Skip to main content

tv   Bloomberg Markets Americas  Bloomberg  August 23, 2018 2:00pm-3:30pm EDT

2:00 pm
scarlet: we are live from bloomberg world headquarters in new york over the next hour. here are the stories we are covering. rate it focus more on our conversation with the president of the fed in kansas, why two more rate hikes would make sense this year. and our interview with tom hayes and his plans for changing what you eat, while coping with everything from geopolitics to trade. harley's new look, an aging consumer base reshaping the eye cannot -- the iconic brand. we discussed the cover story, just ahead. in tworkets closing hours and abigail doolittle has been tracking all of the moves. we are searching for direction. abigail: you are right about that . mixed action for the averages,
2:01 pm
fractionally higher. earlier it was up .5%, but a little bit of volatility on the day, some uncertainty around trade, political uncertainty. for the most part, investors in latency mood. the top of the bloomberg here, we have an interesting chart. in white, the index of political uncertainty. we see back in the 1990's at an all-time high, then coming down. in blue, the s&p 500. now we have trade uncertainty on the way back at those highs. do not seemvestors to care that the s&p 500 carves out another new high. and uncertainty around nafta and reaching a deal. this is weighing on car parts makers. the we see some weakness on uncertainty, so uncertainty seems to be one of the keys of the day and the reason for the
2:02 pm
small moves relative to stocks. on the metals front, uncertainty for trade and trade seems to be weighing on the metals. go down 7/10 of 1%, some of the miners stocks getting hit to a degree. and of course it comes as the u.s. and china launch the next round of tariffs. interestingly, over the longer term -- right now we have weakness for platinum and a silver -- but we have a long-term chart here with a white, platinum, official bear market, and now down 10 over the last 11 weeks. silver is in yellow, down a record 11 weeks in a row, but similar to the chart we saw around political uncertainty, the stock investors not caring and the divergence comes at the end of qe, where we said the stocks go higher, but the lack of support from the fed could take away that from the metals. stock investors looking past the bear market right now.
2:03 pm
caroline: not moving much. now to first word news with mark crumpton. mark: two republican senators have signaled the president trump that he could replace attorney general jeff sessions after the midterms in november. south carolina's lindsey graham says that sessions does not have the confidence of the eresidents, and that "ther there will come a time when it is time to have a new phase in fresh voice of the department of justice.' chuck grassley, the chairman of the senate judiciary committee, said today that he would make time for hearings for a new attorney general. illustrate general reports that according to a person that was told by the conversation, michael cohen's father urged him not to protect president trump. it reports that in the conversation his father told him that he did not survive the holocaust to have his name sullied by mr. trump. the journal also reports that federal prosecutors granted immunity to american media's
2:04 pm
david packard in the investigation, he is the publisher of the national inquirer. the associated press reports that court papers say that david packard opera to help deal with negative news about donald trump's relationships with women. court transcripts made public after paul manafort was convicted of tax and bank fraud this week, revealed that at least twice before the case went to the jury, at least one request was made after a juror complained to the federal judge that others on the panel had improperly discussed the case. on monday, the jury convicted the former campaign chair for president trump on eight of the 18 counts he faced. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. scarlet: thank you. alright, staying the course.
2:05 pm
minutes from the meeting earlier this month, reinforcing expectations for two more rate hikes this year, but a growing list of downside risk could influence those rates going forward. kathleen hays asked the kansas city fed president for her outlook on the hikes. they spoke at the jackson hole symposium in wyoming. take a listen. >> i agree the economy is doing well and based on what i see today, i think that two more hikes this year could be appropriate. but i am also mindful that that is not a commitment. that each meeting you have to reassess and understand what you see in the data, what are you hearing from constituents that you talk to, and make the decision at that time, so hopefully evident holds together as we get toward the end of the year. >> would you say that the committee has coalesced around the? is there a strong consensus? >> if you look at the dot plot, read the minutes, the statements that have come out, it was a just that there is a degree of consensus around the state of
2:06 pm
the economy, but obviously within the committee you look at differences on how many rate hikes are appropriate at this stage. >> earlier, you were worried about inflation picking up, with concern that fed policy would have to move faster, is that what you are expressing now or du think this will have to pick up even more getting into 2019? >> based on what we see today i do not think the performance of the economy that we have seen in the way inflation has performed is an argument for fundamentally changing the course, but i think that an upside risk would be that we had procyclical fiscal policy happening at a time when we have accommodated monetary policy, so we have to watch that and see how it unfolds. >> have you penciled in a number of rate hikes for 2019? >> i am obligated to pencil in those rate hikes, but whether they come about it is hard to know. i can see that maybe the next quarter, maybe the next two quarters, looking into 2019 will be a function of whether the economy continues to perform.
2:07 pm
>> do have an estimate to share? >> i could see getting back to somewhere in the neighborhood of 3% neutral rate, which is how i think about the long run neutral rate was a just we need to make several more moves next year as well. >> i am glad that you raised the question of the neutral rate, because there seems to be a very interesting discussion within the group, not just about where the neutral rate is, but how you use it. do you get to neutral and to stop, or say, we have to go further and make sure we do not have an inflation issue? >> it will be a big challenge. i call it threading the needle, which is we have arrived at a point where it will be important to judge whether our policy is restrictive or still accommodative, and it will be a function of looking at the data, increasingly. and that is why it makes it hard. it is not an observable benchmark. if we could see it, we could be more clear about where that is. i went to the consensus view,
2:08 pm
the median of you in that forecast, to see people coalescing around 2.5% to 3%, and we have to be conscious that that policy operates with a lag, and to see how inflation, employment, growth in the economy unfolds. >> would you put yourself in the camp that says when we get the 3% i am ready to waiting to see what happens next? >> i do not know if there will even be 3%, it depends on how the economy unfolds. taht we should always -- but we should always evaluate that. i take a meeting by meeting approach to really judge how far and how fast we need to go. scarlet: that was the kansas city fed president after george speaking with kathleen hays. with morefor more -- from jackson hole we have mike mckee. we have heard the fed outlook, but all eyes on jay powell now, what he said in his speech. is he a man under pressure? mike: not really. with the academy growing at the
2:09 pm
rate is, inflation at the target but not showing signs of accelerating, he really does not have to say anything. and most people on wall street have the feeling that he will not. what is in it for him to try to drive the markets one way or another at this point? we saw housing really decelerate this week. today, new home sales down to a nine-month low. and prices starting to drop for housing. we have seen the emerging-market problems. and you have the questions about what happens with tariffs. so maybe he wants to express it little extra caution about the outlook, perhaps more than george is doing. but that would be about as far as he would go, given that there is really no reason for the fed to deviate from its course, and we saw that yesterday. scarlet: still, there is a lot going on outside of the u.s. emerging-market problems, for instance. increasingly we see the fed as the central bank to the world and caroline observed earlier that the bank of japan will not be attending jackson hole
2:10 pm
either. how much of a global perspective are we expected to get here from the proceedings? mike: probably not a lot. this topic this year about changing market structure and its implication is global, but it does not bear on monetary policy, at least in the short run. so there does not seem to be a big attendance from foreign central bankers, at least from the biggest. mario draghi is not coming, neither is mark carney, so it is kind of all about the fed. we may have some talk about emerging markets, but not really a global issue right now. and the fed has to worry about america first, coin a phrase, and he will be looking at what is happening in the emerging markets around the world in terms of its effects on the u.s. economy, not in terms of the fed's effects on those emerging markets. caroline: are you expecting anything from jay powell's speech, with mentioning the emerging markets, or the further concerned about the chinese and u.s. relationship unlikely to
2:11 pm
see a breakthrough in the next few days -- what do we think of terms in response to how it will affect the u.s. economy? mike: i do not think, and most people on wall street would say that they do not think he will go into any detail. you could mention those things as factors the fed must consider, without making a judgment on them one way or another. because in this case, given where we are with the economy, and given where the fed is right now with the monetary policy strategy, the idea would be not to push markets to force the fed to do something one way or another. to try to leave here with markets unchanged. scarlet: i wonder whether the central bank policymakers will say anything on immigration. do they tend to do that? i bring it up, because it group of ceos, including tim cook, have written a letter to the secretary of homeland security, making the point that the white house changes to immigration policy will hurt the u.s. economy. the: that is kind of up to
2:12 pm
reporters here, we will be asking questions of the fed presidents who will be speaking to us on television. a lot of them have commented on this in the past, saying immigration is key to expanding the labor force of the u.s., and expanding labor force is one of the parts of the equation for a faster potential growth rate. so they would not really comments on the trump administration policies per se, but they endorsed the idea immigration is a good thing. scarlet: put their feet to the fire then. thank you so much. now we want to bring in breaking news. elon musk is said to have had morgan stanley to help take tesla private, that and goldman sachs said to be advising him on the transaction which would mean by hiring both of them, he has tied up the top two merger advisors in the u.s. this year. we will continue to monitor for further headlines. again, bloomberg reported according to a person familiar with the matter. this is bloomberg. ♪
2:13 pm
2:14 pm
2:15 pm
caroline: this is "bloomberg markets." i'm caroline hyde. scarlet: i'm scarlet fu. more tariffs, just as china and u.s. resume trade talks. the taxes are being levied on more than -- of products. we have sarah mcgregor with us. the tariffs hitting just as the chinese and u.s. officials, the lower-level officials, are negotiating. doesn't have an impact on the talks, because people have been trying to manage down expectations on what could come out of these discussions? >> you said it, expectations are pretty rock-bottom right now. the u.s. and china, before just yesterday when the new talks
2:16 pm
began, they really had its had discussions over trade since june when they had high-level discussions and there was hope they would be able to reach a deal and then every thing seems to fall through. at this point, the u.s. has not promised anything. we heard from secretary ross yesterday, saying it is always good when you can engage, but again stirring up the threats the china is in a weakened position right now because their economy is not doing as great as it was, and trying to ramp up the rhetoric that the u.s. is not willing to settle for anything less than some very sweeping changes to the chinese economy. caroline: interesting, we have been hearing from those in china as well it earlier today we spoke with a vice-chairman from alibaba, to get his take on how the trade tensions are affecting the economy thre. -- there. >> we believe chinese policy will continue to support imports to satisfy the rising demand of the chinese consumers.
2:17 pm
this november, china will hold the largest import exhibition in shanghai, which will showcase products from all over the world. if u.s. goods become too expensive due to tariffs, china's consumers can shift to domestic producers or imports from other parts of the world. caroline: covert leaders saying -- the corporate leaders saying china will find other ways. why we seeing the $16 billion ramp up now and what does it mean in terms of the ongoing discussion? sarah: the $16 billion that took effect today, it was in the pipeline and it is just a drop in the bucket of the overall relationship. we had hearings going on this week that coincide with the talks, just coincidently, over a further $200 billion in tariffs, and that is what economists say -- that is when the rubber could hit the road and we could see some impact. i think that chinese companies, it is natural that they would want to try to spin this as
2:18 pm
well, that of course there is a huge consumer market in china and in that country is not entirely depend on the u.s. either, and china really bolstered their argument to try to get the investors calm there as well. when we start looking at the $200 billion and if it will take effect as early as next month, that is when we will really see whether the trump administration is a serious about a trade war and not willing to back down. caroline: final question, i know we mentioned david malpass speaking on the behalf of the u.s., and a representative from china, their position here, but where does malpass sit in the camps of trumps advisors on china? i assume since he is a member of the treasury he might stand with the treasury secretary, more on the free trade side, rather than robert lighthouse are or peter who are hawks on china -- navarro who are hawks on china? sarah: this is where the talks
2:19 pm
go deeper. the chinese are even confused sometimes about who to listen to. like you said, do them all pass works for steven mnuchin, who is more of a globalist. he in june was trying to put forth a deal where the country would agree to buy more u.s. goods, and it would alleviate the trade deficit, which has really been an issue for donald trump. that deal fell through because of, from what we heard, the more nationalist camps, the hawks like peter navarro, robert lighthizer, they said that is not good enough, we need bigger changes to the economy. i think that is a point in the talks this week, who has the ear of trump? is treasury negotiating something with the chinese, even if they came up with an agreement for the talks to progress again from this week, is it something the hawks are willing to accept and that donald trump will ultimately agreed to as well? caroline: fantastic reporting. a great summarization of those
2:20 pm
negotiations. thank you, sarah mcgregor. and a recap on the tesla headlines that came out. elon musk said the higher morgan stanley to help take the company private, goldman sachs as well said to be advising him on the transaction. we will continue to monitor those headlines and we will be live from san francisco, next. this is bloomberg. ♪
2:21 pm
2:22 pm
scarlet: this is "bloomberg markets" ." caroline: now let's talk about tesla. another step toward taking the coming private. bloomberg has learned because hired morgan stanley to help with the private did. he shocked the world when he tweeted he wanted to take it private and has secured financing. joining us with more is our bloomberg correspondent who covers tesla. talk about the implications of this. we expected it regarding the fact that morgan stanley moved
2:23 pm
away from giving us analysis on the company. >> yes, would morgan stanley suspended coverage everybody figured they were working for someone, but we didn't know if it was the company, the board, the special committee of the board that is supposed to evaluate the proposal, but today we learned it is in fact you on musk, so now he has goldman sachs and morgan stanley working on his behalf to help them with the go private plan, but the plane itself nobody has seen yet. scarlet: and everybody is wondering what it involves. doing anything more about what happened to the saudi arabia sovereign wealth fund that tesla was speaking with, or at least they spoke with elon musk, who said financing was secured because there was a report not long afterwards that indicated the wealth fund wanted to make an investment in and other electric carmaker, one that was earlier in its development. dana: i am not exact way sure where it stands. musk in one of his posts said he met with the director of the
2:24 pm
group, but we have not heard anything to wrigley from the saudis on where the negotiations stand. obviously, because of tesla being an american company, there is concern about foreign control. i think he is interested in getting a number of investors to go along, not just in them, but who would make up such a conglomerate and which current investors would flip, i am not sure yet. caroline: looking at market reaction, flat yesterday, flat inay, not much exuberance reaction to the fact that morgan stanley is on board, we have seen them tick off the lows, but we are far from the level tweeted by elon musk. what is being discussed as to how realistic this is actually going to be? inquiry into the timing is a big overhang on the stock right now, so that is one issue. i think that people in silicon valley are impressed that he
2:25 pm
always sort of has the jets but to do these things -- bravery to do these things, but whether he can pull off is not clear. big investors will want to do some due diligence and the company has a fair amount of debt. that is all about the third quarter and what cash flow looks like as we get more model 3's out the door. it just has been, everybody is playing this parlor game of like, which investors are on board, it is the big institutional investors that will be the big question. caroline: andy will be there for us. thank you -- and yo you will b -- and you will be there for us. thank you. scarlet: bloomberg business flash. another sign the housing market could be cooling-off. sales dipped to the weakest pace in nine months, 1.7% to the annual rate of $620,000. higher prices keeping more potential buyers on the sidelines. and bloomberg has learned guggenheim partners talks with
2:26 pm
munich re have ended without a deal. it involved a mandate for guggenheim to oversee about $30 billion in assets for the german reassure her. now coming up, harley davidson restarts. an aging customer base with the company changing its patches. the new harley davidson. this is bloomberg. ♪
2:27 pm
2:28 pm
2:29 pm
2:30 pm
2:31 pm
scarlet: that is some of our reporting from tictoc. from world headquarters in new york, this is "bloomberg markets." caroline: here is mark crumpton. mark: a watchdog says the trump administration needs to step up management for the sign-up. periods under the health care law. the government accountability office found problems with consumer counseling and advertising, and recommend a basic things such as setting and roman targets. it did credit and meditation actions that did help the people in role, such as a more reliable website and reduced call-center wait times. and a former governor contractor
2:32 pm
who pleaded guilty to mailing a classified u.s. report to a news organization was sentenced to more than five years in prison today. reality winner, who worked at the national security agency's office, admitted printing the report and leaving the building with it in her clothing. it is the longest sentence ever imposed for a federal crime involving leaks to the media. and education secretary betsy devos is considering allowing states to use federal grant money to buy guns first goals, that would reverse a -- for schools, that would reverse an already existent -- in the government. in march, the school safety bill was passed, allocating $50 million a year to local school districts, but expressly prohibited the use of the money for firearms. ministerlia, the prime is promising to fight the latest attempt to replace him. he says he will step aside, only
2:33 pm
if his chief rival, peter dutton, can prove he has enough support. tomorrow, the governing liberal party may hold its second though this week. australia has switched prime minister's five times in little more than a decade. times iners five little more than a decade. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. scarlet: thank you. now let's turn to silicon valley. its contractor labor is a hot topic. several candidates are sponsoring legislation that could force companies to negotiate with more workers they claim not to employ. that pushes too late for a union from microsoft, who were dismissed. all of it the subject of a new story cowritten by josh adelson, who covers labor issues for bloomberg and joins us now from palo alto. this is interesting, because the
2:34 pm
america, theyf actually had a victory here. they had a victory, but it did not turn out so well for them. walk us through what happened. >> in 2014, they accomplished something rare as a group of temp workers doing software work for microsoft, while employed by this contractor, lyon bridge, they filed for and won a unionization election. the federal government gave them the right to bargain collectively with lyon bridge, the contractor. there were hopes that this would lead it to a broader trend elsewhere, but instead what happened within a few years is all of those jobs where you limited, so the workers fatah charges with the government against -- workers filed charges with the government against lyon bridge. and against microsoft, but the
2:35 pm
charges were withdrawn earlier this year after the workers got tired of waiting. and with the trump administration in control in washington, they did not expect that they would win. caroline: it is a story about really what the tech giants and the biggest companies really owe subcontractors. google hires more than they do direct employees, so how big is the tech force when it comes to temporary workers? josh: a ton of workers, not only in tech, but also in health care, or trucking, a ton of workers also in tech, are in what we could call fissure jobs, positions where they create a bunch of wealth for a well known company, but their paychecks do not treat them as employees of that company. instead, either they are treated as employees of a third-party company, or as self-employed. and that makes a difference in
2:36 pm
terms of the rights and protections that they have, including their ability to bring legal claims and bring the demand to bargain collectively to the company that is the one we have all heard of, that often the workers argue is really setting the rules. groupt: so the unionized won their victory, but they were ultimately dismissed. has microsoft responded in any way? josh: they said it was a matter between the employees and lyons bridge and that they are glad there was a resolution, referencing a settlement that was agreed to earlier this year. microsoft also, in the legal filings we obtained via the freedom of information act requests, said it was not familiar with the details, but that there was an innocent explanation because the app store was having a hard time, that 80% or so of the apps that were on their, there was -- there, there was a reduction of
2:37 pm
2017 in from 2014 to terms of how many apps were there, so there was a reduction in the need to bug test them. caroline: fantastic report. i urge people to see it. this is something that we talk about in europe, because when you are looking at what is happening with the uber drivers, uber is being forced to give them insurance. they are having to change their working practices. this is the difference between the labor in europe and versus the u.s. scarlet: it was a hollow victory for them, because they could not prevail against microsoft, so we will see how it continues to play out for other subcontractors, and their workers. caroline: now let's turn our attention to the new harley. that was the cover story of bloomberg businessweek, taking a look at what the future for harley davidson could look like. tariffs and an aging customer
2:38 pm
base could force the stable to embrace a cultural shift. joining us is the writer of the cover story, and it all starts with you on the back of the harley. >> i did ride on the back of the harley, i did not drive it myself or steer it. i thought i may be needed a license for that. but it was a lot of fun. scarlet: this is the old-school harley davidson, the one that you have to lean back on, those of the ones that have done really well up until a certain point, then maybe sales have dropped off. claire: you think of your harley-davidson rider, you are thinking of an older, probably white man riding on the back of one of their bigger cruising bikes. that is a huge part of their customer base. they still make up a majority of their customers. but the problem is, essentially most of those people already own harleys, so if you want to sell more bikes you have to get more people involved. and that biker stereotype does
2:39 pm
not play well with a lot of groups of people. caroline: this is why. the new sort of millennial focus on motorbikes, to a certain extent, who are they targeting? it is amazing how much of they will have to look abroad. so sleek and aok small compared to the bigger ones. so essentially, while in america the motorcycle sales are dwindling, they are growing in europe and asia, the people are riding different types of bikes and using them for different purposes. a lot of commuting, people in europe do some long-distance riding, but in the cities that are densely populated people need something to get around. so harley is now making those bikes. in the u.s., obviously young people do ride motorcycles, but a different type. there is an adventure bike that is really popular. they are available for on and off-road riding, and up until --
2:40 pm
well, they are not on sale yet currently, harley does not make one. they have designed one and i think it will go on sale in 2020, but they had to really get in on this market. scarlet: they are a little bit late to that effort, because their rivals moved ahead of them. part of the story deals with how harley davidson recognized that the ground was shifting underneath them. i did not realize they did not do research, they operated on their got. -- gut. claire: they did a little bit of research, but they have had the same type of rider, the man that was in his 20's in the 1960's, so they knew what their customer base was for a long time and they didn't need to do very much. they are still the top motorcycle brand in the country. and i would talk to people who write about motorcycles, who run the magazines, and they said that we almost do not even have to review hardly, because people will give them regardless.
2:41 pm
that said, they've already bought them, so they have to get more people. caroline: and they are getting older. these guys, i am assuming they were mainly guys, what did they say in terms of how they have shed a spotlight on harley davidson coming from the man at the top, president trump? claire: they largely support the president and all of his other policies. they like him. i do not know if they voted for him or not. scarlet: they actually said we had the right to attila the hon. claire: that is what one guy told me. but they actually took a more nuanced opinion of harley, because as much as they like donald trump, many of them have tattoos of harley, they have been riding them their whole lives, so they won all the sudden just abandon the company just because. so they said while we do not want harley davidson to move production overseas, we understand they have these tariffs against them and it is costly for them to sell the
2:42 pm
motorcycles in europe and asia -- caroline: what about the new bikes? claire: they are not out yet. but i think they like the pictures. [laughter] scarlet: they like what they see. thank you. great story in bloomberg businessweek. and check out gtv , where you will find the charts that we feature here. claire was talking about trade uncertainty. here is one on u.s. trade policy and of the uncertainty there, the white line, contrasted with the s&p 500, which keeps going up. basically at a record high this week. this is bloomberg. ♪
2:43 pm
2:44 pm
scarlet: this is "bloomberg markets."
2:45 pm
caroline: time now for the stock of the hour. here is abigail doolittle. >> we are taking a look at the xly, consumer discretionary etf. not a lot of movement on the day. that is one reason we wanted to take a look at this, because if it finishes higher on the day it will be its 6th up day in a row. the other reason we wanted to take a look at the xly, lots of interesting movers. take a look at this chart, plunging down 13.2%, this after shown earlier trouble this year. also at the pink chain. a new ceo coming in. investors not liking it. shares down sharply. as for a boost for the consumer discretionary space. -- stores up.
2:46 pm
and the promisor reports after the close today. or discount retailer. and tractor supply company 2.9%, up for its fifth day in a row and the best streak since early june. not clear why, but we wanted to pointed out. we want to stick with the theme of the close. take a look at tesla. it is a four day chart. morgan stanley earlier this week dropped its rating and price target, there was speculation it could have to do with the idea that they could be banking tesla around the possibility of going private. we see the flat line into today, up 4% in the last few days. recently today, the source saying that the ceo has obtained or retained morgan stanley as its banker to go private. time will tell, but interesting to see this chart. for the stock of the hour, we are sticking with cars and morgan stanley, take a look at this chart.
2:47 pm
its worst day since july 10, ofs as adam jonas, the axe all the analysts, saying that the rally offers investors a very good exit point and he thinks it is a bullish conditions of this year that are not sustainable into 2019. he sees the pressure on pricing. and despite a strong second quarter, where they talk about a strong third quarter, he thinks it will not continue. that we have already seen about as good as it is going to get. he is underweight, the price target -- scarlet: it is very bearish. caroline: the price target is usually about $21, so how out of -- off of this are they? >> he is saying that the 2020 estimates are 40 the lower consensus is. and joel at bloomberg intelligence, he said on his calculations 12 times leverage. and if we going to the bloomberg, this is a terrific chart.
2:48 pm
we're looking at a big piece of the story here. white, the shares of hurts, -- hertz, and this is the 40%, so there is a bearish interest on this stock, for sure. it is starting to waver back down, perhaps back into this channel below adam jones' $15. so there is reason to think that despite the strength this year, the 50% analysts we see, the rally on this year, that there could be more of a reversal. scarlet: thank you so much come abigail doolittle with the latest on hertz, all on that announcement from adam jonas. and now a look at some of the biggest business stories today. active fund managers falling behind indexes that they aim to be. according to morningstar, only 36% of them did better than their benchmarks. the value managers among the worst performers. managers of intermediate term bond funds of the only ones to
2:49 pm
beat indexes. vw has reached their makeover goal, trying to transform himself from just a carmaker to a provider of transportation. the first step, a car sharing service. vw will begin by deploying 2000 all electric vehicles in berlin under the -- label. jpmorgan wants to do more business with midsize companies overseas. liberty has learned that the firm is looking to hire bankers in mexico, france, spain and the u.k. to build out teams for their commercial banks. jpmorgan would be expanding into a market traditionally dominated by local banks. and that is your business flash update. coming up, with the markets actually crash if president trump is impeached? he says just that, that is the threat he gave. we take a look at how investors could manage some of the d.c. drama. this is bloomberg. ♪
2:50 pm
2:51 pm
caroline: this is "bloomberg
2:52 pm
markets." i'm caroline hyde. scarlet: i'm scarlet fu. many questioning what impact of potential impeachment would have on the markets. the president weighed in on that question this morning. president trump: if i got impeached, i think the market would crash and everybody would be very poor, because without this thinking you would see, you would see numbers that you would not believe. in reverse. scarlet: for more insight into charts, we are joined by our correspondent. investors do not try to address this, because they know what will happen. >> first things first, the market generally cares less about the man in office and more about the general trajectory of fiscal and broader monetary and government policy. that is always going to be more important. i visit, the man in office helps to shape that. but if you want to play this game. since he was elected, or
2:53 pm
basically the s&p 500 is up about 26% and since his an operation, it has been up -- you not duration, has been up about 30%. when you compare that with the obama era, that is about one percentage point higher on an annualized basis compared to what we saw during the obama era. the one big difference in the data that i thought was interesting, if you measure from in, to the was sworn election, there was a huge run-up. from his election, you compared to obama, you had a 6% run-up. not the same enthusiasm. people came in to november, december, january 2016 and 2017, hoping for something good. scarlet: that disparity, that disparity is really illustrated in this chart that we are showing, where the trump rally is a straight line up. >> yes. caroline: if it was all about hypotheticals, if there was an
2:54 pm
impeachment, what does it mean for the trump agenda? the tax reform was the big win. will it not matter then? >> think about this, we have had a couple other litmus test for this. obviously, nixon. keep in mind come in 1974 we were already in a bear market. it was about the oil crisis and other things. and we had the clinton impeachment, where the market kept rallying. we were in the middle of the tech boom, the bubble i should say, and the market kept rallying. so these are examples where the market looked past the politics of the impeachment itself, the impeachment process, and focused on the broader issues. scarlet: but the backdrop for this particular market at this stage of the cycle is people are very confident, all the surveys indicate that the consumers feel good. >> so this is the interesting thing, something many folks have to keep an eye on. you want to look at investor sentiment, and really keep an eye on consumer sentiment. and they have been dipping a little bit over the past couple
2:55 pm
months. investor sentiment is slightly down. and this budget other chart shows consumer sentiment, but with consumer sentiment, there was a survey that said basically the percentage of people that actually heard about good and news regarding government policy had actually dropped to 17%. it is a very specific question, but it is important, because that is about half of what it was in january. at least perceptions have shifted a little bit amongst the trade war. so you have to take that into account when donald trump talks about what the market reaction would be if he would to disappear, those sentiments, as they stand now, that will be what to watch. scarlet: you also want to see who says what and where. people in the northeast in california would be thinking clearly different from those in the midwest. caroline: the key takeaway for me is should the markets be right to not worry about right now, because it is all about interest rates at the end of the day? >> we've spoken to some analysts
2:56 pm
all day long and they all said the same thing, they are focused on em, the dollar, the housing market, consumer spending. the only way that donald trump and the political issues factor in is if what happens politically has some material impact on those economic fundamentals, but right now they do not see it. they are focused on the midterm election and how it might affect those things, more than anything having to do with donald trump himself. caroline: s&p 500 down by 1/10 of 1%. always good to have your opinion, roam -- romaine. coming up, the real estate market. we get the insight. this is bloomberg. ♪ retail.
2:57 pm
2:58 pm
under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store
2:59 pm
near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. it's 3 p.m. in new york, 8 p.m. in london. i'm scarlet fu, i'm caroline hyde. welcome to bloomberg markets.
3:00 pm
>> where live in new york. here are the top stories we are covering. u.s. real estate in focus. with toddeak henderson. guggenheim scoop, talks are set to collapse. using the eye word. the campaign to impeach president trump. fellow democrats fear that raising the issue in the midterm elections could cost them the right now we are one hour from the close of trading. let's get a check on the markets. >> not a lot of direction here. are lower. s&p 500 the nasdaq is slightly higher.
3:01 pm
it has been weaving between small gains and losses throughout the day. overall, mixed message. unchanged markets roughly. not a lot of certainty. if we happen to the bloomberg and look at what is happening sector wise, we see most of the sectors are lower. some bearish brett behind the small decline on the s&p 500. energy,m, materials, materials. did watch thehina next round of tariffs against each other. up top, not surprisingly technology. what is really helping out the tech sector, we had some power performance relative to technology coming from the chip sector. no stocks are up for the third day in a row. behind those gains, advanced micro devices up 6%.
3:02 pm
a street target high of $30 per share. nvidia going along with the ride. is an electronic design company. these chairs hitting an all-time high. they beat quarterly estimates. investors are rewarding those shares. where we are not seeing -- take a look at this year's they chart. this has everything to do with .opper down 28% an official bear market there in today's concerns not helping up the shares of freeport-mcmoran. we see for the haven, things relative to bonds relatively flat.
3:03 pm
gold the quasi-haven asset down. down again for gold. >> a consistent underperformer there. thank you so much. let's get to first word news. >> the european union is offering financial support to iran to help increase the country's flagging economy. it is part of a commitment to keep their run nuclear deal alive after president trump with jury the u.s. from the accord in may. the first portion of the package totals $21 million will be used for the private sector to help with environmental problems and to battle drug abuse. the u.k.'s warning that i'm no deal brexit would raise prices for european goods and make life difficult for retirees. the uk's brexit secretary published 25 technical notes on how the country should prepare for the possibility of talks with the eu collapsing.
3:04 pm
one problem, british retirees living in eu countries could lose access to their u.k. back accounts. one of the catholic church's leading advocates for gays told the vatican sponsored conference today that lgbt catholics deserve to be loved, listen to, and welcomed by the church and not ostracize and condemned. the reverend delivered a presentation on welcoming lgbt catholics at the churches world meeting of families which pope francis will be closing out when he visits ireland this weekend. welcoming, by excluding lgbt catholics the church is falling short of its call to be god's family. lgbt catholics, you are breaking up god's family. you are tearing apart the body of christ area >> ahead of the visit, a note to the pope campaign attracted a following and peaceful protests have been
3:05 pm
planned. senator elizabeth warren has posted 10 years of her tax returns online. thedecision to release federal and state returns whence they came a day after the massachusetts democrat called for sweeping anticorruption laws in washington. it is also a possible signal that she may be laying the groundwork for a run for president in 2020. the bill crafted by war and told require the address release tax returns for congressional candidates from the previous two years and during each year in office. global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 analysts and journalists in over 120 countries. i'm mark crumpton, this is bloomberg. data out today shows that no -- new home sales fell. a report from the ws finds that
3:06 pm
overall, the u.s. real estate market is performing well. is attional vacancy rate its lowest in nearly 17 years. is this what happens when we are at a mature property market that you will get bits and pieces showing things are doing well while new helms -- home's start to roll over of it? >> what you are seeing in the mature phase of the market cycle is that you typically see low vacancies. you see where the market is performing well, has produced a high returns in the past. you see where certain sectors are differentiated from other sectors in respect to their future performance. we are seeing that in the markets today. we are seeing a healthy market. low vacancy rates across the commercial for major sections -- sectors. growthseeing 4.3% income
3:07 pm
which we saw last year which is well above inflation. that is what you see in his mature cycles. you have to be very thoughtful and mindful of what can be around the corner. you had to position portfolios accordingly. how much of the risk as to the downside? >> what we tend to focus on is less single-family housing market and more multifamily housing market. the downshift for the single-family housing market could mean an option for multifamily housing. what we have seen across the housing market, is tremendous renter demand. it has followed the millennials leasing or wanted to lease in urban environments. ist we have started to see that the millennial is now getting older and having a family and wanting to move to
3:08 pm
the higher and the suburbs. for education and space quality. we are watching the multifamily leasing market very closely and carefully because it is actually overbuilt and overdeveloped in the urban environment. i am looking for an apartment in new york. that is good news for me. >> that is good news. more concessions across different areas of the multifamily market depending on what your appetite is for a higher-quality multifamily. scarlet: we moved to caroline over so she is going to be renting or buying. what is a strong u.s. dollar mean for foreign money that is being put into homes or office buildings? us thee it is impacting most is on raising capital for future investments. the cost are significant. as a result, we are seeing less
3:09 pm
capital flow into the u.s. from .urope, from asia some of that has to do with the capital controls that are being put into place in china. we are seeing much less capital flow into the u.s. from these traditional sources of capital over the last two years. canada is making up a significant amount of the investment. they have been the largest investment in real estate -- u.s. real estate over the last 12 months. what about it comes to the property market? >> that is another thing that happens in these mature faces. you see a dislocation among certain markets. the office market, for example
3:10 pm
in manhattan, and in washington dc experienced a fair amount of supply. supply exceeding demand it is hard to group rents and income. we have seen those markets underperform our overall benchmarks that we compare our performance two. the west coast in the industrial market which we love the industrial market, their secular shifts going on in the industrial market which i hope we get to talk about. they are driving significant performance and we are seeing the most performance on the west coast in the industrial sector where we are rolling rents 30 to 40% higher than were the rents are in place. thank you for your time. time now for our deals report. guggenheim is one of the u.s. money managers.
3:11 pm
the firm hopes to strengthen that division by diversifying its u.s. dominant investor base. , our guest our scoop is here. >> that is the big question. there is a lot going on. at memory we have executive changes. is stepping down. a guggenheim, there have been a series of sec reviews into different dealings over the different managers. whether munich holds the mandate because of this. there is a competitive rate now and manage rate -- institutional investors are $30 million of assets at the time. goldman wants that money. jpmorgan wants that money. guggenheim was a great mandate.
3:12 pm
what happens next note these discussions have ended? -- guggenheiming looking for someone who is interested? >> yes. talking to different investors about this possibility. my sources say that there have been inquiries as well from other different types of investors as well. insurers, chinese insurers, japanese insurers. there is interest from across the world. things can change very fast. thank you so much. when something does develop we will bring you right back. coming up, making a $50 million push for president trump's impeachment. why democrats in the house are not biting. this is bloomberg. ♪
3:13 pm
3:14 pm
3:15 pm
this is bloomberg markets. he rem of the most successful hedge funds in the country and then went on to found next jet. -- next jet. now tom steyer is financing a multimillion dollar campaign to impeach can -- president trump. bloomberg earlier over the phone. >> it's not that there was more information. what was different was this information came through the in the condition of a guilty plea or a guilty verdict. people started to take it
3:16 pm
seriously. one of the things people are talking about is what is the standard for impeachment? it is political, not legal. as long as economy is doing really well it will manage unless the president does something really bad. >> as long as the economy stays strong as it is, unless donald a verys truly guilty of high crime, i just don't think it is very likely to happen area >> what about that? how high a crime does it have to be? the way to think about this, i know what it says in the constitution about high crimes and misdemeanors area. has the president broken his oath to the american people? has he broken his oath to the constitution? is our democracy under threat?
3:17 pm
if the answer to all of those questions is a resounding yes. i believe that the man from the heritage foundation statement that if the economy is doing well, the american democracy is irrelevant, is one of the most profoundly cynical and shortsighted statements i have heard in my whole life. to go back into history, president nixon of course there were bills of impeachment drawn up against him. that was because of subverting the constitution. he was using his power. were writing the bills of impeachment against president trump, what would be number one? asked 58 say this, we constitutional scholars that questioned last december and would put their answers on the web. in june.hem refreshing
3:18 pm
they came up with nine different bases. grounds for his impeachment. number one for me is corruption. it is described in the constitution as the emoluments clause. you are not allowed to take any payment whatsoever from a foreign government. obviously, this president does it every single day. when you ask me to rank them, it is almost as if you are seeing his continuing obvious obstruction of justice, which is an absolute ground for impeachment, isn't that important. it is absolutely important. president whothat is lawless on so many levels that it is -- hard to rank them. one that is so obvious and measurable that it handles it for me personally. the president and founder of nextgen climate a.
3:19 pm
>> more cuts on the way. sears as a struggling retailer plans to close another 46 unprofitable stores. plans tony already had shut stores by early next month. barsal mills nature value will no longer say made with 100% whole-grain oats. traces of an train pesticide. general mills is not commented on the claim. the swiss engineering company is considering what could be a $10 billion sale of its power grid net. bloomberg has learned -- bloomberg intelligence estimated this month that the --
3:20 pm
that is your business flash update. >> don't forget to check out gtv . sentiment widening between higher and lower income earners. those who make over 50,000 are feeling a little bit better. this is bloomberg. ♪
3:21 pm
3:22 pm
this is bloomberg markets. i'm scarlet fu. i'm caroline hyde. today -- me we are in the dog days of summer. what are your thoughts? >> they are asking the best beach is right now.
3:23 pm
this is a quiet week. you can see it in your office. people are off and the volume is reflected. as a result, the market is churning along. company buybacks are still in play. you don't have this impetus right now for people to be even though with jackson hole this week in the political stuff going on it has all become background noise right now. let's turn to your trade right now. . >> canopy growth has gone parabolic as a result of the constellation brands -- brands by back last week. -- at a buying it as a discount right now. you have this nice parabolic chart. you can tell traders not to play
3:24 pm
around with something that has a traders willrt but always get involved. they will try to figure out how to do this without getting burned. >> talk to us about it in the -- you are not able to short the stock. of course you could just buy a call if you think it is going to the moon. the structure we came up with put is to sell a near-term at roughly at money and use the money to fund and out of the money put. for zeroo that dollars. it is set up as zero. there are ways to play that isn't even as the stock moves. >> i actually had a charted out and this chart is pretty phenomenal.
3:25 pm
if we hopped into the bloomberg. what we are looking at is an uptrend. the buyers are very much in control. we had some congestion and uncertainty in the constellation -- you have so much momentum on the stock you can see it good to 60 or 65. have you tie that into your seat short idea for the options question market is a matter of timing? >> yes. it is also a matter of target. your target is higher than mine. the charts target is higher than the one i was using. you would hold a little bit then you pick a higher out money put the as you wait, you did use higher strikes in the stock goes up you did to read a little run more money. then you time it a little bit differently. you can play with strikes and timing to suit your specific
3:26 pm
technical or fundamental viewpoint. the point today was a structure that you can sell the near-term at money, found the outer one that hopefully play or profit on the way up and profit on the way down. >> great stuff. we love your trading idea here. yields moving on the fact that funds are not moving -- this is bloomberg.
3:27 pm
3:28 pm
3:29 pm
i'm mark crumpton was first word news. president trump met with republican lawmakers and the secretary of the treasury steve mnuchin at the white house today
3:30 pm
to discuss protecting american technology and intellectual property. the president praised the lawmakers saying that each one was instrumental in passing the foreign investment risk review modernization act. >> you have all been reading the intellectual property and all sorts of different things of that nature are being stolen from us by other countries. it will be very hard to do that. >> one senator highlighted threats from china as quote the foremost economic challenge to our country of any other country in the world. ae president agreed saying focus was on russia's saying not enough focus is on china. as a category four hurricane roars toward hawaii, fema says it is learning the lesson of last year's devastation in puerto rico and is promising a better response. him officials said today that hurricane mar


info Stream Only

Uploaded by TV Archive on