tv Bloomberg Markets Americas Bloomberg July 26, 2017 10:00am-11:00am EDT
coming up later today, but last-minute economic data for the fed to chew on, potentially. let's get to julie hyman. new home sales for june coming in at 610,000, 5000 less than estimated. it still makes for a month-over-month gain of .8% here. we have seen choppy housing data recently. looks like this is largely in line with expectations. canfocus is more on the fed as well is on earnings. continues to be busy on the earnings front. all three major averages rising to records, largely on the back of strong earnings reports here. yesterday we had the dow and s&p leaving the way.
youy we have all three of s&p is the weak link among the three. if you look at the earnings microdevices, topping the s&p 500 with again of 9% after the chipmaker predicted third-quarter revenue will rise, leaving it room to beat analyst estimates. boeing coming out with monster cash flow, free cash flow at $4.5 billion, more than double what analysts had been estimating. the company is also returning cash to shareholders and its earnings beat estimates and forecasts, too. the best-performing stock in the dow this year. at&t shares rising as well, the biggest gain in three years. it is posting a surprise wireless subscriber gain. analysts had been predicting a drop. gain of 127 thousand subscribers.
here are the three worst-performing stocks in the s&p. that handles web traffic, that company's third-quarter numbers missing estimates. some of these media companies are bringing some of the traffic in house rather than outsourcing akamai.e likes of universal health services is the second hospital operator to miss estimates. the company forecast for the four-year missed estimates. wynn resorts as well -- that company doing well on the resurgence in my cow. but earnings missed estimates, and wynn palace is missing estimates. there is still construction there and that has had an effect on traffic. as you watch it stocks climb to are watching volatility at record low levels, at least for stocks. this is the year-to-date chart of volatility in stocks, bonds,
and fx. the vix remains in the basement, that is the aqua line. you are seeing a slight uptick in bonn volatilities and also in fx volatilities. it is interesting that we still have stocks lacking -- lagging. vonnie: julie hyman, thank you for that run down of all things market moving. grover earnings are pouring in as investors keep a close eye on the latest fed decision, 2:00 p.m. eastern today. with no change in interest rates expected and no news conference scheduled, investors will be looking for updated language on inflation and any details on a fed plan to unwind its balance sheet. and then of course there is washington. joining us is one of the biggest bowls, binky chadha, quick -- chief global strategist at deutsche bank.
even when we have this crazy help to debate best health care debate, -- this crazy health care debate. binky: listen to the other part of washington. the fed is extremely important. i don't expect major insight or news coming out of them today, but the decline in inflation, the range-down behavior of the middle yield since the of december while the equities have continued to throw up. a pretty big disconnect. as you said, the key issue is inflation and how much the fed is going to take seriously what i would argue is a relatively modest and pretty normal, noisy pullback. how does the fomc statement have the power to move markets today? binky: potentially it does.
i don't expect it will be a big move. i think at the last fomc press conference, they were very, very player that -- very, very clear that they would look through the , evolvedin inflation into we have monitoring more carefully. so yes, you have to listen to what degree, and continuing to move down this path or the slowdown in inflation more and more seriously. mark: we are in the middle of the earnings season. second straight quarter of 10% -plus earnings growth. obvious question, is it sustainable? binky: in our view, it is very sustainable. one of the things we would point to is if you look at past recoveries, outside of recession , earnings growth of 10%-plus is actually the norm in the last 2
recoveries. in this recovery we have occasionally seen 10%, 10%-plus. we have had during this cycle several very large sharks come starting with the european financial crisis and the slowdown in the emerging markets and the u.s. dollar and oil shock. i think most investors and people don't think that 10% is the normal, and i would argue that the bar has been set very, very high for the earnings season. much more are beating strongly than the average, and the bar was set high. mark: companies have often talked about the tight labor market, wage hikes. where is the largest pressure? binky: that is something that has to be very, very close to
watch, a sign that the cycle is ending good we don't have to remind you that it is a nice year. so far it seems that companies are doing a good job of andtting the wage pressures in terms of the tightness of the labor market in terms of really making investments to improve the productivity of the existing labor force. if you look at where margins are, i would say margins have expanded across the sectors, and that is pretty surprising. margins are essentially holding flat close to the record peaks. vonnie: one of your main arguments at the moment is rotate towards volume if you have been in growth. negative value and the presence of negative growth -- can you make a positive case for getting into value stocks? absolutely. it is a board keep in mind that
value relative to growth over the last seven years -- over the course of the recovery after the initial burst where the value, as it typically does, outperforms, and a very simple point to make is that value is sitting relative to growth at the bottom of this. if you think about it from a trading point of view, there is greater upside and downside is limited. number two is value relative to growth tends to correlate extremely well, as a church, in our view with cyclical growth indicators. if you look at cyclical growth indicators such as the citigroup economic surprise index, we are sitting in the vicinity of -60. it is clearly a mean-regarding index. it is about surprises. we are at the beginning of what and then a long phase
eventually positive surprises. number three comes back to the issue of the news we get this afternoon, the 10-year yield, inflation, and i would argue that the risks for rates are up rather than the downside. mark: given that janet yellen recently referred to some assets as somewhat rich, and we had a survey of various strategists that suggested that the end of the bull run that began in 2009 could be by the end of next year. given that they indices are in records today, do you look that far out? eriod byave a time p when you think it is going to end? binky: i would argue that the fact that equity markets are record highs -- it is a nominal as that, like gdp. as long as there is real growth and some inflation, earnings are going to grow. you talk about earnings growing robustly.
the stock market is going to go up. in terms of thinking about valuation i don't not -- i do not believe we are anywhere close to high valuation levels that would suggest of the pullback because of valuation. the bull run in the equity markets will end with this cycle. equities our growth as that, and it is about the business cycle. we think it is three or four years away. vonnie: three or four years? wow, thank you. binky chadha, chief global strategist at deutsche bank. -- be sure to catch as special report, "the fed decides." let's check in on "first word" news. courtney donohoe has more. isrtney: president trump banning transgender people from serving in the military. on twitter, he said that the military must be focused on burdenednd "cannot be
with the tremendous medical costs and disruption that transgender in the military would entail." in june, defense secretary jim status delayed for six months a plan to allow transgender recruits into the most revered the senate will consider another proposal to repeal obamacare today. senators rejected mitch mcconnell's health care plan last night, after several days of debate over how to scrap the affordable care act. there is no clear idea of what obamacare replacement plan senators will be asked to pass. attorney trump says general jeff sessions has let him down, but he will not say if you will fire the nation's top law enforcement officer. he has been highly critical of sessions on twitter this week. among other things come he is unhappy that sessions recused himself from the russia investigation. of dieselban sales and gasoline-powered cars and 2040.d -- in
the decision is largely brought on by cap eu emissions rules can even though the uk's planning to leave the bloc. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. i courtney donohoe. -- i am courtney donohoe. vonnie: courtney, thank you. eiaers gear up for the crude inventory report could will oil maintain upward momentum? this is bloomberg. ♪
time for "futures in focus." oil is climbing above $48 a barrel. joining us to discuss it all from the cme is oliver sloup. we might be seeing a little bounce from the dollar today, but it has been weakness over the last few weeks. where does that any doubt -- where does that end? oliver: very little change as traders are sitting on their hands waiting for the fomc meeting. we have been in a well-defined downtrend all year and accelerating over the past several weeks. i would not be surprised to see that continue after today's statement come as i don't think anything you will be brought to the table. vonnie: is it a complete nonevent, or is there a way that traders the cme are playing this? oliver: it is probably going to be a nonevent, but you should expect the unexpected.
the market should pay attention to little words and missing asds in the statement, such declined recently, declined further, and whatnot. there is more downward pressure in the u.s. dollar. we are waiting for more of a process to find the bottom as we go forward. ultimately, we see lower prices. vonnie: one question on oil -- opec headlines this week, and we are inching towards $50 a barrel. we are about it for brent? do you see wti making that level? oliver: veryoliver: a big one. $47 for dissents was a big win. we will get confirmation later eia, whereg from the the expectations were $3 million. if we get a bigger drawdown than expected, i would not be surprised to see has had towards the psychologically important $50 level.
it presents a really good opportunity for hedger to put headers -- hedges back on. vonnie: our thanks to oliver sloup. mark: great stuff. time for the biggest is the stories in the news right now. -- biggest business stories in the design of it jim hackett surprising wall street with second-quarter earnings that beat estimates. ford is battling some familiar challenges -- a slowing u.s. auto market and an aging model lineup. coca-cola also has a new chief .xecutive, james quincey cost-cutting has paid off. coke posted second-quarter profits that beat estimates. belt-tightening and hydrant is high during the prices helping coke -- belt-tightening and high prices helping coke offset sales declines. squeezing more cash out of the 77 dreamliner program in the
second quarter, estimates are that boeing will spend $3.4 billion of its cash haul on buybacks and dividends. that is the latest "bloomberg business flash." still ahead on "bloomberg markets," the defense companies reporting results today. the cfo of calais school join us from paris -- will join us from paris in a bloomberg exclusive. in the next hour, the mcdonald's ceo joins us to the world's biggest restaurant chain rolling out a new delivery service on top of a strong earnings report. this is bloomberg. ♪
today. general dynamics and northrop grumman post second-quarter results. here in europe, you are watching shares of catalase rise. rise, confirming full having your targets. joining us is the cfo pascal bouchait at. thank you for joining us today. how would you characterize the very segments within your market right now? of the menrall good in a business is even though there is uncertainty regarding the overhaul. the level of demand -- look at our figures. top line for thales in the first half of 2017. and all of our businesses are growing in quite a nice way. as you say, there is
pressure on some defense budgets, but there is also pressure on u.s. president donald trump to enforce the spending on military by 2% of gdp. boonhat going to provide a for yourself if he is successful in pushing that through? , i guess -- we have seen president trump urging nato countries to increase overall spending in defense. this is what we see in 2017. overall, we see today the midterms quite positive in terms .f defense spending this is a bit new and mature countries.
france is a good example. present mark crumpton from his will to increase budget spending moving from what it is today 2% in 2025. sayhe midterms, let's tailwinds in terms of demand in defense markets in particular. macron, whichg up is a good opportunity to bring up the former head of the military, of france's who resigned after a public dispute with macron over military spending. do you feel sympathy with h im? pascal: i would prevent from commenting -- what happened with him. let's look at the underlying figures.
it is true that with regard to 2017, it is expected moving in will be terms of defense spending for france. macron maderesident it clear to start increasing defense spending, and this is what is important for a company like thales. mark: let's see if we can get a comment from you on the new franco german fighter jet development. is thales going to be involved in that? pascal: yes, at this point in time it is probably just a project. we will have to see how things go going forward. seek development of cooperation between germany and france, of course thales will eager tole, and we are
see how it will go between those two countries. mark: i want to talk about the u.k. based in london. u.k. businesses have been struggling a bit. are you revisiting and looking to reset your u.k. business to help bring it back to growth? understand it's a bit of -- the evolution is the situation. let's make it very simple. regarding the back seats of our business, we are a british company in u.k. we employ more than 6000 people in u.k.
release of weekly u.s. oil inventories. surveys call for a drawdown of 3.1 million barrels. been an opec meeting come in the meantime, as well. bit ingyrating quite a the last two days. let's get to julie hyman, because she has those data. we're seeing a larger than estimated drop, 7.2 million barrels is the drop in crude oil inventories last week. there is also a drop in u.s. gasoline inventories, although it is slightly smaller than estimated, one million barrels versus the 1.8 million drop versused in distillates, 161,000 that was estimated. , alooks like on balance positive report for the oil prices, and it looks like on bloomberg we are seeing oil take
a leg up. if you look at the bloomberg, you do see a leg up in oil prices. we will be keeping an eye on oil to see how this shakes up. mark: we are one hour away from the end of the wednesday session. health care is marginally low. up by .5%. i know there is all this talk of records in the united states. 7% below the record high set in april 2015. there was a bit of perspective for you. below 10.s record run we have never been -- i look back over data -- never been below 10. 13.2. at you saw the spikes in april before the french election and before the brexit vote in june
last year. there is the fear index. big day today. draghi three-year anniversary since he under that memorable phrase that he will do what it takes to save the euro. saving the bumblebee of the time -- the eurozone the existential crisis -- as you can see the italian spanish and french. 6%, 7%. the limitation of negative rates and the qe program. leading to discussions about .ormalizing policy talking about gdp, we had data in the u.k. -- thenomy's last roster economy's lackluster
performance, only modestly picking up. .3 come in the first three months. the economy experienced a .otable slowdown growth was led by services which rose .5%. production and construction were a drag. agriculture had zero impact and the latest numbers reinforce that view. out, andto be petering hasn't been sustained for the first half of 2017. vonnie: fascinating. mark, thank you. earnings season is quite a roller coaster ride. let's check in with "first word" news. courtney donohoe has for. courtney: j 2 of what is likely to be an underrated that double debate -- and unpredictable
debate on obamacare. the result may be a slimmed-down obamacare repeal that gets rid of the most unpopular provisions . more from capitol hill in just a moment. the house has sent a tough message to president trump on russia, voting to impose for sanctions on the nation and limiting the president's ability to lift those penalties on his own. the senate has passed similar legislation. president trump says he may reappoint janet yellen to another term as chair of the federal reserve. he told "the wall street journal " that he likes to see interest rates low. cohn was also a contender. cohn has indicated he is happy in his current position. in venezuela, president nicolas maduro is showing few signs of backing down from moves to increase his power. on sunday, there will be a vote to rewrite the constitution.
opponents of call the general strike today. venezuelans have been stocking up on food and water. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. i am courtney donohoe. this is bloomberg. vonnie: courtney, thank you. the senate is bracing for potentially chaotic path to repealing and replacing obamacare. senate republicans are said to hold votes on a number of different health bills, after vice president pence cast a tie-breaking vote to begin debate yesterday. kevin's really spoke to former -- kevin cirilli spoke to former republican senator jim demint earlier. >> i don't think it is going to advance unless the democrats vote for it, and i don't think it will. kevin: can you support a skinny version? makes no sense at all, unless it is some kind of shell to where they can get a real feel ill. to repeals promised
obamacare come and the mistake they made is just not repealing it and then going on to reform the health care system in the way we know it needs to be done. as long as there is repeal, you cannot get one immigrant to help you. that's one democrat to help you. --you cannot get one democrat to help you. kevin, getting to conference is exactly what it is. kevin: yes, it is, and former is one of the puppeteers, meeting with folks in the freedom caucus, trying to get to a path of repeal. both of the freedom card -- i spoke to freedom caucus chairman mark meadows in the last hour, who said that the skinny version of the repeal bill will not have support of the freedom caucus. should this advance out of the senate and go to conference, you are looking at a timeline of some sorts if not in the fall --
early calendar 2018, early part of next year. all of that, a lot of moving parts. though we areen having it in the senate. vonnie: what is mitch mcconnell's strategy from here? getting 20 hours of legislative debate out of the way so there can be an up-and-down vote eventually? kevin: i think the strategies for him to turn the page, because yes, republicans would like to repeal parts of the obamacare act and fulfill that campaign promise, but it seems likely there are too many strong divisions. the longer this debate continues and we start talking about having a final vote in the fall or next year, the closer it gets to 2018 midterms. it is incredibly unusual to have a major divisive policy vote in a midterm election year. the window of opportunity for republicans to repeal obamacare is closing if they cannot get this done before the fall. nark: in the meantime, ca
trump pick up and run with tax, or you cannot do that before obamacare is done? kevin: you can do that, and that is what is happening behind the scenes. meetings are underway on tax reform. they voted that budget process bill advancing out of the budget committee on the house side, and they are moving forward and laying the groundwork for a new type of reconciliation process. they have laid down the foundation to be able to address tax reform them even if they don't address health care. vonnie: we have plenty of tweets today and we do not get to go into all of them. i do want to mention this new story coming out the president trump will announce today that foxconn, the wisconsin plan, the apple suppliers -- he has an announcement on jobs to make. kevin: wisconsin is a key battleground state, mind you, that helped propel then-candidate donald trump into
the white house. this is part of the conservative coalition as they look towards the 2020 elections. this has become a key state for the republican coalition. cirilli, we will be back with him in a little bit. treasury secretary steven mnuchin is testifying on capitol hill to the senate appropriations subcommittee. this on the full-year 2018 budget. he has been saying that the uncertainty on the debt limit has implied costs in the markets. naturally, as treasury secretary, he would not want to get the government to be reached or agencies to consider downgrading their outlook or rating on the u.s. this is bloomberg.
live from new york, i am vonnie quinn. mark: and i am mark barton. this is "bloomberg markets." business stories in the news right now. amazon is calling it the largest job there in the united states. the world's biggest online retailer will open 10 fulfillment centers on august second. amazon says it has more than 50,000 jobs available. parents of mercedes-benz is studying a legal separation of its businesses. the company has been looking for its units to become more nimble for growth. isean automaker hyundai counting on a new compact suv to stop the slide in sales in the
biggest market. it will be introduced in the u.s. and europe later this year. hyundai just reported lowest reported quarterly net income since 2010. that is the "bloomberg business flash." vonnie: time for the "quick take," where we provide context and background on issues of interest. we look at:, where the president has vetoed the ruling party's attempt to overhaul the judicial branch. after the horrors of world war ii and the iron curtain, poland turned the corner in the 21st century. it cemented a transition to capitalism and joint unrivaled economic growth. in 2015, 50. in a party that promised a aakeup -- the people swept in party that promised a shakeup, the law and justice party. government's drive to cement in power has sparked public
protests and a rebuke from the european union lawmakers. here's the situation. poles took to the streets in support of an independent judiciary after another government power grab. the eu, which gives more money to poland that any other country on a net basis, is concerned about democratic backsliding. to lower the retirement age and increase payments to families with children -- it is calling on the country to assert national identity and control what is permanently station nato troops on polish soil. s&p cutabout conflict, its great on the country's debt for the first time, and economic growth has slowed. here's the background -- after the fall of communism, poland's we began and free-market capitalism took hold.
the eu began to pour money when he joined in 2004. what lingered is a legacy of mistrust and conspiracy theories, not uncommon in post-communist europe. the prime minister says that her government upholds the rule of law, and that history shows poland suffers when outsiders interfere in its politics. it is raising questions among investors, including foreign banks and retailers that have been criticized by poland's new leadership for not showing enough of their profits. can read more of our "quick takes" on the bloomberg. mark: earlier i spoke to the polish deputy prime minister, reaction to the veto. >> to be very precise, the reaction of the bond market and currency market was zero from preview and post -- pre-veto and
post-veto. my understanding of the whole situation is that 80% of polish society wants to judiciary system to be reformed. clearly it is the achilles heel of the polish economy. it might have been more longer discussed with the president and .hould be based on discussions mark: the next attempt to reform -- >> the country vetoed this and said that if you were to present the legislation. if we were to over-vote, the veto is not possible in the
parliament. the previous legislation is close, and now the move will be made by the president. mark: the european commission addresses the matter, as you know. how important was the climbed out in your relations with the eu? euour relationships with the .re not so rosy i believe there was lots of misunderstandings in all of this. everybody agrees that the judiciary system needs reform not too much are changes after 1989. now the reform has to be thought the judges, president, parliament, opposition parties.
we will see what the next proposition will be. mark: are you ready to take measures in case market sentiment does turn against you? whether the euro or the dollar is down a percent or so since the end of last week, are you ready to take action in case the market or sentiment does turn against poland? are critically important, and what i can ensure you -- are sure use that we are -- assureything to you that we are doing everything to make sure investors are happy and certain about democracy. the polish currency strengthened from the beginning of this year. the starkest currency of all the emerging markets in the world.
vonnie: live from london and new york, i am vonnie quinn. mark: i am mark barton. this is "bloomberg markets" on bloomberg television. vonnie: tonight on "the david rubenstein show," financier and philanthropist david rubenstein speaks to paul singer, who shares his thoughts on the u.s. economy. >> how do you see the economy right now? >> i'm very concerned about where we are in terms of the
financial system, the american economy, the global economy. after nine years of what i consider to be distorted set of policies, completely oriented towards what i regard as monetary extremism, combined with what i consider to be growth-suppressive fiscal tax -- i-- regulatory, think it as created a distorted recovery, partially responsible for this augmentation exacerbation of inequality that a combination of that and the incomplete recovery has caused this middle-class stress and edginess around the world, which has led to some inge parties and french thoughts from populism. after nine years of this artificial levitation on the
part of financial assets, high-end real estate, the things that rich people by, what we have today is a global financial system that is just about as leveraged, and in many cases more leveraged, then before 2008. and i don't think the financial system is more sound. i don't think that the fixes havehave put into place actually created a sound financial system. i don't believe that confidence is justified in policymakers and central bankers, and the fact that confidence has not been is obvious.ow lost, it confidence is can be lost in a very abrupt fashion, causing conceivably a
ruckus in the bond market, stock financialnd in institutions. vonnie: catch the full interview on "the david rubenstein show." that airs tonight at 9:00 p.m. eastern on bloomberg. mark: daimler missing second quarter earnings estimates amid allegations of collusion with bmw, the maker of the city spends, vowing to fight for u.k. planshe fate -- an diesel cars by 2040. overshadowed by this collusion allegations, did it managed to distract the market by talk of separation and sticking with diesel? >> that is exactly what they did, actually. they didn't talk that much about collusion or diesel, we are going to shore up and fight for it.
a bought athe market little bit by saying they are prepared for separation of legal entities like trucks and buses and cars, which could pave the those,spin off some of which was music to the ears of the market, although all those distractions overshadowed even that. mark: chris, it comes as the u.k. is getting rid of petrol and diesel, following france, by 2040. germany does not seem to be following suit. chris: germany is definitely not following suit. and think the french british approach are uninspiring -- i think that is what the german spokesman said today. germany itself next week has a diesel summit where the auto industry will meet with the government to figure out ways to rescue diesel. germany is not giving up on the combustion engine anytime soon. mark: we will leave it there.
thank you for joining us for a brief chat, chris reiter. vonnie: coming up next hour, the mcdonald's ceo joins us live. the world's largest restaurant is rolling out a new delivery on a strong earnings report. mark: coming up on the european away, literally 35 minutes from the end of the wednesday session. what a week it has been, and we still have not the fed not -- not had the fed. lots of excitement to come get stoxx 600 up for a second day. check out what is happening in the currency markets, as we approach the close. this is bloomberg. ♪
vonnie quinn. this is the european close on "bloomberg markets." mark: the other top stories we are covering from the bloomberg and around the world. a more dovish tone, and what will the fomc mean for the dollar? fires a warning to the u.s. over potential russia sanctions? energy companies could be caught in the middle. we vonnie: mcdonald's chief executive is live in just a few seconds, from earnings to the new delivery service, we will get the latest update from under the golden arch. nothing solves the fast food chain's problems like your