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tv   Bloomberg Markets Americas  Bloomberg  August 5, 2019 1:00pm-2:01pm EDT

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the shootings in ohio and texas. the president outlined his proposal earlier. >> we must make sure that those judged to pose a grave risk to public safety do not have access to firearms, and that if they do, those firearms can be taken through rapid due process. that is why i have called for red flag laws, also known as extreme risk protection orders. the president also called on the justice department to propose legislation that people who commit hate crimes and mass murder face the death penalty. spokesperson's says the u.k. will leave the european union on october 31, whatever the circumstances. johnson also announced $2.2 billion for the country's national health service. germany doesn't believe in boris johnson's threat on brexit. the prime minister says he wants a new agreement but is willing
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to accept a new deal brexit. german officials expect parliament to stop any attempt to take the u.k. out of the eu without a deal. at least four people have been injured in an explosion at a russian military base. the russian defenseman of -- ministry says the last occurred at a storage site that holds charges for artillery shells. the explosion happened 10 miles away from a city. those residents are being prepared for evacuation. global news 24 hours a day, on-air, and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. it is 1:00 in new york, 6:00 in london, 1:00 a.m. in hong kong. i'm vonnie quinn. welcome to "bloomberg markets."
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from bloomberg world headquarters in new york, here are the top stories on the bloomberg and around the world that we are following. china fights back with the yuan and soybeans. the country devaluing its currency and ordering state owned companies to stop buying u.s. soybeans. u.s. markets plummeting as the trade war intensifies. the shooting deaths of 31 people over the weekend raising pressure on president trump to address rampant gun violence. meantime, a handful of stocks higher in the s&p 500. we are at session lows. kailey leinz has more. kailey: shaping up to be the worst day for the s&p 500 this year. down by more than 3.5%, the worst two-bay street from christmas eve of last year. it is now down for a sixth consecutive day.
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off of the record high that it set just back on july 6. one of the catalyst for all of this was the counterpunch from china, allowing their currency to breach that seven level, the offshore yuan. now above 7.1 to the dollar. this is the biggest fall in one day since that devaluation in 2015. that is a concern, coupled with some weaker data that we had in the u.s. serviceshowing the gauge also dropping, the weakest 2016, in addition to the weak manufacturing data. is notonomic actor providing a risk on sentiment for investors, but we do have a few select stocks that are higher today. up about 7.5%, on pace for its worst -- best day since february 2016.
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higher beef prices and volume leading to an earnings beat. jacobs engineering, a beat and a raise for that company. e, also a guidance raise. there are some bright pictures but overall, a red day for the stock market. vonnie: thank you. china punching back against president trump's latest terror threat. raising speculation that beijing allowed its currency to depreciate. the pboc governor disputed that earlier, saying, i'm confident that you want will remain a strong currency despite recent fluctuations amid external uncertainty. shawn donnan is with us with the latest from washington. was the pboc directed to assess the currency weaker today? n: that is the suspicion in
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the markets. there was a feeling that seven to the dollar was a red line in the sand, that the chinese w ould the willing to defend. that is how the markets read it. when we moved from that today, there was a feeling that that was a conscious decision by folks in beijing, and therefore a clear sign a retaliation against donald trump's threat last week to increase tariffs by 10% on $300 billion in new products from china. this is of course the worst-case scenario for the markets. they don't want to see this escalation and the kind of tumbling through into growth fears that we have seen. are getting a statement from the senate democratic leader chuck schumer saying this. china has been image of a their currency long before and since
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president trump took office. he should tell his treasury secretary to label china a currency manipulator. that is all he needs to do to make it happen. how interesting a development is this, that the democratic leadership is now piling and on top of china as well? shawn: that is interesting on one level, but we should chuck schumer has been a china hot for a long time. he has been an advocate for moves to address chinese currency manipulation long before donald trump was in the white house. chuck schumer has been a china hot for a long time. he has been an advocate for moves tocertainly, today, in the house they are reading this as a response by the chinese to the tariff moves last week, the president reading that out in the last hour or show. -- or so. we mayure response that get from them, we need to look at. it is not clear what it would be at this point.
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it was not so long ago that larry kudlow was forced to go out in public and say that they had decided against any intervention in dollar markets. whether or not that conversation is back on the table at the white house. certainly people over there that would like to see intervention. vonnie: does this make the september 1 tariff editions a 100% certainty? shawn: it is hard to see how they don't go into effect. what is important on that side is the signals from beijing on agricultural purposes. -- purchases. as recently as friday we were hearing from the administration that if the chinese would deliver big buys of soybeans and other agricultural goods, maybe these tariffs could be avoided. beijing signaling pretty heavy today that it has pretty much lost hope for a deal. that seems to be what the markets are latching onto today. vonnie: shawn donnan, thank you
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very much. for more on the market impact of the deepening u.s.-traded battle, let's bring in kevin divney. how much will china have to manage, -- have to spend to manage this currency volatility? yuan has spiked over the past day. we have not seen that for a long time. volatility up to 10% there. kevin: it is no coincidence it happened today. certainly being initiated by the pboc. we have the worst fears of market participants now out in the open. up until now, the u.s. consumer didn't think they felt the effect of tariffs. you had white house officials saying that the chinese were absorbing what was happening with trade policy. now they are saying, the gloves
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are off, it is out in the open. that in concert with global deceleration at the same time is creating a lot of uncertainty at the same time that we have fed uncertainty, china uncertainty. if you remember the last time trump announced the raising of it came after the last negotiation rounds they had. he is not hearing anything that he things will get a deal done soon. it is august, they are set to sit down in september, but the market is not discounting anything material happening. vonnie: would you be buying anything today? kevin: within the u.s. stock market, it is a little bit of a conundrum. defensive sectors of run-up out before this, and cyclicals have performed differently. we still believe in the u.s. consumer, we have been underweight the capital goods sector. those companies more affected by imports and exports. that is an area where there could be some valuation
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components. the earnings season has come in pretty good so far. the most interesting thing about is always volatile, the economy is decelerating globally, the u.s. is a little better, but margins have not declined. that is the warning sign, coupled with the job report on friday. vonnie: how intertwined are margins at all u.s. companies? not just agricultural companies -- by the way, we have a new headline stating that china will not rule out tariffs on agricultural goods. marginsrtwined are regular s&p components? kevin: you have the tech sector and semiconductors hugely impacted by what is happening in china. there has been a natural increase in operating leverage in u.s. companies. the fear was, after a lot of
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regulatory stimulus post we 16 election, that that would roll up as earnings decelerated. incredible, the margins will only decline about 40 basis point to this quarter. they are and 11.5% versus 8% of the year ago. vonnie: warren buffett staying in cash, happy to park there. what would you be doing with any cash reserves right now? kevin: mr. buffett's perspective is to look for value. a lot of things don't look incredibly cheap. the paradox is the things that look cheap have not done well. if you look at the market over the last 30 years, price-to-book to return on equity, it looks extensive because the returns on capital are higher than they've been. most of the sectors are in line with that. we are relatively neutral to the market. aggressiveto be too because of these shocks.
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looking into fundamental plays, consumer discretionary her, underweight internationally exposed sector. not really piling into the super defensive names. they look more expensive here in august than they did earlier. vonnie: have to get your thoughts on the 10-year yield. a fat probably scratching his head. there are a lot of theories out there. i don't think there is three-dimensional chess happening where the president back them into a corner by inserting the trade uncertainty policy. some people are saying it could have to be 100 points. the markets are pricing in more of a cut of the yield curve is inverted. theg back 50 years, if yield curve stays inverted for more than 10 days, it predicts a recession. the good news is, the average is about a year out. down, sayinggoing the bond market is ahead of policymakers. it was unclear after that press conference last week.
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that, the global deceleration forces and the trade are backing the fed into a corner and they don't want to see the yield curve inverted for long. there are certainly signs of deceleration globally that are coming home to roost in the u.s. vonnie: we have to leave it there, thank you. indices down 2.6% on the s&p. the dow 3.2%. coming up, two mass shootings over the weekend renewing calls for gun control measures in him. but our background checks a solution? we go to capitol hill next. this is bloomberg. ♪
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vonnie: this is "bloomberg markets." i'm vonnie quinn. two mass shootings in less than 24 hours. with the death toll at at least 31, washington is under renewed pressure to address gun violence. president trump spoke earlier about the violence. >> hate has no place in america. hatred warps the mind, ravages the heart, and devours the soul. we have asked the fbi to identify all further instances they need to investigate and disrupt hate crimes. the president stopped short of endorsing specific gun-control measures but he did hearken back on calls to address mental illness, violence in the media, and video games. for more, let's welcome josh wingrove. the president also use the word condemn, the first time he has used this politically sensitive word.
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does that change anything about i think heity josh: will at least claim now that he is pushing back on this, but left unsaid are the links between the language that one of these alleged shooters, and the manifesto he posted, used. he used a lot of the same language president trump uses. that is why we are hearing democratic candidates come out and say even if you are not directly responsible, you are at least sowing the seeds for white nationalist terrorism here in the united states. the president has avoided that. yesterday we were with him in new jersey, he spent the weekend at his golf course. he didn't say a whole lot over the weekend despite these tragedies. now he has, with these measures. it is not looking like anything legislative or substantial will move forward in the aftermath of the shootings. many americans, of course, will not be surprised. vonnie: he did talk about the
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videogame industry, and stocks dropped off of that. he talked about mental illness as well as social media companies. to point to a tweet that also aligns with something he said earlier today. he said i am also directing the department of justice to propose the death penalty. ok, that is not a tweet. he said he was proposing the death penalty be used again for people that commit violent massacres. how much can he do something like this on his own? how much does he need the judiciary or congress? on the congressional side, two things that he can do. one is a red flag law that allows problematic individuals to maybe have their guns taken
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away. republicans are already watering that down today. i wouldn't hold your breath. the other thing is background checks. a bill passed the house of representatives, stalled in the senate. mitch mcconnell has given no indication that he wants to bring that up. this other stuff is more doubling around the edges. the trump had already taken steps to expand federal use of the death penalty. of course, individual states have rules on that already. the other stuff that you mentioned is stuff that exists in other countries. the u.s. is not the only place with violent video games, mental illness. there is no definitive mental illness ties from these shootings over the weekend. the president is going after the social media companies already with threatening antitrust investigations, but now believes there is some sort of magic fix to head them off before it happened.
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the manifesto was not posted to a major social media website. all these things that he is trying to do a line with measures that the gun-control lobby favors, in lieu of meaningful gun reform. remains the u.s. country with the highest gun death rate. democrats are sitting here saying, when are we going to do something about this? the republicans are focusing on these other individual issues and really not addressing what democrats see as the core issue, the availability of guns. vonnie: thank you for that, josh wingrove. michael bloomberg is the owner of bloomberg lp, a founder of and helps to fund every town for gun safety, a nonprofit that advocates for gun violence prevention and other gun safety measures. more pain for u.s. farmers.
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china is stepping away from further u.s. agricultural imports. more on that next. this is bloomberg. ♪
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vonnie: and this is "bloomberg markets." i'm vonnie quinn. yuan plunging today. the other big news is on the agricultural front. china has asked state owned enterprises to suspend purchases of agricultural products. so where does this leave the american farmer and what about commodity prices? corn, those are just some of the agricultural commodities impacted. what should we look to for direction on this? >> we are going to have to look for where the trade talks go. any resumption of chinese purchases in the u.s. will
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depend on how trade talks progress. there was a lot of hope in the market that with the tops having resumed last week, we would see agriculturals of commodities like ethanol, sore gum, more soybeans. the talks suddenly soured. the talks suddenly soured. trump announced on thursday more tariffs on china. as a result, we see china acted back. looking at prices, we have seen soybeans, hogs, today. prices have recovered a little bit. there is a little bit of fatigue in the market, traders are very tired of one day of talks are positive, the next day they are negative. vonnie: a few moments ago, we get headlines, china will not rule out tariffs on agricultural goods after august 3. china says the u.s. agri has future it promises are
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kept. to offerd allow china the u.s. a carrot? >> i think it is quite hard to say. that are lots of things the chinese wants, the u.s. has different negotiations. some of these tactics are also outside of agriculture. if we look at what is being discussed with intellectual property, the role of state owned enterprises, the way china sees these points are very different from the u.s. agriculture is caught in between. sometimes the discussions are outside of agriculture, the discussions that are really impacting the trade talks. but agriculture ends up being affect did. obviously, we have seen, if on china, tariffs they tend to retaliate by using agriculture.
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knows that it is , andting farmland states that is not amazing for president trump in the next election. at what point will the president step in to protect some of these states? >> i think the farmers are still behind the president. when you ask them, even though prices are down, they think in the long term trump is doing the right thing. vonnie: thank you for that. let's take a look at markets. we are seeing asset classes across the board move today. as you can see, the home entertainment index down 5.1%. the s&p down 2.6%. ♪
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mark: i'm mark crumpton with bloomberg first word news. president trump says the suspect in the el paso, texas mass
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shooting was consumed by races hate and said america must condemn the white supremacy. the president spoke today after the attacks in texas and ohio that left 31 people dead over the weekend. he called for a law that would allow courts to take away guns from people who are potentially dangerous. he also took aim at the videogame industry. must stop the glorification of violence in our society. this includes the gruesome and grisly video games that are now commonplace. it is too easy today for troubled youth to surround themselves with a culture that celebrates violence. several scientific studies have shown little connection between videogames and mass shootings. the national rifle association has weighed in on the shootings. the powerful lobbying group says it will not participate in the politicizing of these tragedies. instead, the nra will "work in good faith to pursue real solutions." described groups have
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mass shootings as unpredictable as my sick individuals. in india, the government is ramping up security crackdowns in cashmere. the region's special status has been provoked. political leaders there have arrestaced under house and the indian army has deployed thousands of extra troops. india says it is respond to cease-fire violations along the line that divides kashmir with pakistan. arrest and the indian army has deployed thousands of extra troops. australian prime minister scott morrison has ruled out hostingis in australia. he said no such request was made during key diplomatic talks. this comes after the new york times reported that defense secretary mark esper said he was in favor of deploy u.s. missiles to asia within months. afterve came only a day the u.s. formally pulled out of a cold war era arms treaty with russia which limited these weapons. global news 24 hours a day, on-air, and @tictoc on twitter, powered by more than 2700 journalists and analysts in over
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120 countries. i'm mark crumpton. this is bloomberg. shery: live from bloomberg world headquarters in new york, i'm shery on. here are the top stories we are following. china fights back with yuans and soybeans. orders state owned companies to stop buying u.s. own story beings. 4000will fire more than people, targeting senior execs is and ceo john flint stepping down after 18 months. the fallout in the u.s. china trade war is being felt the most in tech. apple bonds among the worst performing in u.s. investment grade credit. let's get started with breaking news.
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we are seeing the fed governor discussing the payment system. she says the fed plans a real-time payment system to compete with wall street. we know that this system would allow consumers to instantaneously access funds that have been sent to their bank accounts. systemal-time payment would compete with wall street. saying the fedw service will be available in 2023 or 2024, that it's 90% of commenters back to the fed. the fed is currently seeking comments on how to design this new service. lyle brenner outlining these plans at a speech in the kansas city fed. we are talking about wall street already having such a real-time payment systems, and now the fed creating their own system which will compete with wall street
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banks, and should be available in 2023, 2024. let's get a quick check on the major averages. stocks plunging, markets taking a big hit as we continue to see escalation of the u.s. china trade tension. .he s&p 500 down all 11 s&p 500 sectors are down today, led by tech and communication. we also see the dow falling more than 700 points at the moment, the largest losing streak since march. the nasdaq also down 3.3%. take a look at the speed of this selloff. rsi insee the 14-day oversold territory, which would be near the lowest levels since that december selloff. we continue to see volatility jumping with the vix jumping more than 20%.
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let's continue discussing what is happening in these u.s. china trade tensions. china punching back, the yuan plunging past seven per dollar for the first time since 2008 after the pboc said its daily -- , raisingaily rate speculation beijing was allowing its currency to depreciate to counter the president's latest tariff threats. joining us now is our chief emerging-market credit strategist. it is interesting because we saw the pboc governor say they would not use the currency as a tool in trade disputes. at the same time, the pboc saying the yuan broke through seven due to the threat of u.s. tariffs. have they essentially just weaponize to the currency? the currency war has been
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going on for longer than anyone would like to admit. if you look back to the the currency war has been going on for longer than anyone would like todollar-yuan cross y rates, they just need to keep it stable enough to keep investors moving their money. with volatility kicking up the way it is, it has dragged the entire em for word. what we are seeing now is credit curve flattening in china. are spiking. if you look at the offshore yuan, it has basically blown out to levels that we saw in april of last year, back in the crisis of 2015, 2016. the offshore yuan is allowed to move more flexibly than the onshore. that can only move within a 2% band of the fixing right. investors needs to take note. shery: we are seeing on the hasmberg, the onshore yuan
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blown past those estimates for the year and forecast. given what you say between the gap in the onshore and offshore, does this mean there is further downside for the onshore? >> it calls into question how low the yuan can go. it cannot go much lower than this, if the pboc allows the currency to freely float. they will keep it to a minimum definitely. it begs the question, how low can it go? it can definitely breakthrough 7.10 and even further, if the pboc chooses to do that. shery: which assets will suffer the most when it comes to sustained weakness in the chinese yuan? >> those that are tied to china via trade. malaysia comes to mind, philippines, south korea, taiwan. if you look at many of the equities across those asian
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markets, they are all off about five, 7% over the past few days alone. you have seen some pretty big weakness, and that speaks to the market cap deterioration. five central bank decisions in asia this week. will we continue to see this urrent bias given the con environment? >> if you see the philippines cut rates, which many expect them to do, or india, that may drive a run on their currencies. can they afford that in this environment? both central banks have recently cut rates to stimulate the economy. the verdict is still out. growth is definitely slowing. six of the eight largest economies, their pmi has turned into contractionary territory for the first time in history. while central banks are trying
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to stem the growth, they have a war chest to do it. shery: thank you for that. before today's volatility, our next guest says we are in uncharted waters due to the various monetary policies across the globe. let's see how today's markets are affecting her view. jody lurie is coming to us from philadelphia. great to have you with us. selloffs the market tell us today about how fragile the current environment is? jody: exactly right. extremely fragile in this environment. we see while returns were very robust across fixed income assets this year, it can unravel so quickly. investors continuing on that train of enjoy this credit risk have to be aware of when this train will eventually stop. shery: for those investors that have been caught up in the fervor of buying high-yield corporate, what should they keep
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in mind now? jody: putting on all your eggs is key. diversification is what we preach every day. getting involved in high-yield involves risk and understanding what it is you are buying. if you are buying a pond or individual security, you have to understand what you own and how long you want to own it. if you are an investor with a certain yield requirement, if you are buying high-yield, you are forced into the longer sentiment. 1.75, have treasuries at 10 year treasuries, that is giving you little room where to go. if you are an investor that cares more about the preservation of your capital, you will want to look outside of high-yield corporate's, outside of corporate in general, and diversify into other areas within the fixed income asset classes and across the globe. shery: you talk about the 10-year yield.
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it is close to completely erasing that surge after the 2016 election. how low can this go? jody: great question. on not quite sure. i do not that we will see a flight to safety over and over again. we saw it last year in the fourth quarter of 2018. people have already forgotten what that feels like. maybe today will be a reminder for them to lineup on these risk assets. valuing between interest rate and credit risk is key, and understand the pros and cons of each will help to investor over time. three-monthg the curve. given what we have seen in terms of data and the trade risk, could we see the curve steepen, given all of these expectations? jody: yes. i think the question is, what did the fed do last week that will cause the yield curve to steepen?
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if we have inflation, potential growth, if the fed cutting rates does what it was supposed to do, which is spur growth on the long and, you could see a steepening of the yield curve. however, if we have these exogenous factors like trade, a thing going on his glee or geopolitically, you can have a scenario where everyone rushes for the long and and safety, the 10 year treasury. shery: it seems right now the mentality of lower for longer is setting in. this is coming at a time when the fed is cutting rates, when we are not seeing a recession, and when data is pretty strong. how do you create that value position globally? jody: it's all a question of what your risk tolerance is, where you want to put your money , and for how long you want to put it there. we are having a scenario where we are seeing many things that have not happen for a long time. we have not seen a 10 year treasury where it is in a few
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years. fed has not cut rates since 2008. we have all of these pieces in play. we also have negative yielding bonds across the globe. it becomes a relative value play but also an absolute value play. it is a little bit at once. if you are the average investor and you want safety, where do you go -- [indiscernible] shery: thank you so much, it seems we are losing you. that would jody lurie from jenny montgomery scott. coming up, more on the shakeup at hsbc. its ceoish lenderousts after a short 10 year. this is bloomberg. ♪
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shery: this is "bloomberg markets." i'm shery ahn in new york. ceo holdings abruptly oust john flynn after 18 months citing an increasingly complex environment, and announced a new round of job cuts. europe's biggest bank by market value grappled with the declining stock price, high-profile sexual harassment case, and failure to hit cost targets. basik.g us now is sonali not a great time to have changes at the top management level di. >> not the first time that we have seen this. the s&p this morning said it showed the increased ruthlessness of the hsbc board.
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we have an insider riding up, but in the bank's history, we may see for the first time an outsider taking the helm. shery: they had never brought an outsider to leave the bank. we were thinking there would be an inside promotion. are there any candidates or are they just looking outside the firm now? >> there are internal candidates. we have one analyst in today's coverage saying maybe the job is his to lose. he is a commercial banking executive, which is something we see across a number of banks. commercial bankers at deutsche bank are also rising. we have others who joined this year, formally the cfo at rbs. here, mark tucker, the chairman of hsbc, wanted straight talkers at the helm after low morale and a lack of direction. shery: how will john flint's tenure be assessed now?
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revenue gains outpacing cost increases. finally in this earnings result, things turned positive. sonali: it is tough for bank ceos because investors are pretty impatient. want to cut costs, increase revenue, but at the same time, you saw the stock did quite a bit. it is only 18 months, a lot of people will say that is not butgh time to assess a ceo, it was enough time for him not to do the job that his board wanted. shery: another round of job cuts. sonali: 4000 job cuts is a lot with the market to absorb. barclays lost 3000 in the last quarter alone. something about hsbc that is different across the board's they are cutting mostly at the top levels of the bank. the most highly paid executives. ceo?ay outside we will see if they bring in outside talent to make them more competitive. shery: hsbc is such an interesting case.
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they seem to be not only in the crossfire's of the u.s.-china trade tensions, their links to huawei have been investigated, you have the hong kong unrest, and brexit. sonali: certainly one of the tensions between john flint and investors. 80% of their profit comes from the asia region. at the same time, they are still trying to grow in the u.s., where there is baking activity going on, and they recently had to change leadership here as well. want to see more growth in the u.s., maybe reduce that reliance on asia a little bit. however, staying competitive in both regions. how do you do that with tensions the way they are? shery: thank you for that. debt isead, apple's declining. how credit investors are reacting to today's selloff. this is bloomberg. ♪
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shery: this is "bloomberg markets." i'm shery ahn in new york. the bloomberg business flash, a look at some of the biggest business stories in the news right now. bitcoin has surged past $11,000 for the first time since mid-july. the cryptocurrency rose as much as 12 sent from friday's close. the rally this month comes after a selloff in july. it is unclear what is behind it. amazon is grazing sellers to offer better prices than other platforms. when it discovers a product cheaper on another site, amazon alerts the company selling the item. it then makes the product harder to find and buy on its own site. in many cases, the merchant then decides to raise the price on the rival site rather than lose amazon sales. in europe, the boards of just eat and take away.com have agreed on terms of a $6 billion
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combination. the deal will pit them against several startups that could also combine. the new company will be called just eat take away. it is betting its experience in turning a profit will convince shareholders it can find off rivals. that is your business flash update. apple shares have their biggest one-day slump in more than two months amid the latest escalation of trade tensions between the u.s. and china. the iphone maker relying on china for key components of its supply chain. apple bonds are among the top investment-grade decliners on the news. joining us now is clear boston. great to have you with us. give us the just of why investors are so worried about these bonds. >> investors are looking for any exposure to china, saying what does this mean that there are escalating trade tensions? with apple it is clear, they get a lot of revenue selling in china.
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at the same time, a lot of their parts are sourced from china. it is an investment great company, so nobody is thinking this will be seriously bad news, bring them to high-yield or anything, but in terms of incremental risk, there are more risky companies like apple right now versus some that may have less exposure to china. shery: what are some of the other companies being affected, there are being affected by these trade issues that continue to rumble on? claire: we are definitely seeing it in technology given the sourcing issues. dell is a big decliners today. communication companies are blowing out on a spread basis in the debt market. very few areas that are considered to be safe havens on a day like today. shery: trade tensions continue to escalate. they have flared up time and again. is this time many different? claire: one thing we are seeing a lot more today, in terms of volume, the hedging people want to do.
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investors are caught by surprise today, sort of the amount going on, the extent that stocks are dropping. is the expectation now, how are investors expected to respond as the selloff continues? claire: a lot of them are trying to figure out, is this going to be a problem that will be resolved in a couple of days, or is this long-term positioning, where we may need to see the fed cutting more? there doesn't seem to be consensus, but there is a risk off trade. you want to be playing those defensive bonds. maybe not the energy, tech companies right now. shery: as you said, investment-grade debt. this is not something that we are worried about apple going out of business, but what about those other companies that are not as secure? claire: definitely the biggest movers will be in the high-yield market. you wonder, those tied to commodities seem to be struggling a lot, which makes sense. global commodities are selling
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off as well. if you are looking at a risky company, you might be more excited, more business heading your way. shery: everything on yields going low. what is the expectation out there about where yields will stand at the end of the year? claire: i have not talked to many people recently about that. rick was saying the 10 year could go to 1.5%. expectations are lower in the near-term at least. shery: claire boston, thank you. bloomberg users can interact with the chart shown using gtb go. you can reference these and also save them. this is bloomberg. ♪ hey! i'm bill slowsky jr.,
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it's great! you have our number programmed in? ya i don't even know your phone anymore... excuse me?! what? i don't know your phone number. aw well. he doesn't know our phone number! you have our fax number, obviously... today's xfinity service. simple. easy. awesome. i'll pass. mark: i am mark crumpton with bloomberg's first word news. president trump has proposed stricter background checks for
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gun purchases after the mass shootings in ohio and texas. the president outlined his proposal at the white house. president trump: we must make sure that those judged to pose a grave risk to public safety do andhave access to firearms that if they do, those firearms can be taken through rapid due process. that is why i have called for red flag laws, also known as extreme risk protection orders. mark: the president also called on the justice department to propose legislation that people who commit hate crimes and mass murder face the death penalty. a united nations fact-finding mission today called for an embargo on arms sales to myanmar as well as targeted sanctions on businesses with connections to the military there after finding they are funding human rights abuses. the mission released a report detailing how businesses run by myanmar's army are engaged in such violations and provide

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