tv Bloomberg Markets Americas Bloomberg November 3, 2016 12:00pm-3:31pm EDT
quinn. this is the european close on bloomberg. mark: we are going to cover stories out of new york, london and france in the next hour. here's what we are watching today. a vote int hold parliament before starting the two-year countdown to brexit. some of the biggest voices are saying this will only calls -- only cause uncertainty. e: mark carney to laying investors today that the wake of inflation must be watched very closely. shares surged on better than estimated revenues.
mark: we are 30 minutes away from the thursday session. check it out. gmm. 80 days of declines. stocks are rising today, sterling up by 1.2%, the biggest gain since july after the high court ruling. yes, theresa may has to consult beforeent, a vote, triggering article 50. she will appeal that ruling. busy earnings week we've had let's talk about it. biggestd's second reinsurer. tailored insurance deals and higher investment deals sharesng falling prices
up by 1.2% today. air france in the news today. 6% higher. reported a bigger than expected 60% drop in operating profits. terrorist attacks in france depressing tourist a man's overcapacity across european markets weighing on airfares. but air france is going to create a new long-haul unit to fend off persian gulf rivals. look at that rally today. a massively. we were talking about egypt. the stock market rising as much as 8.3%.
it is up a mere 3.3%. that is the ejects 30 index -- the egx 30 index. up 11% after the central bank said it would allow the currency to slow to tackle the dollar shortage that has hurt economic growth. the central bank said it would have exchanger controls to restore investor conference in an economy that has been recovering from a series of uprisings. it has toppled to leaders in less than six years. some really significant moves in egypt's assets best -- asset space today. julie: not so significant moves here. mixed markets again for the
three majors. the s&p 500 index is at the moment snapping a seven-session losing streak. we will see if it manages to hold on to the gains. take a look at the groups on the move on the imap on the bloomberg and you will see that we have tech that is the big drag today. about .6%, largely because of facebook. telecom financials and energy are doing a little bit better today. one individual stock i wanted to highlight because it has had a reversal is the charter communications, the cable service provider. you see here that the stock has now turned lower, down about 1.8%. that is after the conference call that the executive said there would be -- they would be investing substantially in a wireless business starting next year. looks like investors are not too pleased with that. in media and telecoms, we're seeing gains.
at&t is getting a lift. 21st century fox, after posting first-quarter profit that beat estimates, it sought cable revenue higher and help those numbers. let's go to mark crumpton who has more from our newsroom. jill stein says that voters are clamoring for options other than hillary and donald trump. >> i think the american people are still not happy with their choices. these are the most disliked and un-trusted candidates in our history. and with each passing day, there are more revelations that confirm that hillary clinton is indeed is the queen of corruption and that donald trump himself is a walking scandal. consistentlyas
polled at less than 5%. julian assange denies claims e-mails fromleaked hillary clinton's campaign were linked to russia. he says that wikileaks will not reveal the identity of its sources. in new jersey, two allies of chris christie tuesday of creating traffic have it are seeking a mistrial, this after a dispute over whether the judge improperly instructed jurors on the law. they made the request today before the start of day 4 of liberations. warns the newions paris treaty on climate change will not be enough. un's environment program says, unless there are more pledges to curb emissions, the climate is headed for catastrophic change. the report predicts temperatures will rise by six degrees fahrenheit, which will lead to should -- rising
seas and deadly storms. thank you very much. u.k. court's ruling the government must hold a vote in parliament before starting the two-year countdown to raise it. this prevents prime minister theresa may from unilaterally beginning britain's exit process from the eu. jennings now is patrick garr. how much of a blow is this to the prime minister? significant.retty everybody was expecting the government to be able to slide through today because it was always going to go to the supreme court anyway. if you are a judge, why get involved in politics? why would you do it? but it seems they were crystal clear on where the law stands on
this. they must go to parliament. mark: talk to me about the constitutional issues. it was the argument used by the best buy dos santos, a law that goes back to the 1600s, the glorious revolution that is you cannot take away rights or you cannot remove laws in this country without permission from parliament first. and the government's case simply wasn't strong enough. vonnie: what is the next step? between three and five days in the supreme court for hearing. that's the highest court in the land. we carry judgment could come in january. usually five justices will provide over a case like that. though we are hearing as many as 11 could sit on this case. vonnie: is there any incentive for theresa may to present her brexit plan, if she indeed has
one, before january than? patrick: she's going to have to get moving, it looks like. if they do have to go to parliament and she wants to trigger article 50 before the end of march, she will have to get in front of lawmakers predict ugly. -- pretty quickly. mark: thank you. the bank of england today saying it is no longer expecting to cut rates this year. governor mark carney says the company is facing a more challenging trade-off between supporting growth and reining in inflation. the mpc hasent of been that the degree of accommodation that is currently being provided is appropriate. it is appropriate because of the pressures that are weighing down on activity. and it's appropriate because of the forces that are causing inflation to rise and rise above the 2% target. declining,l bonds
led by [indiscernible] cosimo, is a less bullish bank of england bad for u.k. markets? us is athey are telling sickly the level of uncertainty facing the u.k. economy is significant. gdp growth, potentially higher expectations. they say it is a huge trade-off they are in a way and see stance. thewe could see happen is curve will steepen. that's in line with what we expect on the global bond market. harring vision expectations and they anchor in one, which is on
hold, we will see higher inflation on the u.k. curve. on the otherrally curb globally. clearly, where less dovish, but not because of the stronger data that we have seen recently. mark: what is more likely, a rate cut or a rate hike? what is the next move going to be whenever, whether in a month, six months or 18 months? potentially, probably they would still look at a rate because the kind of challenges we have seen, the whole negotiation process between the u.k. and the
eurozone, will create a lot of uncertainty around the u.k. economy. so we have seen sugar data in q3. overall, the outlook, in terms of growth for the u.k. economy, will be challenging. vonnie: when it comes to europe -- and i guess we have to include the u.k. as a separate entity -- what sovereign bonds do you like these days? difficult to find any value in core rates. we like -- spread at the moment. if you look at what the market is pricing in in terms of future inflation, --erestimating the actual inflation, we see 2% inflation in market expectations. long italian be teepees at the current level.
in andhe premium priced a long italian curve going into the december referendum. we have to long -- we have to be long overweight. vonnie: most of those breaking things are negative, and my correct -- am i correct? look at theou breakeven component, they are very low. but it's very interesting. the central bank, which is -- has a goal of inflation close, , it predicts2% there will not be 2% inflation ever again for 30 years. it's remarkable. air france is trying to france's try to lure
companies from england to france. had you see dublin as a lure for see dublinw do you as alearner for those -- lure? do you see the island is a big attraction? cosimo: i think so. we have been living here and working here for the last two years. i think it is an excellent location. clearly, some people might compare to frankfurt or paris. but from that perspective, it's a reasonable option they should consider. vonnie: before next tuesday's election in the united states, what emerging markets look attractive to you in the short-term? cosimo: we think the risk is actually -- similar to brexit.
people were underestimating a potential brexit vote. maybe now is the case that people are underestimating a potential trump victory. a tail eventoking with a lower probability, that is when you should be position for. in that case, emerging market bonds. mark: thanks for joining us. coming up, hillary clinton's growing lead with educated like people could block trump. can he turned around before voting day? this is bloomberg. ♪
mark: live from london, on mark barton. bloomberg world headquarters in new york and miami vonnie quinn. it's time for the business flash. the sec is among the regulators investigating wells fargo's sales practices. the bank filed a probative filing today. so far, it has resulted in $185 million in fines. and the departure of ceo john -- johntem pimc stumpf. pimco is losing its position as the world's largest fund.
a federal judge has upheld a u.s. law that bars creditors from filing suits against puerto rico. the ruling offers a temporary reprieve to a u.s. territory struggling to emerge from a decade-long economic crisis. that is your bloomberg business flash. barring a dramatic turnaround, donald trump is on track to become the first republican presidential nominee to lose among white voters with a college degree. clinton has an average 12-point lead among white college gruas. that might be enough to deliver her the election win. graduates are not going to decide this, are they?
>> anytime you are adding up the numbers in an election, it is a game of subtraction and addition. this is a group that republicans have historically relied on. obama lost this four years ago b. he lost by a more narrow margin eight years ago. but this is a republican group of the electorate that is usually in the bank. and donald trump has struggled with this. it's not just that they are even, clinton is winning this group of voters. donald trump is making that up in other areas, so it may not have a huge effect. but he has to make up those numbers somewhere. and this group in particular is important because, if clinton can't turn out obama's coalition from the last two cycles, minority voters, young voters, this is where she is going to make it up. vonnie: donald trump is now speaking in jacksonville, florida, a crucial state. you can watch that live on
bloomberg. you say she is 12 points ahead in terms of college-educated white voters. is it also geographically dependent? arizona is skewing clinton now. steve: arizona is going to be hard to call. in the end of it, given the way the momentum has shifted a little bit in this last final not be as in play as the clinton campaign thought it was just a few days ago. thatis definitely a group will affect everywhere, especially in close states like florida and north carolina. ,lorida and north carolina there are a lot of colleges in these two states. if you give clinton the states where she is up by five points in the battleground states, like pennsylvania, wisconsin, michigan, places like
that, she only has to win either florida.olina or and if she can pick off one of those two, that is the ballgame. that's 270 votes. mark: explain to me. with mostst ground constituencies since the fbi reopened its case. but she has increased her share of wide, college-educated people. how does that come about? how do we explain that? since the e-mails, the re-visitation of the fbi to some e-mails, she has lost some ground among minorities, such as african-americans and hispanics. steve: right. obama --size president what we saw is president obama .ame out yesterday
he put it back on the american voter and said, regardless of what you think him american voters do not make decisions on innuendo, a backhanded way to criticize director comey. he is appealing to some of these groups saying, a, trust me. if you'd trusted me last cycle, you can trust me this cycle. and b, let's remember the american virtue of innocent until proven guilty. i think that does resonate with some of these groups we are discussing. vonnie: five days left and always a surprise every day. you are always a surprise as well. [laughter] you can follow all of our election coverage on your bloomberg. stories, the polls, the averages, the videos, the interviews and the editorial -- the electoral map. this is bloomberg. ♪
live from new york and london, i am vonnie quinn. mark: and i am mark barton. five minutes left in the thursday session. take a look at how european equities are trading. it's touch and go whether we will close higher. the stoxx 600 was up by three orders of 1%. we have followed for eight -- three quarters of 1%. we have fallen for eight straight days. fall for a ninth day, that is the worst run since 2003. big day for sterling today, best increase since august, after the u.k. court ruling and the rank of england. i will explain more in a minute. this is bloomberg. ♪
stoxx 600 will break its eight-day losing run. longest in two years. if we go to nine years, the longest since 2003. the earnings season continues today. saying thehermes chinese market is improving. sales excluding currency swings rose than better estimated -- better than estimated a percent revenue. of leather goods rising 16%. giving some relief to the beleaguered luxury goods industry ahead of the christmas season. the key christmas season. others like burberry are still grappling with demand in key luxury hobbs, such as -- luxury hobbs, such as hong kong. such as hongs,
kong. swings and in stores spending hurting profitability in the third order, even though he did report sales that met estimates on classic athletic styles in europe for adidas. herbert heine revitalized the company. this is sterling today, rising for the fifth the fifth a day, best run into months, rising to most since august. what a day today. sterling rising on the court ruling that u.k. has to have a parliament vote.
the bank of england said it is no longer expecting to cut rates this year. rate,ot a neutral bias depending on inflation expectations. extent --ted to the to which inflation could limits itsarget or tolerance. inflation will rise above 2% in early next year. it will stay above the forecast through the forecast period. it has raised its gdp forecast for next year, for 2018. what a year we have had in the u.k.. this is sterling since brexit. we are at 1.32. we have come up off the lows, but we are still at 1.24. who knows where we are heading next? but we are here to tell you every inch of the way. vonnie: absolutely, we well. you can see it in the u.s. as well. vix is above 20 today, the first
time in a wild. -- in a while. and the yen as well is strengthening once again, below 103. it's been a while since we have seen that, too. nymex crude down another 1.5%, before test below $45 a barrel. waste -- below $45 barrel. a little uncomfortableness here the u.s. nasdaq is down half a percent. the s&p 500 down .2%. and unchanged on the dow, we are below 18,000 once again. mark crumpton has more from our newsroom. is expecteda trump to deliver a get out the vote speech near philadelphia today.
she classified us on her husband's vision for american women, children and families. this will be her first solo appearance of the campaign and her first speech since she addressed the republican national convention in july. president obama is making his own get out the vote of deal in miami. hillary clinton supporters to take it vantage the opportunity to vote before election day. >> all the progress we've made goes out the window if we don't win this election. so we've got to work our hearts out this week. like our to work future depends on it because it actually depends on it. mark: the rally is the first of two the president is headlining -- headlining in florida today. he is also headlining in jacksonville. maintainay plans to her brexit timetable. article 50voke the
by the end of march remain unchanged. the prime mister is relying on a power called to the royal prerogative that lets the government withdraw from international treaties. to cubs have returned chicago hours after knocking off the indians in cleveland to win their first world series -- say it again -- in 108 years. a caravan of team buses were welcomed by a ruckus crowd outside of wrigley field this morning. anthony rizzo showed off the world series trophy for the cheering fans. global news 24 hours a day, powered by more than 2600 journalists and analysts in over 120 countries. this is bloomberg. the women's health care company her logic beat wall street estimates. aiming to reinvent your trip to the gynecologist. steven mcmillan is here with more insight. congratulations.
steve: we look up for them all over the place. brothers, sisters, daughters, wives. vonnie: give us a little more color on what hologic has on the pipeline. steve: there's no company on the planet that is doing more and women's health today, both in breast cancer, cervical cancer screening, as well as reproductive health. and really, it cascades across. we have three key businesses. one is our mammography business. we are the world leader in mammography. we basically develop a 3-d technology which has dramatically improved the ability to detect breast cancer sooner, as well as reducing false positives. in our diagnostic business, huge business for both reproductive health as well as zika testing. also our pap testing business. we've made a huge difference in reducing the amount of cervical cancer.
for an demetrio ablation and cervical -- an endometrial ablation and cervical removal. we've made a couple of big acquisitions. over the last year, we brought in a completely different leadership team and cascading that through toward a company we can depend on quarter in an quarter out. we want to be the rock of stability of steady growth through steady innovation. i think that is what investors have really been starting to see over the last glove of years and it's what our customers expect. friendly, it makes for a great place for employees to work. vonnie: are you joining the s&p 500 this year? steve: we did earlier this year. a milestone for us. vonnie: carl icahn, how involved is she? steve: he was involved early on.
he was the catalyst that prompted the board to bring me in. we had carl and a couple of his for two and board half years. they actually exited peacefully. the first time carl has done that without a transaction. so they are actually off the board. carl called me up personally, congratulated us on the great job we had done. vonnie: does he own any shares anymore? steve: he does not anymore. i asked him, have you ever done this before? and he said, no, probably the first time we have ever been on the board and did not execute a major strategic transformation of the company. , do youwhen he exited know why, what exactly the catalyst was? steve: it was earlier this year. he was pleased and he felt he had made a great return. what he said at the time was that the company activism is no longer needed. it's a great team. vonnie: let's talk about the current environment in politics. we will have a different president.
we know that for sure. the next administration, what do you see as potential risks for hologic? steve: what i said is let's control the controllable's. there are things that we cannot control. what we can control is where health care is going in a broad basis. we cannot affect individual policy, but the more that you detect cancers or any disease earlier, the cheaper it is to address, and the better it will be for the patient. and that is our let was focus. vonnie: that's what you would like to get to the company. but when you're dealing with insurers and obamacare and an administration that may or may not be supportive of it, how do you plan for that averment? steve: we execute against it. our breast cancer technology -- beyond the, talking company ethos. when you're dealing with outside forces, like obamacare? steve: we just keep showing the
economic benefit of our product. i think in any case, when you have a good economic story, the payers are going to take it regardless. we work in single-payer governments around the world. we work in a whole bunch of different systems around the world. the u.s. system will obviously continue to evolve. vonnie: so why is it taking commercial insurers so long to take notice of 3-d mammography? steve: they tend to be slower in general. we applaud cigna who came on recently. we are seeing across the board major pairs are slower to adopt newer technologies than they used to. and they are requiring more data. we've been generating that data. cigna just came on board here to we have most of the blue cross organizations on board. about 55% of the covered universe in the u.s. is now being covered for 3-d technology. and we see that continuing to grow. vonnie: what's your plan for r&d. m&a is not one of your core strategies. steve: rmb, we totally revamped
the r&d organizations across the company in the last three years. we are just started to see the fruits of that. we are taking every product we have, incorporating feedback from users and finding out how to make them better, and really getting to a steady stream of innovation, of product they can both improve care and ideally take cost out of the system. and we think that has been a good formula and it is where we are going with the whole pipeline. vonnie: international growth, why has it been slow? how do you plan on wrapping it up? steve: it is a classic u.s.-based company. so much for success in the -- so much success in the united states. international has been an afterthought. there we say an export business as opposed to a true driver of growth in the company. we've been really revamping and running people on the ground, particularly in europe, in asia, and a lot of the key markets.
that has been a lot of what we have been doing, building the foundation over the last year or two, that will start to pay off in the years ahead. vonnie: we will check in with you and hope you will come back and visit us and keep us abreast of all those to moments. steve mcmillan, chairman and ceo of hologic. mark: credit suisse has been slashing jobs. is it paying off? we will explore. this is bloomberg. ♪
mark:. -- let's talk about banks. she could do get a bad credit suites's poker earlier. have the u.s. election in a few days. we have the italian election. the french election. the german election. is going to be a time when very the political events will have a major impact on the behavior of investors. we are in a very cautious stance. of course, ready and able to take advantage of any treaty, but we are in a very cautious stance. mark: here to talk more about the challenges is -- miller. credit suisse, relative to the
stoxx 600 index, it is down 2% down roughlye it half that level. is its performance -- does its performance deserve performing twice as bad. -- he hasinterrogated inherited a challenge to business. the piece of the market really wants to invest in, their private wealth management, he is alluding to some of the challenges, a risk off environment. and you see this margins coming down. but the reality of the investment case, as opposed to the future investment case is that 35% or so, the balance sheets it's in the capital markets, which is generating a return that is below 5% r.o.e.
we are here in today about an initiative to cut costs over the $5 billion mark. analyzing welle one part oflion, your balance sheet is generating -- restructuringa unit that will probably see a higher loss content on the go forward. they good piece is good. it is working through the legacy in the balance sheet. mark: the french banks seem to be in better shape. unlike the deutsche, the credit suisse has avoided the deep restructuring of its investment bank. our french banks preferable? you sort of split europe up geographically, where do you rate the french lenders? are right. you their story is an illusion
story. they have given us a sort of new pieces of news. one, the international retail business, including russia, is beginning to form better. russia is profitable. not compared to the r.o.e. target, but it is profitable. so they are getting close to their own capital range. cost of the dividend, 50% for the next year or two. that is real progress. bnp, there is less evolution. they're are continuing to performing continuing to deliver and they again gave greater reassurance on the dividend. are on the front and those incrementally getting better and those that are deep in the restructuring base. mark: deutsche is in that category. can these risks be managed? it all depends on the settlement
of the investigation, doesn't it? barrington: the doj number is the key issue. i know a lot of criticism of the management at the time, saying they haven't given us a new plan, business as usual. the reality is they are in catch-22. they are in a position where they need to know what the number is before they can credibly go forward with the plan, with the future vision for deutsche bank. but at its heart, deutsche bank is the case of making the best deutsche bank you can create. at the heart of credit suisse is really the crown jewel of the business, much at ubs, when they went through restructuring. mark: you've got the benefit from higher rates. that's going to help them. on the flip side, you have post brexit, basel four, they u.k. ring fencing, all these issues. which ones do we look at? who is going to look good when you weigh out all those factors?
barrington: i think those who got a clear, sustainable business model that can earn their way out of any problems that come their way, whether it is a bit of a headwind coming from brexit dislocations, whether it is a little bit more capital required from basel 4. if you're having to shrink to address the issues, you are going to struggle. today, we see strong numbers from ing. bnp delivered well. foot who are on the front will continue to accrue and compare value for shareholders. vonnie: and u.k. lenders? barrington: lloyds gave a convincing guidance on the margin. but clearly, if we move into a hard brexit scenario, i think it's going to be hard for the next couple of years. mark: thanks for coming in today.
mark: time for our global battle of the church. the otc, we look at some of the most compelling charts. kicking things off today, joe. take it away. : a spike in the vix was above 20, last time i checked. investors are fearful, maybe a little concerned about the election next week. the top chart shows volume traded on the guest exchange
.ated note that would lead me to believe that maybe people are getting a little nervous. but if you look when he the surface, people are already repositioning a little short on x, thinking on the vi that it might be lower. leading you to conclude that it was the -- that led us to that. people part the marker either downside protection or as a directional bet to the downside. bsxsee the most active contract. nine of 10 are puts. people are already positioning vix to come down from
where it is. mark: how is it looking? vonnie: that was very nice, but i will give he something else. [laughter] mine has to do with muni bonds. they may get more attractive administration because the wealthy will be taxed more. the blue line is the treasury curve. down here, we have the spread between the two. you can see the spread is widening, in the seven-year and then coming back down. the spread pretty narrow when it comes to the 30-year portion of the curve. take on theesting presidential election and what you can do to benefit potentially from a clinton administration from blackrock. tricky.is is
i don't think we've done muni bonds for a long time, if at all. joe was scratching beneath the surface of the vix. say, you joe didn't didn't tell me how long the vix had been rising for, which is a today's, best drawn -- vonnie: you are just showing off, mark. mark: but joe did scratch b'nai the surface of vix. so by a whisker of my chinny chin chin, joe gets it. [laughter] joe: we'll have a rematch sometime. coming up with paul krugman. stay with us. this is bloomberg. ♪
david: from bloomberg's world headquarters in new york, london, tokyo, by nobel prize-winning economist and professor paul krugman. we will get his take on the most prevalent issues facing the economy, including the bank of , the future of european union, health care, and trade. standcheck where things with julie hyman. julie: if you look at stocks, we have taken a turn for the worse. this would mean the eighth straight session of selling particularly for the s&p 500, sincengest losing streak 2008. the dow was little changed, down just under a point. we were earlier seeing a little bit of gains and now we see losses. the s&p is down now for the eighth straight session. here is the streak we have seen,
a down streak down about 2.7%. around the lows of the session today, it will mean substantial losing streak. a committee to uptick in volatility, something we have talked a lot about. earlier, we were seeing a relief some of the latest national polling showing hillary clinton did have an edge over donald trump. a little bit of an uptick in stocks based on that and that seems to have melted away despite the polling figures. this is looking at the spread between mandal -- one month implied and realized volatility. in other words, people hedging in stocks, client and the activity has been increasing. the highest it has been since going into the u.k. vote to exit the eu news are also corporate playing on stocks. particularly on the earnings
front, facebook beating estimates with sales but saying the sales momentum will not continue at the same pace, and fitbit is collapsing now down more than 31% after the company also came out with a disappointing sales forecast for holiday shopping season. sales in asia pacific fell last quarter and there has been a buildup of fitbit devices and stores. ones.uying cheaper some other disappointments we are seeing on the earnings and firstfronts include solar, which made the transition from being a solar farm developer to a solar module make. lenders cutting its key credit line in half, and the maker of armand hammer also coming out with earnings that missed estimates. david: thank you, julie, with a market update. more from thehas newsroom. mark: hillary clinton is adding
an all-star lineup to her campaign rally in philadelphia. the secretary of state will be joined by her husband, bill clinton, president obama, and first lady michelle obama. is slated toon attend the rally in that key battleground state. a spokesman for republican vice presidential nominee of mike pence says he one hundred percent supports paul ryan for reelection as house speaker. that is after a national review report that mike pence declined three times to answer whether the wisconsin congressman should remain in the position. there has been talk about a leadership challenge from house conservatives, frustrated that paul ryan is not backing donald trump more forcefully. british government, there has to be a vote before parliament. >> theresa may's plan to begin the exit from the european union before the march 2017, would be thrilled today as a panel of london judges rolled she must
ask permission from her fellow lawmakers before beginning the process. they said they will appeal and a for dale -- four-day hearing is in november. isk: president obama designating roughly 25,000 miles of u.s. highways as electric vehicle charging cars. the network of 48 will run through 45 states. governments developing science to help drivers find charging stations like the ones for gas, food, and motels. general electric, pacific gas, and others, will help expand the number of charging stations. news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. david: thank you. back to the top stories in the markets. the bank of england announced it was leaving interest rates unchanged and said it is no longer expected to cut rates this year.
mark carney said the wake of the brexit vote needs to be watched closely. they will ease policy as needed. >> it remains the case that the path for monetary policy will on the evolution of the prospects for demand and supply in the exchange rate and therefore inflation. monetary policy can respond in changes inction to the economic outlook as they enfold in order to ensure a sustainable relation to target. hand it over to my colleague kathleen hays, new york times columnist and nobel laureate. >> of course, could we find a better day or time to have paul krugman back with us here now bloomberg? obviously, you're smiling in part because you were the guy who said even before the brexit vote was a yes, that they would not send the u.k. economy into a deep recessionary hole.
it has come true that the economy is doing better than people thought. now they are saying it does need to do more. is it the right time for them to say there might be hiking rates? >> i would not say that yes, it has been a little bit gratified, even though i would have voted to remain if i had to vote, but the claims there would be a recession i thought were not good economics and it turns out there was not. i do not see the case for hiking rates. there will be a brief lip because of the decline in the pound, but it is a blip. interest prices will be volatile with the exchange rate. view is that physically policy is still title most everywhere including britain. i would not have said what carney said. i do not think he should do anything that would give rise to
a long-term rise. in spite of the fact there is no brexit session. >> even if there had not been a brexit vote, right you think they have that easing bias? >> yes. britain is on the whole tending to have underlying inflation below target and anyway, below targets are too low. they are still basically an economy suffering from demand, all of us, the holder -- the whole world is suffering from this demand. britain is doing a little better than some, but not well enough to want to exit from that. >> speaking of the exit and brexit, as expected today, the high court ruled that the u.k. government cannot trigger 52 start that process, it has to come from parliament. this is a setback to theresa may , and more broadly, is brexit a good stuff for the u.k.?
paul: no. as a whole, if you asked people what they were bothered about, there were reasons to be bothered. a few of them were linked to the eu but mostly not. that wasas an economy distorted by the size of the financial sector as an economy that was having trouble with the health care system, which was being blamed on immigrants but was actually because of austerity policies, and so on. was more a shout of rage against a leap that the public did not trust, but it was the wrong target. not a helpful thing. admittedly, the eu is institutionally and politically a problematic thing. it lost its way. in some sense, a shock, but i do not think this is a good thing for britain. >> what about the viability for the eu? is it in jeopardy? paul: probably not.
thing about the eu is actually the euro and britain was not a part of that anyway. the euro really should be in jeopardy but i'm not sure it is. as for the rest, it ends up being -- it was supposed to be more. that is what is in jeopardy. the grand european project has pretty much stalled. i do not see the customs unit going away. moments, a of brexit lot of parallels are being drawn to the u.s. election, asking are we in for our own kind of brexit moment, with the "throw the bums out, i do not want establishment getticians to, what to do," obama into the white house? paul: perhaps. -- there is a lot more noise in polling than people think that the polls do pretty strongly point to a clinton victory.
also, the way the remaining campaign and britain, it was a terrible campaign. it was, we are the experts, the establishment, trust us. way is not at all the clinton is campaigning here. trump is saying yes, throw the bums out and everything. clinton is campaigning values on women's dignity, on racial justice, these are all things that are a lot more fundamental. it is not just trust me because all the wise men say to trust me. i think there is very little parallel between what went wrong and britain. big want to move on to the central-bank questions. at au look for example classic illustration of this, the dollar-yen, the u.s., the fed has made it clear if they can, they want to raise that rate by december. japan maintained stimulus. let's start with the fed. is it on the right track?
paul: no. i was put it, look, we do not know when the next u.s. recession is coming. we do not know when the next aftershock is hitting. the question we should ask is does the fed have the ammunition to deal with it when it comes? the answer is no. you cannot cut rates any further or significantly further. it would really help a lot if we had more inflation, so we could cut real rates further when the next recession comes. by saying inflation is coming up on our target, maybe, not above it, but coming up on it, so we will raise rates, you're throwing away the chance, or a, i am not a sailor, but i think you're close to a sure and yes, you're not looking like you will run the crown renault, but you really want to get a little away from it for the next storm hits, the fed is bizarrely determined to act as if things are normal when they are nowhere near it.
>> he would say do not raise rates this year. >> no. not this year, not next year. not fire until you see the whites of inflation's eyes. >> the latest after for the governor and his colleagues was will not specifically target mantra base, we will target the yield curve. the yield curve control what do you make of the policy? will it finally succeed in raising japanese inflation? >> i am unclear. it is worth trying stuff. a much more adventurous and determined guy than anyone might have expected, i still think not enough. the problem i think with japan is it is very difficult to raise inflation simply through monetary policy, when you're already at zero. nothing you do has much direct effect. it is all a mind game, all about convincing people that there
will be inflation so they should spend. pick yourself up by your own bootstraps. that is hard to do. the only way it has a chance to succeed, unless it has support from other stuff like fiscal policy, is if you have something that is really a very clear regime change what people say, this is not the world we were in before and inflation is coming. i do not think a switch from monetary to yield is going to do that. fiscal policy, is hard to see what more do they are to had a big shift in the political economy of monetary policy. i think really, you know, it was supposed to be monetary policy, fiscal policy, structural reform. i'm not too big on the third of the second has still not arrived. give us the second arrow. but want to look at trade in the context of the asian nations, and they are looking back at the u.s. ofwill delve deeply into all
the election issues and trade, the big one, since hillary clinton has kind of pulled back the support and donald trump is bound and determined to make the changes. from an asian perspective, what does it mean if the u.s. pulls back from this direction? paul: there are different stories here. we do not proceed with ttp, that we do not do the next rounds of trade agreement, which is, i would say, in concrete terms, not a big deal. ttp has a few trade elements but mostly it is about intellectual property and dispute settlement. but thee arguable, point is, we have already taken conventional trade virtually to the limit. there are only a few other things. dealis really not a big except possibly for global diplomacy. if the u.s. start
going back on the whole system that would be a huge event. is pretty unlikely and their son this morning, i would say there is a 14% chance of that happening with president trump. clinton no way will step back. >> there has been a lot of chris's mother china and steel exports. india, speaking of tariffs, have proposed an anti-dumping tax on china. a contentiousis issue not just with the u.s. and other nations, but hr itself. paul: the world trains -- the exists,ade system as it
is actually a system designed by intelligent people. one thing is it has an escape clause and safety belts. things,able to do measures toduties, give yourself some time. i do not see what is happening as being out of the norm. it is new to have developing companies like india to play a role. you expect them to play -- behave the way the ufo's did. >> is there a problem with trade deals in compliance or with management and unfair advantages, some people say, that are taken by some nations, maybe even china, by currency manipulation? the chinas funny how story has changed completely and the political discourse has not caught up. these days, china is supporting on a massive scale. they are leading the is there
trying to support capital fight spirit not now. five years ago, that was a real issue. i do not think that is the story now. >> what about growth in the world? are you concerned global growth is too low and too slow and central banking, monetary policy, just does not have what it takes to get going? paul: i'm a big stagnation guy. i'm not 100% sure, but it sure looks like it that we have a fundamental shortage of demand, that maybe because of what looks to -- looks like a slowing of progress, there is not enough technical demand to make use of the world savings. there are not enough safe assets . they are not financing real investment. that means we are talking about ion.danger, the japanificat need policy to give us
a chilled and stay away from that, what i was saying about japan, or about the fed, even more so now, for the world as a we arty have extraordinary monetary policy, but it is not enough and we need more. >> we need more with you, paul krugman. he is with us for the entire hour. a lot more to talk about. david: breaking news on to cut according 11 filing to nikkei, the company had one of the biggest auto recalls in history because of rupturing airbags. coming up, more with paul krugman we will dig into traits and the transpacific partnership. the u.s. election five days away, plenty of -- plenty to talk about there. this is bloomberg. ♪
david: there is not much donald trump and hillary clinton agree on. they both oppose the ttp. let me ask you the degree to which you were surprised prices in issue in the campaign. strong.oric has been is now.e surprise to me the case we made the blue-collar workers were hurt by trade agreements have been other for decades now. burst to the top of the applicable agenda because at exactly the point when probably the big push of imports from developing countries is leveling off, basically world trade seems to be stagnating and
just when it ceases to become a big deal and just one most of the manufacturing jobs are gone, the ones that are exposed, but most of the ones that are exposed with traitor arctic on, it now becomes an issue. i think that has more to do with the fact that it becomes more for some white working-class anxiety rather than anything substantive. about how thisou plays out from asia, one argument we hear is we have to do this now, we have to pass some thing like ttp because if we do not, there is a vacuum that china will step in. does that have much salience to you? does that make sense, that argument? is if youeneral view cannot really make the substantive case on economic grounds, it is a poor argument. why exactly is it so good for geopolitics if it is not actually good economics? to people if you talk in the administration, they will say, ok, we understand there can
be arguments back and forth about the agreement itself, but geopolitics. it is not a stupid argument, but it is not the way i think we really should be doing these kinds of things. >> you just mentioned and dismissed white working classing zaidi. it seems to me that is one of the reasons donald trump is doing so well because that it zaidi was dismissed by so many people. manufacturing was hollowed out in the 1980's by china's workshop to the world, et cetera. now other kinds of jobs are in jeopardy. there are technical jobs, white-collar jobs, all kinds of things. is that possibly reason this has resurfaced? you cannot just dismiss it now. it is a threat to more more people. paul: the change distraction, d skilling for some and the loss of premiums is real. first of all, most of it does not have to do with trade. technology orly
just things going on with technology. ofn most of the decline working-class incomes is more about the destruction of the union movement than it is about the impact of trade. trade is the easy focus. if you want to say to someone, you know, people are not making up the problems they are facing. but if you want to say them -- to them, this is because institutional changes and it is because of technology, if you say a trade, and put me in charge -- in charge and i will bring back those jobs, even though it is crazy in the math does not work, it is something that sells. >> is there something about the trade law and trade regulations, any news organization that you would change if you could? paul: i think it is a pretty well constructed system. i am sure i could come up with some additional things. my problem is mostly not if the system we built up through the round, as it is with the things
we're trying to do post that round. current trade agreements are not actually trade agreements. a property in dispute settlement credit is not at all clear that each of these things -- it is not at first. i used to teach a >> at princeton on policy. i spent a lot of time and what is a shock is to realize how little that was about trade and how much of that is about pharma patents. this is a post trade aberalization that i have problem with. >> how long-lasting is the fallout from the rhetoric we >> i do nothing there will be more trade agreements. i could be wrong. tariffs are extremely low. report withannual
-- which has gotten embarrassing because the numbers tiny. street trade deals are pretty much done except for things that are your resume -- irreducible like agricultural products basically. as for these other things, things like ttp, they are creating super nationalist institutions that, you know, reach in, and i do not think the political base for that exists. david: more with paul krugman in just a moment. this is bloomberg. ♪
mark crumpton has more for the newsroom. mark: three afghan soldiers and 26 civilians were killed today in a joint u.s. afghan raid against the taliban. four other americans were wounded. two'ssociated press -- senior taliban commanders in over 60 insurgents were also killed. it is also reported that afghan officials say some of the civilian deaths may have been caused by airstrikes. whoed in to support troops were under fire. the most extensive u.s. senate race in history is unfolding in pennsylvania. wall street unions and billionaires charles koch and david coke are funding the state with money. at least $139 million has been spent by advocacy groups and the candidates. senator pat toomey and his , according to federal election committee filings are both sides feel race is critical to controlling the u.s. senate. believed to be
used in an ambush of iowa police officer spirit of racially charged run-ins. in october, scott green was kicked out of a high school football graham -- game after he waved a confederate flag new spectators. two officers were shot in separate attacks. finalours after the outcome of president obama -- to visit the white house before he leaves office in january. the president tweeted that it happened at the world series. -- that is changed even this south sider can believe in. global news 24 hours a day powered by more than 2600
journalists and analysts in more than 120 countries. this is bloomberg. david: we're back with paul krugman and my colleague, catherine hayes, is with us as well. you recently commented on james comey's reopening in your column and you wrote that it was worse than bazaar and it was outrageous. mr. comey apparently had no evidence to suggest any wrongdoing by hillary clinton. he violated long-standing rules and did so despite being warned wasther officials that he doing something terribly wrong. with a few days hindsight, what do you think is going on, and i wonder, if he'll are clinton is elected president, how long this would persist. paul: no one really knows what is going on. how he has gone dead silent ever since p are attempts to justify or anything. the best guest is -- the best
guess is that he was bullied by republic -- with republican congressman who are never .atisfied it was incredible and something that, all the norms are breaking down and the fbi seems to be full of people who do not understand their responsibilities. know what happens with james comey. if he's as the white house after the president is elected, water glasses will turn into icicles. but what will clearly happen is if she is elected, republicans will begin impeachment proceedings probably before he enters office. are you so sure it was due to republican bullying? was in play for a while, was there an indication there was something in the background? paul: they have no idea what is on the belt -- what is on the laptop. there are all caps of things we
are reliably informed that the fbi has an investigation into .hunks is in russia e-mails may or may not be new information. this was absolutely bonkers. let's say hillary clinton gets elected. what does it mean for her ability to govern? paul: that will be interesting. she has a democratic senate, at least she would be able to fill the vacancy on the supreme court. if she does not have that, legislation, president obama has not been able to pass any since he lost the house to republicans and there is no reason to think that would be different.
failedlously close to a date. here we are in this assist -- a sophisticated country where everything works well and we have a government almost incapable of functioning. david: i'm curious if there is any chance that would change. of the candidates talking about tax reform and what they would like to do to reform taxes. it will be any sense better between the white house and congress going forward? >> it is a possibility but if thereet close, then maybe would be 10 or 12 republicans who say, ok, we are prepared to maybe make some deals. those left will be the more radical ones. a lot of it has to do ultimately with the polarization of the public hearing the fact that we have republican districts where
they do not fear losing in the general election but only fear being overthrown by crazy people in the primary. david: abenomics or trump is him here, are we going to find that in five or 10 years? or are the republicans mainstream who are adopting this going forward? paul: it is almost random stuff. it is all of the dominance and who is in charge and the chinese are taking advantage, but there is no coherent doctrine. they are standard republican stuff. lower taxes on rich people and believe wonderful things will happen. trumpism is much broader. instead of we are against welfare, it is just we are against evil with darker skin. unfortunately, that is not going back. thehat would you have
government do, whoever wins? i guess you would have to bring in budget. paul: we do not have any kind of fiscal problem. the current deficit is reasonably low and there is a longer-term issue of entitlements, though it is not clear how there that is. about half of the baby boom agent and has already happened. straitstill not in dire in terms of a will happen by the end of the decade. the fiscal outlook does not look especially dire. we do not need to afternoon now. it is the kind of stuff you can probably get with marginal changes in the tax code. we have a lot for structure spending. not will -- will not happen because of the republican house but still, we need it. what it would do to boost the
economy would in the end, probably keep the debt gdp ratio no higher. >> do you cut taxes for anybody? paul: not at this point. it is not as if we have a surplus, we have a lot of unmet needs. i would not be cutting from here. central bankers are calling more loudly for stimulus and they have in many years. been calling it for many years as well. what will it take for that to get some traction? paul: legislators, my impression, i know i do not know or have inside information, but i know the people close to hillary clinton, so many people with barack obama, it's is not do them any good.
the trouble is, how does that get passed? the northe about atlantic economy and there are two problem that makes fiscal stimulus the reagan to do. there are two problems there making it impossible. between the republicans and the germans, it just cannot happen. >> climate change. what is going on? paul: media organizations, all those debates in a single question about climate change, which is bizarre. the thing about climate change is it turned out to be an easier issue economically and easier even politically than with hot because it turns out technology is moving our way. we have a global agreement and , the u.s.he epa wilson fillets part of the agreement is on is the epa's
given a green light by the supreme court. everything depends him a senate. if democrats take the senate, we probably save the planet. david: you heard about this recently. saying the two major political parties are at odds on many issues but none are as big or consequential on the climate. haveof the environment we seen in the last eight years have been executive. leave the way things will -- things will advance? >> we have a republican party that has been radicalized. nothing legislatively happens. the only way policy gets made is -- david: is the argument republicans are making as you hear it taste on economics we talk abouten climate change or is it still anti-science?
or most president obama likely president clinton is against it or for it, that is basically it. it does not know -- does not matter what it is. science or economics, it is just for anym that calls kind of government action to solve it, the ebert and -- either deny the problem exists or that it could take place without dire consequences. there is a debate about the carbon credit and that sort of thing as a system th combines the capitalism to spread the cost. there are fine tuning points as well. paul: if you wanted a more market friendly solution, you would go for cap and trade. a carbon tax. market incentive. i would go for that but it will not be possible except possibly as part of an epa administrative solution.
you go for some kind of top-down thing except it turns out the climate problem was pretty simple. coal-firedy just power plant spirit you can do a lot with this one thing. it is not a complex problem when anything short of a complex market solution is really bad. it is a not bad second-best to do this. >> coming up, we will take a look at economic inequality. this is bloomberg. ♪
shift to income inequality now you have written about the debate over real america, i will put that in quotation marks. there is a hard-fought debate over who that represents and who represents that part of america. are we any closer to finding that? as with, he is everything, as with everything, people choose their answer of a somewhat they want to see happen. people want a certain kind of policy, only rural small-town, the point is who are proposing policies that will actually -- as opposed to people with perceived grievances.
back in ohio and looking at former union members support of democrats had eroded. democrats used to support discount on that support particular. why has what donald trump has been saying resonated? avoid -- why to exactly these things are coming to a boil now, it is oh is been there. predictors if we talk about the working-class, a lot of the working-class is actually latino and overwhelmingly democrat. it is only white workers who feel, they are correct to say the economic fortunes have light, that they have not seen
real income gains and have seen declines. they do not feel the position they used to have, and they are inclined -- maybe too distant to understand how policies that are and at the 1% are responsible. >> you'd have to go to detroit or someplace like that. race, it say it is all is may be clouding over some of the issues. i want to ask you about very specific steps. are you in favor of raising the minimum wage and if so, how long would you take it and as us -- , inn aside, a local owner two years, you will not have small deli type restaurants because owners are not going to build a up those wages. >> here is where i have done something peculiar. face of my views in the
evidence. 20 years ago, had you asked me about what the effects of race minimum wage would be, economics 101 said that. we have a lot of natural experiments because we have state-level minimum-wage. key can see what happens when new jersey raises minimum-wage and pennsylvania does not. it is clear that at the level where minimum wage is now, there is no effect on unemployment. are not talking about -- we're talking about people. there are a lot of reasons that is true. minimum-wage adjusted for inflation are very far from the historical peak. we've had an erosion of it. someng the minimum wage
even substantially still looks like a good policy. whatever you will find. someone will pay the hymen wage and of course tell you -- we do not see that. wehas been long enough at should have seen something if anything was going to happen. these naturalof experiments along the way. how far? alan krueger, one reason -- one of the people who pushed this research and is a great innovator, thinks that 15 is too far. he thinks it should be short of that. and go asng to except far as 15, but clearly, nobody in his right mind would say 30. it matters a lot where you are. problem is north america is a big place and minimum wage be affordable in manhattan or northern california , it will not work in mississippi.
raise minimumys wage but from here, yes, we should go up further. david: concern as you mentioned, health care. i spoke with the ceo of that no last we, who said the next president has nine months to figure it out when it comes to the affordable care act. what needs to be done to keep this from continuing? >> nothing will happen in nine months. what is interesting is obamacare is not a national program. it is safe -- it is 50 state programs. functions varies a lot across states and there are a number of states where it is working reasonably well. jonathan has a great piece in whereffington post today it is actually doing decently. not perfectly. premiums are up 17% this year
after being way below expectations of the past. they are still cheaper than people expected. there is plenty of competition in the market and stuff is available. the reason is the state has tried to make it work and a bunch of different things are involved. making sure people know about it, expanding medicaid. fundamentally unworkable program. ideally, we should have more enforcement of the mandate, and there should be a somewhat higher penalty for not signing up and fewer loopholes and more subsidies, but it would not cost a lot of money. david: final thoughts coming up. this is bloomberg. ♪
trumpism. if you look ahead at the next senate, what role does he play and is it in concert with senator elizabeth warren? be, he think there will and elizabeth warren, the democratic wing of the democratic party, the kind of progressive wing, will always be there putting pressure on clinton. mostly to hold to the way to test the way she campaigned. that is fine and normal. not tremendous disagreement about priorities and goals and all of this stuff here there was disagreement about print -- political practicalities. single-payer health care will not happen in the next four years. none of the things sanders was pushing as part of his platform will be legislatively feasible. regulatoryabout decisions.
>> you are a professor and you have to great people all the time. you are teaching again. lucky graduate students there. how would you rank barack obama's performance as a president? what grade would you give him? i would say a minus on analysis and a b plus execution. he should have done much harder on tenuous or exit. that would help to a lot of ways. since then, he has been sensible the deeply constrained. peopleof the criticisms made about barack obama, a bit aloof and having a hard time getting people together. whether you dislike hillary clinton or not, she is given a lot of credit for working across the aisle. paul: i have seen that. really liketh sides her.
scarlet: welcome to new york. over the next hour, we're covering stories out of san francisco, chicago, brazil, and london. here's what we're watching -- drama out of the u.k. the prime minister pledges to stick to her brexit time table, despite the ruling she needs permission to be in negotiations. the bank of england holding rates steady, but dialed back plans for a future rate cut. cbs reports earnings after the as the eye network results leads to a potential merger with invoice acome? we'll explore in today's "numbers don't lie." and does the f.c.c. launches a probe into wells fargo, new details of behind-the-scenes activity. we'll discuss how an ambitious sales culture led to a massive scandal. we've got markets closing in just under two hours. julie hyman joins us with the latest, and for the s&p 500, which has been fluctuating, at stake is the seven-day losing
streak, which might be an eight-day losing streak. julie: it doesn't seem as though there was a sharp catalyst that sent us lower here. it's just this trepidation, this caution, this fear even among some that remains in the marketplace. and the nasdaq is taking the worst of it today, as we had earnings from facebook, but all three major averages have now rolled over. what's curious is they're rolling over despite some of the latest poll results. you can track these poll results on the bloomberg, by the way, at elec go election,. so this is the aggregate of polls. we saw the clinton polls tick up slightly today as the donald trump polls ticked down slightly. initial that will provided a little bit of a relief rally for u.s. stocks. but that, as we've been talking about, has melted away because it is still a close race, according to most polls, even within the margin of error. another way to measure what's been going on is to look at the v.i.x., the so-called fear index, which is now up for the
eighth straight session, as we have seen that eighth straight down day for stocks. what's interesting is, if you look at the s&p's losing streak compared to other at-day losing streaks, the magnitude is not hufpblge it's down a little more than 2.5%, around 2.7% or so. the v.i.x., on the flip side, it gained in this eight-day period, according to dave wilson with bloomberg news, is larger in magnitude. so in other words, there's quite a lot of hedging activity going on versus sort of outright selling of the market. of course, we've also been watching the mexican peso. that's sort of the proxy for elections as well. the dollar is trading lower against the pace of today. the peso still holding on to gains, even as u.s. stocks have rolled over. and, of course, earnings are still a part of the story today. and three notable earnings movers i just wanted to mention including a.i.g. the stock falling 4.5% after that company's results disappointed estimates, hurt in part by the american consumer
business. facebook falling after sales momentum is going to slow. and marathon oil rising as the company increases its production forecast. scarlet: lots of earnings to review there. thank you so much, julie hyman. let's check the first word news this afternoon. mark crumpton has more. mark: scarlett, thank you. president obama is intensifying attacks against donald trump. at a raily for hillary clinton in miami, the president said trump is "uniquely unqualified" to be president. president obama: he's got some support, and the most frustrating thing is, some of his support is coming from working folks. people say, well, you know, he's going to be our voice. are you serious? this is a guy who spent 70 years, his whole life, born with a silver spoon, showing no respect for working people. mark: mr. obama also said that the progress made by his administration "goes out the
window if we don't win this election." mr. trump is also in florida, and he criticized the president for campaigning on behalf of hillary clinton. trump spoke to supporters at a rally in jacksonville, part of a two-day swing through his state that could decide the election. mr. trump: this guy ought to be back in the office working. he's want going to be there very long, thank goodness. but he ought to be back in the office working. mark: mr. trump also said questions surrounding secretary clinton's use of a private email server would follow her to the white house, and he said she'd be "under investigation for many years." syrian troops will allow rebels to leave aleppo during a temporary break in fighting declared by moscow, according to the russian military, which says a corridor leading toward the border with turkey, and another one in the direction of the rebel-controlled city will stay open friday during what's called a humanitarian pause. but russian defense ministry said today rebels in aleppo are
taking advantage of the suspension of air strikes to counterattack. the united nations warns that the new paris treaty on climate change will not be enough. the u.n.'s environment program says unless there are more pledges to curb emissions, the climate is set for catastrophic change. a report predicts temperatures will rise by six degrees fahrenheit, and that could lead to rising seas, superstorms, and deadly drought. global news 24 hours a day, powered by more than 2,600 journalists and analyst, in over 120 countries. i'm mark crumpton, this is bloomberg. scarlet: thank you so much, mark. as julie was telling us, u.s. stocks scomplipping sliding as the afternoon progresses. investors await the election. the v.i.x. has been climbing, up eight strace day, the longest streak since 2013, with the v.i.x. moving from below 12, or right around 12, to above 21. the dollar also declining.
the bloomberg dollar index down for five straight days. joining us now with perspective is jeff knight, global head of investment solutions at columbia thread needle investments. jeff, great to see you. the s&p 500 down for the eighth straight day. one convenient nervousness before the elections. pricing in the uncertainty that a trump presidency might bring. how do you fold in election polls in your day-to-day management of risk? jeff: i think there's sort of conventional analysis of the election, and this year there's some unconventional analysis you have to think about. so on the conventional side, i think we can say very confidently the polls are narrowing, and that throws an uncertainty element, and that uncertainty extends not only to the presidential down ballot as well, so i think you have to think about who are the winners and losers in various scenarios. we also have the wild card in the uncertainty risk of will it be over when it's over? is there a contested he sflecks i think that's probably why you see a bigger move in the v.i.x. than you see in the index itself, because i think there
is a good case to be made for hedging and paying attention. scarlet: it's henling rather than outright selling? it does feel like we're at some point of inflexion point, where central banks have taken their monetary experimentation as far as it can get. would you agree? jeff: maybe not as far as it can get. i think it matters a great deal. i would start with the perspective. look at what happened after the u.k. referendum where, when we were analyzing the fundamentals behalf that meant, it was very bad for markets. but as soon as that turned into a monetary policy response from the bank of england, from the e.c.b., then marks were right back. so all the inflexion points we've seen in the last two or three years have been very directly connected to monetary policy, and i think the dynamics around this december's rate hike, which we expect, are very different than what we had last year. scarlet: you've talked about this in your latest note, about how market tran troubles are linked to monetary policy. we've certainly seen that in the past with the taper tantrum. what do you see going forward? are we at risk of another market tantrum?
jeff: i think the issue is the monetary policy has been a wind beneath the wings of all the asset classes, so they've all sort of benefited and drifted higher in value, so when the policy inflexion moves in the other direction, there's a risk they all go down together, and that makes diversification very difficult and makes it hard to achieve portfolio stability. so i'm not so worried about that for a rate hike in december, because investors expect that. it's 80% priced in. the nuance this year is that last year we had the december hate hike packaged in a narrative that we were going to get four of these through the year, and investors were confused, how did that make sense? then the fed backed away from that plan, and that inflexion point was very bullish. this year i think we risk maybe the opposite, where this one is being packaged in a moderate, slow, one and done kind of a packaging -- scarlet: a dovish hike. jeff: a dovish hike. what we see baked in might force that conversation to a degree, where even if they
don't hike, there could just be some job owning and some managing of expectations, and so i think the risk management challenge the first part of next year will be analyzing how the expectations evolve for a more aggressive rather than last year's less aggressive inflexion. scarlet: you're in the camp that believes the signs we're seeing are credible and could lead to something more sustainable. jeff: i think so, and that gets into the jobs data. we're starting to approach some levels of employment, where there's some bargaining power in labor. and if we get to a power to the people, as one of my colleagues calls it, environment, then you could see wage push inflation. we're also seeing, when you pull the lens back, some at least stabilization, if not strengthening commodity prices. the economic data aren't horrible, so it's not out of the question. and i think at least in the near term, it's going to be -- it's not an i answer to say, oh, this is all base effect, we shouldn't worry. i think there's some real content to analyze there. scarlet: does the positioning reflect all this, do you think? jeff: the positioning?
scarlet: among investors. are investors positioned for that outcome? jeff: well, if we see a durable and material increase in inflation, then i think no. i think bond yields are far too low for that. so there's a scenario where we dodge all of these uncertainties and risk events, and we target to see growth again. but it's accompanied by inflation. and i think bonds will need to reprice in that scenario, but stocks can do ok, and other risk assets can do ok. almost argues for a more lopsided investment strategy. but maybe the bond market is right. maybe there is no inflation, maybe this is all a false alarm and we should be worried about the durability of any kind of growth or nominal earnings expansion or whatever, in which case then we have to worry about our risk management, as wets before, because the bonds already are priced for that, and the stocks are not. scarlet: and that's what it's been. thank you so much, jeff knight, of columbia thread field investments. coming up -- we're going to focus on the bank of england. the b.o.e. governor shelving
scarlet: this is "bloomberg markets." big development n.u.k. today. a parliament must approve the exit from the e.u. the u.k. government is appealing that. moments later, the bank of england dialed back plans for a future rate cut. earlier, bloomberg day break america spoke with the president of the peterson institute, as well as the dartmouth college economics professor, and former member of the b.o.e.'s monetary policy committee. >> the dates have actually improved from their last meeting when wets we're probably going to cut. huge amounts of uncertainty. that decision today has
probably added to that uncertainty. we've seen a rise in the pound. so i think in some senses, we don't really know what's going to happen. we'll do whatever we have to do. there's lot of uncertainty in the air, and they're trying to reassure people that they'll do whatever is necessary, but a quick read has 30 seconds to read it, suggests that they don't really know what's happening. they're going to respond to the data as they see it. so i see this really pretty much as a holding pattern, and they clearly would not have been able to respond to the high court decision today. so, you know, not a huge amount of news in this decision. down the road, we're probably going to see a lot more, and the reality, of course, is that they have rates that are the move to maneuver down wards is limited, and they're probably waiting to hear what the chancellor is going to do in his statement in a couple of weeks or so. >> we shift toward the politics in a minute. i want to use what johnny said as the basis for the
conversation then, that we're in a holding pattern. let's talk about where it comes from. it comes from an m.p.c. that told us most participants saw a rate cut by the end that have year. that language is gone. most people saw inflation above target through the forecast period anyway. and now they're saying they've got limits of tolerance, and beyond that, we shifted from rate cut by the end of the year to policy respond in either direction. what does that mean to you? >> what it means is i think you have missed the two actual variables that were the main ones in the room, in my opinion. first is the question of how anchored are inflation expectations. it's not what the print is going to be. it's about whether yields are moving in the same direction or not, or whether they're staying stable. in 2009, we could look through inflation, because guilt yields seemed to be stable. this case, that's not what's happening. they're looking at all their five-year forwards and various other measures and all the
uncertainty that danny rightly raised, and they're saying sthrrks a possibility that the rise of inflation will get its own momentum? that's hard without wainl increases, but if they -- if the government screws up the credibility of the u.k., it might happen. the other variable which you all didn't talk about is potential growth. again, it's not about what the forecast is, it's that the government -- excuse me, the m.p.c. is down grading their estimate of what they think the underlying growth is in the u.k. because of brexit. so therefore, if you even get the same amount of growth you saw before, it's more inflationary. those are the variables they're actually looking at this. mandate stuff is a distraction. >> let's swift away and talk about the underlying, not the forecast, but the potential for growth, the potential that inflation comes back to target. my question for you would be, i'm looking at this bank of england and the way it's involved. it becomes quite confusing, because coming into this, we assumed it was your m.p.c. it was governor king's m.p.c.,
and they just look through inflation and focus on growth. i guess fundamentally my question is, has that changed with the bank of england? >> no, i think what adam said was absolutely right. but i think the answer is that they don't exactly know. they don't exactly know what's going to happen to inflation expectations, whether they're anchored. they don't exactly know what the potential growth part is going to be, and they basically said we stand ready to look at those things. i mean, there's another thing, a labor columnist cares about it. we've actually seen an up tick in the unemployment numbers. there's a variety of ways of deciding how big it is. but the question will be, what actually happens to the data going -- and as time progresses, does the uncertainty kind of resolve itself? and i think the answer to adam's very good points are, well, we're not going to know. we're certainly not going to know by the next report, and essentially it may -- it may sense for them to say we stand
ready, because we've never been in a situation like this before. i mean, what will happen to these investment expectations that firms have said that they're going to cut? is this going to be impacted by the decision toy? what do we see going forward? i think all those points are really very sal i had, but we're in a position where the u.k., i've written it, a column the last couple of weeks, the u.k. has been hit by an economic tsunami. what are the implications? we really don't know with four months in. i think adam's points are very good. when you read these minutes, yes, the data is a bit better than we thought last time up, because our action probably helped things more than we expected. but we stand ready to move. so i don't read as much into it as perhaps you do, because i don't know. we've never been in this situation before. and the question will be, if inflation expectations are hit, if the potential growth part appears to be hit, then they're going to have to respond, and i think that's what they've done. scarlet: that was the dartmouth economics professor, as well as
the president of the peterson institute. we've got breaking news here that is moving pharma stocks. let's go to julie hyman for the details. julie: this is an exclusive. the justice department, which began an antitrust investigation into a generic drug maker two years ago, is preparing to file charges by year end. that according to people familiar with the matter. this investigation has spanned more than a dozen companies and about two dozen drugs, and it has to do with whether the executives colluded over generic drug pricing. some of the companies named in this probe are falling sharply right now. mylan, for example, is down by 4.5% here. we also have been watching teva farms, which teva bought in august, is also named in this, but obviously now it's teva's problem. we've been watching some of the other generic, big generic drug makers as well, and pretty much all of them are falling on these headlines that have been coming out. this is another one of those
that is named in this probe. endo health solutions is also talked b. those shares down by about 17% right now. already, there's obviously been a lot of scrutiny on this industry, on the drug industry broadly over drug pricing. this one focusing specific on generic, specifically on general ricks, and specifically having to do with potential and alleged collusion here. all of these companies are cooperating except one called main pharma group, which said it did not expect the inquiry to have a material effect on earnings, and a company said last year it was unable to assess the outcome of the investigation. again, we'll continue to bring you more details, but it is having an immediate effect on these various drug stocks. scarlet: absolutely. the first charges could emerge by the end of this year. julie hyman, thank you so much for giving us the update on that. still ahead -- the phony account scandal that has already shaved 10% off wells fargo. now the bank is bracing for
scarlet: the legal headaches are mounting for wells fargo following that phony account scandal. the s.e.c. is now investigating whether the bank failed to disclose pent nent issues to shareholders. the bank is facing mounting lawsuits from former employees who claimed that they were wrongfully terminated for refusing to cheat customers. joining us now is bloomberg news reporter lori keller, who covers the banking industry. your team interviewed former and current wells fargo employees. what were you most surprised by when you spoke with them and when you gathered all the materials? >> i think what was most surprising in talking with these different individuals is actually how similar a lot of their experiences were. you know, whether you're talking about really senior managers and how they were thinking about this situation, or what they experienced, or if you're talking about some of the more junior employees, you
know, who either were fired or just kind of weren't very happy with their jobs, because they felt like they were really pressured to do things that they otherwise would not have done. so i think probably just, you know, the common thread. >> yeah, exactly. scarlet: it sounds like there's most definitely a culture issue here, in which aggressive cross selling was part of the culture that people really encouraged to take part in, maybe not necessarily they had to do in their punitive repercussions, but they were certainly encouraged to do so. >> exactly, pushed to do so. we didn't -- we found no one who said, look, a senior manager told me how to do this, instructed me to do it. certainly there were lower level managers who did those things. we had people say it to us. i just want to be clear, there was no one at the top that was instructing. it was more that, you know, a situation was brought to their attention, or maybe they should have looked further at the numbers, they didn't. we had instances of that. scarlet: you figured there had
to be a lot of people involved, because we're talking about 2.1 million accounts opened fraudulently. what kind of plans are being put in place? laura: there's a couple of things going on within the company. they're doing different reviews. some of those things they have to do based on the consumer financial protection bureau that fined them. they do have to do a resandrue really work with regulators. also, the board is taking action as well. they've hired a law firm to look into the bank and see what problems it is, and also to hold people accountable. scarlet: speaking of being held accountable, retired, the official terminology there. he retired as c.e.o., and the person who oversaw the consumer unit, who was in charge of this department, also retired. any other heads -- have any other heads rolled? laura: no. that was one thing they pointed out. the bank has said, look, we fired one person over this, an area manager. but if you look back and consider, include that, there's really -- it's not a very
senior person. there are at least 50 or so eople above, and then 120 on that level. that's actually not quite a senior. our investigation did show the fines, that there are managers that executives have put that level. that's on a that they are considering to piers. scarlet: i'm sure they need to consult with many, many lawyers, but still, moves are being made. laura keller, thank you very much. check it out on bloomberg.com. still ahead -- the commodities close. oil dropping a five-week low on signs of an expanding glut. we'll have the latest on nymex crude. this is bloomberg. ♪
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five-week low on a record supply gain. just below $45 a barrel. stockpiles rising to 4.5 million barrels. opec production is at an all-time high, and there's still question marks about whether they implemented cuts. coffee prices are also gaining by better than 1.5%. brazil, which is the world's biggest producer, is expecting rain storms in a key region over the next three days. investors certainly starting to price that in. and the price of live hogs slipping as well, off by 1.34% to $47. beef may face increasing competition over the winter holidays, as consumers buy more ham and more turkey. in the meantime, let's get a check on the headlines on first word news. mark crumpton has more. mark: thank you. green friday presidential candidate jill stein says hillary clinton is "the queen of corruption," and that donald trump is, again quoting, "a walking scandal." stein's comments came during an
appearance today on "bloomberg surveillance." ms. stein: it's a race to the bottom between the greater and lesser evil. the politics of fear, delivered everything we were afraid of, and our politicians do not have an entitlement to our votes. they have to earn our votes. the american people were clamoring for other voices and other choices. mark: most polls show stein with less than 5% support. wiki likes founder julian assange denies claims that leaked emails from hillary clinton's staff came from russia. u.s. intelligence officials have blamed moscow for the hacked emails from john podesta. assange says wikileaks will not reveal the identity of its sources. friends and family of walter scott, an unarmed white man shot and killed by a white police officer last year, testified today after opening statements in the south carolina murder trial. cell phone video footage showed a former officer shooting scott
in the back as he ran from his car after being pulled over. if convicted, the ex-cop, who is free bond, faces 30 years to life in prison. a group working to reduce the $30 billion price tag for hosting the 2020 olympics in japan says all options are now on the table. a panel said the price tag could end up being four times more than originally planned. one option includes moving games hundreds of miles away from tokyo. a final decision is expected at the end of the month. global news 24 hours a day, powered by more than 2,600 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. scarlet: thank you so much, mark. let's return to politics, where donald trump could become the first republican presidential nominee in generations to lose among white voters with a college degree. we crunched the poll numbers and found clinton has an average 12-point lead among white college grads. republicans have won the group
since the dawn of modern exit polling in 1956. joining us now from our washington into very bloomberg politics reporter, who wrote this story. college educated whites, a slice of the demographic pie, how big a deal is this, and is this a growing demographic with the aging of millennials? >> it's a slowly growing demographic, especially because, as you pointed out, and as pollsters have mentioned, as more and more millennials become of voting age, more and more college educated mill i can't even yals are replacing some of the older mill i can't evens, i'm sorry, older voters, who will no longer be voting. i think that's a major reason that they're growing. but what's happening is donald trump right now is on course to be the first republican since at least 1956 when this exit polling began to lose with this bloc, and that's a very significant loss for him. if it's true, because the polls have narrowed hillary clinton's only leading by two or three points nationally, and this bloc could make a huge
difference. it could be, as one forecaster put it to me, potentially catastrophic for trump's hopes of capturing the white house. scarlet: his message is clearly alienating. is this a deliberate part of his strategy, do you think? >> well, i think what he's doing is his message revolves primarily around white working-class voters. he's company toured the grievances and the concerns that they have with a message that's strongly anti-immigration, anti-trade, anti-globalization, and that's really a cord with this voting bloc of white working class voters, voters without -- without a college degree, are supporting him in enormous numbers. he's outperforming previous republican nominees with that group. so he's made up some of the margin there, but he's also losing with scommirntse millennials and on married women so. losing college educated whites on top of that could be problematic for him. scarlet: good point. do college educated whites tend to vote red or blue, and how
has that changed over the last couple of cycles? >> they've been voting for republicans pretty reliably. the margins have fluctuated from as high as 40% 1956 to the single digits, where it was in the 1990's with bill clinton, and i think john mccain won by single digits before mitt romney won it in 2012. scarlet: in terms of polling we've been looking at, certainly the financial markets have been reacting to the tightening of the polling between hillary clinton trump. how concerned should hillary clinton be about this tightening? >> she should be concerned enough to get out every one of her voters, because she can't take this for granted. her coalition is made up of nonwhite voters, scomblacks hispanics, unmarried women, and younger voters, none of whom are particularly reliable when it comes to turning them out. they turned in and out huge numbers for president obama in 2008 and 2012. it remains to be seen if they're going to turn out in similarly big numbers f. they don't, then hillary clinton has a problem, especially if
hillary clinton also turns out in bigger numbers than expected. that will be the formula for a trump victory if we were to see one. scarlet: when you look at it state by state, utah is an interesting example, because if evan mcmullen wins, it could be what keeps hillary clinton or donald trump from getting to he 270 he electric trorle vote threshold. any discussion on the likelihood of him winning utah? >> it's pretty unlikely. utah is a tough place to poll, because it hasn't been in play for so long. the methods aren't quite honed there. but the polling average still shows donald trump with a considerable lead. they show evan mcmullin, along with other candidates like gary johnson and jill stein slipping. polarization is having a weird impact of moving voters toward the major party candidate they dislike less, which bodes well for hillary clinton and donald trump. to answer your question, i wouldn't expect, you know, either clinton or trump -- i
mean, both clinton and trump to be under 270 votes. scarlet: thank you so much. our politics reporter. coming up -- it is a conference attended by a-list celebrities and women at the top of the suite. we'll talk to the creators of the makers conference about how they're empowering women to be bold. this is bloomberg. ♪
the hope that he can resuscitate the flagging tv and film businesses. let's zero in on cbs in today's "the numbers don't lie" am we start with the stock price action. the white line, which is cbs' outperformed viacom on a normalized basis. investors have pushed cbs higher since the announcement of the potential merger. cbs is not just the most watched u.s. tv network t. leads the four major broadcasters in operating revenue as well. ad sales are crucial for cbs, since that makes up 85% of this revenue. in the second quarter, ad sales slipped almost 3%. however, bloomberg intelligence is looking for a pickup, estimating that tv station ads rose in the high single digit percentage in the third quarter, offsetting weakness. cbs says unlike others, it has not seen weak frns donald trump's lack of ad spending. of course, any slowdown in network ad growth should be partly balanced by strong retransmission gains, which follows a trend in the industry. this chart shows how fees, which are the big orange slices
of the pie, certainly more recent, are becoming bigger and more important for the networks. cbs' second quarter revenue benefited from a 44% jump in those retransmission revenue. a potential weak spot is the nfl. falling television ratings for live football games may hurt cbs more than others. a 10% shortfall in nfl-related ad revenue could cost up to six cents a share in earnings in the fourth quarter. with concerns about the shrinking audiences for live tv, cbs has focused on licensing, on online subscriber revenue, online streaming services, all access, as well as showtime have amassed more than two million subscribers between them. we'll follow the earnings when they're released after the closing bell. makers, the u.s. women's platform, is out to break the glass ceiling. they captures influential women from all walks of life, from politics and finance to activism in hollywood.
today makers announced its third conference will be held in february. for ead's walk the talk, i sat down with the founder and executive producer, and the vice president and creative director to talk about what's on tap. >> it's called a conference, but we really think of it as a live documentary, because we produced it in a way, we're filmmakers at heart, and so we don't want to just sit around and talk about the problems. we really to want create a 36-hour action plan and work together, and so it's interactive. there are talks. there's music, heavy video, and really, our goal this year is to, if you look, it's our fifth anniversary of makers. when you look at the past five years, a lot has changed in terms of us all talking about the national conversation, but we're just inching towards actual change. so our stheem we're challenging our audience to be bold. we can't just inch towards
change. we've got to sprint towards change. scarlet: how do you go about setting the agenda, the specific items on your to-do list? >> we're going to cover topics ranging from violence against women to the inclusion of men. one thing we've always talked about, they can't just be women speaking to other women. we need to include men in the conversation as well. just last april, we announced our next big initiative was going to be makers men. we'll premiere that on the main stage in february. but really, the idea is we kick off the conference with our mother maker, gloria steinem, only name we're really seeing right now. she's always with a high profile female leader. the past couple of years it's been jennifer aniston and america ferreira most recently, t.b.d. for february. scarlet: u to come? >> u to come. scarlet: all right. newer. >> and then we do a full day of main stage programming and end with breakouts. we task all of our audience
members with coming up with an action plan is that they will then bring back with them to flip the script. scarlet: what's the example of an solution that's been offered at one of the conferences? >> one of the programs we have is called makers app. so it's the app fine, so makers ath bloomberg, for example, and we had the makers at unilever last year, and one of our makers are the representatives, went back to her company and said, you know, we don't have enough pumping stations here. we have a really progress company, but she went back and is implementing change around that. scarlet: this election cycle has exposed a lot of anger at diversity. there's a pushback against political correctness. do you acknowledge that in your work? does it change how you frame some of the stories that you tell or the kinds of peel that up to the feature? >> our mother maker, gloria steinem, says it takes a hundred years really make change.
what we do at makers, we mack sure we're telling the stories of the women who aren't being bold, like the theme of our conference, and that's how we talk about these things. we make sure we're profiling, letting our makers speak for themselves. >> what do you think is the net effect of the vitriol on the effort to get more women to leadership roles and get companies, sandub private sector, to pay more attention to women's issues? is it a net positive at the end of the day? >> i think so. i mean, here's an example. so at the cornerstone of our conference, as i mentioned, called makers app, 50 companies, blorg being one of them. and i think what we've seen over the years, as we start to go out to companies, we say you should really be telling the stories of the makers within your organization. bring them together. help them, you know, we want to give you the tools to make change, and i think we're seeing an increased interest in that. so all of these things, even though there's a vitriol, it's just the fact that we're talking about the potential of being the first if male
president ever, that has a ripple down effect. >> we believe in makers. a lot of our makers have said that. this is ultimately the leadership position, the ultimate glass ceiling. ainge loft people to want see more women in leadership, and this is something we're looking to the next generation that's going see something that is possible. scarlet: at the same time, we're looking at potentially the fist female president in u.s. history, but women in leadership rolls haven't necessarily held up. >> well, new york the world economic forum said if we continue at this rate of change, it will be 118 years until we really have gender equity. i mean, you're right, there were, just last year, there were 25 c.e.o.'s of fortune 500 companies. now we're down to 1. again, it deps back to our theme at the conference. we have to be bold f. we continue at this point of change, we're never going to get there. >> and that's whealing out what's working and not working. how do you get out the stories by women, for women, is not
product. he >> we looked recently at google trends, and sometimes you put women's topics in with things like poverty, but even, it's like an issue. really, what we're finding is women's content is a trend. i mean, it's an interesting of people, just like shopping and the news and what's going on in the world. people care about women's content, and they want to hear stories of inspiring women. scarlet: that was the founder and the vice president and creative director over at makers as well. t is time for the bloomberg by news,. moving quickly to end a legal drama as a place to do business. they were named interim chairman of the $100 billion group, yained's biggest con glom late after the abrupt removal.
according to people with knowledge of the matter, he wants the dispute settled out of court. president barack obama's 2013 tax increases for wealthy americans neither slowed their income growth nor hurt the economy. that is according to a new study. the top 1% managed to increase the share at about the same pace after their taxes were raised, as they had before. that outcome suggests that wealthier americans did not respond to the higher taxes by working russ or saving less. samsung is planning to open its first retale story in cuba. an anowment made the announcement and said the tire wants to booth its crush. it's unmarry when the store may open. and that is your business flash update. we've got just onan hourologist. let's hit back to jewel jewel and focus on new hour.
julie: u.s. authorities are going to file charges against the number of general rec drug companies bit end of the year, according to people familiar with the situation. it has to do with allegations of collusion over generic drug pricing. is did have an effect on the e.t.f. that tracks healthcare. you see it falling to the lows of the session, just about 2/3 of this the the as opposed to healthcare services and equipment. let's tpwhr go through some of the companies being made. not ought of them are publicly trillly, but endo is the one with having shots. the generic pardon me, the arm that is being parmed in this country. shares are down here, but it's not the only stock that is reacting in this situation and to this story here. among the drug makers to
receive subpoenas are industry giants like mylan and tev a. teva is down by 10.5%. va also bought activist from allergan am some of the other others that are fall, as well s i mentioned incidento. so not all of these are necessarily household names, but they make generic drugs. but they could ago fect by this probe. many of these companies did decline to comment beyond the companies mav that me mid or didn't respected for comment for question. e're seeing a ripple effect. mall and crew seems to be very reactive to issues of drug pricing. i think we'll motion more on these story throughout this
scarlet: this is "bloomberg markets." we want to get back to the news we broke earlier. we have u.s. prosecutors said to ready file charges against generic pharma companies by the end of this year. this comes up as they wrap up an almost two-year criminal investigation into suspected price collusion. joining us now with more is bloomberg's caroline chen, who helped break the story for us. this is a two-year-long probe. what exactly is it about? it's about executives coming together and agreeing on prices ahead of time? caroline: this probe has been ongoing for two years now. we may have charted bit end of the year. the fact that it's bigger than we've known before, with two
dozen drugs involved and maybe a dozen drug companies, and as you said, it seems to be around price collusion. we don't know exactly the details of what happened there or what exactly the justice department is looking at. but we know they're looking at how the prices changed on these drugs and whether or not there was, in fact, collusion. scarlet: and in terms of what it takes to show collusion, what's the path that the d.o.j. is taking to prove that these companies have agreed ahead of time on how to set prices? caroline: drug companies do change and raise their prices t. does happen. it's not illegal for drug companies to be raising their prices at the same time. so it's on the justice department to show that there was some sort of agreement here, either coordinating on discounts, coordinating on production, coordinating on fees that would affect the prices. that's what the justice department will look for. scarlet: in your reporting, you found all companies have said they're cooperating, except for one of them. maine has said it didn't expect
it to have material impact on its earnings, which i thought was interesting, given the fact these are all generic drug makers. caroline: we don't know the extent of the specifics on what each company is being asked right now. most of them have said in their filings, they're cooperating with the probe right now. it means it may not be material for them. webb that sometimes the justice department subpoenas a large number of companies when they're trying to find out information about others. since so many of these companies make drugs that are about the same as each other, it's not really surprising the justice department has thrown open a wide net here. scarlet: i like the way you put it, a wade net. there's been a lot of scrutiny on drug makers in general. they kind of started with branded drugs, but now the government has shifted its focus. nut into perspective for us in terms of the kinds of pressure that the drug industry has been under this year. caroline: it's been a difficult year for the drug companies when it comes to the topic of
pricing. nobody has been spared. we've seen that actually in the earnings this quarter. the entire sector has taken a beating on pricing. so i think it's not surprising that the generic companies would also be under scrutiny, but they're a little different because the whole point of generics is that they're supposed to be a cheaper alternative and help drive cost savings for insurers and consumers, you know, after a branded drug comes off patent. so i think it's something that is particularly important in terms of how the system is set up, that generic drug companies not be colluding to raise prices, because that's entirely counter. scarlet: really important context there. caroline chen, thank you so much, joining from us san francisco. much more coming up in the next hour. this is bloomberg. ♪
live from new york for the next hour. we're covering stories in chicago, london and israel. watching.t we're the presidtial election. most reveal where there's volatility. profit ed 3rd quarter profits. selling asset and cutting jobs. from the ceo peter hancock. move either with way on cuts depending on how the inflation pass us up. speaking to george lat later in the hour. given the breaking news, we've shares becomee one of the worst performers in the s&p 500. taken down the averages more than they were.
stock has been holding pretty steadily. for much the afternoon here. particularable in for its eighth straight decline. like that seen a drop since 2008. according to dan curtis makes haven't seen, we an eight day drop this millennium. interesting here, here's a look eight day drop on an day to basis pep we were actually higher and rolled over lower datate the latest polling that shows hillary clinton slightly heated of donal -- ahef donald trump. still some concern. the pull back during this period has been 2.7%. i wanted to talk about the today.on the mow healthcare very much a part of that which we'll get into detail. .t's down .6 of one percent it's texas with the biggest drag
today. and energy,ncials holding up relatively well. let's talk about some of those stocks.al according to bloomberg news reporting, the justice department which began anti-trust investigation, is chargesg to file against them by the end of the year. alleging price collusion specifically having to do with generic drugs. here are some of the companies named. we spoke with bloomberg news indoe health solution, mylan. getting away from stocks, what we're seeing here is not just sort of risk aversion. we're seeing it elsewhere. curiously, in the bloomberg index, which is down for a fifth straight session. having lost about 1.2%. a huge drop in terms of
magnitude, just in terms of the streak. at the same time, oil has had a five day pull back. that we'veunusual seen oil and the dollar fall. not something happens. dropped during that period of time. ofs much bigger in terms magnitude. we've had the disappointment and lack of in agreement among opec members. yesterday, that big build in weekly inventory numbers that on.going >> thank you so much. let's get you with bloomberg first news. >> costly u.s. senate race in history is unfolding in pennsylvania. wall street unions and billionaires charles and david koch are flooding the state with money. federal election commission shows $139 million has been spent by advocacy groups candidates.
to race is seen as critical control of the senate. a federal judge has denied allow pollefforts to watchers from anywhere in pennsylvania. to monitor precincts on election day. state law permits poll watchers to monitor locations only within county in which they're registered to vote. violates vetoers free speech. for republican mike 100% supports paul ryan for reelection. that pence declined three times to say whether the speaker should remain in the post. there's been talk about a leadership challenge from house or frustrated ryan backed donald trump. chicago cubs first baseman anthony rizzo recorded the final out of the world series. he took care of business. he placed the baseball in his
back pocket for safekeeping. goldsen, the fouledder of golden auctions in new jersey, be worthball can $3 million. global news 24 hours a day, than 2600 more journalist and analyst. i'm mark crumpton. is bloomberg. unusual slumpng in equities as election day gets closer. s&p 500 has advanced in the five day before presidential election years.o 22 past stocks have been declining. some perspective is , mike.rg columnist >> do we really have to explain. >> the lead up so eight straight
days losses for the s&p. magnitude is not extreme. >> the magnitude is not that bad. that is the longest stretch of since 2008. brothers.r lehman the but the magnitude is not huge. from the high in august, we're 4.5%.bout about half of that in this last stretch. but it is a very unusual decline. especially as that chart you point out. skeptical of studies, stocks x percent of the time after this happens because stocks hadn't rise. if you look at four year returns over less number of years, far you go back, rise. see stocks tend to when you have something like, of them2 instances, 90% positive about two percent gain on average. that's something you take note of. thee, i imagine that uncertainty -- you go back to
important cliche, markets uncertainty. in this case, all the uncertainty seem to be back loaded right before the election. if you made this a west wing plot, i don't think would you.ve people are braced for anything that can happen. friday, it would be another election sakely where you pretty much knew what the outcome was going to be. to keep in mind, technical levels. falling below 2100. strengthke relative index. if you come inside the 48, you can see here, we're getting to this point where things are overbought. this is basically an the markets that compared the size of declines to of gains.
it's pretty complicated. is, you can see it on the chart. when it gets to 70 level, the line at the top, that's over bought. is over sold and the market tends to stabilize or bounce back at that level. can take this chart back for years and you see that same thing. the market to for go too far below it. unusual situation. it gives you sort of a howtitative way to see unusual this slump is. in magnitude it's not very it's very unusually weak market. >> certainly. other thing you're looking at how there's been slight to safety. we're seeing a move into and gold andnds japanese yen. >> it's pretty much -- except for the dollar, i can't spline. textbook.y much you have rise in gold, treasury
is rising, stocks falling. the magnitudes of it are not off the charts. textbook risk as tighten.ers maybe plain why we stabilized here.se levels >> of course, not to mention, tomorrow.t mike regan thank you very much. outmore, you can check it on the bloomberg. coming up shares of aig dropping postinge insurer another disappointing quarter. how long will it take to turn thing around. hear from the ceo of aig peter hancock. this is bloomberg.
>> it's time now for the flash.rg business u.s. prosecutors are close to a sweeping criminal investigation suspected price solution by generic drug makers. the angioplasty trust investigation started about two ago. the grand jury probe is examining whether executives prices. agreed to raise takata is preparing for potential bankruptcy. it could help the air bag maker backer. -- it's set to be finalizing a short list of potential buyers by mid-november. google is dismissing allegations
skewed search can results to favor its own services. regulators fail to recognize the amazontion it faces from and ebay. allegations lack evidence and will ultimately harm use per that is your business flash update. stocks move,pany aig, the shares dropped. that missed wall street estimates. 4.4%.ff by peter ceo peter hancock has been theing units and reshaping portfolio, aig remains prone to surprises. bloomberg spoke with hancock from the new york stock exchange. we announced when update on the village, we -- clear of we made demarcation.
the legacy portfolio contains that largely discontinue. is a big question mark. what can we expose the legacy for. the analyst can make their own judgment on the value. promises as to what we will be able to dispose of the legacy portfolio but we intend to dispose of it as quickly and ively as possible. the operating portfolio which is about the future. i have great confidence in. taking all the right steps to be selective in focusing on the value we do most in the operating portfolio. that is what i view is king destiny andur improving the quality of earnings going forward while dealing with the issues of a past in a systematic way. >> i'll get to the operating portfolio in a moment. the legacyon on asset, does reaction that we see today stock price
motivate you, incentivizes to assets of the legacy faster. perhaps at a slight discounts otherwise like to say in the sales? >> we've been very focused on disposing of expeditiously. we're ahead of schedule in the in year.e months in terms of price, we've held right price. weighing out the pros and cons. if you look at the price we of unitedor the sale guarantee in the 3rd quarter, theeen the sales proceeds, reinsurance that we retain and the tax attributes, it's a north of 4 billion net proceeds. for business that i couldn't arrived here 10 years. me $25 million for it. by being patient and realizing legacy asset, we'll do the best. in yourf the businesses main operating segment of the
company that you targeted for improvement. commercial property and casualty a disappointing quarter. >> it was real estate in one particular area which is the program business where you have third managingcialist general agents underwrite on our behalf. are about dozen that cause the problem and we terminated relationship with them in the of this year. it was part of a broader focus parts.most attractive the prior development that we reserve adjustment was concentrated in a part of the business that we're leaving behind. you say to share holds who -- shareholders who volty -- earnings volatility. >> the more we focus upon customer business, where we adding value to the
customers through expertise, the can stabilize earnings and take control of it. areas of earnings, taking huge steps. ago, thated a year we'll reduce hedge fund allocation. we're on track cutting that in half. that are reduce earnings. >> that was aig ceo peter hancock speaking earlier. we're joined -- if you look at aig shares, down as 5.3%. currently off by better than 4%. specifically within aig earnings report are investors responding to? fell 20 centshey short of estimate. that was due to about $600 million in costs due to higher mortality expectations. people were living longer than expected. having a pay out claim for a longer period. on top of that, the commercial business, which is ones of aig's
businessiness, this is that they wanted to improve. about $300 million. that showed that maybe -- at least the profitability is not as strong as expected. what aig said this morning, be volatile in improving lines. we'll have to see in the coming quarters. it doesn't look great, given take $3 billion reserve charge. toinvestors would have moment.t the what kind of response might we hear? >> this morning, peter told eric, he hadn't talked to them yet. for the legacy book, the $600 million charge, some of that is expected. get rid ofting to thinks oh these businesses and
wind them down. costs?e such high the business supposed to be aig's prides and joy. >> aig has done a lot of the things that were suggested by investors. you come inside the bloomberg here, this is a look at how the aig got from icon. >> absolutely. when you look at something like price and plans that investments for instance, it has about $350 billion worth. that was something that did the quarter.n waste the outlook there? >> surprisingly aig net is 18% theyncome to exit aboutlan hedge fund holding in this quarter, hedge fund were a
straight sessions. at what point do you think election outcomes are priced in here? keeps going. the hedging keeps going. where does it stop? >> absolutely. few really -- we're only a percent down from when the selling began. it's kind of a slow dribble down. the vick has rocketed up. this is short volatility covering. maybe laying in some protections just in case trump. getting close to the end, eight straight days in a row. longest streaks in a long time. oil below 45, earnings not in great. there's some reason beyond election for the selling. >> let's say that at least what looks like the best case for the market.
hillary clinton victory here and republicans hold on to congress, even under that scenario, you're not necessarily that positive on going to go are post election? >> absolutely, the fact that we break out when hillary assumed to be a dead lack. it shows that evaluation concern. the fact that some of the big the amazons, apples and really selling price action here post earnings. we'll have trouble grinding higher here given the fact it's volatility. kind of trade structure across the board here. >> trade structure across the board. let's talky today, the q2's here. why have you chosen to highlight? >> absolutely, certainly, i think over the next couple of value lower stocks will
out perform those growth high thes that are part of nasdaq. the big boys, apple, amazon and facebook have come out and disappointed. qq1 performs. capture some really expensive options premium. i like that kind of combination here. >> with the specific change here, lay it out for us. december,ut to regular december monthly, 120 q.ls on the highing 122 protection. ifking at about 20% return the nasdaq stays below the all time highs, basically until year end. given the concerns even post election, i think we'll have moving higher here. >> just quickly, if you think potentiallyuld perform better, not to put you think spot, where do you
might do better in this environment? hillaryu're thinking biotech names like amgen which has been destroyed here. certainly those kind of names i think will be the star performers if hillary does win the election. they've been decimated here. basis.them on a yield >> some stuff to chew on here. thank you so much, appreciate it. >> thank you so much. meantime coming up, we've got colleagues at the bank holding steady. george magnus to join us on his take.
president. >> he got some support. coming fromsupport working folks. ourle say, he's going to be voice. are you serious? guy who spent his whole life born with a silver spoon. showing no respect for working people. itthe president also said goes out the window if we don't win. mr. trump in florida where he the president for campaigning on behalf of hillary clinton. he spoke to supporters at a rally in jacksonville. part of two day swing in a state decide the election. >> this guy ought to be back in the office working. verynot going to be there long. thank goodness. he ought to be back in the office working.