tv Bloomberg Markets Americas Bloomberg July 11, 2017 10:00am-11:00am EDT
vonnie: here are the top stories we're covering from the bloomberg and around the world today. president trump will nominate randall quarrel to be the fed's chief banking regulator. how will the choice affect financial? are the biggest opportunities in emerging markets and how will more hawkish central bank policies impact them? we will talk with sergio, at blackrock. and, drains in the perfect storm. suddenly turns into a hot market. we are about 30 minutes into the trading day in the united states. week in july, julie hyman is here to tell us more. julie: not much movement on the
overall average as he s&p is 1%, the biggest move of the three major averages. more movement on the sector numbers it analyst estimates but the shares are trading lower. some of the growth came from selling more premium level snacks and higher margins. they expanded a bit. still seeing stagnant beverage growth particularly in north america. ont may be putting pressure the shares in terms of trading here. downgrading stocks saying a recent pullback in home buyer traffic is inconsistent with the rise in valuation we have seen for the homebuilder stocks. lower,he stocks trading they are among those specifically downgraded by barclays as well. valuations andof in this particular instance, i am looking at going back about a
year here. if you go back further, you will see that on a historical basis, they were not elevated but certainly, the ratio for homebuilders as a group has been indeed trending higher. look at the recent ipo passes in the united states. they are not faring so well. down more than five point 5% today, and one of the things pushing it lower is a downgrade by morgan stanley. analysts expecting -- expressing concerns on the ability about to grow as fast as initially expected. blue apron betting a two dollar price target and its first analyst rating since the $10 ipo. two dollars a 10 at the price target.
they are saying that business model has severe cost challenges and intensifying competition. it is not a very rosy outlook. mark: four but three industry groups are falling on the stoxx 600 today. it is all about corporate news. as much as a percent earlier, biggest drop since january. it says it will out eight fewer resources than some investors penguin random house majority owner for about $1 billion or this has raised concerns from the analyst community and may require more funds to prop up its balance sheet. the company announced the reorganization and is seeking to address sluggish command. collegewindling u.s. enrollment and textbook sales.
shares down by 21%. quarterly clothing revenue and missed estimates for food sales. biggest decline since january. same-store sales and home division fell since it ended july the first. 9% in comparable time earlier. sales that is evidence the u.k. disposable- amid income, we know more on that since wage data is released. marking the second straight quarter that it failed to meet low expectations, it raises questions on whether chief is negative steve closed 30 stores here in the face of long-term
sales and decline. all retail sales rebounded in the second quarter according to the british retail -- up to 2.1% decline the most since 2013. might not be a surprise to many. consumers the driver of growth since the referendum last year. the data does buck recent weakening trends. mayad sales plunging in statistics andatistics these are showing that consumers are doing -- consumer spending -- week for quiet
economic data points to look forward to. nominated by president donald trump to be vice-chairman overseeing the banking system. now awaits confirmation from the senate. it is ironic that this was the and there are a few little quarrels. >> he will be the first person to serve as vice chair for supervision and he would like to roll back parts of dodd-frank. never have the job on a defective basis until -- until he left in march. dodd-frank has good features to it but he would like to amend and cut backule
stress test requirements the fed opposes. he opposes breaking up the bank and thinks capital requirements may be too high. no sign of that yet but it is what he suggested might happen in the future. mark: he will vote on policy of course. what type of policy does he favor? and heavors using a rule cited the taylor rule suggesting wall street would be better off if it did not have to guess the feelings of various members of the open market committee and instead could just look at the inputs from the economy into the role and figure out what the fed funds rate will be the problem is the fed is oh is saying there are multiple roles with multiple inputs and you cannot always trust the data and it is an unreliable way of making policy. yellen will testify on capitol hill tomorrow and i am sure she will be asked about that. said it is a powerful
requires at one that majority -- requires a >> with some regulation can be dialed back. it is a question of how far and how fast he wants to move your the fed really regulates the largest banks in the country. the controller and the currency also regulate banks. do, he will be able to can influence but he cannot make them do anything. >> fascinating. not the last we will hear from you on this subject. correspondent for bloomberg news. goldmanction comes as sachs and other u.s. banks, joining us now for previews is
michael from bloomberg news. at firstld we look for glance from these earnings? >> one of the things will be the trading results here a lot of banks signaled that the second quarter was much weaker than the first quarter. saw some of the executives come out six weeks ago and some of those numbers, we have done quite of a -- quite a winning streak for the banks trading results. this could break the streak. we are entering the summer slowdown. this was not a good quarter, you may not see that pick up again until cap september. .ark: welcome back wall street a wonderful story today by laura. it so slow out there lacking in market making stories that traders are taking to tender and playing golf?
michael: it has gotten slow. we have heard some stories about timendo, just passing the for the traitors because there is not a lot of activity. did -- the vix dip into single digits. which rarely ever happens. the volume is down, volatility is down. had these big events that really drove the action. you have not had that so far. some of the traders are saying that every summer, there has in some kind of event that got them back to work at full speed in the last few years and they and'tis fit some ring, even a resolution for north korea, that would not necessarily be enough to wrap up the bond market, would it?
>> no, i do not think a one-off event like that would happen. i think traders are saying if the trump administration could actually follow through on some of its policy, perhaps that would unlock activity. you saw that in the first order when there was more optimism about tax policy in the health care policy, something changing. so far, we have been at a standstill. they would need something to change along those lines to pick up the activity. vonnie: thanks for joining in studio and a reminder, fed chair beforeellen will congress this week. -- catch both right here on bloomberg. news from areaking french lender. from london moved to paris, 300 to 400 jobs mostly
in corporate and investment bank in order to a spokeswoman. they represent about 20% of the staff, no timeframe for those relocating jobs. it comes as jamie dimon, who is in paris today, speaking about a number of issues, the jpmorgan chief executive told, he said could forcecials london-based firms to move substantially more employees if they demand additional banking operations to be performed. of bankseing a feet moving employees from london to other hubs such as paris and frankfurt. no doubt that will continue. would: it makes sense it be paris. we have yet to see the labor reforms going effect in france. it will be interesting to see how much soft in is hoping that will happen and how much those are irrelevant.
first word news. >> let's get you caught up with the headlines. u.k. prime minister theresa may trying to reset her leadership after losing a parliamentary majority and last month's snap election. >> though the results of last month's general election is not what i wanted, those remain. my commitment to changing britain is undimmed. my belief in the potential of british people and what we can achieve together as a nation remains unharmed. >> one year after becoming the conservative party leader. at least 16 people were killed in the u.s. military plane crash in mississippi. an official says the plane belongs to a reserve unit. no details yet on the cause of the crash. president trump off his nominee
to succeed james comey faces the senate and his confirmation hearing tomorrow. he is expected to be asked whether the president demanded his loyalty in exchange for his nomination and if he can stand up to the white house. mr. trump fired james comey in may. and going green. the company will become the london elected vehicle company powered by batteries instead of diesel fuel. won't be limited to london. global news 24 hours a day powered by -- global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. mark: right. we will put agricultural reports on with key u.s. crops. this is bloomberg. ♪
mark: time for futures in focus. today,g oils closely , weing us now to discuss are seeing dry hot weather boosting grains in recent weeks. -- has this got much further to run? >> good morning. these were underpriced for quite a while and i think now, you take a little bit of the weather and a little bit of weaker dollar, and all of a sudden, they are back in demand again.
we've and corn rallied 40% for the lows. after having a little struggle, finally broke out as well. the very near term, probably a little bit of selling to overall, there will be great buys. money for alternate investments as well. it looks pretty good for the agricultural spot right now. >> opec needs to shock and the market. a shock and on tactic. worthless andis has nothing to do with the price of oil and the united states. time.don't react every the first place, we were $55.
higher, wet it is don't have any manufacturing going on. plus the fact that we have in the united states a supply without affecting -- will, wey to pretend can see over the last seven or eight months. mark: you said general markets are in a coma searching for a reason to go further. will they find the reason? think they will find the reason and i believe the reason will be the downside and i think they are circulating. we have got all the good news we can stand. earnings,ngs, good you have got all of these promises. what happens when they don't deliver question mark what happens when they are making bit ofney, ready for one shock and ought to start the show off and until that happens,
launches is the senior etf analyst at bloomberg intelligence. it is interesting that all of these keep being introduced though there is more demand for other kinds of etf at least for now. when that you are at is a low volatility etf. there are a lot of products out there. what makes this one different? >> this is the minimum variant s&p 500 etf. bigvolatility is now business. though it is not respected as a factor with in the academic community, investors love it here they love getting the market with less edge. this one is like their low volatility portfolio which gives you 100 volatile stocks in the s&p 500. this one basically goes and gives you a portfolio with sector with -- sector ratings similar to the s&p. it has got overweight certain
sectors like utilities and staples. it is themilar, minimum volatility turmoil. you have increasing competition in this space. powershares came out first and ishares answered with a unique product and powershares is answering back but all in all, it is a $40 billion market in etf so there will probably be some market for this project. >> on the faces it, it does not sound smart, it sounds pretty straightforward but you say it is actually a factor. >> i do. put them in the smart beta category. this is a all right -- equal weight. before you talk about the story, pro sports, revenues are up, i at it, you are equal weight basket of stocks.
you are essentially giving smaller cap stocks a louder voice. that introduces you to the size factor. the etf will probably outperform in bull market and underperform in bear markets because it got a little extra volatility. and when youverlap look, there is about a 50% overlap. you look at something like the video game etf, that one only has a 5% overlap with the s&p 500. the volatility and how much overlap to something i already own? julie: these are just a couple of samples -- examples. leastare new issuers at to this particular universe. big asset managers are coming out with etf's. what is driving it?
>> basically what you have is a massive repackaging of mutual funds into a smart beta etf. a lot of the big managers you love and know who have not done any and etf, that is what they are doing. value momentum etf's is, transamerica will have risk-weighted smart beta etf's. launchingity is also a line of smart beta etf's. julie: thanks so much. vonnie: julie hyman, thank you for that. still ahead, the fed's tightening spooking emerging-market holes? this is bloomberg. ♪
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has more from new york. >> the menu set up a meeting between donald trump junior and says -- lawyer at behest of a moscow-based man with ties to trump's friend businesses. you may time for the meeting organized by publicists rob goldstone on information about hillary clinton. the new york times says goldstone told trump junior at of the session that the russian government was behind the information on clinton. qatar torson is in mediate the dispute between the nation and for other arab countries. >> make sure both come -- those countries are accountable. together, the united states and qatar will do more to track down sources, do more to share
information, and do more to keep the region and our homeland safe . >> the next obvious saudi arabia and the main player. the trade deal donald trump is offering theresa may will be easy to promise but hard to deliver, a warning from business leaders and trade analysts who say there is more leverage in the trade negotiations. .t could be made to compromise day to for hundreds of thousands of commuters using new york state -- new york city's penn station. north america's busiest rail hub and it schedules. by most measures them first day for new jersey transit, railroads, mostly without issue. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg.
down moreu.s. dollar than 6%, and it is expected to grow in conjunction with high interest rates. for more on the impact of monetary policy, let's ring in black rock head of emerging market fixed income sergio. good to see you. half, been a strong first you were expecting a more muted second half, why? go, all thes we mess -- all the fears unwind thomas they eventually keep hitting manufacturing exporters. firstsically have high-yield or's rally and low high-yield or us coming back, which gave almost close to 10% return for global markets.
the second half will be a different story. less of a beat down and more of an out. conclusions for the drivers. we believe the quantitative tightening is coming. we know that that means eventually, the adjustment happens in prices. as we seeews is central banks moving together or saw or less giving what we in january of 2016, it means when they move together, prices are less volatile. into --est-rate differentials between the countries. the party to ward higher rates and liquidity. us is why we say the end is night. side, twodamental
polls on the tightening, which --good for commodities and and the first have to at on the ofosyncratic side, a lot surprises from mexico, brazil, turkey, all of the events with cash, and what we see is eventually, in the second half, ofthere is less of a wall money, eventually, these will start to pay. annie: let's just great down few of the points you have made, let's start with the central banks, for example. the emerging-market central asks have not in as hawkish perhaps the developed markets. they have not been able to. what happens is emerging-market central banks stay dovish? >> you get a convergence. you get the major central banks moving out of do we and
emerging-market central banks are of course witnessing inflation expectations collapse, getting some comfort and eventually, either not hiking at the same pace or eventually, some of them, they have some cuts. is we putportant things into context. what has made a significant part of the performance is flows. everything boils down in the second half. for the second half, it is great because we have more money to put to work and i do not want to buy on top of market. continue, youe to have to expect another 2.5 total return for emerging-market indexes.
, you get negative interest rates going forward. mark: let's look at a chart that highlights this perfectly. the bloomberg local sovereign bond index, the white line, blue line, the dollar, sovereign bond index. you can see the currency bond markets this year. currency will weigh on the second half or not? , the newse to think that the dollar will not be as strong as people would expect, in that case, look markets will then whatndem because will happen is more on the duration side. we expect both of them to behave the same.
eventually, more volatility on the low markets because the dollar eventually going to fight the situation on growth in the u.s. vonnie: what kinds of markets are you looking at in particular at the moment? we are more, rather than markets, we are increasing positioning in our portfolios to make sure when we start to move out, we're not caught with stories -- vonnie: where are you seeing value then? africa, weple in believe they are particularly fragile moving out. though the stories are moving out, they are not even -- underway rather than man markets. countries have a rating --
buying it again since the country open the window or are you still avoiding it? wesley believe it pays you more and has volatility. classless about egyptian t-bills? how do you actually go about it? >> we're letting the exposure mature. vonnie: any value there? the ofs a place we like course, fundamentals are asroving the euro situation well as making other currencies -- so volatility on the commodities side. you --ry is still paying
we're very happy to see carver. you have been attracted to the more geopolitical -- in latin america like venezuela. >> i would not put them -- moore a special situation where of course, some of them were present -- we see some opportunities. what about bond etf's? you saw what happened in the global market last week in the last couple of weeks. them -- i see a
work atlows who to valuation levels. normally the people who go at the top of the market might be spooked very soon. a 5% selloff to see these move. mark: in the last 14 years, every year he has one. emerging markets, at the current it with emf is assets? >> i don't know. happy.ou are it has to be a relationship between maybe football and emerging-market debt possibly.
americans spend more on prescription drugs than anyone else in the entire world. they buy a lot of pills, but what really sets the u.s. apart from other countries is high prices. about $1100 per person is spent per year on prescription drugs in the u.s. cancer drugs routinely cost $2000 per month. drug companies have become the subject of a quick outrage and in 2015, martin shkreli became a symbol of greed when his company bought the rights to an old drug and raised the price more the. drug spending began to surge in 2014 and rose in 2015. specialty drugs accounted for the majority. like other nations, the u.s. government with drugmakers, u.s. private payers typically rely on third parties. to negotiate discounts. also, their parties make exclusive deals with big pharma
and limit the patient choice of drugs. saidn five u.s. adults they failed to complete the course of medicine because of the cost. need toutical companies isk -- critics say pharma exaggerating the cost of development. president donald trump said he would force industry to bit but after meeting with executives, he is here to back off on the idea and folk instead on reducing regulation on drugmakers as a way to cut costs. it is an idea drugmakers have embraced. mark: rising at the 2016 meeting, once again distracting the trump agenda.
joe manchin spoke to bloomberg chief washington correspondent kevin's really about the latest development. >> it is incomprehensible anyone go to a meeting such as that surfaced small, for paul manafort to let that happen, that is an inadequate campaign manager who less that happen, i can assure you. a campaign that is really struggling come you don't have odds, youchance, long start thinking about anything you can do. they say we cannot get out of this parameter. to let them go that far is uncalled for. >> republicans are saying democrats did this, what is your response? >> it is a shame that politics have dropped that low. to -- here a way
>> have complaints against people do crazy stuff. , doingr off of the grid the thing they are supposed to do. we get it through open source know exactly what they haven't have not done here when used to this slow, working with an adversary that has been an adversary our entire lifetime and long before that, russia. -- someone from the russian government will be help, what is the purpose? >> a lot of folks scratching their head in washington frustrated with washington but they're not getting done the things they said we would do. infrastructure, tax reform, health care. when will all of this -- >> when you are in a hostile work environment every morning, trying toainst them, defeat them and whatever they
sit down and have a common sense approach, a balanced approach to how you fix things, it is not going to happen. >> let me press you. the majority leader is trying to get the health care proposal done before august the is it smart for him to work with people like you or should he work with people like senator ted cruz? >> i would think he would work with all of the staff. this countryke i have reached out and i'm happy anyplace anywhere. bill cassidy, people that i they want to fix things said, we just can't do anything until we find out what it will be, whether we will vote or not your request and he has not
reached out to you at all. you think this is just posturing to get on board for health care? >> they cannot even get 50 plus one. 60 democrats and no republicans. >> only $2 billion in the majority plan to combat opioid addiction. there is a suggestion there could be 45. this is an issue you and your republican counterpart in west virginia care about. is that enough? >> not at all. not enough treatment centers. people who go before a judge every day and my cousin is a federal judge. i never have a problem finding the jail cell. i have treatment centers i can put people in. that is wrong. atit is just headed corporate tax at this point?
mark: i am mark barton along with vonnie quinn. jpmorgan chase chief executive morgan. -- telling the community at a conference in paris that his bank among will have to move several hundred jobs on day one. quite what happens next is totally up to you and not up to britain. step, ifhave the first the eu determined he wants to
move a lot more jobs out of london into the eu, they can simply dictate that. the politicians can dictate it. telling bloomberg that j.p. morgan passes eu investment bank, other services will be handled at dublin and luxembourg. for more, let's bring in bloomberg news brexit managing editor. a reset, relaunch, rebound, whatever you call it. prime minister treason may. was it seven tosh by the foreign secretary health scandal dating back decades? >> not the first time. loose lips sink prime minister of ships. declaring there is no plan for a there wasexit because going to be a great deal.
suggesting there is no contingency planning. very swiftly came back and said there was continuous planning for both scenarios, putting the secretary back in his box. mark: how it was it received, putting aside foreign secretary? >> you could argue to some party forcingour it to come forward and work on brexit. it has not really been interpreted that way. it has been interpreted as the fact she was asked to seek guidance, more a sign of weakness, having her hanging off a cliff to give you a hand. it is more interpreted as a sign of weak this comes so difficult -- different from the one -- hoping that it would result in a soft or brexit.
going to be surprised. >> yes, a senior member saying leaving the market make sense. main trap of the through which most parties are going. but yes. any idea that written would try -- dealt a blow there. conservative lawmaker theresa may, the bad news keeps flooding and for the prime minister. she is not getting a lucky break. but sheg very much faces this repeal bill on thursday. >> trying to stand in her way? attempt to going to undermine an effort to get some eu.hese over from the mark: today's the one year birthday of something.
the exit bulletin. you can get it sent every morning. >> back then, the chancellor, the prime minister job was described as impossible. mark: whatever happened -- there you go. simon kennedy, good job, bloomberg news brexit, managing editor. european closes next. we are following stocks lesson 35 minutes away from the lows. this is bloomberg. ♪
these the top stories we're covering from around the world. stocks are running lower today. we are primed for the earnings season. companies on both sides of the atlantic, they start with a solid week. prices are dipping further. goldman sachs says only shock in the auction keep crude from dropping below $40. how drastic does opec have to cut western mark when it comes to hedge funds, fixed income is falling out of favor. we are here with the latest hedge fund survey. this is a look at european equities. this is the tuesday