tv Bloomberg Markets Americas Bloomberg October 27, 2017 2:00pm-3:30pm EDT
chatterley. welcome to bloomberg markets. ♪ we are live at bloomberg world headquarters in new york over the next hour. here are the top stories we are covering on the bloomberg and from around the world. a profitable quarter for internet giants, including amazon and alphabet, giving equities a big boost. the nasdaq 100 soaring to the best performance in eight years. ine retail giant amazon targeting health care. industries might be considering a defensive response. and a lobbying frenzy on capitol hill next week. a sweeping bill excepted in secrecy. we have u.s. market closing in two hours time. taylor breaks -- taylor riggs is here with us now. >> you mentioned it. it is all about the nasdaq and nasdaq 100. you we are also seeing record
highs on the s&p 500. we do not want to count that out just yet. made one 25-75 level we friday. the nasdaq up more than 2%, the nasdaq 100 up almost 3%. amazon, microsoft, facebook, google, apple -- all the names we know that are driving it higher. let's dig into a few of these. i want to focus on microsoft and amazon. microsoft serving to a record after a quarter beat on revenue. dumping -- jumping by double-digit. about the pivot to cloud computing and ai. similar with amazon. double-digit revenue, 34% in this quarter. a smooth transition with that whole foods business. like scarlet said, going into some of the pharmaceuticals, getting a license there in 12 states. we are watching that. let's put this into perspective here. we have been talking a lot about
techech sectors -- sector's outperformance. it is outperforming by about 15% here next to the number two, the health care index. spreads there are certainly widening today as the health care sector is down again, and the tech sector higher and higher. not everything can be green, so i want to quickly talk about some of the losers we are seeing . it is in the retail sector. i will focus on jcpenney, having its worst drop here in one decade after their forecasting -- they forecasted some more law offices -- losses. you wonder if this decline is inevitable after transitioning into e-commerce. they have to liquidate him inventory and put pressure on those gross margins. that is unbelievable, that jcpenney is a three dollar stoxx, but let's get to the tech strength -- three dollar stock.
-- here, stephen, thank you for taking the time. stephen: higher today. abigail: it is all about tech. we have a terrific chart that speaks to what scarlet was talking about, the idea that tech relative to the s&p 500 is having its best day in eight years, since 2009. the top panel of this chart , ins the nasdaq in white blue, we have the s&p 500. we have the spread down here greater than 2%. the biggest spread since 2009. pretty extraordinary, especially at this point in the bull market. what do you make of this? this is the last component -- stephen: you this is the last component you needed for a meltdown. we said the correction was over. talk about what i meant by that. been aot like there had
correction. we thought it was a rolling correction, which is what happened. we have four drivers. one was the earnings season, two was the fed chair, three was interest -- the economy, and what throw was tax reform. we thought they would come together in the fourth quarter, and the one thing that was moveen that and another higher, which we expected, was the tech earnings. the tech stocks have run heavy already this year into this season. expectations were high, and the concern was can they beat these expectations? can they go higher? and the you got the answer to that question. everything else is working. i think there is not a lot to stop this market right now. scarlet: talk a little bit about positioning and how investors are positioned right now, especially relative to 2018. are they where they want to be, or were they taken by surprise? we had the some of these stocks showing weakness in the days leading up to the result.
let us: that is what going into the quarter, because we feel that people have been so focused on the near-term that the big outcome of this quarter's earnings season was going to be fine tuning 2018 numbers. what has been happening under the surface is the 2018 earnings have been rising through this season. 146.e now at by tonight, after this, it will probably be higher than that. we have always felt of the people saying the market is overvalued have been looking at trailing earnings, which concluded -- included in earnings recession in 2016. once we started focusing us to get to the end of the year on the next year's earnings, at 26.80,en at this level, the market is trading about 6.5 times. that is not cheap, but it is not expensive, given the fundamental
backdrop that is strong right now. abigail: that is what i was going to ask you about valuations. you think this execution of the tech companies, but other companies as well, is really worthy stephen: of valuation we are seeing? -- of the valuation we are seeing? stephen: that is high you get the growth competitors. every company we met with in europe was talking about amazon, google, facebook -- the tech companies are global growth if you get the economy moving higher, which it is doing right now, the cyclicals can start to do better. if you get a fed chair that will stephen the curve, which we think powell -- that's another thing that happened today, right? .hat is good for the financials suddenly, you have an awful lot of components of the s&p index having wind at their back. scarlet: i want to show a chart that highlights what you were saying, which shows earnings
were tech companies has been skyrocketing and is now at twice the rate of the s&p 500 overall. the white line is the tech estimated eps, the blue line is the s&p 500 estimated eps. what happened after the melt up? what next? stephen: i think you have to think longer-term. that is what i have been telling our investors. when we put out our target eight years ago, it seemed crazy at the time. 3000 targetut a last june. that is the level we are heading to. i thought we would get there to the end of next year -- by the end of next year. i hope that is correct. my concern is that it happens to quickly. -- too quickly. that gives you more concerned think theback, but i location of your question is right. if it moves too fast, you run the risk of something going off the rails that we are not thinking about that could cause
a broad correction in the market. we had a rolling correction. many stocks across most sectors have had 5%-10% downdraft at sometime this year. it happened at different times. and we have headlines highlighting some of the risks, especially overseas. sack theready to spain. government in you just mentioned you came back from europe. could turmoil, this kind of political turmoil in spain, start to spread to the united states? could that be the catalyst for people to calm -- come into office? stephen: it might take away from the castle on -- what i take catalonia and the u.k., the more the catalonian's give the spanish a hard time, .he harder it is on the british i see you squinting, but the dynamic is it happened already. the brexit moment. the germans and the french feel
very strongly that they have to punish the british and make sure nobody else gets any wild ideas. were their worst nightmare, that they would try to escape. continues to be underway to the u.k. and nervous about the pound. that is the way it plays out. i do not think catalonia means that much for europe. there is no place for them to go. they are not going anywhere. i think this will get resolved. scarlet: we are waiting for the spanish prime minister to speak again, prepared to sack the government. we are waiting for mario batali to begin speaking. in the meantime, let's get a check on the first work news with mark crumpton. mark: the white house says cutting the corporate tax rate to 20% would boost u.s. economic
growth by 3%-5% over time. the report also be the assertion that the tax cut would increase average household income by at least $4000. however, other economists have disputed that. goblins first minister -- scotland's first minister is pushing a vote to urge clarity for theresa may transition after brexit. may says she is concerned the country is headed for a "no deal" brexit. may has suggested there might not be a transition agreement until a deal is struck on trade relations. most scottish voters chose to stay in the eu. icelandic voters head to the polls tomorrow for the country's second snap election in a year, after the resignation of the country's prime minister involvinga scandal grants clemency to child molesters. the election comes one year
after iceland's last national vote, called after another prime minister resigned out in the fallout of the panama papers week. president trump is leaning toward naming federal reserve to be jerome held. the decision is not final yet, a president could change his mind. president trump has said he will make his decision before he leaves for a job, a week from today. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton, this is bloomberg. scarlet? amazon'scoming up, quest for complete world domination continues. the online retail giant which has targeted industries from now has itsfood sights set on health care. more on the waves amazon is making in this sector. from new york, this is bloomberg.
abigail: this is bloomberg markets. i'm abigail doolittle. scarlet: and i'm scarlet fu. watching stocks flying high. and as they by 2.3%. abigail: the best day for the nasdaq of the year, and the nasdaq 100 up almost 3%, the best day since march of last year. as you are talking about relativity, this is the s&p 500 best day since 2009. scarlet: and you can credit amazon, microsoft, and alphabet. and speaking of amazon, it is now targeting health care. news that amazon received pharmacy wholesaler licenses in one dozen states triggered a selloff in drug distributors.
other players seem to be looking at some defensive moves, with cvs in talks to buy aetna, the insurer. tito martins joins us now. when it comes to this report edna, this is from , defensive posture -- aetna this is from a defense upon your? this is the amazon specter, they cast a long shadow over any industry they are involved in or route to be involved in. there is not a lot of opportunities for cvs in their core businesses. they are a pharmacy and manager. we have seen horizontal mergers and those businesses are not going through these days by evidence of the walgreens-write a deal last year being pushed , so the only way they cannot on to their business and
grow is to do anything outside of those core businesses. what about how this will look in the real world, i know that analysts are saying they might create many urgent sensors out of this -- centers or minute clinics out of this. what do you think? moved away from being a retail pharmacy. they have moved to being a health care delivery company. that is what they aspire to be. scarlet: and they changed their name. health, that is right. stop selling tobacco, they want health care. we are seeing the expansions in minute clinics, fusion centers. they want to deliver more health care as the market evolves over time. signed alast year, cvs five-year contract with anthem. seemsurchase of aetna like it is in either/or. it is not an and, in addition to
it cbs has already done. cvs has already done. stephen: they do not want to be competing against each other and have the deal with the same pharmacy benefit manager, especially if they own aetna. if this deal comes to fruition, and it is still anyone's guess whether the talks will go through or not, we will have to see what happens with the and then deal. abigail: what about the president of united health care. how well has that worked out for them, and does it set a good aetna market?cvs- stephen: people used to see cvs is just a pharmacy, then united got a lot bigger with their acquisition of catamaran in 2015. they take a holistic view of marrying drug and medical benefits. it is a great model that serves
as a kind of proxy for this cvs-aetna deal. scarlet: is at the a willing -- aetna a willing seller here? stephen: that is a great question here. i think anyone is for the right price. great perspective. jonathan palmer, health-care analyst for bloomberg intelligence. still ahead, what is in the republican tax plan? washington's biggest mystery, next. this is bloomberg.
runt as well is on thearp lobbyt potentially. i spoke with several republicans after the vote yesterday, including congresswoman blackwood -- and they said as it was known in the asset manager world, this will not be exactly how they pay him for it. scarlet: wonky issues will be the theme of all next week. in the weeds. remind us again, kevin of what the president has said. he has weighed in different times and promised different things. i know he has been very vocal on no changes to the 401(k) deductions, for example. is this something that the house ways and means committee has embraced as well? avin: yes and no, and that is great point. the president tweeted out the many) issue, and
republicans sort of a code him, but also noted they do have to find some sources of revenue. meanwhile, on the issue of illuminating the state and local tax reduction, we have also seen the president has listened to some of the republicans, like are presented of peter king, the republican from his home state of new york on this issue as well. that is why you have people like commerce secretary wilbur ross speaking at the economic club earlier this week, talking about what they are proposing. i heard that a lot from republicans yesterday after that budget vote as well. as we move this forward, the notion that this has been hardly doorsn done behind closed is correct. it now gets to the public position of this part in the process. after this is unveiled on november 1, november 6 it will go through the house of representatives for a committee markup. that is when november 6, the week after next, when you will be hearing a lot of these grievances being done behind closed doors with lobbyists,
lawmakers, and policymakers in the administration, really airing out in public. house speaker paul ryan said there is truth in comedy, when he was a little bit hopeful and happy, so to speak, that the president would be in asia when all of this is going on. scarlet: this -- abigail: the secrecy around the tax bill that is likely to be presented next wednesday -- our lawmakers, republicans learning from their many, many failed attempts at repeal and replace? are they trying a different way this time around? do you think yo it will work? toin: i put that question senior aides, lawmakers, and members of the treasury, and they are adamant that yes, they are. i was at a financial services a banking luncheon, and i was asking them what exactly what happened if this did not get signed? they said it would be devastating for the economy, as republicans in 2018. chief washington
correspondent kevin cirilli joining us from the white house. the spanish prime minister mari on oprah is speaking, making a statement saying he has fired the entire an government,al the president, and the catalonian police chief. this is after the catalonian parliament unilaterally -- and illegally -- declared independence. sweepingk on some powers to paralyze the secessionist movement in catalonia, and he is talking about some of the details there. he says he has already begun measures to respond to this declaration of independence, by firing the catalan government. he said it is a sad day, abigail. lans are ignoring general interest. in the referendum, it is unclear , the people voted because we
only got the catalan side of the numbers. abigail: an extraordinary day to have these headlines across, and what will it mean for the financial markets when they reopen? not affecting the rally here in the u.s.. the eu even asking whether or not it will be contagious. he seems to think it would not be. these are really impactful headlines and real-world events. words fromarp, sharp the spanish prime minister. he is firing the entire cata lan government, as well as the police chief and the entire cabinet. we will cover this for you as it continues. from new york, this is bloomberg. ♪
has madeister rajoy some dramatic moves to dissolve the catalan parliament, and fired the president and entire cabinet. he has let go of the vice president and the police chief as well, and calling for .lections for december 21 why don't we bring in our madrid bureau chief to bring us some perspective here? charles is speaking with us by phone as the spanish prime minister has just left the stage, just finished speaking. give us some condiment -- context regarding the complement.com it's -- comments. his is to capitalize on the sweeping powers that he was granted, just moments after the parliament unilaterally and illegally declared independence. charles: that is exactly right. an parliamenttal declaring independence today,
stylingident now himself as the president of the catalonia, and this is the spanish government's response. they held an emergency cabinet meeting and rajoy has come out with guns blazing. he has made some strong statements. he has fired the government and called elections for december 21, which is not far away. he obviously feels the situation needs to be dealt with quickly. scarlet: charles, where do they go from here? moves into an , i think.period we have to claims of authority on catalonia at the moment, with the declaration of independence today. this very firm statement of authority by the spanish government is a confrontation there, which will have to be resolved.
the spanish government says it will reassert authority, has dissolve the parliament, has ired the government, and guess we'll have to assert its authority to make that become a fact and reality. in the face of what we would expect to be resistance from the independence movement supporters. youlet: resistance, and, as can see, a live shot of what is happening at spain at the moment after the prime ministers spoke. do we expect social unrest? do we expect violence? is there the possibility of that, charles? charles: i would not like to predict what may happen, that it is certainly true. we have reported that the independence movement is talked about as a human shield to protect catalan government buildings and also to protect government personnel.
and we have certainly seen some large crowds in barcelona today, celebrating independence. kind of a becomes wrestling match, really, for a on the ground in catalonia. scarlet: charles, i understand you are in barcelona. what is the tone there -- abigail: oh, i thought you were in barcelona. scarlet: it is the live shot. a lot of confusion through this breaking news. abigail: do you have a sense of the tone their? charles: we have reporters in barcelona today. of celebrationes at the declaration of independence, but one comment from one of our reporters there is that it seemed to be somewhat more muted than you might expect , obviously. the people on the ground in barcelona, the supporters of
independence are anticipating a response from the spanish government. that probably -- the expectation of that tinges the mood of celebration somewhat, because, as i mentioned before, it is a situation of confrontation or a struggle for authority at this point. scarlet: once again, a live shot in barcelona. people are amassing, there appears to be a protest following mari on oh rajoy's -- mari on oh -- no ramallah's comments. macron says -- other countries have backed the hard-line approach. how consolidated is that? how unified is that response behind spain? is there any signs of it cracking? up until now, they had been treading cautiously, the european government officials on
what has been going on in spain. charles: i have seen two responses over the last few weeks, since the october 1 referendum, which produced those alarming scenes of the police using, in some instances, violence to try and prevent voting taking place or to frustrate the attempts to allow voting to happen. those things can cause alarm, but on the other side of that is, from what we can tell, full support across the major european nations for the spanish constitution, for the rule of law and order in spain. rajoy has been cultivating that support very carefully. forlet: charles, thank you giving us some much needed
perspective from the dread. he is our madrid bureau chief. we want to head to barcelona, on theur reporters ground. this is a live shot of barcelona. lots of people, it is late evening on a friday night after mariano rajoy came out saying he is sacking the catalan government. he has also dissolve the parliament, cabinet, and fired the police chief. he is taking steps to respond. maria, give us a sense of what you are seeing, what you are hearing on the ground there. what is the mood like? maria: hi again from barcelona. it has been a chaotic day, to be honest. we have seen a lot of confusion in the cattle on -- catalan parliament. this boat was approved, but it was held in a secret ballot, which was very unusual.
this has serious legal implications the vote in this law carries. we are seeing reaction from madrid, the entire catalan administration is going to be ousted, the head of the catalan police will also be ousted. this timing is particularly relevant, because of the december 21. remember what role said, this could take up to six months, but he seems to have decided it is better to do it as early as possible. w,e people of barcelona kno they were aware this was going to happen after the vote took place and madrid will try to assert its authority here. but what is going to happen to the regional president? it is an option that he could get arrested. the people i am talking to on the ground will tell you that look, this is an iconic day for us. it is something we have earned, achieved, and we will defend this republic. there will be a lot of tension in the streets of barcelona for sure. maria, sticking with
the idea of tension on the streets in barcelona and looking at this call to action begins "do not respond violently to , smile.or provocation sit on the floor and cross your legs." are you seeing evidence of that, or something that is more disruptive? the signs that violence could come that scarlet mentioned? maria: that is right. what we have seen is a very peaceful protest. aware of this.ry you need to keep in mind that for me legal point of view, they have no ammunition left. they know that this will be seen as a legal by both the central government and the courts, but also the european union. they know the cards they have to play, the one card may have left is getting people out on the streets. again, it has to be done in a peaceful way. you do not want to discredit this movement. there are also people in region --, there are 7
million people in catalonia, only 2 million voted in independence. so it is not even clear that they have clear-cut support across the catalan society. we know on sunday there will be a march in favor of pro-unity, and that will be one to watch. what we are getting is demonstrators are happening -- demonstrations are happening almost simultaneously on both sides. scarlet: what happens on monday, maria? the happens on monday if catalonian president decides to show up for work? maria: it is pretty clear he is no longer the president of catalonia. if you shows up to his office, the question is if he is going to get arrested? we know the government in madrid has a longer site, that a lot of this has to do with optics. you do not want to be seen as undemocratic. mark as toa question whether they want to arrest him now or say you can show up and
your signature means nothing, you will be replaced by ministers, and in madrid, life goes on as normal. but how tough is madrid going to go? goes on as normal for those in madrid, but probably not for those in barcelona, live on the ground. tadeo, thank you for giving us your perspective on barcelona. and this comes on the heels of ajoyish prime minister r firing the president and dissolving the catalan government. he has chosen to go with a sooner date for election, december 21, rather than a later date. we will keep you posted on any further developments on the ground in spain. in the meantime, let's get you caught up with other headlines in bloomberg's first word news. republicaner retirement could be on the horizon, with orrin hatch
telling friends he plans to retire at the end of this term. also, it is reported that the former massachusetts governor, mitt romney, lance to run in utah is senator hatch sets down. warninge department's countries that they risk american sanctions if they do business with more than 30 russian entities. the u.s. published a list of businesses and individuals linked to russia's defense and intelligence agencies, and nearly a month after the list was due. the penalties were required under a sanctions bill congress passed in july. president trump signed the bill into law in response to kremlin interference in the 2016 u.s. presidential election. defense secretary james mattis visited a south korea military , wheretion post in seoul he looked across the border into north korea. he was briefed along conditions -- about conditions along the
created afterwas troops halted the korean war in 1953. this fuels tensions with pyongyang, but mattis added america is ready to take military actions if pyongyang does not halt its creation of of military missiles. he takes over ministerial responsibilities of deputy prime minister joyce, who was disqualified from sitting in parliament. the decision to qualified -- asqualified joyce came from 100 16-year-old constitutional ban on dual citizens serving in parliament means a by election will be held for his electoral district in december. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton, this is bloomberg. abigail? abigail: coming up, we will get more insight on today's big market rally, led by tech shares
♪ abigail: this is bloomberg markets. i'm abigail doolittle. scarlet: and i'm scarlet fu. abigail: let's get back to the markets. the nasdaq 100 is surging, following strong earnings from amazon and google's parent company, alphabet. mike, this is pretty extraordinary. the rally in the nasdaq 100 best day since march of last year. what do you make of it? >> and the best day compared to the s&p in 2009. >> yeah. >> crazy.
i think it shows what david was talking about the other day, that the value of investing is so hard right now. everyone wants to pass for growth. if you think about it, it makes sense when you look at the earnings estimates going forward -- not just this quarter, but they are so solid. amazon is obviously starting on a low base. you cannot look at any traditional valuation metric on amazon other than it keeps expanding, growing into new businesses, now talking about pharmacies. it is just a machine that has taken over the stock market. what is amazing to me -- i wrote a call about a year and a half ago calling amazon a $300 billion penny stock. and it is because its earnings come in so far off the estimates. it beats or misses by an average of about 50% every trend season. and is crazy. the stock averages 9% on earnings day. for a company that is now $530 billion penny stock, that is such a volatile stock for it to
be such a mega cap stock, for traders you have to love it, and a buy and hold perspective, you have to love it as well. but it puts to bed this whole idea that may be valuable people rotate into value, and does i do not think it goes completely to bed, but it makes you look sleepy at this point. amazon'sfollowing results, it has zoomed past the $1000 barrier, now just under $1100 a share. we were saying was that amazon got to $1000, he considered it a short. not because it is a bad company or process, but because it got icy, kind of expensive. are you -- pricey, kind of expensive. you hearing people say that or is it all guns blazing into these stocks? michael: a lot of stocks is 100 shares. i do not think anybody cares. to be saidmething
about more liquidity and lower-priced stocks, and there has been research suggesting that. and funnily enough, it interest research showing if your kicker is up at the beginning of the best, there is a lot more liquidity. -- ticker is up at the beginning lothe stock, there is a more liquidity there. so amazon. it is clearly not stopping it. will they ever do a stock split? i do not know if they would see a need to warn not, but it might be something they should think about. abigail: picking up on what scarlet is asking and what you were talking about with david einhorn of green light capital, they were asking about whether the value of investing was dead. is that a signal a turn is about to come? ,f i look at this chart absolutely soaring, some might call it a blowoff top, the reverse of a -- bottom. is there any volatility or are we going to keep going higher here? michael: if you look at tech, we have seen how many things that look like blowoff tops? value investing is not dead.
it has seen better days, obviously. we really need to see inflation the economy really accelerate. obviously, we had a good gdp for today. i'm not sure that everyone is convinced that 3% growth this year's essay -- is here to stay. i do not know if we will see that consistently going forward or seat yields pick up enough to go into bank stocks. scarlet: that is a long list, mike. [laughter] michael: it is tricky. , it hasle bull market been the best trade to be in. see thatd to reversing. maybe in the short-term, sure, but permanently, i do not know. scarlet: we end this with more questions than we do with answers, but that is partly because it keeps defying expectation. coming up, president trump is said to be leaning toward nominating fed governor jerome powell to lead the central bank.
♪ abigail: this is bloomberg markets. i'm abigail doolittle. and i'm scarlet fu. let's get back to the breaking news on spain. i am looking at this chart on the bloomberg. this is the average value at the time of ew p, the etf that tracks spanish stock. it is not the price, but it is the etf credit, down by $.60. what i am looking at is volume. the white line tracks what is happening today. the yellow line is what typically happens. you usually get a pop right around the time spain closes, the regular spanish market closes for trading, which is around midday in the united dates. here, you can see that volumes did not get that usual pop because people are waiting for rajoy to make the announcement. indeed he did, saying he is
dissolving the catalan parliament and sacking the president, and you have this lift in volume. projected to continue moving in this direction and get us a lift at the end of trading. for more analysis on what is going on in spain and how this all fits in with the economy and companies there, we want to bring in michael mckee, our correspondent for bloomberg news. we were just talking about how a lot of companies have made the , ae to move out of catalonia lot of the banks, for instance. you had a number -- 1600? mike: 1600 companies at last count had moved their headquarters out catalonia -- out of catalonia after the independence vote. another problem is that no one in the european union is recognizing their breakaway government. they would fallout they would be toependent -- if they were be independent. they would have no trade relationships, no currency, there would be a lot of problems in maintaining and running an economy.
it is not clear now what they othern it -- from it than the emotion of separating. a pedal -- catalonia nunnally tro the police and civil government, but health, industry, trade, consumer affairs. it is no longer -- not clear how much control rajoy will be able .o assert over catalonia this will be a dicey weekend there. abigail: this is unprecedented for the spanish government, but what about other situations in the past that remind you of other countries, where you have seen something along these lines, to get some sense of what could be next? or is it unprecedented in relative to modern history? mike: modern history. there have been a lot of independence movements. the issue now is you have a lot of regional trading and currency spain is in one. catalonia would not be in one. who did they do business with?
that is one of the key questions for them going forward that you did not have another situations where country had desk countries had to trade. greece had trouble paying its bills that could barter with other countries. but the european union is saying they will support you in this. isrlet: this article unprecedented as well. we are looking at elections in december 21. more on that because it is a developing story. i want to jump in here because we have a headline from the white house briefing, sarah theabee sanders says president plans to make an announcement on the fed chair next week. we have a little bit more detail here on the timing of this now. oh boy, that means we can go home now. we do not have to stay late on friday. scarlet: but there is a lot going on next week, so he has to pick a time carefully here. mike: you have the fed meeting on wednesday, the earnings
report on friday, and he is leaving on friday, so either he doesn't on thursday or steps on the fed meeting, and that would not look good, especially if he is not renominated janet yellen. so monday seems like a logical day for this. wednesday is not only the fed meeting, but it is the day that kevin brady releases his -- on taxes. michael mckee, talking spain and the fed. thank you. coming up, shares of apple rising today, getting a big lift. says customerany demand for the iphone x is "off the charts." we bring you the latest on this $1000 phone. this is bloomberg. ♪ ♪
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julia chatterley. scarlet: and i am scarlet fu. welcome to "bloomberg markets." ♪ we are live in bloomberg world headquarters in new york. technology shares surging today following a stellar quarter for internet names like amazon and all for bit. plus -- gone in 60 seconds. in aphone x sells out flash, but that does not mean it will be a hit with consumers. and a crisis in catalonia. what is next? we are one hours from the close of markets. let's get a check on markets with emma chandra. wow. rally, rally, rally. emma: it has all been powered by that surge in tech stocks, as you were mentioning, abigail. we have seen a number of those stocks beat amazon earnings.
the s&p 500 seeing its biggest gain since march of last year. that's contributing. third quarter gdp in the u.s., second strongest growth in three years for the u.s. economy. let's look at how these things are playing out on a weekly basis. see here is how everything is doing on a weekly basis. we are looking at seven straight weekly gains for the s&p and the dell. for the s&p it is the longest weekly winning streak since december 20 14, 5 weekly gains in a row for the nasdaq. let's look at some of the movers. all big tech names. amazon, apple, alphabet. alphabet hit and new all-time
high and amazon stocks back over the $1000 mark. to seizewed jeff bezos the crown of world's richest person. let's move on to my next chart. perspective the kind of day the tech sector is having. they are having their best day .ince 2009 you can see how well they are doing. finally just a few on the movers for you today. we have first solar up again on earnings, a number of record orders. and line technology -- they make isalignle line -- inv braces. and we do have mattel -- they had awful earnings. they are trying to deal with
rough going. back to you, scarlett. scarlet: thank you. mattel down by 25 basis points. at least it has come back a little bit here. staying on the techmeme, shares -- stayingsing today on the tech theme, shares in apple rising today after they sold out on initial preorders for the iphone ask. the weight time six weeks -- the time six weeks in the u.s.. mark lehmann of gmp securities. anyone ordering will be waiting six weeks. tol it be worth waiting up two months for this new device, or could the iphone 8 get a little bit of a boost here? mark l: i think the answers to yes. questions are both
early adopters will want this phone and we saw in the early hours how quickly this sold out. will get somene 8 of that. people who do not want to wait for those two months. it just shows you the power of the brand. for all of those naysayers who were looking at the 8 and said it was a glorified 7, this is the power of the brand in the stock today. how does apple account for taking so long -- and if it once theyk ship, could that cause the december quarter to come and lighter than analysts and investors are expecting right now? mark l: that's a great question. for shareholders, i don't think they are worried about the third quarter or, frankly, the fourth quarter. and beyond018 earnings story, so it will affect those numbers. and i think it is frankly, a kind of irony be six-week and
bleed overearnings into 2018. i think that is great for the stock and great for the story. scarlet: and the shortage of the iphone ask, the facial recognition id technology that will be replacing the touch id -- given all of the production delays we have been reporting on, how confident are you we will not have a situation where removed a critical feature and replace it with something worse? mark l: we have at this over the years where we have had panicky calls from analysts and buy side people, forever, frankly. here it comes. this will be the downfall of apple. i don't see that. i see these issues as being temporary. this is obviously an enormous technology with far-reaching
effects that will be the gateway for them for the next decade. that is a glitch, bothersome. long-term, it will be annoying, certainly for some of the people who own the phone itself, but the story will not get in the way of the stock going a lot higher. a long-term story in tech them. one more question on apple before we brought it out to the tech sector overall, typically, mark, how long does it take supplythe new iphone reaches equilibrium? where it is shipped immediately as opposed to waiting for 6, 7, 8 weeks? mark l: this feels like it will be a long time. you cannot use the launch of the theythe bigger phones launched soon after the new operating system -- this feels to me like it will be about a year before they get that it equilibrium or more. i think it will take some time. hurts thehink that
story. it builds of the ecosystem, the chatter about the stock, as well as the chatter about the phone which does not hurt apple itself. scarlet: people waiting for the latest iphone. abigail: people want what they cannot have. a lot of people waiting. and tech has had its best day since early march of last year. locks -- lots of stocks trading higher. amazon at all-time highs. we have a chart on the bloomberg that shows how well the fangs stocks are doing, this is the merrill lynch saying index -- fang index. what do you make of this? is it sustainable? mark l: what i make of it, usually mid-quarter we have people coming on your show are other shows and worrying about the trade and it is very hard to call the market top when you see revenuea acceleration. we have been very
cognizant of that. aboutleague was talking just that -- what they are doing in cloud, what they are doing in other areas. they are redefining other areas. there is chatter in the health care arena. stocks hasf the fang not diminished. it has accelerated. it is very hard to call the top. i think there are people, frankly, who shorted the stock. they are coming back into it today. you will see followthrough. they are talking about health care -- you have heard them talk about getting licenses. there are large parts of the economy they have not touched or are barely touching. you will want to on the stocks because i do not see accelerating at all. abigail: there must be something -- that you do watch something that you do watch just in case? is a tell.hink that one thing we have not talked about is legislation, government
oversight. these companies are run autonomously through the beginning of the trump administration, they have busted forward and redefined how we are as a nation. we are still the global leader in technology. that has not changed. if we see government oversight or something more important that i think we have not seen today, i would get worried. i think for the overall message though, this juggernaut, this move to the cloud, this move to online, this move to all of the things that facebook and amazon and netflix and others are doing, that is not accelerating. that large portion of the economy they are overtaking -- albeit smaller than it used to be -- it is still out there for the taking. right, great perspective on apple, the fangs, and tech overall, mark lehmann securities. let's get a look at first word news with mark crumpton. mark: a story we have been
all afternoon, prime minister mariano rajoy of fired the catalan government. the prime minister says he is dissolving the catalan parliament and calling for new regional election on december 1. the syrian government siege of capital suburbs is being called an outrage. he said that residents are facing what they call a humanitarian emergency, despite the truce negotiated in april to facilitate relief. images circulating of severely mounir's children "shocking." boris johnson says it is unthinkable that european union citizens living in the u.k. might the senate -- might be
sent away or lose their rights after brexit. he was asked about their rights, a key issue in brexit talks. he said he cannot imagine a circumstance in which eu citizens will be asked to leave or have their rights violated after the u.k. leaves the bloc. president trump has responded to a california billionaire who has spend $10 million. he says that tom steyer has been "fighting me and my make america great again" agenda from the beginning. applications for american citizenship are up. applicationsn generally fall after election, but this year, the volume of applications is on track to be
2016 figures. the national partnership for new american says this is the first time that applications have not slipped after presidential election in 20 years. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. am mark crumpton. this is bloomberg. scarlet? thank you. the crisis in catalonia. spain for prime minister dismissing the regional government and dissolving his parliament. what happens next? from new york, this is bloomberg. ♪
i am scarlet fu. abigail: i'm abigail doolittle. it's time for the bloomberg business flash. heldrivate equity firm talks with the retailer bonbon this week. bonbon has struggled with mall traffic -- bonton has struggled with mall traffic. suinger banker is deutsche bank for unpaid bonus. he filed in january according to the defensive document file today. in internal review found he preached conflict of interest rules. nflictached co interest rules. a representative will attend a hearing before the senate judiciary committee crime and terrorism subcommittee which will discuss russian election interference and whether new laws are needed to regulate social media.
that is your business flash update. scarlet: we are, of course, keeping and i am what is going on in spain. the prime minister of that , hasn't mariano rajoy dismissed the catalan government. he is calling for a new election december 1 as he tries to control the rebel region. all of this hours after the approvedn senate measures under article 155. says that they tried to state a kidnapped and take part of the community from the people. joining us, a reporter in madrid. this is a pretty bold move from mariano rajoy. rajoy talked earlier about possibly holding elections in six months. now it's less than two months. what changed? the government led by
decided to go in a big way and do it quickly. were allres he took known. that was written down a week ago. these were all things that could happen. this all came down about an hour ago -- the big surprise today, he took all of the big measures right off the bat minutes after it was published in the official gazette, it became legal. probably the biggest surprise was the call for early elections for the region on december 21. , andsets the clock ticking it's a bit of a roll of the dice who favortalonians unity and do not favor independence will come up with a clear majority and form a new regional government. to the: we mentioned clock is ticking toward that december 21 election.
look likethis weekend though? so much uncertainty, and what about monday? todd: first of all, it is very likely that cattle and officials or another political party and the opposition will appeal this to the constitutional court, which is the highest court in spain. it's theoretically possible there may be a delay while the highest court reviews this. but practically speaking, what everyone will be watching is how the government based in madrid can physically carry out what it wants to do. ,he catalan regional president who was dismissed by rajoy tonight, and the last couple of hours has been signing documents catalandent of the republic. so, to actually arrest him or change the lock in his office, etc., you name it, there will
have to be police who carry this out. the government in madrid has people abovewo top the police chief. so, it will come down to a bit of a police question about the national police reasserting control over catalonia they have not had in decades. scarlet: what happens if catalonia's civil service does not abide by madrid's orders on monday? thes one thing for president to continue to sign orders on behalf of the catalonia republic, but what about the civil-service? d: the civil servants -- the governments, as you are intimating, the government in catalonia continues to function. but if they make a decision, it has to go through madrid, which is veto power over it. scarlet: ah.
that the buys would be to the downside. now rate is at 60. what do you think? chris: to me, the most interesting point is the divergence between commodities and stocks. we are seeing a 2% rally on the front piece of the futures curve reinforcing that backwards ovation -- backwards civilization lindsey. we have large caps stocks. to me, it it is still an opportunity. does that meanat for oil though? does that mean there are some investors who do not think oil will be supportive if they are not willing to buy the equities? capital structure of the oil and energy companies? so, oil, i think, is taking cues from the saudi's and core opec members. they have been vocal about until 2018 and we have
seen the supply demand imbalance is starting to rationalize. and the equity market, unlike the credit market, where with a backward curve you can pay your bondholders, you need -- what the prices are below where they would be on the spot. abigail: you mentioned the inventories. there's a very good chart on the bloomberg that suggest than inventories are going the right direction, at least in my view, to see prices climb higher and inventories come down. what do you think about that? so, this chart to me is indicative of what we see playing out in the futures curve. i think it's really important. because in a backward aided market --backwardated
credit markets are getting paid. with high-yield spreads, when they blowout, high-yield volatility gets realized. however in equities again, you need visibility on longer term prices above where they are today to justify some of the valuations you are paying in growth in mps. equities to us are still priced too high. abigail: that's pretty interesting. it will be interesting to see how these layout. and your trade on the xle -- can you talk to us about it? chris: our motto for november is get paid to fade. the idea you can sell and up options to collect the options premium -- we want to kill a call spread, the 68-70 call spread in xle. abigail: that will be how
investors perhaps play oil? chris kettenmann, thank you very much. scarlet, back to you. thank you so much, abigail. stocks trading up, up, and away as we count you down to the close, 30 minutes away. the s&p 500 at a new high, the dollar rallying as well. 2.3% for the nasdaq here. volume also higher than average. 84% above the 20-day average in the dow industrials. 25% above in the nasdaq. this is bloomberg. ♪ who knew that phones would start doing everything?
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million contract to help restore to ao rico's power grid tiny montana company in interior secretary ryan zinke's hometown. the white house said that federal officials played no role in the selection. 75% of the u.s. territory thanns without power more a month after hurricane maria made landfall. sayschigan, the judge aint has yet to secure long-term water source and may be pushed towards bankruptcy. the council's proposed two-year extension with the great lakes' what authority is not the long term plan he had ordered. flint continues to suffer a crisis. was incorrectly reported