tv Bloomberg Markets Americas Bloomberg July 10, 2017 10:00am-11:00am EDT
vonnie: here are the top stories we're covering -- gets back to work with just three weeks to try to ram through a health care bill and get the ball rolling on tax reform. will the latest distractions out of the white house blunt any progress question mark as investors largely to note the washington drama, can corporate earnings be enough to sustain gains? jpmorgan and inquire which sectors will have big reports. and company news, amazon is flying its prime day deals for the first time in its own cargo plane. should fedex and ups be concerned? we are just about 30 minutes into the trading day in the
u.s.. julie hyman is here. julie: not much has been going on overall. we have a little bit of a downside for the major averages. not without them -- none of them of 1%wn more than 1/10 but we have to watch the movement today in the context of last week. aheade investors looking to events later in the week. with testimony coming from janet yellen and we have a earnings season kicking off on friday with the big banks reporting their numbers. when i talk about the context of last week, we have the combined stock and bond movement last week globally, not just in the u.s. $855 billion was being wiped out . that was the worst weekly performance for the two combined on the year. into push ahead further this current quarter, we will see what kind of performance
this week brings. overall, the major averages are not moving much but there are notable losers this morning. abercrombie & fitch leads them, down by 18% after the company terminated talks with potential acquirers. it looks like folks are not so optimistic. we are also watching best buy. wolf research is downgrading southwest airlines.
just shyintel is down of 1%. jeffries is cutting the stock to an underperform from eight hold saying intel has the most to lose from a tectonic shift in computing. the losses today are not just tapping an individual stocks but have been happening in commodities. we are now seeing a turnaround in crude oil and gold which had been down earlier in the session but now are getting a little bit of a bounce after we see high short interest in oil contracts and long interest in gold contract but silver is down 1/10 of 1%. mark: we are up for the first day in three weeks. we rose last week for the first week and five. the stoxx 600 is up.
stocks and bonds fell last week which was the theme. barclays global aggregate billion.l by 681 european investors are selling their debt holdings, likely to make room for undervalued stocks as bond yields rise. msci value index which tracks the cheapest shares posted its best week in two months. financial firms made up 37% of that gauge come a rallying high
and boosting the prospect that lending will become more profitable. i thought we would put on the german 10 year yield as well as. that's a wonderful chart. this is a simple chart looking at swap data. we have come off the highs of a week or so ago. the probability rose to roughly 55%. coin whetherf a the bank of england will raise rates this year. big data in december or today but the big thing is jobs data on wednesday. average weekly earnings are slowing to 1.8% for the three months through may. that's from a previous reading of 2.1%.
you've got to add inflation into the equation. you've got inflation in may rising 2.9% and real wages are declining. something to watch this week is the implied probability of the bank of england raising rates in december. some greatwill have guests to ask questions of. in the u.s., president donald trump returns from the g 20 summit to further questions about his administration's ties to russia. met with ason connected lawyer during his father's presidential campaign. she had potentially damaging information on hillary clinton. congress is also returning to washington after the july for recess. lawmakers in three weeks to tackle health care, tax reform and other key agenda items before another recess in august.
to capitol hill. is there any way to conquer health care and get onto tax reform? they have to decide what they will do with health care. they have to get a pass on it or dispense with it. they are using a vehicle you can already use once in a year and you cannot have health care and tax reform at the same time. congress is back today in all eyes will be on the health care bill but there are no signs of life more now than they -- them before they left. -- more now than before they left. and chuckike ted cruz grassley are raising questions. bill cassidy, a moderate conservative from louisiana, has said the original mcconnell
draft is dead and is raising questions about the new idea of moving to repeal and doing replaced later. there is a big cloud hanging over this. talk me through the train wreck of the calendar. i advise everyone to read this piece in the bloomberg. that was not even me saying that, it was a former senate republican staff director for the budget committee saying that. behind oney are everything, the republicans. they have a series of deadlines is staring them in the face. recess, by thet end of september, it will have about 2.5 weeks to do this in the have to fund the government to prevent a shutdown. they have to extend the children's health care program and they have to extend flood insurance. shortly after that, they have to raise the debt limit which is a painful boat the republicans hate to take. in order to begin the process, .ou have to agree
they have to agree on spending and what tax revenues it can bring in the next 10 years. they cannot even agree on that and they are much further behind on the appropriations process. there are many divisions within the republican party getting no democratic help. the parties are too far apart on the ideology. these deadlines will complicate moves more and you cannot tax reform without getting this stuff out of the way. vonnie: how much of this and are show will be on congress and how much on the administration? it's up to congress to do this stuff the administration is not helping by the present getting distracted. his tweeting habits are not helpful. scandals a number of
involving controversies that have emanated from the last week or so. be his son missing decimating privately with a russian lawyer during the campaign and not disclosing it vanka trump sitting in his seat at the g-20 meeting or his remarks with vladimir putin. he talked about partnering with russia on a cybersecurity program but it was defended yesterday morning and the president had walked it back by the evening. a lot of chaos and confusion continuing to come from the white house. republicans want clarity to bridge these divisions. thank you and we will speak to you again later on. on first word news. : teresa will call an opposition lawmakers to
coordinate getting out of the eu. she will restate her political agenda and she says social and economic reform is needed to make a successful brexit but in a sign of weakness, she will call for cross party car -- cooperation to deliver it. it british court will assess new evidence in the case of 11 month old charlie guard. relating to potential treatment for his condition came up. the application came after pope francis and president donald trump but international attention to the case. the early morning commute in new york city got off to a smooth start as amtrak began extensive repairs. penn station in july and august will curtail operations for amtrak. in its place, the long island railroad. new york governor andrew cuomo has called the delays a summer of hell for riders. more and more americans are spending their golden years on almost 19% of people 65
and older were working at least part-time in the second quarter of 2017. that's according to the latest u.s. jobs report released last friday. the age group employment has not been higher and 55 years. news, 24 hours a day, 2400ed by more than journalists in 24 countries. pressureoming up the is on for gold and silver with futures in focus next. ♪
markets. it's time for futures in focus, oil is off its lows of the session and touching its lowest level since april of 2016. joining me now from the cme is alan knuckman. let's start with the oil market, , its trading just above $44 per barrel again another opec meeting will be in two weeks. what is the oil market want to hear? marketn't know, the oil is getting active in the fact that it trends in one direction and then turns the opposite direction. $47 was the halfway mark of the $52 high we had down to the $42 low. it came back to $47, hit the wall of resistance and bounced lower again. that was important. let's see what happens this week because we had not seen any technical recovery action for weeks and weeks.
vonnie: the increase in supply from libya and nigeria, has that been announced? is that why prices are off their lows? do we expect something else to move the needle? >> i'm not exactly sure what it was but you can see a heavy volume coming in when we made those highs last wednesday at 47 then it just turned tail and headed back down. the overall trend in the last couple of weeks as been downward. it's important as a traitor to judge of the market reacts or fails to follow through. it failed to get to the 47 level. you saw that short covering halt and it was more of a technical reaction than anything else. vonnie: let's talk about precious metals. down to the 1210 per ounce range and goal. our the central banks getting more hawkish? >> that's very interesting, it's central banks outside the united
states. toughited states talks a game about raising rates but that's not the case. the dollar has been on the decline. it's interesting to see what is not happening. geopolitical concerns around the gold at $1300ad per ounce and when it could not push through $1300 in may, we saw a major disappointment. it's been straight down since a let's see if the 1200 level can hold. it's disconcerting that the dollar has not helped gold at all even though the dollar is down at nine-month lows. what about silver, is this a supply and demand story? silver just follows gold most of the time and you are seeing some profit taking their. and continues to move lower lower. a lot of this is money flows and i think you seeing money flow to talk about a market that i look at as positive. futures and itx
may be stabilizing. you might see money flows going there and something we have seen every time in history come every time we see a selloff in technology, it bounces back on top of the old highs. if that happens again, the ndx could move 10% from where we are now. vonnie: thank you so much. the: great stuff, time for bloomberg business flash. abercrombie & fitch arla -- is lower today. the retailer had begun preliminary discussions with several parties regarding a transaction. in a statement, chief executive arthur martinez said the company is pursuing a rigorous execution of the business plan.
an experiment the drug has strong test results but is being challenged. rocherug could help grabbed the hemophilia market. larry -- a promoter there was april amerian junction on the drug. companies in the u.k. overwhelmingly opposed to britain walking away from talks with the eu without a deal. a survey.ording to a poll by the british chambers of commerce show that more the1/3 of businesses want country to stay in a single market after brexit. that's the latest bloomberg business flash. still ahead, prime time, amazon cargo planes are getting ready on the annual day of
mark: this is bloomberg markets. amazon is gearing up for its third installment of its so-called prime day. -- event last year were at was the biggest sales day in the annual event shines a light on their logistics operation highlighted by the addition of amazon's own fleet of planes. cory johnson joins us from seattle-tacoma international airport. you are standing in front of a plan, does that mean i can order you with one click? cory: you should order from may with one click, as many clicks as it takes. prime air, amazon as if they don't have anything -- have , they are already
showcasing this prime air thing on this big shopping day. the biggest day of the year last year. it's interesting to think about their global logistics. one can argue that it is an enormous strength that no other company can compete with. they've got 22 of these planes in the air. they are operated through a partnership and they are 767's. are changing their logistics operation and running certain flights they cannot get from fedex and ups and the others. are more and more users going to be ordering via alexa? cory: i think that is their wish. they have ruled out this alexa physical device in lots of forms and they will put those massively on sale over the next
day or so as part of the prime day because they see that as a way of closing the ecosystem and getting people to shop on amazon alone. it's an intriguing device and there are more apps that are yet to be seen. you see a lot of companies like apple and google looking at this way of locking in customers into their ecosystem. theyfascinated by the way are changing the way -- not too long ago, amazon have fulfillment centers in low tax environments like nevada and were further away from the customer so when they made these decisions to push a closer to the customer, it has changed the way their global logistics ran. that got over 70 fulfillment withrs across the country 150 thousand square feet of fulfillment center capability. clark whon with dave is the vp who runs this
business, listen to what he had to say. >> there are a lot of moving parts and airplane business and we found a couple of great partners. come upwith them to with a great path forward. it works great for them and the supplier and it's a fantastic service to customers. amazon does not own the planes themselves. they have these long-term deals but it showsd atsg you the notion of what they want to do. you can see these planes take off. ups and fedex see this plane and know this is their competition. vonnie: exactly, what are the plans for these planes for their destinations and why should ups and fedex be concerned? how many planes to they have? now and planes right
they will commit to 40 by the end of this year. they are talking about flexibility. it allows them to decide that we've got some products in our fulfillment center in columbus, ohio and we need to get it to get into a fulfillment center in phoenix so we get into a customer in tempe, arizona tomorrow. they say would got enough of this stuff to use our plane to make this happen. the order numbers are so hughes that they think that makes sense for the business. that's our own cory johnson. still ahead, we are talking markets with j.p. morgan chase. this is bloomberg. ♪
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from new york. taylor: a person for vladimir putin says he is unaware of a meeting between donald trump junior at a russian lawyer during the presidential campaign. thep junior said it was lawyers claim she had information on hillary clinton. it they cannot keep track of every russian lawyer and their meetings. the next few weeks may be crucial on whether donald trump and deliver on his promise for tax cuts. several obstacles await health -- lawmakers. there will be deadlines to keep the government running. to tillerson will travel kuwait and saudi arabia to meet with gulf leaders as the u.s. seeks to help and and the standoff against one another. severedabia, egypt
diplomatic ties with cutter last month. ofy are accusing them destabilizing the region. appalled by the british chambers of commerce showed more than one third of businesses want the country to stay in the single market and customs unions after brexit. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. mark: it's a big week for markets. investors are looking forward to yellen on wednesday. jpmorgan and citigroup and most fargo will pick up the second quarter earnings on a friday. for more on what to expect, let's bring in david. it's great to see you. one of the more interesting stats out there is the
coordinated decline in stocks and bonds last week. the backupn for now in yields? is there further to go? david: i think we've seen the they got the idea that there was a hawkish tilt heard there was no formal coordination. it caught investors by surprise. tohink i do expect yields grind higher this year. i don't think they necessarily leads to a lower stock arc it. if we get healthy data from the world's major economies and they , that remove the stimulus is a positive thing for stocks. mark: what the outlook for the earnings season as we approach some of the big u.s. banks this week? what is the sort of earnings
versus stock price ratio looking like? pretty heady are -- highly valued. we are expecting good news for earnings to continue. we think you will get something in the range of 8% to 10% year on year when this order is said and done. i think there is a lot to like on where earnings are for domestic firms. internationally, there is a pick up in trade. you still have the end of the energy tailwind as well for now. aware thateed to be u.s. equities really can't keep up with double-digit earnings pace ad infinitum. something in single digit's is something we can hope for in coming years.
that should frame the kinds of returns. vonnie: will that their out relative strength in economies from europe to the u.s. best and mark what will management tell us? david: i think you've seen a lot of this globally where ceos think the world is going. we got past the end of the commodity crash. kleinspast some of the in emerging market currencies. that was happening in the last 18 months. you have a little mini reset. it is a significant growth momentum. you will see management being positive about where earnings are going. said you have significant operating leverage there. figures forer sales the bottom line. this is a big change for earnings in europe over the past four years.
month after month, we saw earnings down. we saw commodities and industrials all have poor earnings outcomes. now they are being revised. that's why i think you see them perform well and you see investors going forward. vonnie: what you telling your clients to do? i know it's on an individual asus. in general? retain our overweight view for bonds. we have had that for number of years. we believe the global economy has significant room to run. if we compare earnings yields with dividend deals and what you are getting from government bonds, they tell investors to stay invested in the progress asset class. essentially, --
you can see that. if you look at where the dynamics are in terms of gdp and where profit growth is going, don'tikely u.s. equities have quite the upside as emerging markets going forward and if a client were heavily over eight in the u.s. equity we are looking to potentially raise some international places for those clients. if there is a set back in the u.s. equity market, if the dynamics look as good as they are now, i would stay on that ball back. anything from a market perspective that we can take away or not? was it all just geopolitical? david: there was very little that change my investment
outcome that came out of that meeting. there is huge gap with the united states and everyone else on several key issues from trade to climate change. very little of that is investable right now unless you see a new state of direct measured protection coming out of the white house. we did not get much of that. i think this is about a world divided on some political grounds. you can take some positives for matt. at some point, there will be some legislation on taxes. there will be a need for european leaders to act on their own and have domestic reforms. hopefully that comes through. from an investment point of view, we did not have much come out of the meeting. mark: we will keep an eye on janet yellen midweek. she will begin in testimony to congress.
is she going to wheel out the same old message? david: i think those will be the key planks of her message. ultimately, if you radically changing the message every five minutes, you're not doing it right here in you want to remain calm and give consistent messages to the markets about the outlook. that has not changed. the labor record was pretty good in terms of indicating where the economy is. i think they look at the unemployment rate and think it's low enough that we could have an inflation issue. let's remove some accommodation. i suspect they will announce and set number they will probably hike in december. it will be fascinating to hear what she is going to say about inflation. if you look at the next two or three months, where policy is going, we get down to the
crucial debate about europe's inflation. is it the case that these are temporary? significant and systemic changes to the product architect services markets which are going to be deflationary. i think there is a significant amount of an environment that is down to secular changes. i will be interested to see if she gets questioned by the congressman and the senators. mark: thanks for setting us up for the big week ahead. that's a big reminder, janet yellen delivers her policy report this week to congress. first to the house on wednesday and the senate on thursday. catch it on a bloomberg. coming up on bloomberg markets,
vonnie: live from new york, i am vonnie quinn. mark: this is bloomberg markets on bloomberg television. let's look at some of the biggest business stories in the news right now. canadian telecom company is buying 41 $.4 billion. the acquisition is made through broadband. it will extend their reach into the u.s. market.
have homes in the northeast. the outlook for oil supplies is increasingly worrying. conference, the chief executive said his company will invest more than 300 ilion dollars to maintain spare oil production. years, the company wants a pioneer in wearable technology has struggled with payments and manufacturing issues. the chief executive said they are focusing on health related latest bergat's the business flash. vonnie: today, you are looking
at central banks and janet yellen is testifying before congress this week. after inflation run amok in the 60's and 70's, central bankers want more freedom to set interest rates are in a their heels began to crack after the financial crisis. and dependent central banks are too secretive and put the interests of commercial banks ahead of tax payers. they need to be free from political pressures. the president has set mixed messages about janet yellen. he accused her of holding interest rates low to help president obama and hillary clinton. in april, he said he liked both her low interest rate policy and it yellen herself. volcker980's, paul raised the rate as high as 20% to curb impression -- inflation.
he dated bring prices under control. this boost the case for central bank independence. the boe had independence in 1987. it overseas interest rates for all countries sharing the euro currency. lately, there has been a movement in the opposite direction. the bank of japan will coordinate policy with the government. that is a move some called an alarming attack on its independence. paper co-authored by larry summers concluded that independent central banks are better at controlling inflation than central blanks -- banks under clinical control. they don't always do better in a financial crisis. stiglitz says all public institutions are accountable and the only question is to whom.
you can read more about this on the bloomberg. mark: let's stick with central banks. european policy makers are in no rush to change their stances. the governor of the bank of frank's -- france spoke to us about when the ecb is likely to tweak its stimulus measures. francois: our policy is efficient. inflation,gative that was a year ago. we expect for this year an average of inflation of 1.5%. it's partly due to energy prices, but also to the progress of implementation of our motto tell he -- monetary policy. we are not yet there. inflation,is midterm self sustained.
this will be close to 2%. we will implement the recommended policy. what we have to do and what we started to do is to adapt this intensity of the monetary policy to the progress of our inflation toward europe. what we did last march when we 8260, wee from announced once that we would not reduce further interest rates. in the future, this will be our decision, we will go on adapting this monetary policy. >> should this move quicker? do you think the markets are expecting this more quickly?
francois: i think we have an extremely clear about the predictability of our monetary strategy. as far as last december, we announced our monetary policy for the year until december 2017. we will talk about what happens. ite impatience, i don't say for the financial markets, we are independent did independent means we are independent from political pressure. >> are you waiting for the political risk? you mentioned that protectionist policies are a threat to global growth there in is this what the
governing council is waiting for? how the risk evolves for the rest of the year? this is an important characteristic of the european situation. declined with them in the eurozone. -- this was supposed to be a very dangerous year with much turmoil expected. we have seen the contrary. our recovery is solid because it is the mastic driven. level, outside the eurozone the brexit negotiation is a challenge. policies, whatn we have to do and this is an thing it, we need to go on with monetary policy and international rules. this is the best solution for
global growth and also it's the best solution against any quality. mark: back in france, he was speaking to our own reporter. you're looking at life actors of parliament in london. theresa may and jeremy corbyn are trading words. they are talking about climate change and the g-20. you can watch that live. lastingis the long displacement of workers. ♪
production of the model 3 after the first car rolled off the production line friday. they already have half a billion dollar in deposits for the electric car. plan,n the production this is caroline hyde. musk has got his hands on the first one. caroline: we don't know that much about the specifications. we have glorious photos from twitter over the weekend. what we do know is you will go to 60 miles per hour. we know the single charge will take you 215 miles. it's a smaller vehicle from the model s and the suv. what everyone needs to know is how on earth they get the target.
they are going to produce 30 this month or in -- month. there will be a big fanfare party. then all the way to december, we will start to see 20,000 cars per month. how do they make this leap all the way to 660 cars per day? they have to gear up for next year. about the same amount of electric vehicles as the entire world. this is the thing they specialize in. vonnie: if you do one thing, you will eventually do it really well. high he has set the bar so and people are happy with the cars.
cars making the original simple. caroline: they do not want to see the same debacle that happened with the model s, where they had problems with some of wings that were able to avoid cars next you. there were problems with misaligned body panels and software glitches. they don't want those problems with the model 3. it is more basic. it doesn't have the usual upgrades they promise. they are trying to play it safe and get in the right hands at the right time. despite the initial glitches, it was the fourth best-selling luxury suv in the united states. good luck. that u.k. is still
managing to pull in the bc capital. 2.4 billionout pounds of money since frexit. this is largely held by the vision fund. this was set up by softbank. money flow into the u.k. france sees two big funds this week. they are up to one billion euros now. mark: you did it in 35 seconds here it you are a real pro. the european closes next. it this is bloomberg. ♪
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mark: these the top stories we are covering around the world. european markets are starting on a high note. food markets are leading shares higher. we will look at what she name may be the best value play in the second half of the year. minister is a bolstering her case for breck is a -- brexit. jeremy corbyn is speaking to parliament right now. the metal exchange is making a major push into the gold market. why they are releasing their first gold futures contract in three decades.