Skip to main content

tv   Bloomberg Markets Americas  Bloomberg  August 29, 2017 2:00pm-3:29pm EDT

2:00 pm
>> we are alive and bloomberg world headquarters. president trump is on the ground in texas examining the damage of tropical storm harvey. we will get the latest on the the president said, we will federal support, still ahead. all options are under congratulate each other when it is all finished. the secretary general of the consideration when it comes to condemningns is north korea, according to the president. you can see prices coming down. israeli settlement construction. ceo, pulling the he said the international community remains a solidly by plug on any new stores, despite the goal of palestinian independence. sales rising twice that of he said he remains committed to estimates, he told investments a two state solution. land, dream in the holy that these results will not be the new normal. two states. let's get you started with our first word news this afternoon. a palestinian state and an israeli state, living together mark: estimates for total damage in peace and security and mutual forgnition, and allowing caused by harvey continue to rise and research is projecting
2:01 pm
economic losses of $42 billion, something not to be possible. up $12 billion from monday. the trip follows the potentially surpassing hurricane katrina in 2005. secretary-general's meeting yesterday in jerusalemit less than 30% of harvey's losses are likely to be covered by private insurance. life flooding will continue in southeast texas, according to the governor, and he is urging residents to listen to state and local officials and spoke on radio stations in san antonio and corpus christi. trump's 2020 reelection campaign urges supporters to donate to disaster relief efforts for hurricane harvey. the email urges people to "help
2:02 pm
fellow americans in need." president says he hopes that the administration's response will be regarded as a model. at a briefing with texas officials, governor greg abbott called the response so far very effective, to which the president replied -- we will congratulate each other when it's all finished. global news powered by 2700 journalists and analysts in over 120 countries. i'm mark crumpton, this is bloomberg. >> a funding fight might be moving back home in washington. let's bring in kevin cirilli from our bureau in d.c.. kevin, great to have you on. he wants to provide further funding and we know it has been a tension point between republicans the past and those who say why will you increase spending on this?
2:03 pm
how is this going to play out? great julia, you make a point. first and foremost, the president speaking yesterday at the white house, saying that he wants to make sure that those in texas and louisiana in areas impacted by the devastation because of tropical storm harvey get the aid that they need. dive deeper into the news of this, traditionally republicans have had a bit of a disagreement on the issue of disaster relief. some republicans feel they have to be budget offset for any aid advocated for this. nor has vice president mike pence, rather. but on the flipside of that, senator ted cruz, who was traveling with president trump,
2:04 pm
suggested that everyone is on the same page on this. saying in texas that he doesn't believe that there should be or suggesting that he doesn't think there should be a policy fight. the quick point that i would make is that they have got to reach some type of deal. you are looking at these tragic images from tropical storm harvey and flood insurance is going to play right into that. advocating for more conservative reforms. for that to get some new muster as well. >> astounding numbers on the lack of insurance. scarlet: we know the donald trump promise rapid action, but the bottom line is that congress has the ultimate say. options?the available how might they get this done? >> great point. if you are in texas and you have got relatives in texas or you
2:05 pm
know anyone down there right now, that's where this is all headed. the rain hasn't even stopped falling. with the lawmakers returning next week, they have to raise it up and they have got to let , pre-stormfunding harvey, we were talking about funding for the wall and the politics that could surround that with democrats potentially dodging on that particular point or objecting to that and republicans in a situation where there could be a partial government shutdown. if you add in government assistance to this government funding bill, there could still be a lot of fireworks. servicesith financial last night and they suggested that the potential for a partial government shutdown is still very high despite the collective cohesiveness, seemingly, on aid relief. great job, thank you so
2:06 pm
much. the american red cross, by the way, is asking for your help with the disaster in texas, they have doubled the shelters up and running but they expect the crisis to grow exponentially and thousands will wind up relying on the red cross for food, water, and a place to stay, so your donations would help that. if you go to www. for more details and information there. there are under two hours left to go before the close of trading. let's get a check on where stocks are headed. taylor: quite a bit of a resilient market here. last night dow futures and down 100 when we saw them blogs that missile over japan and into the pacific. the s&p 500, mostly unchanged, nonetheless some green on the screen with the russell 2000 also making some gains.
2:07 pm
wouldr resilient market i point to hear is gas, taking a different turn than oil, and i will get to that. gasoline looks like it's making gains as the traders prepare for more shutdowns of those refineries. meaning that prices are higher. with oil you are heading lawyer and i would argue that's more of a global supply and demand picture. as you know, at least coming up this weekend, it's the end of the peak demand driving season. less demand means prices a bit lower on the oil front. i wanted to stick with the oil theme, looking at the e&p carrying to those refineries, some of those start to shut down and you are getting those pipelines shut down a bit. -- clogged up a bit.
2:08 pm
that is weighing on the companies we are seeing. a few more days is ok. anything more, they say, you are starting to see a ripple effect for the rest of the industry. theme, wethe harvey are looking at the equipment rental companies and those are as the relief rescue efforts start to play in then those other construction and engineering companies helping to boost some of that as you enter the recovery phase hopefully next week and you start to see some of those, pointing out they could -- benefit modestly him harvey. mentioning,ylor was north korea launched a ballistic missile over japan and landed in the pacific ocean. investors are waiting for any official response from the united states and its allies. according to a bloomberg s today, here is what could come next. >> contrary to misperception, there is a lot more that could be done using its own laws.
2:09 pm
>> i think that china has been fueling this crisis as they get a lot of short-term benefits. whether it was just the limited , eventually exports there would have to be a military response to stand with japan. >> the next step has to be more significantly on chinese editing or financial institutions that are likely the source of north korean funding. >> there is no real good military option in north korea tot doesn't involve risks probably tens of millions of people on the korean peninsula and the surrounding area. that's obviously a horrible thing for the world and for markets as well. earlier today president
2:10 pm
trump issued a statement saying that threatening and destabilizing actions only increase the isolation of the north korean regime. all options are on the table. joining us now from washington, alex swain, great to have you on. "the new york times" called it a direct challenge to the president. do you think donald trump will take it as a direct challenge? and are we one step closer in the next -- last 24 hours to some form of a of military action here on north korea? alex: i think the kind of debate the just demonstrated among outside analyst is going on within the trump administration. they haven't decided, they don't really know how to respond to this. this was a provocative launch, flying a missile right over japan. it has alarmed not only japan but a lot of people in the white house, including the president.
2:11 pm
i don't think that a military responses on the table. you will note that they didn't even try to shoot down the missile last night when it was fired, which they could have done. there is a lot of downside risk to that. if you miss you demonstrated your missile defenses aren't that great, so you might want to reserve that option for a missile that is perceived to be a greater threat. but as far as sanctions or some sort of financial response, i think all of that is being examined within the administration. i do believe that there will be some sort of sanctioning broadening to other entities in of the analysts suggested. i would not expect military response. thus far it has been treasury that has come out ahead of this with those economic sanctions, but who is taking the lead here? alex: it will be the national security council, presenting the
2:12 pm
final recommendations to the president. of the common nation state department and treasury department and the nationals 30 counsel working on options to respond to these tasks. about for china, here, alex? we went through a time when donald trump was openly on twitter saying that these guys tried and failed and be have to go it alone. what do you think the relationship, the situation is in these two countries? the last time sanctions hit the chinese they said they were making a mistake at the same time we got back a unanimous u.s. rose -- you and resolution, so it's kind of a tough one to clarify here. yeah, every country involved in this dispute is in a tough spot, including china. any kind of economic collapse in north korea or certainly a military confrontation could
2:13 pm
likely result in millions of refugees coming across the korean border into china and china desperately wants to prevent that. they do keep north korea afloat economically. if you start pushing chinese companies to try to pressure china or north korea to behave .etter, you risk a backlash a set of sanctions from china against u.s. companies, perhaps, or perhaps some sort of trade war. it's just a very difficult situation. i suspect that back when the president and his predecessor, before taking office, president obama whispered into the europe trump that there was this one grave foreign dispute that trump was really going to have to wrestle with and would be a big problem for him, i think it was korea. trump has never said so, but i suspect it's this. julia: a grave threat, yes.
2:14 pm
scarlet: alex wayne, thank you so much. coming up, best buy tumbling over cautious comments. r the good times over for the big-box retailer? they had a good string of is, but what's next? this is bloomberg. ♪
2:15 pm
2:16 pm
♪ is "bloomberg markets," i'm julia chatterley. scarlet: and i'm scarlet fu. best buy, thanks to the demand for wearable devices and smart they beat their estimates, but investors are not convinced that they can stay on top of the forecast given
2:17 pm
mounting competition. joining us from washington, ick, who has an overweight rating on best i. you,, great to speak with thanks for speaking with us today. i guess no matter what they cautioned about the durability of same-store gains, best buy has managed to make real progress over the last quarter, especially when you consider the consumer electronics is one of the most amazon it those categories out there what are they doing right, first of all? david: results fit into what we see since the turnaround has come together. ,hey are closing stores investing digitally, and frankly when a retailer does better we don't want to see them expand margins too quickly, if at all. if you earn too much margin, your customers will find a cheaper place that essentially
2:18 pm
charges you less margin somewhere else. sameare doing more of the to compete online. online is up 31% this order. >> comparable store sales were ,p 5% based on the last order we mentioned that would wearable devices as well. that was more than twice what analysts were anticipating. if there were a point to make about how bearish analysts had tied to that,t, is it sustainable? they were asking that weston in the introduction. promotional activity this quarter. question,s a great there's always something new
2:19 pm
coming in to the consumer electronics world and always something leaving. the industry growth rate will be low or single digits. they are gaining share in an industry that is selling new solutions and services to consumers that want them. by, ifi think that asked you look at the pattern of the last three years, they try to be cautious, especially in the fourth quarter when it gets to a promotional gain and they try to play that less than they have in the past. macro is going to matter, execution is going to matter, competition is going to matter. at the industry is growing nicely relative to retail, investment growing on top of that with roast profit dollars in advance of forecast models. it was a good number, cautious, stocks back to where they were a month ago. a lot of it had to do with investor mindset. shares have been on fire, rising as much as 46% for the latest drop today.
2:20 pm
record high on monday. what do you think is priced into the stock right now? a couple of days ago, as of, it's a real important piece with what's happening. if you look at what happened to retail as an industry with secular economic threads, it was going into financial crisis, covering the group act then. really part of it at that point. then it was your average or typical retailer. the leaders were taken down last. what's interesting is that asked by his acting much more like a retail leader, valued like one, executing like one. shares today is best buy not being taken down because of execution with the market saying, hey, retail has been taken down with a great number. up to 30,000g feet, the company is taking share in an industry that is
2:21 pm
investing digitally and rightsizing the capital of the business, good things for your multiple returns on capital overtime. julia: the shares were doing pretty well and then the ceo said -- guys, don't get overexcited, this is not the new normal. pointing out all the things you have been saying, challenge not just for best buy, but the broader industry. sales, as itore mentioned, there was a dramatic increase. was the ceo right to be cautious ? to say to everybody, hey, guys, there's a lot of pessimism but don't get excited at this moment, or are we being too bearish in your view? >> first of all, their business and industry is evolving. fourth quarter it's more about a price point, just kind of blowing up the doors. best i is evolving their business to more of a service model. it's right to be cautious.
2:22 pm
the second thing is i'm not sure that our investors would want the opposite, which would be to say we want a great fourth order and do whatever it takes, compromising our ability to mean the right thing in the marketplace. lastly, best buy over the last three years, the stock is down meaningfully. this is part of the way that asked by has seen retail overall, included, these are generally low operating market businesses with a load them -- low denominator in the conversation with an inordinate move to the way that people think about the future, but this is the typical, i hate to say it, typical of them for the last numberrs, to have a good talk cautiously and have the stock react in a negative way we have seen before. thea: sensitivity around sector now, so high. interesting. david, radiator thought there, david schick. thank you for that. still ahead, porsche set to unveil a new version of its
2:23 pm
best-selling car. with miss our interview the ceo. you can see that first on bloomberg at 4 p.m. new york time today. this is bloomberg. ♪
2:24 pm
2:25 pm
♪ >> this is "bloomberg markets." julia: it is time for the bloomberg is this flash and a look at some the biggest is the stories in the news right now. made anechnology has agreement to purchase rockwell collins for more than $20 billion. of course, "the wall street journal" reports that it will come by the weekend. they make a you not -- friday of aircraft parts. -- a variety of aircraft arts. as much as $1 billion in london, a company that generates additional resources and renewable units for wind, solar, and hydropower.
2:26 pm
consult will be the first london power company and eight decades. jetblue founder, they've vanilla mint, launching a private jet commuter service under the tentative name azura airways. so far they have two jets with as few as 16 seats, targeting niche customers or individuals who frequently travel between cities. that is your business flash update. zura, i like that. i would fly that. scarlet: coming up tomorrow you will want to catch an interview with warren buffett. here the latest on his investments, including ibm and wells fargo. this is bloomberg. ♪
2:27 pm
2:28 pm
2:29 pm
♪ from bloomberg world headquarters in midtown manhattan, this is "bloomberg markets." we are starting with energy. gasoline spiking for a six
2:30 pm
straight day, driven higher by 4.2%, oil falling for a second $47 per, trading below barrel now as tropical storm harvey threatens to make landfall for a second time on the texas coast, possibly forcing additional refinery shutdowns. metal and gold, climbing to their highest rises of the year over japan, the precious metal being fueled by a decline in the dollar. scarlet? scarlet: think you some much, julia. we want to head to texas, where president trump is on the ground, meeting with officials and volunteers with the recovery efforts from tropical storm harvey continuing for a fourth straight day. gathering strength in the gulf of mexico, poised to make landfall once again on the
2:31 pm
border of texas and louisiana tomorrow. joe joins us on the phone with the latest. first, give us an update outlining the conditions that you see right now. how do things look, has it stopped raining at all? >> it hasn't stopped, it has been raining all day and is supposed to can you to -- continue tonight. floodwaters are rising, the power has been knocked out. sort of the humanitarian crisis keeps going. we think that 30,000 people have been displaced already. i read this morning that the army are releasing more in a relief tactic that are flooding surrounding areas. can you give us a sense of what is going on in terms of that and what impact that is having, if you know? >> those of the two reservoirs in the western suburbs of houston that were so full that
2:32 pm
they were worried the embankments would fail, starting controlled releases to take the pressure off. unfortunately that has not enough to keep up with the reservoirs that overflowed anyways. there is catastrophic flooding in all the neighborhoods on every side of those reservoirs, with bridges collapsing in the city, flooding and places we have never had before, and with harvey moving back towards land, another group of refineries getting shut down. at this on the bloomberg, laying out the hurricane map, and how the storm may proceed, it is looking to make landfall as soon as tomorrow along the texas louisiana border. what kind of for cautions are being made for those areas before landfall? places wheree there have been mandatory evacuations, low-lying enough that they are already seeing flooding. other than that, they will have to wait and see what happens. there's not a lot of access to roads. julia: we are kind of mid-event
2:33 pm
here, it seems to worsen with the amount of rainfall that we continue to see. there?morale how is sentiment holding up? how are people doing mark joe: the people -- doing? joe: we are right at that threshold where folks are starting to run low on the supplies that they stocked up on prior to friday so there is a scramble to try to wind a grocery store that might be open, find a way to get there. the next couple of days are really going to test people. julia: the mayor was criticized for not evacuating, deciding not to do that as was anticipated this week. are people talking about that? are there recommendations were people saying we should have been a back weighted and have done so earlier? joe: he points to one of the
2:34 pm
previous hurricanes where they did try to evacuate hit was just a disaster on the highways and a lot of people died. i think that's why this time they ruled it out. it's too big of a population center to put on the roads and send away. scarlet: let me ask you about the energy infrastructure in the skin area. we know that a lot of refineries had to shut down and close up because of the storm. have been ablem to resume operations or open up once again? joe: some are, really they need work in and do extensive to see how badly they were hurt. julia: great to see her update there, joe. in the energy sector, tropical storm harvey threatening to disrupt the weekly report due
2:35 pm
out tomorrow morning, which could have far-reaching implications for the industry. joining us for more, jason .hanker -- schenker great to have you on the show. explain to us the anticipation there, if we have seen this shifted around the country, it complicates things in terms of the rundown, i guess? jason: that's true. not just in this report will we see it, but future reports that could spill over into other reports as well, looking at the jobs report, not this one that's out this week, but next month. you could see all kinds of different data impacted by this. the biggest factor here is what's happening on the product side with lower refinery runs and refineries shutting down. will that data all be captured, will it all the captured in the next report? it will likely take a few weeks
2:36 pm
before we have all the data available and we have to revise some of these reports. i would watch for a lot of volatility and prices and in the inventory numbers themselves for the last -- the next. -- next few weeks. scarlet: hurricane katrina is now the model for a big, disastrous storm. in terms of crew refinement and inventory numbers, do you think it will be worse? jason: i don't think it will be worse than that. i think that a couple of things, the experience of katrina has also resulted in a number of different changes, not just katrina, but katrina and rita in concert with everything from how the mayor of houston decided whether to evacuate or not and how refineries prepared ahead of the storm. of course, in this case we have with moretegory storm
2:37 pm
water being dumped on the region. the risk's are little bit from. i think it will depend what happens with the pipelines, it was a massive disruption of the colonial pipelines. if we still see products able to get out of the region, refineries and other regions you to ramp up production, might see the product getting to the markets where it's needed, with a disruption where we saw that with rita. it certainly depends on how the storm moves as well. this is a map that shows the with the different refineries and where they are located. the red dots indicate a refinery outage and up rate as well, while the green dots indicate operational refineries right
2:38 pm
here. we are looking for the storm to move towards the texas louisiana border here. julia: i want to show you what i have got on my bloomberg theinal, just getting to point that jason was making, about the crack spread on the there inial rocketing the white line. this is aid that gasoline story, not a normal story, but even with what we are seeing on the falling dollar, we still have them under pressure here, talking about some kind of bottlenecking of supply, strange movements and entries as well. what is the risk we are seeing further on the downside pressure here throughout the summer driving season? jason: four crude oil there is some downside risk tied to that good but i would say that these wide crack spreads made eye running oil through the refineries will incentivize them to demand crude to run through their refinery.
2:39 pm
there is some downside risk here for gasoline prices with more upside risk, but perhaps less so as the summer driving season is coming to a lows. for the dollar it's a different really starting at the end of december with a trend of lower highs and lower lows. we have been through reticle technical some that have been in place since january 2015 that came after the statements on friday. i think that there is more downside risk here, too. somewhat unrelated to what is going on with oil prices and what's going on on the oil side and the global economy. the pmi's will be important this week, the eurozone, it will be important for the demand side as well as the supply side. scarlet: i want to find out from you, jason, what kind of affect
2:40 pm
do you think that harvey will have on global inventories? saudi arabia and russia, pushing for cuts that they have already announced, though they haven't done much to lift the prices to the levels they want to see it at. are they at risk of misleading the inventory sector globally? jason: i don't think so. the demand side of the market is something that they are quick to betweenwith a section december of 2014 and june of 2016. if you look of the size that look of the manufacturing pmi with manufacturing of 15 or 19 of those, that was really what resulted in the drop in oil prices. that really resulted in a big build in oil inventories, with a pullback in may. if you continue to see the chinese economy expand, the
2:41 pm
biggest marginal source of additional crude oil demand going forward, if it continues to expand month over month, they might not be misreading the inventory picture, because that demand could draw on oil inventories sending them lower. so complex, i love it. i can't let you go without talking about gold. what do you think about this one? jason: we have been in the upper range of the bullinger bands for a few weeks here. there are some upside risks still to the greenback, equity market volatility and the risks that tax reform won't happen. these things often present downside risks of the dollar when you actuate the risk of north korean nukes flying over japan and what not. fireg more fuel to the that lights up gold. jason, getting excited
2:42 pm
about gold. [laughter] scarlet: david schick --jason schenker, thank you so much. let's get a check on the headlines with mark. president trump, as you mentioned earlier, is in texas. to see the devastation of harvey. harvey man -- made landfall on friday as a category four hurricane. cruz isnator ted expected to survey the damage around san antonio, keeping away from houston, where art are still flooded. the senior national guard officer said that the role of the military in the aftermath of hurricane harvey has been limited i the weather and the flooding. the air force major general told reporters that there were currently 3500 national guard
2:43 pm
troops involved, including 3000 from the texas national guard. >> just on the national guard side we are looking at a possible 30,000 soldiers and airmen that effort rested could be brought in and those include additional rotary wing assets. those will be needed to finish the response needed and then start in on the recovery phase. scarlet: the generally knowledge to -- mark: the general acknowledged that it exceeded what state planners could have foreseen. the u.k. once to step up the intensity of brexit talks, meeting with the eu more often. toldhief brexit negotiator negotiators that he had concerns over the pace of the talks. the german chancellor, angela merkel, said today that she did the right thing by allowing large numbers of migrants into her country two years ago and the europe has not done enough
2:44 pm
to develop long-term solutions to the migration crisis since then. since then the popularity has returned to levels where they were before 2015, when the crisis reached its peak. global news, 24 hours per day, powered by 2700 journalists and analysts in 120 countries. i'm mark crumpton, this is bloomberg. up, more ofg harvey's stock impact as rescue efforts continue and we look ahead to the rebuilding efforts to come. from new york, this is bloomberg.
2:45 pm
2:46 pm
is "bloomberg markets." scarlet: we are focusing on
2:47 pm
industrial names with [indiscernible] >> we are watching closely what the market reaction will be to tropical storm harvey. looking at markets, there are some this or smith that crop up. but the strength of some of these companies where investors were looking at the potential positive impact for these publicly traded companies, specifically those in the industrial sector. thestrials is going to be group we are looking at. the had inhe ideas these stocks, companies that rented out materials, repair and there to take part in this and provide the equipment they will need for the situation over the long term. obviously some of these numbers keep taking us higher and higher.
2:48 pm
here is what we are looking at for the actual shares moving the most today. machine isrg rental pretty much what we want to focus on, the type of stuff that moves around from place to place as the incidents happen, providing the machinery and the to think about the storage space or any place that needs something big, something that needs to be moved around in use, ultimately. , the bigg mover here one that is interesting is united rentals, the stock of the hour before, particularly interesting. i have heard a lot of chatter about this company from investors and portfolio managers. before now, you think about that he would want to think about companies that benefit, but now it has moved into a shorter-term play as well. scarlet: there will be spending, but in a different context. oliver: right, and this is
2:49 pm
something the stock needed. jumping into the terminal, basically what we are looking at here is a recommendation that got pretty outdated, calling for about $134 per share on the and its a pretty solid premium that we need to get to, perhaps with some short-term bullishness. yellow bars are holds, red bars are sell, green bars are a buy. that's her target price, 15% higher than we are trading now. julia: can we go back in time, take this chart back to before hurricane sandy? oliver: interesting question, can we go back to 2013 or so? this company has gone for what a ride. get back roughly to 2000 13, 2012, we are seeing some strength trading close to the
2:50 pm
previous highs and it has since come off a little it. big fiscal spending expectations and it will be an important company to watch, closing and acquisition the last time we were here. there's a lot of things happening here and overall, pretty will, looking at the options on the stock today, pretty sizable jump on the gain in stocks. , great to talk to you, as always. coming up, what stands in the way of another fed rate hike this year? a few options to choose from. that's coming up. this is bloomberg. ♪
2:51 pm
2:52 pm
♪ julia: this is "number of markets," i'm julia chatterley -- bloomberg markets."
2:53 pm
gold, surging to its highest level this year. earlier today, vonnie quinn and dan foxan spoke with about what rising tensions mean for future fed policy. say that theto geopolitical and domestic political environment are such that it will cause our central bank, as well as others, for our central bank to go forward and reduce its balance sheet and bring rates up as much as i earlier thought they would. i still thought that they might post once at the end of the year , if everything quiets down. geopolitically. but that does not look very likely right now. >> how will the balance sheet reduction project affect the
2:54 pm
treasury market and the mortgage debt market? will you be adjusting or folios? or are you adjusting your >> welios ahead of that? have been adjusting for the past nearly two years and we made a further adjustment in recent months. about have the average of 40% of where we used to run. we are under five years now and average maturity. yeah, i know, wow is right. we have driven the quality up another third, we are in single a territory. the yield is still all right, but we could obviously add more yield if we get more aggressive right now. it's the geopolitics in the politics, rather than fear of
2:55 pm
the fed. the fed will do its darndest to bring the balance sheet down a bit. but they really, it's an environment. the three major central banks are trapped. the u.s., europe, and the european central banks. and japan. so, this isn't in the normal playbook that you read about for central banks. they are supposed to be focused strictly on the domestic economics, employment and so forth. it's the geopolitical and the political starting to dominate. >> the dollar is at the lowest level since january of 2015. how low could the dollar go? when does the dissent of the dollar and?
2:56 pm
-- end? the $64 question. you could say that it should be stronger, that the flight to the major research currencies, recall that half of asian currency trading stopped in the other is difficult now, with the mexican peso, to see what the emerging currencies are doing. nonetheless, it's a flight to safety, but not a wild one. scarlet: this is bloomberg. ♪
2:57 pm
2:58 pm
2:59 pm
julia: it is 3:00 p.m. in new york. i am julia chatterley. : and i'm scarlet fu. welcome to "bloomberg markets."
3:00 pm
e ata: we are like bloomberg world headquarters in new york. here at the top stories we are covering. president donald trump is on the ground at texas. tropical storm harvey is still a risk, in what will be a second round of heavy rain and flooding. why he is betting on stocks in the long run, despite potential shocks to the market. and is the finish line nearing the finish line? shares, taking today on his last today on a tanking slashed forecast. julia, thank you.
3:01 pm
as rainfall continues to be forecast for houston, officials warn of continued flooding. after devastating floods in 1929 the reservoirs there were designed to hold water until it can be released downstream at a controlled rate. some meteorologist says, homes could be inundated with water for up to one month. >> that is why we have been talking about this for the last and a half, to warn the residence that this potential is there -- warn the residents that this potential is there. when we first started talking about it, we were uncertain we would get to these levels. now we are at these levels. and we are very confident we are going to get water in some subdivisions. mark: houston's mayor says the number of people rescued by than 3000.ore
3:02 pm
the white house press secretary says president trump wants to make sure his presence in texas is not a distraction from harvey recovery efforts. the presidentsays scheduled visits to corpus are intendedustin to highlight coordination at all levels of government, and lay groundwork for a lengthy recovery. one avoided flying over houston, where much of the downtown area is underwater. the president is promising texas will get emergency disaster aid quickly. he says there will be a very rapid reaction from congress. still, there are signs there may be a political fight over that money. the top texas conservative, jeb nsarling, says he wants to pay for harvey recovery. the city was already the worst performing in the u.s., after
3:03 pm
oil prices hurt occupancy. still others say houston's rebuilding effort could bring in more visitors and jumpstart the economy. global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. you, mark.k we are under one hour from the close of trading. let's cut abigail. abigail: we have a little bit of a rally, i should say a reversal of stocks. the major indices started at lower earlier, but now the three major averages, all higher. really, pretty remarkable considering north korea did send that missile over japan and set . huge risk off tone but now assess that investors are's processing that that is not going to cause any trouble anytime soon.
3:04 pm
oppenheimer says this is pretty far from the course that we have seen from these events in the past. typically they turn into buying opportunities and we do see some buying mentality today. are looking at apple, amazon and united technologies. apple, pretty remarkable, putting in a new record high for investors, getting excited i had of the release of the iphone eight. we have amazon reversing from lower to higher. a look at united technologies. we have the wall street journal reporting that united technologies is close to a deal of buying rockwell collins. taking a look next at a few stocks doing less well, the finish line and best buy. the finish line, getting pummeled, down 21% after the company pre-forecast on the downside. the worstn pace for
3:05 pm
year since 2000 seven. the light at the end of the tunnel does not seem to be happening. and best buy, talk about another remarkable reversal. the shares were higher on a beat, they did beat second-quarter estimates. ceo was cautious and now, these chairs are on their paste for the worst day since january, 20 15. lots of reversals today, including for safe haven gold. let's take a look at the intraday chart gold. old had been high, up more than 1.2%, but it is now down 3/10 of 1%. we have seen this big reversal, from a risk off tone, to a risk on tone. but on the year, it is still hard to say. let's take a look at a chart in the bloomberg. in the blue we have the bloomberg dollar index, right now, down around 2% on the year. in white, we have gold. you see the haven gold, climbing steadily since the election. up about, right now,
3:06 pm
10%, of about 14% and on its pace -- on pace for its best year since 2010. it will be pretty interesting to see how that tension between risk-on assets and risk-off assets, plays out. scarlet: investors seem to be shrugging off risks. earlier, our david westin spoke about what it would really take to shake up the market, with schlosstein ceo. anticipated,sn't and what it should fear, is exogenous events which caused
3:07 pm
the sense of calm to disappear. those could be in the form of international conflagrations, like the situation we see in korea right now. of theuld be in the form failure of our u.s. government to effectively deal with issues like the debt ceiling, passing a budget. the failure of talks between britain and the eu, with respect to the brexit discussions. all of those things destabilize the confidence that people having markets. unlesshink we are fine, one of these things or more than one of these things happens. and those are almost impossible to predict. seen reaction in the markets to north korean developments. we are seeing that again today. can a few days of tensions,
3:08 pm
followed by normal, how cannot trigger a correction? >> -- i am not an expert in this but i have a strong belief that there is no really good military that doesnorth korea, , probably, risks to tens of millions of people on the korean peninsula and the surrounding area. that is obviously a horrible thing for the world, and for markets as well. but we should not ignore the fact that we have, coming in the next month or so, here in the u.s., a couple of tests as to whether our government can actually function effectively. we have all forgotten how the market reacted to the debt ceiling challenges that we had
3:09 pm
about three years ago, and how the market reacted about four years ago when we could not get a budget passed through the congress. those are things that deeply inermine people's confidence the effectiveness and predictability of our government, which is 25% of the world's economy. >> and what does the president mean. they can't stop harvey, and korea has been around for quite some time. various presidents have had a tough time dealing with it. would the markets be in a different position with respect to these factors, if it had been president obama, or george w. bush, or president clinton? at this point,k, it would make a difference, certainly with respect to party. i do think in the next two or three months, we are going to have a number of opportunities topreserve -- tw
3:10 pm
observe the predictability of our presidential administration. the trade negotiations between mexico and canada, and china, and if the world reaches the conclusion, collectively, that our administration is very difficult, or unpredictable, to deal with, that is a negative, not only for the markets but for the world economy. >> given the insurgencies -- given the uncertainties right now, what is the lesson for the investor? how should the investor prepare for the wide range of possibilities? there is decade-long research about how difficult it is to figure out when exactly to get of the market. and i'm pretty convinced by the research, that no one can do that extraordinarily well.
3:11 pm
history, therein were people who became very famous for predicting the crash of 1987, for the financial crisis in 2008. most of those people predicted one of those things accurately, and then the next seven predictions they had were not as useful as that one. i certainly don't know anyone who is smart enough to figure out what is going to happen in north korea in the next week or two, much less the next month or two. i'm not certain how the trade issues get resolved. i'm not certain how the budget gets resolved. i'm actually a believer in what warren buffett believes. invested into be equities, in the long run, you have to have some exposure to volatility when you do that. but in the long run, equity values grow with the value of
3:12 pm
the world economy. and there's nothing else out there that does that consistently. julia: that was evercore partners ceo ralph schloss stein in.schlossteu david will be speaking with mr. buffett tomorrow at 11:00 eastern. the latest company to sound a major alarm about the leisure market. completely run out of steam. from new york, this is bloomberg. ♪
3:13 pm
3:14 pm
♪ scarlet: this is "bloomberg
3:15 pm
markets." i have scarlet fu. julia: i'm julia chatterley. let's look at the biggest business stories and the news right now. airlines ints houston. united continental holdings could take up to a $265 million hit. southwest could take a $77 million it in its fourth quarter, too. and discounter spirit, an estimated $11 million lost. consumer confidence in the united states has risen to its second highest level since 2000. that is according to the basesence board the group the increase on gains and spending. earlier today, the u.s. automaker announced a partnership with dominoes, and ford is also in talks with several other companies.
3:16 pm
that is your business flash update. scarlet: it appears to be yet another nail in the coffin for athleisure. i has adopted a poison pill to avoid takeover. shares of the retailer are falling -- at one point were falling the most on record, and are now down 22%. you are also looking at a rollover effect at companies like nike and under armour, and foot locker. lindsay, put this into perspective for us. it is not just finish line. beennk five companies have missing their estimates and cutting their annual sales forecasts. has anyone escaped unscathed? lindsey: we have lululemon coming up on thursday. we will see. they created the category. they won't say that, but everyone else is. that is been a bright spot for the apparel industry,
3:17 pm
athleisure. and the fear is, if that goes away, what will replace it? is aporting good guys, it big problem. they are used to inflated sales, and going back to normal necessarily be good enough for their investors. for everybody else, it could mean, we have to find a new trend. scarlet: -- julia: i want to get to the poison pill strategy that they have adopted. it really is a hunger games scenario within the industry, as to who survives here. sports direct where is still interested, and now it is trying to ward them off. >> they want to make sure they have a chance to turn themselves around, rather than sell. we have seen some consolidation in the general retail industry, but we are also seeing some sporting good players go out entirely. it has really been a competitive landscape. so i think the poison pill is a
3:18 pm
defensive measure, but we will see if it works. julia: -- scarlet: according to one analyst, it eliminates a bottom, because there is no white night in armor coming to rescue the company. is there any reason they see, to be optimistic? nikeere is always hope will come out with something new, and it will be a must-have item. infelt this is just a blip the overall trend, but nobody knows what the answers are, necessarily. i have not seen a lot of hopeful tones out there. julia: it is a little bit more helpful for a brand like adidas, so to what extent do you think retailers were caught off guard by this? >> i think it is a big problem for retailers. they move too slowly. they are used to planning their
3:19 pm
businesses nine months out, and when a trend shifts quickly come as they tend to do now, they are not ready to catch up. it takes a long time for those brands to come in. so when they stock adidas, or deal withe their nike, the trend will shift again. it is really hard to keep ahead of the trend, and retailers just aren't the ones setting the trends, anymore. the changing structure of the industry, whether it is online door being in a mall, with less foot traffic, what is the biggest issue? because i guess that is i guess that is how you point to what the solution is. which is the critical issue here, for these guys, other than everything? >> i think it is figuring out how to reach her customer, and get them to pick you. there is almost no loyalty anymore, so you have to have something other than the lowest price. otherwise, you're going to lose to amazon or some of the else.
3:20 pm
it is not a winning strategy. julia: coming up, a new version of the porsche cayenne. don't miss our interview. how exciting. from new york, this is bloomberg. ♪
3:21 pm
3:22 pm
♪ this is "bloomberg markets." i'm julia chatterley. i'm scarlet fu. its time for "options insights with abigail doolittle. abigail: kevin, as always, thanks for taking the time to joining us. time to join us. you talk about the madness of the vix option. >> everybody has been talking lowt how vix has been so
3:23 pm
for so long. ofrybody just came right out the gates, and started buying vix calls. you can see, there is about 12 and a half times the amount of calls being traded versus puts, which is pretty significant because there is 735,000 contract by 1:00 p.m.. that is in contrast to about 60,000 contracts for the put. the vix market thinks volatility will go higher and longer. trades of the biggest that happened was a risk reversal where somebody sold at did inhave strike, t those proceeds to buy in october 20 strike call. but this is still relatively cheap compared to historical standards. everybody is still waiting for that big buyout. speaking of the spike in the vix , this hasns activity
3:24 pm
been pretty standard to what we have seen. if we help on the bloomberg, you talk about record trading days, since august 10. this shows that just recently, we had a record volume on calls for the vix, way, way hide from what it has been. it was kind of erratic. what you take out of it? >> we are entering an unprecedented time where you are seeing a lot of this tail risk insurance happening on the skew index, trading above averages. everything is blown out. starting to espouse the market because august is typically a volume -- typically a volatile month. earnings are out, everyone is looking forward but the unrest is out there. especially if the fed starts to raise in place in -- raise inflation.
3:25 pm
volatility could spike up from here. abigail: what are you seeing, sector wise? >> you saw another bet being placed on the utility side, where someone went out and bought a bunch of 57 strike calls heading into september. it would need to move up significantly from here. it is another way for people to hedge themselves, going to the defense is, because utility would spike up. abigail: gold is really on a tear and is on pace for its next year since 2010. y bullish.nservativel t options the deepes market so you want to sell the january 1 21 put. you collect those proceeds and you get to dollars, that is about 1.65% in options premium, total. that is a great way to get exposure to gold after its 14% move up.
3:26 pm
you have seen the dollar has been down precipitously, and even today, people would rather get into the japanese yen as opposed to getting into the dollar. so, gold is a great way to do it. this is a cheap, cost-effective way to buy gold. if you want to have a further upside, you can take those proceeds and by. abigail: that was kevin kelly, of kelly and company. julia: thank you, abigail. still ahead, resident trump is trump is in texas to do with the aftermath of a historic storm. this is bloomberg. ♪
3:27 pm
3:28 pm
3:29 pm


info Stream Only

Uploaded by TV Archive on