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tv   Bloomberg Markets Americas  Bloomberg  July 5, 2017 2:00pm-3:31pm EDT

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changed at the moment with the nasdaq leading gains. bonds are higher committed is pushing yields lower. that's that is pushing yields lower. chris: three immediate takeaways from these fed minutes -- number one, there was no agreement on when the fed will begin trimming its balance sheet. number to come a rigorous debate showing again a quite divided committee. three, the was an explicit mention of high equity -- there was an explicit mention of high equity valuations. no agreement on when the balance sheet trimming will begin. after the june meeting concluded, the fed released a begin toow it will reduce the balance sheet, beginning with reducing it by
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$10 billion a month, ramping that up to $50 billion a month in quarterly increments. they could not agree. several committee members favored starting in a couple of months. that. preferred to do for er that.fer -- to def it could be argued that some of the dots would prefer to get more time before taking any action related to the balance sheet. -- some of the doves would prefer. more hawkish members may prefer to move ahead with another interest rate increase before the balance sheet is taken on next. ,n the question of inflation the official message from the committee is still viewing inflation of the recent dip in inflation as something that is
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transitory. committeembers of the doesn't several participants expressed concern that progress toward the committee to present longer run inflation objective -- to present longer run inflation objective might have longer run% inflation objective might have slowed. there were some senior fed officials, including janet yellen come who talk about high equity valuations in these minutes. exactly an alarm, but another not to that idea. scarlet: thank you for that synopsis. let's get you a check on the market reaction to the fed minutes with abigail doolittle. abigail: not a lot of reaction to the major averages.
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the dow down slightly. the s&p 500 up slightly. the nasdaq still the big winner on the day. a bit of a reversal there -- the dow higher on monday. the nasdaq dropping from the highs, down 5%. -- down .5%. now, the nasdaq is higher. we see a bit of volatility in the morning. the 10 minutes not having too much of a reaction on stocks right now. slightly dovish tone. -- the fed minutes not having too much of a reaction on stocks right now. these are the top scores. behind the tech pullback. perhaps we have found some sort of a bottom for those tech shares. let's now take a look at the 10 year yield on an intraday basis.
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a bit of a reaction. basis by -- down by one point. haven bonds are rallying on the day. a bit of a selloff on those fed minutes. much of a hawkish or dovish reaction right now from the financial markets. that fits a chart we have in the chart, a, a great long-term chart. this is the merrill lynch market risk indicator across market for most ofated 2016, but now dipping. right background for the fed to progress in a steady manner. not a lot of reaction in the market right now. for more analysis, let's bring in ian lyngen.
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he's been raided a top u.s. rate strategist multiple times by institutional investors. a top u.s. rate strategist multiple times by institutional investors. consensus is still for september. anything in this that you think perhaps gives a shift to that? n: the consensus is still for a september tapering. the more divided the committee appears to be, the more dovish the minutes will ultimately be interpreted as. build consensus internally, and will be much harder to deliver the combination of a taper and a rate hike by the end of the year. julia: the optionality makes sense. we have a debt ceiling debate coming come a budget debate coming. who knows what happens with health care.
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the fed is leaving the option open. ian: that makes a great deal of sense. they've done a masterful job of pricing in a tapering later this year. they will want to take advantage of that. barring any catastrophe in terms of the economic at akamai think they will go through with that. in terms of the economic data , i think they will go through that. scarlet: the it hasn't changed all that much. just the economic data hasn't changed all that much. are we in a state where inflation is transitory or are going back to that path where 2% is normal? ian: you see the curve flattening the way it has been. saying it's not transitory were the fed seems to be saying they will push forward with normalization at all cost. we will get more clarity on that over the coming months.
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scarlet: also in the next couple of days and weeks, we also get a lot of fed speakers as well. you have the monetary policy report due on friday. thato you position for ahead of those key meetings, key announcements? ian: right now, we are trading the market very technically. everyone is playing for a flattener. we tend to want to be on the other side. we would be looking for a modest steepener before a push back towards the flattening trend as the fed followthrough. scarlet: we got a lot of fed speak that mentioned valuations. they talk about elements of positioning in markets. do you think that is important? fed officials noticing financial conditions have eased despite their highs. as much as they are trying to be very clear about this policy
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here come at the same time, markets aren't really responding. ian: they are certainly not responding in a way the fed would want them to. part of the story becomes a real rate story. what happens when inflation drops the way that it has? the player rate hikes become that much more powerful and risk slowing the economy -- scarlet: is the fed to trying to talk down rate prices? i think they want to prepare the market for the fact that they are going to let the balance sheet roll off. that would be a much larger impact on risk assets. they want to give a narrative that allows them to present a narrative that allows them to follow through with their rate hike campaign. julia: it's consistent with their view that this is transitory. thate not hearing anything this court in here in the message. -- discordant here in the
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message. w rlet: we don't know the hen yet. ian lyngen, thank you so much. let's get a check on the other headlines. leader vowedorea's to never put the weapons program up for negotiation. that's after successfully testing the country's first intercontinental plastic metal desk ballistic missile yesterday -- intercontinental ballistic missile yesterday. the united nations security council at the request of the u.s. is scheduled to discuss 's missile test in an emergency session this afternoon. president trump discussed the dispute that egypt is part of the saudi led coalition that is
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isolating qatar. president trump told the president both sides should negotiate constructively and follow through on pledges to curb extremis him. -- to curb extra miss him. german corbyn and theresa may went head-to-head in parliament today over the continued cap on public-sector pay. repeatedlyyn challenged the prime minister over her austerity program. country inthe only which wages have not recovered since the global financial crash. more people are using food banks. 4 million children living in poverty. mark: the prime minister has been under pressure, some of it from her own party, to end the 1% cap on public-sector pay increases. prime minister may said recommendations would be considered but stressed the need to live within our means.
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was u.s. army soldier killed and two others wounded after an attack in southern afghanistan. a pentagon spokesman says the soldiers were working with their afghan partners outside their base when they were hit by a mortar. the wounded are being treated at a coalition medical facility. a group of government supporters entered venezuela's opposition controlled national assembly by force today. several lawmakers were reported injured during the melee. president was at a military parade marking the anniversary of venezuela's independence from spain. criticizedaduro opposition lawmakers sang the national assembly should defend the flag and call out those who betray the country's ideals. the national assembly should defend the flag and call out those who betray the country's ideals. global news 24 hours a day, powered by more than 2600 journalists and analysts in more
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than 120 countries. i mark barton. this is bloomberg. julia: we've got details on deutsche bank's plans for a post-brexit world. from your, this is bloomberg. -- from new york, this is bloomberg. ♪
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julia: this is "bloomberg markets." global banks are preparing to move operations as britain prepares to leave the eu. we got details on deutsche bank's plans for a post-brexit financial landscape. joining us with more is michael moore from a leading the u.s. finance team for bloomberg news. great to have you on. another win for frankfurt.
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here?re we talking about front office, back office, a mix of the two? >> you could get 2000 and the front office and 2000 and the back office. that is the high-end. it will depend on how the negotiations unfold and how hard brexit appears to be. you have deutsche bank not only looking for the people side, but on the asset side as well. making plans to set up a book ing center in their frankfurt office to route trading assets through there. scarlet: what gets included in the asset side? it's more than just people, obviously. >> it could be worth a book the loans. where trading aspects are cleared through.
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it could encompass a variety of things come as our reporting show comment could be the majority of the assets they currently booked for london. -- it could encompass a variety of things, as our reporting shows, it could be the majority of the assets they currently book through london. advantage in that you have a lot of banks already there come including deutsche bank. a number of banks have offices there. the ecb is little more experienced with the bigger banks and their operations. julia: they said it would take place over an 18 month period. it will be reviewed of the situation around brexit changes. we talking more brexit or more positive signs -- no brexit or
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more positive signs? is it that sensitive? >> it is pretty sensitive. all the banks are trying to keep some optionality in their plan when delaying the people moves as much as possible. so that they can adjust those ner numbers if need be. there's a difference between a hard brexit and something much -- that changes plans quite a bit. scarlet: deutsche bank literally means german bank. up until recently, it is very much a multinational bank. it did and do many of its operations in germany. lately, there is more of a tilt to rediscovering its roots. >> definitely. london was the third biggest top for it. -- biggest hub for it. it has recommitted to becoming a german bank. they couldn't find a buyer for
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postbank. they may be able to use those deposits to help the investment banks. as part of that, you are seeing a commitment to the german corporate space. they missed out on some of the german deals in recent years. they don't want to see that happen again. they are recommitting to germany. scarlet: thank you so much. still ahead, we have more from the banking world monte paschi one $6 billion in state aid and announced a restructuring plan. explains why this is a turning point for the embattled lender. ♪
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julia: this is "bloomberg markets." has laidmonte paschi out a restructuring plan that includes cutting jobs and selling assets. this announcement comes after
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the eu approved $6 billion in state aid for the embattled lender. earlier today, jon ferro spoke with marco morelli. he explained why this is a turning point. -- we'venger i waited been negotiating with a number of european regulators since the beginning of january. time thise first applied to european institutional lenders. a lot of attention has been paid .o restructure the plan this would allow the bank to start working again in a stable and normal commercial framework. i think we did get there. in europey investors at the moment, they are confused by eu regulation and the spirit
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of the rules. we talked about the recapitalization plan. they've asked you about whether is circumventing their own rulebook to help banks like monte paschi. i can talk for monte paschi and only on what we experienced in the last six months. the rules we were bound to comply with, the precautionary cap scheme, we did play by the role. us is what the negotiation took so long. we played by the rule. this is why the negotiation took so long. there will be a monitoring
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aspect to check and engage to what extent the bank is complying with commitments agreed upon with the european commission. we did apply all existing rules and regulations. >> some say the eu is being more lenient come a little more flexible with a total loss. thing that the european regulator is being a bit more flexible? terms, rules need to be crafted and then implemented. we must have a checkpoint to see actually rules do function properly and where the
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rules need adjustments going forward. this will be a good case to see to what extent the overall scheme of the camp works. as far as the bank is concerned, for us, for me, for my management team, for all the employees of monte paschi, this is clearly a turning point. the dust has settled and there's no clarity and transparency on what the capital structure of the bank is and will be going forward. what is the impact of the final disposal of 26.1 billion of ?ross npl whether the rules work, we need
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more time to see how these are forced. julia: that was marco morelli speaking earlier on "bloomberg daybreak: america's." julia: time for the bloomberg business last. according to people familiar with the matter, the private equity firm is considering purchasing the bank shares on the market. the bankers cut thousands of jobs and stream line operations to improve profitability. announcedrways' union 40 more days of strikes starting july 19. ways -- they will operate some flights during the strike. united plans on challenging the --tish approval of that
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thei's lawyer said defendant responded "i'm not admitting to something i didn't do." still ahead, the commodities close. while ending its winning streak in a big way today. crude plunging as comments from russia rattled the market. this is bloomberg. ♪
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julia: this is "bloomberg markets." i'm julia chatterley. commodity markets are closing in new york.
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oil getting hit hard today, snapping an eight day winning streak. we are closing at the lows of the session, down 4.2% at this moment. russia is set to oppose any proposal to deepen opec led production cuts. we will get more data tomorrow when the u.s. releases its latest inventory report. natural gas futures led to a that isth low today -- driving down demand for powerplant fuel. .75%.ome thre no clear direction for gold futures, despite the tension over the north korean missile test. yenks rising and the slipping for now. scarlet: a major shift for volvo. the swedish automaker is now
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owned by a chinese billionaire -- every new model launched in 2019 and beyond will have an electric motor. tesla says deliveries have flat lined this quarter -- joining us with coverage on both of these stories from detroit is jamie butters. let's start with what's going on with volvo. shift to hybrid and electric cars, there will be some compromise when it comes to margin. what kind of cost compromises will the company needed to accept? >> it definitely adds cost. you have a slightly smaller engine, you are paying for two systems and the customer pays for that. add a few thousand dollars,
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you are adding to the payments and you are less competitive against the tesla or mercedes or whoever else. or, they can just eat the difference. that is a real challenge for a smaller brand like volvo. julia: following in the footsteps of the likes of bmw and volkswagen and audi, who are they planning to hear? e chinese audience? -- who are they playing to here? >> you did point at the right markets, china and europe. it's not a big part of the market yet, but the indications are it will be a bigger piece, especially in europe where they really turned against diesel. they know it takes time to change over the factories and car lineups. europe is cracking down on diesel. hybrids enter
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electrics will play a bigger role. we see demands from the government for more and more pure battery-powered vehicles in china. they are trying to be ready, even if the u.s. is not going down that route as aggressively as we work under the previous and ministration. were under the previous administration. julia: d you think the window for this will be pretty narrow where you have to make the investment -- there's a cost problem here when you are creating a car that can do both. >> there is a cost problem in gasoline that's when gasoline is so cheap. forline has been affordable two or three years and the outlook has been pretty bullish that it will stay cheap and that makes hybrids and electric cars
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much less attractive. there is some possibility having the whole portfolio of powertrains gives you flex ability to adapt to the market, but committing to electric and hybrid and more electric than hybrid takes away from your flex ability -- your flex ability if you are dealing with cheap oil and gasoline. ultimately, hybrids are a stepping stone to electric vehicles and some automakers like toyota will tell you electrics themselves are just a stepping stone to hydrogen powered cars. julia: president trump saying he wants gasoline prices lower. scarlet: i'm wondering to what extent volvo is trying to compete with tesla. tesla shares are sinking today because they are reporting flattening sales. is this part of the story line behind what volvo is doing? a little bit, yes.
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although isn't that much bigger than tesla. voalthough -- lvo isn't that much bigger than tesla. if they are going to chase tesla, they are playing tesla's game. so far, with electric cars from a tesla is the only one that has really caught on that has made people get excited about electric cars. the same way that we would prius is the only hybrid that has a result in large numbers -- that have sold in large numbers. when it comes to tesla, talk more about what happened with the latest sales report. we saw a plateauing of sales.
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does not typically happen before -- doesn't that typically happen before a big launch? >> if iphone sales and ipad sales fell before the launch of the apple watch -- it's a smaller into different product. is ithe company said it was a manufacturing problem and that it wasible more complicated and it slowed them down. there was a speculation on twitter that maybe there's a sop ning demand. -- softening demand. at this point, it looks like a manufacturing issue. which is a big problem for tesla because they've struggled with manufacturing since the start of the company. julia: they are at full capacity. they need more operations space. here? the actual winner
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is it the suppliers who provide the technology? them -- i'my helps volvo.e about my first thought is probably china. volvo still clings to its swedish heritage. by a chinesened billionaire. china is pushing hard for this. there's domestic chinese companies that have said they are big hybrid players and are working on electric. they are not globally competitive. if this is a way to track the swedish brand into china and into electric, this could be a
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big win for china. a political wing, and internal confidence when that's a -- a political win, an internal confidence win. analysts are concerned about friday's meeting between the president and russia's president. they worried that it could be a mismatch. a u.s. leader new to global affairs against a former soviet spy master. two more airlines and say they desk andbeen named ankish airlines joined airline in satisfying american security concerns.
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in new york city police officer who was shot to death early this morning was ambushed inside a command post rv by an ex-convict who granted online about his and policen prison getting away with killing people. the gunman was killed by officers a block away. when sergeant called the killing a clear assassination. career spent her entire with the bronx precinct where she worked the midnight shift. the british government said today it is sending outside experts to help with recovery efforts from the power fire. -- tower fire. british police say they have recovered all the remains from the london tower block. the blaze killed at least 80 people.
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the final death toll may not be known for months. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. , shoppingoming up malls desperately trying to bring back the shoppers. , is with all their changes it too little too late in the age of amazon? ♪
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julia: this is "bloomberg markets." scarlet: i'm looking at the 10 year yield the two-year yield turning positive. stocks little changed right now. abigail: we have had a slight
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change. earlier, the dow had been slightly lower and the nasdaq .own less than it is the nasdaq is up 20%. -- the nasdaq is up .8%. on monday, the dow hit an all-time high. the nasdaq down .5%. preventing the dow from putting up another record high today -- disney down 1.8%. paul sweeney told our team that this has to do with the wall street journal article talking about the fact that espn is not disney's only cable problem. chevron down into the with oil. depot down 1%. not clear what's happening there. it could be the weakness from down automotive when
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that's weighing down retail overall. big players in the technology space -- nvidia sharply higher. a big rebound after last week's selloff. microsoft and alphabet, two of the biggest boosts. let's see what's happened with the last time the nasdaq put in a record high. this goes back to june 9. the nasdaq did put in the record high. the nasdaq in blue. down 2.5%. up top and white, we have the dow up 1.4%. what might be next around the tech pullback, this is a great chart -- a long-term chart. in blue, the nasdaq. in white, the number of days since the nasdaq has been a record high. the last record back in 1987.
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right now, we are on a record 165 days. we are down 3% from this record highs, suggesting more of a pullback. julia: the spillover effects and the impact tech is having -- with amazon increasingly swiping market share, many owners are going next from i'll throwing millions into elaborate makeovers just to survive. joining us now is sara mulholland. great to have you on. give a sense of what the big malls are doing to counter the trend. is a desperation? >> it depends on who you ask. the mall owners would like to say it is strategic. there have been successes thus far. they are taking these department stores and getting them out of
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and turning it experiential type of things you cannot get online. gyms,rants, bars, bowling alleys. scarlet: who pays the cost? the mall owners? if someone has an idea for using that big space, they don't foot the bill? >> that would be negotiated by the mall owner and the attendant coming in. not necessarily just the one sears they will have to do. they then have to redo everything surrounding that sears. you cannot just redevelop one piece of it and leave the rest of it the same. the malls are on the hook. thea: is the hope here that
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experiences will lead them to buy something in the stores in the mall itself? >> exactly. that's what they are aiming for, that there is a return on this investment, they will spend all this money and build a dave and busters or whatever it might be and not only will people pay to go there, it will bring more people to the mall. thisis a critical piece of . a big part of the strategy. now, you have more people coming to your mall. they will also go and spend money at other stores in the mall. scarlet: traffic is a big part of it. i've investors priced in the amount of cost these shopping mall owners are having to lay out? >> it is hard to do. the disclosures are in great. -- aren't great. granular it'soun something analysts are talking about.
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it is a question that is asked. thus far, it is still an early stage. we are looking and seeing how this follows out. there's been some success for some of these mall owners who've acted proactively to get rid of the department store before the department stores leave. they say it has worked and its increased foot traffic for them. there's a lot more to come. scarlet: and they are able to charge higher rent in the process. >> sears and macy's paid basically nothing in rent. scarlet: sara mulholland on the changing landscape for shopping malls. julia: traditional retailers are the only ones feeling the squeeze. , too.t processors are
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-- aren't the only ones feeling e.e squeez too.nt processors are, ♪
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julia: this is "bloomberg markets." scarlet: time for the bloomberg business flash. and that -- investing in an electric battery be a cold investing in an electric battery vehicle production. google could face more penalties from european antitrust regulators this year. --y've already been fined authorities are also investigating its advertising
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service and android mobilephone software protecting to control the competition. the trump administration is set to propose a requirement that refiners use 15 billion gallons of conventional renewable fuels for 2018. unchanged from 2017 and the highest level allowed under federal law. corn farmers a more modest win since they provide the bulk of corn-based ethanol. that is your business flash update. largest -- agreed to acquire the group for under $10 million. this would give them great exposure to e-commerce retailers and more businesses. joining us is the bloomberg payment and regional banks of porter. -- supporter. vantiv is big in
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the brick-and-mortar space. will pay gives them access to european markets. it opens up the e-commerce site of the payments processing equation. scarlet: talk about the extent of consolidation in the payment processing market. it's been going on for a number of years now. >> we have seen a lot of the big guys only get bigger. the way that they see growth happening right now is through deals. we see vantiv and world pay today -- it has been speeding up this year. scarlet: is there anyone left who is being eyed as a potential target? >> not so much. as the big get bigger, they are hard to acquire. there is no a big gap between the little guys and the big guys. thus there is now a big gap between the little guys and the big guys.
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julia: jpmorgan was in the loop as well. the stock price rallied and jpmorgan came out and said we are not interested. there was confusion. what happened there? >> jpmorgan today announced they will not be bidding after seeing the offer from vantiv. jpmorgan would be a bit of a threat. they are already the world's largest acquirer by payments volume. this would give them even more scale internationally. they really big and e-commerce. -- they are really big in e-commerce. they may be shaking in their boots of it -- a bit. this something is amazon will hand payments for whole foods over to jpmorgan. >> vantiv is getting hit on both
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sides here. first, the general move to e-commerce, they don't do a lot of e-commerce right now. they process for whole foods. with amazon, that was more of a direct threat. scarlet: amazon uses jpmorgan for payments processing. how sticky is that relationship? could they hop to someone else? >> is actually a pretty sticky business. nobody likes to switch their payment processor the u.s. is going through this huge transition with the jakarta -- the chip cards. the small businesses are trying to upgrade to that chip technology and payment processors see that as an opportunity to gain share. julia: and you take him everything is chip-based -- in the u.k. come everything is
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chip-based. scarlet: thank you so much. up, the united nations security council holding an emergency meeting today after north korea's rocket launch. we will discuss the geopolitical imprecations of that country's increased hostility. from new york, this is bloomberg. ♪
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>> it is 12:00 p.m. in london. scarlet: welcome to bloomberg markets. ♪
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-- "bloomberg markets." ♪ >> we're live from bloomberg next headquarters over the hour. in politics, growing concerns over north korea's aggression after they launched missiles. .et to begin any moment now also saying the missile was a type not previously seen before. meanwhile, the cloud of north korea looming over the start of the g-20 summit. senior fellow at yale university's jackson institute discussing geopolitical risk and the impact of trade talks at the summit. and in markets, investors are suggesting fed minutes be released over the next hour. divided over the timeline as it is shrinking its 4.5 trillion dollar balance sheet. fed officials are also
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expressing concern over inflation arrests. let's get a check on markets with abigail doolittle. abigail: what stands out here the most is the diversions between the dow being down ever so slightly and has julia was noticing, the nasdaq up .6%. the best gain in weeks. we had a lot of selling and technology. this is a reversal of monday. at that time come the dow had been up a little bit. what is happening sector wise that explains the diversions. this is a great way to see what is happening within the s&p 500. we see a pretty even split between green and red here the s&p 500 up slightly and at the bottom, energy is down 2%. let's take a look at some of the winners helping nasdaq today in the technology center. we are looking at take and
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well-known names including amazon and microsoft. not really the fundamental reason for this, buying the gift motel it -- mentality. macron, of 7%. this had been down sharply last week about 5%. like investors are dipping a toe in the water and coming back to technology. not so much for energy. let's look at what is happening with the energy sector. oil down sharply, it's worth stay since june 7. ine of the higher beta names the energy sector, and behind the declines for oil, russia saying they are opposed to a future supply cut. a bloomberg commodity strategist told me he is a little skeptical about this. it is not entirely clear who the sources are there within russia. it goes against what they had been say more recently. we will be watching this.
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it is its first down day. this is g #dtv 299, a one-year chart. we see the moving range around the oil 33 day moving average. mike used to trade oil. of areliable off the lows few weeks ago. up to the moving average dipping back down. inventory report will be a little different. down athe energy sector little bit. that had just gotten word the council meeting is underway. this meeting was requested by u.s. ambassador to the u.n. nikki haley after washington confirmed north korea's rocket itsch yesterday was in fact
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first intercontinental ballistic missile. joining us from the white house is kevin cirilli. let's start with you. give us a little bit of a perspective in terms of timeline. trump has only been office -- in office for six months. if you look of a time when all the way back on february 12 one north korea tested four intermediate range missiles, which true a strong rebuke from president trump and japanese prime minister shinzo abe, they were down in mar-a-lago for a series of meetings during that. they were having dinner when that happened. 5, less than a month later, three fell into japan's economics zone. and then to april 16, unidentified ballistic missiles were fired, that it actually asked loaded after the launch. moved thetrump
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warship offshore to anticipate this holiday. that, june 20th, a few weeks ago, president trump said china's efforts to rein in north korea had failed after u.s. i satellites -- spy satellites had detected modifications to a north korean underground nuclear test site. all of this comes with what we saw yesterday, north three a's most defiant political move yet, testing and intercontinental ballistic missile on the fourth of july. >> the timing here could not be more pivotal. it is right before a g-20 meeting as well. rising tensions between the united states and china appear president donald trump has been calling out china for not doing more as far as north korea is concerned. you throw russia in the mix and russia has also been
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facilitating north korea by hiring people. what does this mean? what comes out of the u.n. security meeting as well? do we get a more firm stance? >> what you're seeing is essentially washington has no other option than to try to project an even greater show of unity from the international community. what nikki haley is doing today and what donald trump and rex tillerson will do at the g-20 meeting later this week. there is no indication north korea has ever responded in a way the u.s. role -- would have wanted to to show strength. president trump believes the key to this is with china. if he can get china to strangle the north korean economy, that will then bring them in line. what you see in the last couple of days is u.s. officials saying, we will call out china and we will also call out all the other countries around the world that bring in north korea and guest workers and any sort
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of business with them. saying listen, if you do business with north -- with north korea, you're aiding and abetting a criminal regime. shifting to include china and then put even more pressure on the rest of the world, that is what we expect to see in these at differenty and -- and the rest of the week. >> we are seeing a huge shift. kevin, i want to see you in this as well. if you look at the timeline between china and the united states, donald trump finding an arms deal with taiwan, which he must know will -- the u.s. warship in south china sea, also upset the chinese here, downgrade them in terms of the ranking for human trafficking. it feels like donald trump trying to gain leverage over north korea. it feels like we have got a
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north korean dictator perhaps using these. >> just before president trump took off on air force one in route to poland, and he will end up in germany for the g-20 meetings, he tweeted he thinks the 40% increase in trade between north korea and china is something that has been significant. he tweeted so much for china working for us. clearly he is trying to pressure the chinese. steven mnuchin announcing a chinese financial institution in china against the one financial institution. they are saying it is not specifically targeting china. but north korea has the largest exporting and importing partner ofchina with more than 80% exports and imports coming from china. it is a significant economic engine to north korea.
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it is one of the main points in germany. no formeraley had policy experience as an ambassador to the united nations. what are the options? >> using the pulpit of the security council, a naming and shaming process. you saw samantha do it, you see the u.s. investors doing it going back decades. hey, sitting around this table, you want to call yourself a responsible nation or do you need to get on board. >> nikki haley is speaking now. let's listen in. >> it showed that north korea
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does not want to be part of a peaceful world. they have cast a dark shadow of conflict on all nations that strive for peace. samerday came from the dictator, who sent a young college student back home to his parents. americans, it painfully and image -- up as they transported him from a prison he should never have in an. he is but one person out of killed, who have been tortured, or deprived of their human rights by the north korean regime. two americans, the death of one innocent person can bs powerful as the death of aliens. and women are created in god's's image, depravity toward one is a sure sign of willingness to do much more harm. the nature of the north korean regime is clear.
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only the scale of the damage it does could become different. that is why yesterday's escalation is so alarming. if north korea will treat an innocent young subdued and -- student this way, we should not be surprised if it asked our bear clear on a larger scale. the united states does not seek conflict. we seek to avoid it and we see going the useful -- of the korean peninsula and an end to the threatening actions by north korea. regrettably, we are witnessing just the opposite. icbm korea's launch of an is a clear and sharp military escalation. the north korean regime openly states its missiles are intended to deliver nuclear weapons to strike cities in the united states. south korea, and japan. and now it has greater capacity to do so.
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is not only the united states and our allies that are threatened or north korea's de-stabilizing escalation is a threat to all nations in the region and beyond. actions are quickly closing off the possibility of a diplomatic solution. the united states is prepared to use the full range of our abilities to defend ourselves and our allies. one of our capabilities lies with our considerable military forces. we will use them if we must but we prefer not to have to go in that direction. we have other methods of addressing those who threaten us. and average resting those who supply the threat. we have great capabilities in the area of trade. president trump has spoken repeatedly about this and i spoke with him at length this morning. there are countries allowing and even encouraging trade with north korea, in violation of un security council resolutions.
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such countries would also like to continue their trade arrangements with the united states. that is not going to happen. our attitude on trade changes when companies do not take international security threats seriously. to a peacefulh solution is entirely closed, the theins more that international community can and must do diplomatically and economically. we will bring before the security council a resolution that raises international response in a way proportionate to north korea's new escalation. i will not detail the resolution today but the options are known to us. if we're unified, the international community can cut off major sources of hard currency to the north korean regime. increase restrictions, we
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can hold senior regime officials accountable. the international community has spoken frequently against the illegal and dangerous actions of the north hurry and regime. ar many years, there have numerous human sanctions against north korea. they have been insufficient to get them to change their destructive course. in order to have an impact, in order to move north korea off its military escalation, we must do more. we will not look exclusively in north korea. country thatat any choose to do business with this outlaw regime. we will not have patience for stalling or talking our way down to a watered-down resolution. yesterday's escalation raqqa ours and escalated diplomatic and at the -- and economic response. time is short and action is required. the world is on notice.
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if we act together, we can still prevent a catastrophe and rid the world of a great threat. if we fail to act in a serious way, there will be a different response. much of the burden of enforcing human sanctions rest with china. is of trade with north korea with china. we will work with china and any and every country that believes in peace. but we will not repeat inadequate approaches of the past that brought us to the start date. we cannot forget the multiple missile tests this year or yesterday's escalation. others thatrget north korea continues to hold her we cannot forget the threats to our friends and allies around the world. we will not forget and we will not delay. thank you. >> that was the u.s. ambassador to the united nations nikki haley speaking to an emergency
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meeting of the united nations security council. standing by listening to her remarks, nick, i heard the ambassador mention the american visiting north korea as a tourist in genuine 2016 was arrested and sentenced to years of hard labor and later died because of injuries to the head. she mentioned his name a couple of times. how did that event change the approach the u.s. is taking an -- because it certainly seems a part of this narrative? >> obviously, it personalizes the issue. it is a very stark demonstration of what has become of the north korean regime. arrested basically for tearing down a propaganda poster off of the wall in every things i rolled out of control. what really struck me about the speech that is very new and that i had never heard before after covering the yuan for about 15 years, is nikki haley saying listen, if you do trade with north korea, we will not trade with you.
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that is a clear message to china but also any other country that if the u.s. detects economic business lease -- links with north korea, she is basically throwing down the gauntlet and saying listen, we are willing to sacrifice a trade relationship with you if you trade with north korea. the question with china, u.s. and chinese economies are interdependent that if the u.s. carries out the threat with a country like china, we can expect to see massive economic pressure and an impact on the economy. >> that is why we wonder whether the threat is credible. we see pressure points that say they can impose us on china. that, nikkiine with did say that they would come up with a further resolution. also -- you have got russia there and china, classic veto vote. what is the likelihood that once again, we see a firmer veto vote
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here? board,china to get on you would need to see north korea conducted another nuclear test. this is obviously an escalation, but not out of the realm of what north korea has done. it is not a surprise or north korea has been advancing its missile technology for a long time. strategic planners of the u.s. would know this had -- would have known this was coming. to get them on board, you need to see a major escalation like a missile test. according to the analyst we have been speaking to, that would really compel china and they would basically have no other choice but to get on board with a stronger resolution. >> how long until you think they are nuclear capable? how long until china and india -- and the united states debate this? my second question here would be, what about the prospect of unilateral military action here by the united states? she said we have a range of capabilities including military.
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there are two issues. one, north korea has nuclear capability already. the question is whether it can miniaturize the capability to put out an ip -- that would not burn on reentry. no one has any idea when north korea will perfect that technology. that is one question. for military options, the challenge for decades is that really there are no good military options. if you attack north korea, the border is 30 miles from the capital of north korea and is lined with artillery pieces. they could fire off a single volley and the casualty toll would the in the tens and possibly hundreds of thousands. the challenge with a military strike has always been, do you want to start a regional war? north korea is so unpredictable that it could do anything response to that attack. they need to way that carefully.
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julia: thank you, nick. does -- say what with -- about volatility overall? this is bloomberg. ♪
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julia: this is "bloomberg markets." scarlet: time now for options insight with abigail doolittle. abigail: jim, great to see you. thank you for joining us after what sounds ok great july 4 vacation. to work and ready to go p we're talking about volatility, the lack of it, or overall, can you talk to us about that? not just in equities but u.s. equities and across assets globally, being historically low, we are on the lookout a
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little bit for anomalies here and there. one, you referenced, is the nasdaq 100 volatility. nasdaqhen, the volatility index comparable to the vix as it relates to the s&p 500s or the bottom line is technology volatility is as high as it as a -- ever has been. abigail: interesting. let's look at the chart. we see the vix at historic lows or near historic lows, and then the technology vix up there it 17. pretty high. what is the hot topic right now? jim: this week, it is volatility, everything we just talked about it how low volatility is earnings do start next week. we get the financials kicking off. there are certainly a number of events coming up that will catch
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people's interest. we have got minutes from the june fomc meeting today. not much of a market mover. later in july, another meeting. than earnings, not a lot of catalysts on the calendar. that is what the focus is all about in the next several weeks. abigail: speaking of financials, if we bring in technology, the sector rotation out of technology into the banks. suggested this will continue or that we will see a reversal? jim: it puts us back to the point about the vix. does that continue? if it continues, is it possible that volatility lifts across u.s. equities more broadly? we are not making that case or that argument we are watching it pretty closely. abigail: right now, it seems the rotation could stay in place at least right now. jim: that is our baseline. abigail: turning to your trade, not one of the a guest tech names to one of the well-known the biggest ipo of
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the year. you have some information about what is next for the shares. relatively well-known, july 31st and august 31, about 85% of will hit their lockup expiration. a huge number of shares freely traded. snap kate -- became public in march, ran up just about 27, grind it since then, and now is above that original ipo price. as much as as the lockup is known, what is a little less known is how some of the peers performed before that lockup. rob sanderson looked -- went back and looked at link in -- linkedin, facebook, and twitter, ,nd in the months proceeding stocks went down about 24%. what we want to do is hedge that
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potential outcome. we want to go out to august, and this also captures earnings, you sell a 19 strike call, turn around and buy a 15 strike. it is a collar and by committing to sell the stock, it is up 10%, and you have protected your downside. abigail: thanks so much, jim. julia: ahead of the kickoff to the g-20 summit. on the impacts on the trade toll. from new york, this is bloomberg. ♪ ♪
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what should i watch? show me sports. it's so fluffy! look at that fluffy unicorn! he's so fluffy i'm gonna die! your voice is awesome. the x1 voice remote. xfinity. the future of awesome. mark: i am mark crumpton. it is time now for first word news. at the request of the united dates, the united nations security council is meeting for an emergency session at this
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hour to discuss north korea's latest missile test. you are looking at a live shot now. yesterday's rocket launch was their first intercontinental ballistic missile. annorth korea's launch of icbm was a clear and sharp military escalation. the north korean regime openly states that its missiles are intended to deliver nuclear weapons to strike cities in the united states. , south korea, and japan. and now it has greater capacity to do so. mark: north korea kim jong-il and bragged about sending more to president trump. they conducted a joint missable is to drill off the eastern coast of the korean peninsula. secretary of state >> kept -- rex tillerson called the actions escalation of the threat to u.s. and its allies. the president is likely to


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