streak. >> you look at the fed, a full round-trip. there are still concerns in the wake of the fed not doing anything or giving necessarily a lot of direction on the december rate increase. there are concerns which have to do with the market. that would be the longest since 2011. when i talk about a round-trip in today'session, you can see what happened when the fed statement came out. the stocks made their lows of the day and the index made its lows of the day and then came right up about to where it was a as theafter 1:00 p.m. s&p still false by about half of 1%. we have been watching fed funds futures in the wake of the fed
announcement and holding steady even a little bit higher for probability of a rate increase in the december meeting here at a 78% chance of being priced in. that could change as people digest this statement. we have been watching the 10 year notes in the wake of the fed statement and how it is a interpreted in the bond market. there is a round-trip somewhere rates were before the statement and after now down about three basis point on the 10 year to 1.79%. quite similar to where it was before. this might have more to do with focusingion and risk-averse, looking for areas they perceive as safer and doing some buying, sending yields lower. back to stocks, look at the map here. on a day when yields are lower, it is curious to see interest rate sensitive groups doing poorly. utility, telecom, real estate reading the losses even as rates
remain lower. that is unusual. energy is a part of the equation we see oil selloffs and financials which are interest-rate sensitive on the other side. they tend to rise with yields. that makes more sense. gois unusual that we all down together. very well. faring particularly of note is facebook following with earnings from the giant. i wanted to mention news that came out in the past minute or so having to do with valeant. valeant shares had already been following sharply today after being accused of tumbling the market for a female libido drug. it is the shareholders of sprout that are now accusing valeant of that. just a little while ago, a headline came out talking about that the company was perhaps considering selling its
equipment business according to dow jones. the stock took a small leg up, not so much as the shares are still down 10%. shares, just looking at incredible, down 12% on monday and up 34% on tuesday. now down 10% on wednesday. joe: an amazing roller coaster. police say a man suspected in the killings of two officers in des moines, iowa, surrendered to a state employee. 46 euros got in fights down a man in roll down -- dallas county and ident -- presented his identification. without into custody incident. he did complain, some kind of flareup related to an existing medical condition. he was taken to the hospital as a precaution. authorities say the officers were sitting in their squad cars when they were shot
and ambushed. the incident took place two miles and 20 minutes apart. the white house, hillary clinton's lead over donald is narrowing in thesylvania according to latest mom if university poll which gives secretary clinton a 48%-40 4% edge over mr. trump. that is down from a 10 point lead nasty -- last month. the fbi is examining whether the newly uncovered e-mails might pertain to hillary clinton, donald has hit the campaign trail with her nude energy. during the first of three appearances in florida today, trump made an unusual appeal. justrump: the polls have come up. we are way up in florida. i should not say that because i want you to go vote. ok, ready? we are going to pretend we are down. we are down. pretend, right? we have got to win and we have got to win big. we have got to beat her. most polls show a close
race in florida. a panel of senior judges will rule thursday on a challenge to theresa may's plan to begin britain's exit from the european union. that is according to a lawyer in the case. the prime minister wants control over how and when the u.k. leaves europe. challengers say theresa may must initiate a vote in parliament. they begin a two-year countdown. the most extensive weapons system ever is about to cost more. the pentagon will need up to $500 million to the finish the -- to finish the development stage for the f 35 fighter. weapons --n's cheap say -- warned there far from ready for combat. global news powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. back to you. steelt: shares of u.s.
are down after the company missed profit estimates and projected a loss this year because of operational issues. daybreak america team spoke with the president and ceo of u.s. steel. he was upbeat. this was the best quarter we have had since 2014. that is a direct consequence of everything we have a working on including of -- including the operational fundamentals that we have to address every day. what we had this time around was a convergence of a number of smaller issues, time after time, that impacted the ability to fully deliver the output we are looking for. we had a 5% output, and that certainly impacts the results. think overall, it was a positive direction coming out of this quarter. also, they are all known. as we repositioned the footprint, it makes it a little
more difficult to recover once you are running pretty much flat out everything you have. are all known, we are on it, and it will be fixed quickly. alix: if you look at where your stock is traded over the last two days, it is down about 4%. what message do you need to deliver? came out of a good conversation where we covered all of these topics. everything we do is midterm to long term. the fundamentals we have been addressing present u.s. steel with a tremendous opportunity going forward into the next year. i think they understood what we're doing. end ofhe issue is at the the day come it really has to with u.s. steel prices versus china steel prices. i have charted steel prices in china versus the u.s. the u.s. is the blue line and china is the white line. u.s. steel prices ahead of steel prices for a few months, did you miss an opportunity to
capitalize on that? >> not really. the opportunity that we had will come out of all of the work that we have been doing to try to really establish a fair playing field for everyone. in that environment, our ability to succeed is there. the overall pricing around the inld is beginning to reverse the right direction. if you look at commodities and run material prices, they are going up, which create a good and sustaining condition for better prices going forward. alix: part of the reason those prices start so much is there it really helped u.s. producers like yourself but the price gain has not disappeared in the last month and a half. how do you then leverage your business if your pricing power is starting to deteriorate? >> it as volatile as you can see. it goes up and down. you have to see that we have into betteralso up mixes where the volatility is
not as essential in it -- accentuated as what you are referring to. it is a, nation of things that gives us a better moment going forward. run ahow do you then company that seems to be extremely dependent on public policy? tariffs frommping china that really help your business, it helps local demand and keeps chinese steel out of the u.s., how do you do that when it is so dependent on policy? >> you address everything you can control, which is what the transformation is all about, focusing and creating improvements in every aspect of our business model. the other one, you really engage with governments in order to establish a proper playing field. if the rules are respected, we have no problem winning indiana. like we saw in countries japan and china, how are you to these terrorists?
>> we look at the behavior of some of the foreign companies -- countries and companies, we allowed to bring the attention to the authorities, how they are creatingmping or countervailing conditions. we address them all and earnings. it is a lot of work and effort but i think it is essential if ,he world is to really benefit socially and economically, from the globalized world that we have. we have to establish a fair and level playing field in which all of the players play by the same rules. alix: we are days away from electing the next president in the united states. which candidate would support your business more? >> our message to them is about the rule of law. i think both candidates have listened. we have provided them with proper references and i think they will have a sound condition to evaluate what college and -- what politicians can make the
rule of law that will give american companies the condition to play in a fair playing field alix:. matter ast does not long as those are still high and still there? >> of long as the playing field is established, it will not matter. scarlet: that is the president and ceo of u.s. steel speaking earlier on daybreak america. joe: coming up, six days until the election, donald trump campaigns in florida while hillary clinton goes to arizona and nevada. these are new battleground polls that have good news for each candidate. this is bloomberg. ♪
joe: with less than one weeks ago go before the u.s. election, the race is tight between likely independent voters in the latest polls. independence now back hillary comes in over donald trump 39%-30 5% in a head-to-head matchup. this poll comes on the heels of the fbi decision to the new a probe related to clinton has his use of a private e-mail server. joining us now from washington is bloomberg news reporter to lou -- everyone says look at the long-term trend, look at the aggregators, do not get too freaked out by a poll. what we cannot resist it. we all go crazy for every bit of evidence we can get. doesdid we get today and it suggest that clinton is not bleeding anymore, that maybe we're getting some stability with her still holding a bit of a lead. >> both candidates have some good news in the polls that have come out today.
we saw hillary clinton leading among independents. if donald trump does not do better with independence, then he is not going to be able to end. hillary clinton has a firewall with the independence in our bloomberg poll. several polls show donald trump getting a little closer. point lead in some polls in ohio a state he needs to win. both candidates have some good news out of the polls but hillary clinton has maintained what has been consistently a lead for her throughout the election. scarlet: our independence to game changer? does hillary clinton need them to win? >> definitely can help. she needs to get her base out. she needs those democrats who supported president obama in 2008 and 2012 to come out and vote. that is one thing they're concerned about it some of the constituencies that supported president obama have not been supporting hillary clinton in the same amount of turnout. specifically black voters. that is a group she is trying to turn out in stronger numbers.
if she does not get those, she will need to get more ts to turn out for her. joe: i want to drill down to a methodological question here. how would she performing among democrats, independents, and republicans. self-described party id, it is not like demographics or race or gender. one day you pick up the phone, you do not like something much chum said, you might call yourself a democrat. another day you could call yourself republican. the self characterizations can fluctuate quite a bit, can't they? >> that is true. mostly, what hillary clinton and donald trump are targeting are there hard-core base. voters who are going to be democrat through and through, the voters who will be republican. they turnto make sure out the elections and the early voting. if there is softening in the base, neither candidate will be able to prevail in the various
swing states in which they are competing. that is one reason they are targeting their base. you see donald trump specifically targeting the people who have been loyal supporters for him through the primary, and now in the general election. scarlet: they are going back to states where they might have already had the advantage care to hillary clinton revisiting michigan, long seen in her favor, but perhaps is getting a little too close for comfort in the final days. she has the cash advantage but how much of a difference does that make in the campaign? is very clear the clinton campaign wants to make sure they locked down the states they believe they have in the corner. especially after the fbi investigation news that has come out over the last few days. they want to make sure there is no tightening in places like michigan and was -- and wisconsin were donald trump wants to compete. they haveto make sure those states locked down and that is why you see hillary clinton going to the states by going to places like arizona where she is today. joe: is this the future of
politics where there are not persuadable or undecided voters? it is pretty much all a campaign to see who could fire up the kids -- of their core voters? election bseen this polarizing as any election in modern history. that seems to be where things are trending, where there are super voters on both sides, republicans that you need to make sure you motivate and democrats need to make sure they motivate, it seems to be the way they are going. on the other hand, we see a large number of people fed up with the political process and not signing up with either republicans or democrats and we see the no party affiliate vote increase among younger voters especially. there is a big chunk of a voters that both parties will compete for that do not sign up as either democrats or republican in the future. chief,: the motivator in president obama, has spoken on the fbi investigation into hillary clinton's emails. the white house has been pretty silent after the friday bombshell. they came out and said they did
not take a position on james comey's disclosure but the -- we learned a little more from the president today. what did he say? >> he tried to walk a fine line but he said it is important that we stay to specific norms when we talk about fbi investigations and those include not disclosing information before we have the complete fax. he talked about innuendo and leaks, things that have plagued the fbi and the last few days concerning the hillary clinton investigation. ,t seems he was a little less he did not praise director call me the way that his spokesman did a couple of days ago and he seems to be a little stuck between two places in which she wants to defend his and ministration but he also wants to defend his chosen successor, hillary clinton, who is under scrutiny by the fbi right now. joe: thank you very much. how to: still ahead, trade the vix heading into the election week.
joe: this is bloomberg markets. scarlet: time now for options insight with julie hyman. today is mark me sebastian, managing partner at options head. he is joining me from out in chicago. it is great to see you. heard from the federal reserve. it is earnings season and yet you say, all that stuff matters less at the moment to markets. put it all in perspective. clear, you look at the rolling last week.
earnings will be mediocre, not great and not that. then an e-mail boom comes out. been up every day. the markets are not doing that much. about 2% from friday's high. the vix is just up, up, up. not willing to make the same bets they did into the brexit vote, a lot of option and professional traders as they were completely caught looking on that vote. scarlet: talk to me about the positioning differences, the other big political wildcard this year. different?tioning have people taken in the lesson and not been wanting to get
caught? what kinds of trades are they putting on? what hask you can see happened, just looking at vix hitons in particular, their -- there is heavy action on both sides right now. people betting hillary will win and volatility will fall off. meanwhile, the lawns will buy every single call they can. the heavy activity on the 21 strike in the 20 to strike up to the 25 strike in november. you see if you look at how the vix futures are trading, december futures fall off. this is being looked at as almost a binary event where they can go well above 25 if donald trump wins and probably back to 13 or 14 of hillary clinton wing -- winds. scarlet: it sounds you are going a little contrary and.
you are looking at selling on the sp y. >> yes, because you look at the way the election turns out, brexit caught everybody by surprise and what happened? we tanked and we rallied to one thing a donald trump and -- presidency might do is unify republicans and democrats. i am not overly concerned about donald trump being president if he wins. high, andry is still we probably do not see a big selloff. the trade i like is selling about a month out at about two dollars. basically, i collect that premium, and if we do dip, i will take below 305. >> back to you guys. scarlet: thank you so much. ♪
involving third-party candidates, clinton leads donald trump 33% to 27%. gary johnson gets 90 -- 19% and chills -- joel stein is at 8%. independent voters who cast doubts over -- early have gone for clinton over trump 45% to 21%. more than half of those surveyed say they expect hillary clinton to be the next president. secretary clinton made what president obama calls an honest mistake and he says it is now being blown up into just some crazy thing. in an interview with the online news outlet, now this, the president offered his first public comments on revelation's the fbi is reviewing more e-mails. thatbama: there is a norm the in castigation's, we do up -- do not operate on innuendo or incomplete -- incomplete information or leaks. we operate based on concrete