tv Bloomberg Markets Americas Bloomberg November 21, 2017 10:00am-11:00am EST
vonnie: u.s. stocks are in rally mode today, but we start with breaking economic data out of the u.s.. julie hyman has that data. it is just out. existing home sales. 5.4 8 million is the figure on the annual pace, little better than estimated. we saw a little bit of a downward revision, but not a huge change either. again, seeing this number gain 2%. october is the month we are talking about the october existing home sales up 2% to an annual pace of $5.48 million. it says we start as a the effects of the various hurricanes fade, particularly across the south. we will keep an eye on housing numbers it already, seeing gains
in u.s. stocks. all three major averages touching closing records. the nasdaq the only other three to also trade at an intraday record as we see strength on this day when we have a smattering of earnings reports to keep an eye on. that is one of the things helping boost the stock market. also in the case of the stock market, technology is outperforming. word aboutsay a volume. one of our chart masters cooked up this chart. here is the average volume if you go back over the duration of the bull market. here is this year in white. and the low of the bull market is here in red. 2017, volume has been running well above average. it started to arise a little bit, but again, still below the average line. something to keep in mind as we enter this latest stage of the bull market. back to earnings, i mentioned a
smattering of them today. tocks are rising, helping support overall gains in the s&p 500. the packaged meat make a harm ormel, theiret -- h averages up 2.5%. medtronic coming out with earnings that beat estimates. also comingeering out with a forecast that left room for it to be estimates. i want to mention currencies. the's the dollar versus mexican, having a sharp downward move. similar move in the canadian versus the u.s. dollar. i am watching the nafta headlines. the latest is that a nafta deal is near on telecom, energy, and e-commerce. that according to a mexican business representative. however, earlier in the day, it seems as though the nafta talks where sputtering.
it is the latest headline that shows we are perhaps nearer to an agreement on certain areas that appears to have triggered this movement downward in the u.s. dollar as a result, the bloomberg dollar index is also down. particularly of note are these moves versus the mexican peso and the canadian dollar. mark: last wednesday, the stock 600 fell to the lowest in a couple of months. since then, it has risen three days out of four. of 1%.ges up by 6/10 germany, of course, has been in the news the last four hours after coalition talks collapsed. 6509 shows how the dax has outperformed its benchmark peers since trump was elected. this is normalized in zero on of it last year. the dax in blue, up 25%. , theecond best performer
s&p 500, roughly 20% higher. the fifth is the ftse 100, barely up by eight percent since then. germany is powering ahead, despite the fact -- today, it is rising as well -- despite the fact there is not yet and you government. -- a new government. another great chart centering in on that theme of the instability within the german political system right now -- peripheral bonds are outperforming thanks to two different sources. thursday, the knee-jerk strength.gth -- bund commerzbankng -- reminds that the free democrats not -- l's party were could shore up sentiment he says
on periphery debt and will continue the spread narrowing. this is a in-germany, blue line. article-germany, white line. italy-germany, yellow line. the spread have been narrowing on the street. and nestle among the companies a -- ering a purchase of others, including u.s. food makers and buyout firms are said to be interested. shares of nestle up by three quarters of 1% today. vonnie: thank you. sticking with the markets and stocks us to talk about ahead is ben laidler. has 2650 as a target for the s&p 500. that is roughly 2.5% above where
the s&p is today. 2.5% in all of 2018 -- it almost seems not worth bothering. let's take this one at a time. double-digit earnings early next year. the elephant in the room is what are you prepared to pay for that double evaluations, u.s. valuations. 20% to 25% above historical levels. at a time when monetary policy is becoming less accommodative. nearly 10g down percentage points a year. we clearly have not seen that this year. i do think you need to write some of that evaluation compression in for next year. vonnie: with the 10 year u.s. yield at 2.3% now, why bother? why not stick with safety bonds and do away with equity risk? ben: that is a good question. i think the multi-asset cases --
it is clearly not obligated. some-- there are clearly numbers and other regions. we have double-digit returns and emerging markets, for example. mark: talk about tax reform impact on companies that have or have not moved ahead of potential tax reform. who is positioned and where? ben: taxa form is one reason we are over u.s. equities. we like u.s. equities in general. the icing on the cake could be tax reform. that 10% earnings growth could end up being 16% or 17%, if you get tax reform next year. so if you like that sort of upside optionality. mark: a couple of other big calls. underweight japan. in the last week or two, we have guessed after guest saying by japanese stocks. you are underweight and contrarian underweight europe.
talk us through those. ben: japan is simple. the double headwind of the yen, which we think will incrementally strengthen. that will put pressure on very high japanese earnings expectations. we have one of the biggest gdp slowdowns globally coming out of japan next year. to growth essentially having 0.1%, which is trying growth. it will be a they headwind, especially as you point out sentiment in japan has gotten quite bullish recently. i think that is a mistake. anope, similarly, i think is earnings disappointment story. you get maybe 9% growth out of europe this year. given the macro recovery, given how depressed earnings are, i think that is massively disappointing. next year, i think earnings growth will be even lower. disappointment just builds from here. mark: why has europe given the macro backdrop -- why have earnings remained at low multiples? seenyou really have not
much of a recovery. the latent political uncertainty is part of that. has notnger euro helped. european corporate are the most globalized that there are. those are the two main reasons. from here, we are looking for slightly less macro events. and we are looking for slightly higher bund yields. vonnie: so what is everybody else missing? it is true in the last few days, saying, the exact opposite. bullish japan and u.s., more so than a 2.5% gain for u.s. equities. ben: of japan, hope springs eternal. this has in a market that has underperformed for literally decades. corporate profitability is still the lower's -- lowest in the world. the narrative can be attractive that all of these things will gradually recover.
we do not think they really are. it is a relative value track did in europe, i think earnings are the past. i think there is recovery, somewhat. there are just better ways to play that. in the u.s., there are sectors we like. are .5% above historic average doubles. we think there will be compression. vonnie: one -- what are the sectors you are pressure active on and what are the gains they might give? ben: we like cyclical sectors. the u.s. economy is growing right now. very healthy. the dollar depreciating, which is helping. sectors,these cyclical pmi globally, is very high right now. global -- anything in that cyclical space -- very depressed and recovering. materials, energy, the supply side is a lot tighter than people think.
quite a lot of these cyclical stories. we have this globally synchronized strong recovery coming through right now. mark: you say that is supportive of m&a. which industry, from here, could benefit from that? ben: m&a in the u.s. has been very depressed. m&a in europe has been very strong. we are looking forward industries that are very fragmented and could benefit from more consolidation. for us, european banks, machinery, chemicals. these are the sectors where activity could be ripe. vonnie: our thanks to a ben laidler, global equity strategist at hsbc securities. time for the first word news. emma: in germany, chancellor angela merkel says she is open to having new elections to break an impasse to forming a new government. merkel made it clear she still plans to serve her fourth term, but after coalition talks broke down, she said she would rather
face voters again then governing without a majority. trumpays to the administration, "we will see you in court." he is vowing not to sell cnn to appease the administration. meanwhile, the trump administration is ending a temporary program that allows nearly 60,000 haitians to live and work in the u.s. many arrived after a devastating .er -- earthquake haitians will be allowed to stay in the u.s. until july, 2019. ae "washington post" reports woman have accused television host charlie rose of making inappropriate advances towards them.
pbs is halting distribution of the "charlie rose" program. bloomberg, which has a distribution agreement, has ended aaron "charlie rose." global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. thank you. coming up, a bloomberg exclusive with the chief executive of syngenta. is bloomberg. ♪
futures in focus. oil rising. above $57. u.s. crude stockpiles expected to resume their drop. gold climbing. joining us is the president of blue line futures, bill baruch. what will it take to push it above $60? bill: i do not think it will break through 60 quite yet. i am targeting $58,97 ahead of the opec meeting. one of the reasons i do not believe crude can push through $60 is because of positioning. are going to have to see a little bit of a cleansing, which can, after the opec meeting. once we work our way up to $ 58.97, then we can see the market retreat and then make a
second attempt in the first quarter of next year. mark: still concerns russia may not tell the line when it comes to extending production cuts. do you expect everyone to fall into line and for those cuts to be extended in a week or so? bill: i believe russia is flexing their muscles right now. they want to show they are in control of what they want to do. but they are ultimately going to join forces with opec. there is no doubt this production deal will happen. however, this production deal will be completely priced in. i do not think we get bullish surprises. that is why you will start to see a waterfall effect back down. the market has just moved a very well and constructively off of $55. we want to watch that level after this meeting at the $55 mark. again, i am very bullish, heading into the opec meeting. mark: how do you feel about gold? 1270 range.l in the
what will break us out? bill: that was a big move yesterday. than $20.more i think it failed at $1300. it got above 92, but when they reopened, the sellers retook control of the market. the 200 day moving average -- yesterday's price average moved off of that. i like gold long time. i think we will see a perform very well next year. however, we do not really have a catalyst that will push and breakout gold. downplayedsomething was yellen's resignation. everyone knew she was going to step out. however, the impact -- the fact that she assured everyone will -- the fact that she assured everyone she will not be there next year meant there was not
the dovish voice in the fed. vonnie: time for the latest bloomberg business flash. eryer is looking -- bay is trying to win approval of its 66 billion-dollar acquisition of monsanto. bayer is trying to figure out how much of its units could speed up the antitrust investigation. the company already agreed to sell its seed aggregation. nestle is exploring a company that sells -- nestle has made talks to buy hain celestial deal. citigroup fell in the latest ranking by global regulators. authorities, they are recommending that citi's
capital surcharge be cut. also the bear upon -- bnp fell in that ranking. mark: still ahead, we are live in istanbul for more on what is driving the latest rounds of market turmoil in turkey. also, syngenta was taken over by chemchina, the largest foreign takeover by the chinese. how has life changed for the swiss agriculture company? this is bloomberg. ♪
let's get to turkey. we are joined by cosan cyclical us -- constantine. what exactly did the central bank do, and why have investors given the central bank the thumbs down? >> the central bank reacted to the nearest -- lira slide. bond yields spiked. the central bank step in by cutting off some of the cheap funding banks had access to, pushing up and funding costs by 25 basis points, affective as of tomorrow. the move helped trim some of the losses for the currency. what a lot of investors remain unconvinced, unimpressed. they think the central bank -- some believe the central bank needs to push interest rates up higher to combat accelerating acceleration. they believe policy remains to loose. vonnie: what is the level that
terrifies the central bank and makes it want to step in? question.e: good it is unclear what level of the central bank would become very uncomfortable. thatbearers are looking at level. it is hard to say what the central bank is winking exactly. there will be a point. vonnie: how did we get here? constantine: a couple of factors. inflation has been accelerating over the past couple of months. relations with turkey's western allies have deteriorated. both of these factors have led to investors demanding higher rates to hold onto lira assets. so market rates have been
creeping higher steadily. the central bank is -- has pushed through measures in the past month and have not really convinced investors. they started auctioning some nondurables. all of these measures do not really seem -- they are not as effective as a straight up rate hike. so there is concern the central bank was going to drag its feet or not act is how we got here. mark: how does this feed into this whole independence of the central bank narrative? clearly is pushing the central bank not to raise rates. he does not believe it controls inflation. where is that argument progressing? constantine: friday, erdogan criticized the central bank quite publicly.
i think that was one of the short-term triggers for this latest move higher in the dollar-lira. investors seem to think of this criticism is assigned that political pressure on the central bank is growing and that the central bank may succumb to this. that is the backdrop. mark: cosan cyclical us -- constantine courcoulas reporting from in simple. vonnie: coming up, a bloomberg exclusive with the ceo of syngenta. this is bloomberg. ♪
emma: the trump administration additionalnounce sanctions on north korea, a day after her trump added kim jong-un's regime to a list of countries sponsoring terror. russian president vladimir putin plans to call donald trump today regarding the situation in syria. putin had a surprise meeting with syria's president yesterday. rewrite the north american free trade agreement is said to be sputtering. the fifth round wraps up today in mexico city. -- co and canada the u.s. is frustrated the two countries will not, with counterproposals on issues such as regional content rules. taxes tos expecting
rise after the u.k. leaves the european union. see a tax hike after brexit. there is pressure to increase spending. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. vonnie: thank you. the agriculture industry has seen several such african deals of this year, the chemchina's $43 billion takeover of syngenta. that negative is just one reshaping the global chemical industries. the other is dow chemical and dupont. joining us is erik fyrwald, ceo of syngenta. how are you taking advantage of this sweet spot for you, given that dupont and dow, bayer and monsanto, are caught up in trying to emerge successfully? erik: ours is an acquisition.
chemchina acquired us a couple months ago. because it is an acquisition, we are still syngenta, with chinese owners. we can stay focused on their customers. we can stay focused on what we need to do to win in the marketplace, and not be distracted by other issues. vonnie: so how exactly do you plan to take market share from others while they are a little distracted? erik: first of all, we have to drive our base business. we are number one in the world and our crop protection products business. and we are number two in the seeds business. we want to further strengthen our crop protecting business and turn around our number three seeds business, closing the gap on the others. we are investing in our base ,usiness, focusing on customers and doing both on acquisitions. vonnie: to the point on seeds, bayer literally announced it is
the vesting more seed units to help the antitrust process move faster. much longer are they getting thanks to whether shocks? will the development be faster than the ability to ramp up demand to meet them? erik: there are new technologies that are fantastically helping us. advanced seed breeding. we know more about the genetics of plants that we have ever before. we are able to use genome editing to more rapidly increase the yield of plants and make them more resistant to disease and insects. vonnie: what about the demand fight of that equation? tok: demand continues increase with food around the world with population increase and with people coming out of poverty in places like china, southeast asia, and africa. going from rice only or carbohydrate only diets to wanting to eat protein.
we are wanting to breed into the seeds the ability to increase the protein content, when needed. mark: the seeds and spray model farmersone stop shop to -- is it still valid? is stillhink it absolutely very valid, where you can provide the farmer the seeds and also the crop protection products. and these digital tools we have now are incredible. now, every form in the world is really a plot, a test plot, to evaluate products and technologies. we are able to work with farmers around the world to better position our seeds and crop protection products to help them improve yields, so they improve profitability, but also reduce their environmental impact.
significant ability to reduce co2 emissions and water use. emissionsenhouse gas in the world are from agriculture. 70% of the world's fresh water is used in agriculture. our technology allows farmers to be more profitable and also deal with environmental issues. .i.,: we have big data and a bringing machines that will hit laser technology, and in the process, they are using 90% less chemicals. how are you dealing with that threat? ofk: we are on the forefront this opportunity. we do not view it as a threat. we see the technologies that are able to more precisely identify where the weeds and diseases are , and the insects are, and target them as a big advantage to help the profitability of farmers and also the
environmental impact. we have something called the "good growth plan" that we want with farmers around the world. we trained 20 million farmers a year. reducectices help them greenhouse gas emissions by an average of 20%, reduce water consumption by significant amounts, and reduce pesticide use by using better pesticides and more targeted approaches. it is good for the farmer, good for the environment, and good for syngenta. mark: what do you make of the political focus right now on the likes of pesticides, on the likes of herbicides? e.u. looking-- the e.u. looking to extend a license on weed killer. how is that impacting the likes of syngenta and agriculture? erik: we are not a glyphosate
company. we think it is very important to have open conversation with government regulators about what sustainable agriculture is. if you look at the need to feed the world and take care of the planet, environmental sustainability, it requires the right pesticide and seed technologies to do that. you have to have the yields and protect the plants against weeds, insects, and diseases. we believe our approach with a good growth plan is the right way to go. by the just awarded, alliance for sustainable agriculture, a very large organization with lots of food companies, retailers involved, just awarded as the nature and mercy does just awarded us the collaboration award for working together for sustainable agricultural.
vonnie: congratulations. i want to ask about your china model. is lesser things transparency, which could be good for syngenta. do you plan on trying to save your credit rating? what is the outlook for debt markets financing? erik: we have very strong free cash flow. we have working capital, best practices, we are deploying. to improve our capital. we have non-core assets that we can use. we will work with that. we are working with chemchina. we will solve balance sheet issues that they raise and preserve our investment grade rating. china, iteaking of said it wanted to get 10% ethanol in all cars by 2020. how doable is that? erik: very doable.
i think it is important. syngenta has a special product -- this will be corn-based ethanol. this product has an enzyme that enhances the ability of corn to produce ethanol. ofay, we are at nearly 20% ethanol produced in the united states. we plan to bring this technology to china to help china and has their ability to produce ethanol effectively. mark: it is an amazing time. bayer-monsanto, dow-dupont, and syngenta-chemchina all at once. is there more m&a? erik: i think it is a lot at once. i think everyone will look towards building based business but also adding on to acquisitions to fill gaps.
that is that is what we are doing in seeds. we announced an important acquisition for us in brazil and argentina. we are looking for technology companies to enhance our digital capabilities. lots of new stuff is happening in the digital world. we are venturing and partnering with companies. and we are looking for acquisitions. it will be more targeted at gaps we havelling geographically or technology wise, to continue to strengthen our number one position in crop protection and strengthen our number three position in seeds. vonnie: the relationships between free trade countries the world over is changing radically. i wonder how that will affect syngenta, particularly when you look at the u.s. and tbp, for example. agriculturalrs of products from the united states is very important. the farmer in the united states is the most productive in the world. first were. new technologies. has a lot of benefits with the united states' farming
capability. today, we export around the world. that needs to continue. secretary perdue, the trump administration, are cognizant of that and see as having significant advantages in the united states. we need to keep channels open. vonnie: do you have specific conversations with the president? erik: with his administration. we support open, fair trade around the world. vonnie: our thanks. that is erik fyrwald, ceo of syngenta. we willming right up, see you in court. the u.s. justice department sues to block at&t's plan megadeal with time warner. this is bloomberg. ♪
♪ live from london, i am mark barton. vonnie: in new york, i am vonnie quinn. this is "bloomberg markets." filed aice department lawsuit to block at&t's takeover of time warner. sparked decision that accusations of meddling. at&t ceo sharply criticized the decision. >> there has been a lot of reporting and speculation whether this is all about cnn. frankly, i do not know. but nobody should be surprised that the question keeps coming up. because we witnessed such an abrupt change in the application of antitrust law here. the bottom line is we cannot, and we will not, be party to any agreement that would even give the perception of compromise in
the first amendment protections of the press. any agreement that result in is forfeiting control of cnn, whether directly or indirectly, is a nonstarter. vonnie: he seems to know what it is all about. joining us now is it all the, antitrust lawyer -- is david , antitrust lawyer. he has represented several groups that objected to the comcast-nbc merger. first of all, we now have the name of the judge that will preside over this time warner-at&t case. district court judge christopher cooper, appointed in 2014 by president obama. ask you, you have worked on deals with time warner, but you also represent consumer groups. who is to say that randall stephenson is right here and this is something that is politically motivated? that thise the case
is just not right for the u.s. consumer? david: the justice department demonstrate in the court of law that consumers will be harmed. the question is will consumers at the end of the day be harmed. the doj has a very daunting battle ahead of them. the law they are relying on is over a half-century old. it reminds you of the movie back to the future. you will need a time machine to go back to that law. most courts will be very skeptical about relying on lost that old and the factual predicates for this case. vonnie: what is a vertical merger something we should not be terrified of when it comes to district readers and makers of content? after all, the program access rules that would have allowed
consumers a voice here, they sunsetted back in 2009. david: that is the point. what evidence is there that there has been the kind of exclusionary conduct the justice department is raising concerns about? . merger case is really tough judges do not like to predict the future. the justice department is trying to a judge to predict this merger will be anti-competitive, when there is paltry -- at best -- evidence that firms have engaged in this kind of conduct in the past. that will make the department of justice's case released half that's really tough. --really tough. vonnie: how does randall stephenson defend the fact that comcast objected -- that the comcast universal-nbc merger, that they objected at the time? on the factsbased
presented. if you look at how competition has changed dramatically since comcast-nbc, how programmers have so many more avenues to the market than they did five years ago, it strongly suggest that doj has taken a snap shot at competition. they are looking at one moment and not looking out what will happen in the future. that future shows that there are numerous alternatives for programmers, for distributors, to be able to offer their products and serve consumers, regardless of this merger. vonnie: at&t could potentially use this to strike exclusive deals or prohibitive deals for the u.s. consumer. can't the doj lawyer or team of lawyers argue that? will. they certainly but a judge, who will ultimately make a decision -- the judge will look at the economics and the past history. and whether that clearly suggests, clearly demonstrates,
that at&t can engage in this kind of conduct. on both those grounds, the doj case is weak. vonnie: the doj's executive council says he had to go back to the nixon prime minister should to show the last time blocking a vertical merger was excess well. i want to go to the fcc -- david: generally, antitrust law looks at vertical arrangements dramatically differently than 50 years ago. even if the judge can find that law deep in the basement, the judge will not rely on that much. as technet neutrality, the fcc chairman has some strong getments about -- as to neutrality, the fcc chairman has strong arguments, and they deserve consideration. vonnie: thank you, david balto.
mark: breaking news out of zimbabwe. mugabemicawber -- robert resigning as president. nationalg zimbabwe african patriotic front said it would work with the opposition to ensure it has the votes in parliament to oust mugabe. today, lawmakers were expected to improve this impeachment and appoint an eye number committee to determine whether he violated the constitution. impeachment proceedings were set to be underway today. it seems to have come to a head. themove against mugabe climax of the power struggle in the ruling party in the latest days and weeks. robert mugabe resigning as zimbabwe's president. this is bloomberg.
vonnie: breaking news. zimbabwe president robert moog out of it has resigned, according to the speaker of parliament -- robert mugabe has according to the speaker of the parliament. we go now to johannesburg. it was a few days coming. we thought he would resign over the weekend. he did not. suddenly, now, it has happened. >> proceedings did not follow the script. sunday, we expect him to announce his complete the office ofom the president, but it was only a matter of time. a lot of people said it was only a matter of time before that happened. the next in line seems to be his vice president, before he was sacked.
steamed over into what happened now, as we saw in the case of the military apparently taking some -- hold of government and enforcing what it -- coup.be a clue it is official now. robert mugabe stepping down as president. mark: what does this mean for the economy, does this represent hope for the future of zimbabwe 's economy? arabile: it would seem so, but thes remember that replacement was at the side of robert mugabe for at least 50 years. emerson is actually called the crocodile and rules in such a manner. he was responsible for quite a lot of infighting and wars within zimbabwe and a lot of the deaths in killing the happened as well. the question is whether he is
not the same thing as his predecessor. hopes are, right now, that they have gotten one battle won, and now, it is time to have a fresh start. only time will tell. vonnie: impeachment proceedings could last only three or four days, according to certain experts. so what happens to the market? since this all -- kicked off. arabile: the news will fit some sort of confidence and self. of emmerson mnangagwa could move the market. but just the news that nyga -- mugabe has stepped down itself could create confidence. what happens from there on will be a big question. it will all rely on the
succession plan. mark: arabile gumede, our african reporter for bloomberg in johannesburg. coming up, we are following stocks. --s than four minutes away 34 minutes away until the end of the session. let's have a quick peek at the stoxx europe 600. up for a third day in four. it was on a losing run yesterday of just two days and 10. the stoxx 600 rising, as is the ftse 100 and the dax. this is bloomberg. ♪
this is "the european close." ♪ mark: here are the top stories we are covering from the bloomberg and around the world. angela merkel has a message for her rivals, telling them to back up or face new elections. we are live as merkel faces one of her biggest hurdles after 12 years in power. stocks are shrugging off on 13 germany as the stoxx 600 hours higher today. the ecb is set to stand down on any major changes in monetary policy next year. there are new concerns about the safety of cryptocurrencies. the company that supports that , we will look into how save these virtual currencies really are. have a look at