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tv   Bloomberg Markets Americas  Bloomberg  August 14, 2019 10:00am-11:00am EDT

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guy: three a cocked em -- 3:00 a.m. inlondon, 10:00 new york. i'm guy johnson. this is "bloomberg markets." my colleague vonnie quinn will be joining us very shortly after an interview. the u.s. to tens -- the u.s. twos-tens going negative earlier on in the session. the german curve is completely negative, actually not inverted. still, probably doesn't send a positive signal. this chart here is the u.s. 30 year, into record territory today in terms of where the yields are. we've never seen this before.
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which is more scary, the inversion or what we are seeing in the 30 year? what does it mean for global equity markets? this is the picture we find ourselves with right now. the s&p trading sharply to the downside, down by 1.5%. tech stocks are down, chip stocks down, banks trading lower. at where the look banks are here in europe, down by 2.46%. we are seeing a big move to the downside in stocks. stocks, when we look at what is happening with the dow, down hard. macy's is getting battered today on the back of its numbers. we have the wework ipo to talk about. the timing on that one looks pretty difficult as well. two other stocks were focusing on as well. the deal is finally done, that media merger. viacom and cbs are reuniting after 30 years in a long-awaited
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$11.7 billion deal. what is interesting today is the market reaction to that. we are seeing both stocks coming under pressure. part of that is down to what is happening with the markets today. it would be tough to be positive today, but nevertheless, after finally getting this deal done, we are seeing these stocks negative. let's go to my colleague vonnie quinn, who is at viacom's headquarters in new york with the man who led this deal to combine these two companies. funny -- vonnie. vonnie: indeed it has been a torturous route, but we are here now in times square with the ceo of viacom, assume to be viacom cbs -- soon to be viacom cbs, bob bakish. i'm curious as to the couple of days that brought you to this point. you ended up making a deal on the shares. did you come down to meet cbs? bob: we are thrilled that we
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announced the combination of viacom and cbs. assets itook at the unites, the powerhouse cbs broadcaster, syndicator and studio, with paramount pictures, one of the most storied studios in hollywood, a set of global brands in nickelodeon, mtv, comedy central, and bet. they are really a force in consumer publishing, and of , which isowtime pushing the boundaries of storytelling. the deal was initiated by two special committees. it went through a very diligent and thoughtful process. we got the deal done because it positions us to do great things going forward. is ae: no question it phenomenal deal on both sides, yet there are some shareholders a little bit nonplussed that
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viacom isn't valued more in this deal. one threatening to sue. could you have come up? would cbs have given in eventually? two the deal was pursued by special committees. what you need to focus on is the value creation potential here. these were companies valued at particularly low multiples. a lot of that was due to the uncertainty hanging over them, including this deal, and a lack of clarity on the path forward. starting yesterday, we started talking about a three-part growth strategy, really building a significant business through the combination of cbs's subscription, where they have millions of subscribers to cbs all access and showtime, and viacom's ad-supported structure with pluto tv, with 18 million active users. you put those together, we love
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that. significantery partner with ads and distributors, and of course, a huge content supplier. so very exciting growth strategy going forward. is that tracks out, people will see the very real value here. vonnie: you've also identified $500 million in job savings -- in cost savings. some of those will be job cuts. can you identify where? casethe synergies in our include some organizational costs, some sourcing benefits, and some real estate benefits. beyond that, we haven't gotten into it, but i think the more important thing to focus on is the power this combination is going to create incredible value for all of our stakeholders, including the incredible pleas of viacom cbs, who together are going to shape the future of media. vonnie: sherry redstone, now one of the only women at the top of
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a massive multibillion dollar slightlycame from different positions on this. have you thought about how you all work together in the future to blend this company into a successful whole? bob: we put a lot of thought into that. i work very closely with my board. sherry is the controlling shareholder for both boards and will be the chairman of the combined company, so we will work closely with her and the combined board. i've known joe for 20 years. i have trim and disrespect for what he's done throughout his career, including notably -- i have tremendous respect for what he's done throughout his career, including notably at cbs. at the same time, we both know that cbs is a big, complicated business. someone needs to run it. he is ideally suited to do that given his passion for the brand, his intimate knowledge built up of over 20 years, and he is
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interested in doing so, so i am thrilled to be partnering with joe in moving this forward. vonnie: have you thought about whether cbs and viacom will operate on their own, or whether there will be more integration and cooperation, and how the cultures will meet? bob: we will create one viacom-cbs. if you look at viacom circa end of 2016, people talk about the reality of that company. it was very sideload -- very siloed. paramount was separate. international was kind of separate as well. over the last two and a half, three years, we have brought this company together, where leveraging the brand in more ways than we have before. people think of one viacom, and we are going to extend that thinking to viacom-cbs. this is something joe and i spoke extensively about and something we are 100% aligned on. vonnie: this obviously gives you scale.
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how will it help in terms of ad revenue growth? bob: look at the combined company on the content side, over 100 doherty thousand -- over 140,000 television episodes , 750 shows order to or in production. in the u.k., where we have a major broadcaster in five, in argentina, and australia, where we get a leadership position from cbs, and in india. when you look at that and their ability to drive expanding and new partnerships on the business side with advertisers and distributors, it is a very compelling opportunity. vonnie: when it comes to streaming, the cbs products have a goal of 25 million for 2022, and then you have pluto on your end. what will be the goal there, and how would you prioritize subscription revenue versus what you can do with add streaming?
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growth see two strategies that are uniting under one roof. viacom pursued largely in ad supported free strategy. 18 million monthly active users. unite those and create an ecosystem. you bring consumers in through the free space, and some will just stay in free and you create value there. others you sell into one or packages of subscription products. if a subscriber takes a pause, which is something you see in this space, we can keep the many free space and continue to create value. and you have is two dependent strategies that are working and growing, uniting and creating a much more powerful strategy. vonnie: obviously you've announced that you will be
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across the t-mobile service. bob: we are thrilled that we were at the viacom side, at the launch announcement for their forthcoming video service. we are very excited about that. for a number of years, i have spoke to the power of mobile as a catalyst for our business. we are starting to see that come to life. we have nine services on at&t watched here in the u.s. mobile is a big deal. vonnie: you haven't said you are in any particular conversations yet, but you are obviously not big enough to take on the behemoths like netflix. where would you be looking? there's already talk of discovery, of starz. are you looking towards that or more towards platforms? bob: we talked about the power of platforms, the power of business to business. but we didn't talk about was the financial strength. you bring these two companies together and you have a materially stronger company. , twoillion of revenue
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point $5 billion of cash flow. we intend to be investment grade. that financial strength gives us two strong advantages. in, it allows us to invest programming and innovation, and two, it positions us well to take advantage of opportunities that may emerge from an m&a perspective, so we are very well positioned to move forward. vonnie: bob bakish, thank you so much. bob bakish, the ceo of what is going to be the new viacom-cbs. guy: great interview. really great interview. two of the stocks we are certainly focusing on with the stock market story more broadly. stocks falling sharply on both sides of the atlantic as key yield curves in the united states and the u.k. invert. joining us now in new york, investment chief
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strategist at nuveen, and contributor branch of pada -- contributor brian chappatta. is this a game changer? >> we don't think so. we are looking at other baskets of predictors. credit spreads are relatively well-behaved. initial jobless claims are low. we would see those start to tick up in advance of a serious recession. most of the economic indicators are not pointing to recession. we think this is an international issue leaking into bond markets for the moment. guy: i can take your point on that. in germany, there is a gravitational effect. brian chapala, we do -- brian tenppatta, we do have a two- and version, but as you point out, the issue is the record low on the 30 year. reporter: when you breakthrough
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levels that historically have never been broken before, that is an indicator that there's a reach for yield globally, and we might not see yields this high anytime soon. there's no concern about inflation, even though cpi came in stronger-than-expected yesterday. the growth indicators in the u.s. are fine, but it seems like there's really no worry among bond traders that they are going to get blasted if yields backup on the long end. guy: brian nick, what do we do next? history would say you could see risk assets rallying for some time. 18 months i've heard bandied about quite a lot today. nevertheless, at some point people are going to start to take risks off the table. i appreciate what you say about the gravitational effect of the global bond markets, particularly the german one, but nevertheless, signals are up up thato mount
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investors need to be a little more cautious. guest: that's been our play all year. we came into the year defensively positioned in credit and equity markets. we revised that with our midyear outlook in june. we didn't necessarily think there would be escalation of the trade war or this severe downturn in growth in germany and china to trigger this, but trigger downturns. guy: as far as i can see, at some point, the global story is going to bleed into the consumer. you listen to the corporate reporting season and you already start to hear ceo's talk about it. it is the only area of growth i can see. is that phased? that's going to be a factor that investors really have to pay attention to. we've got retail sales later this week. how big a fear is that going to be? bob: when you only have one
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pillar for global growth -- guest: when you only have one pillar for global growth, you have to pay attention to that pillar. obviously the news yesterday about the tariffs being deferred to december was welcome. it would be better for the u.s. consumer not to have any tariffs on these good at all, but can forward to the next couple of months, there's a little bit of runway left for the consumer. the danger starts to hit and first quarter, second quarter of next year if you start to see those tariffs bite on consumer goods. i'm looking forward to the consumer confidence numbers we see for the month of august, which are going to be collected and released after the announcement of the 10% additional tariffs, so we will see what consumers are telling us they are going to be doing for the next couple of months. , is thatn chappatta signaling the fed is kind of out
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now?e game is there anything the fed can do really to have a meaningful effect that far down the curve? reporter: the answer is no. there's really nothing the fed can do to affect the 30 year. but i think the bigger worry for the fed should be that they can't control it, and there's no signal that if they cut rates, the 30 year is going to go up. it seems like monetary policy is ineffective at generating growth and inflation. the good news is you have china and germany showing weakness, but there's levers that can be pulled. china can inject more stimulus into its economy, and germany might do fiscal spending. they've been hesitant to do so, but there is so much runway that if they ever start, you could see a meaningful rise in yields and a potential rebound in growth. guy: from what i hear, you want to watch this space on that one. . . brian nick and brian chapala are going to stick around -- and brian chappatta are still around
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-- are going to stick around. now here's kailey leinz with the first word news. kailey: the u.s. has delayed the imposition of some new duties after negotiators spoke by phone. the president says he thinks china wants to do something dramatic to end a standoff. china has unleashed a torrent of verbal abuse on the protesters who swarmed hong kong's airport. they accused them of being inhumane and committing atrocities. the airport resumed normal operations today. authorities got a court order aimed at restricting demonstrations there. more revelations about the apparent suicide of jailed financier jeffrey epstein. to of the guards reportedly fell asleep and didn't check on him for about three hours. then they falsified records to cover up their mistakes. both the guards and the warden have now been removed from their positions. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries.
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i'm kailey leinz. this is bloomberg. guy: thanks very much. let's get back to the markets. banks under pressure, under pressure, unsurprising given the shape of the curve right now. oil is also trading sharply to the downside. wti currently down by nearly 4%. exxon trading lower. chevron under pressure as well. more coverage coming up. this is bloomberg. ♪
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york, and we new are seeing protesters battling police.
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we have protesters being pushed back by police in riot gear. teargas looks like it is being used at the moment. the forces are wearing gas masks, and certainly have seen them firing forward into the crowd. it looks as if they are pushing the protesters back further and further. the point of contact seems to have moved a little bit further away from the airport. but once again, a night of tension in hong kong. let's get some final thoughts now from brian nick, nuveen chief investment strategist, and brian chappatta of bloomberg intelligence. is the fed still managing a midcycle slowdown? guest: i think they are in the u.s., but they are obviously paying attention to more severe risks from outside the u.s. and uncertainty related to trade policy. we think the fed is going to have to go a bit more aggressively. the fact that the two-year is already reflecting several fed cuts, they can't improve more on
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the dovish side. guy: we've around tripped on the bond market the past couple of days. the trade narrative has given a brief respite back to where we were before the deferral of the tariffs. nevertheless, monday morning sees the yes or no on the extension of the huawei export licenses. if that doesn't go china's way, how does the bond market react? reporter: i think the bond market is going to react the way it has been. it is essentially a risk off mood, and you sort of see those things going on in hong kong right now, and that is just begging for treasuries to be bought here. it's pretty remarkable, and when you have economic data on top of geopolitical risk, i think the bond market is going to continue to find support pretty much anywhere. guy: final quick question. where do you see stocks at the end of this year? are they higher or lower from where we are now? is this an opportunity to get
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in? we seen selling over the last few sessions. is this an opportunity to reengage? guest: that is not our approach. we think the market will be flat , down over the course of the year. we are looking for income from the equity market, not for a lot of price action. guy: we are going to leave it there. thank you very much indeed, brian nick of nuveen and brian chappatta of bloomberg. this is bloomberg. ♪
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♪ emma: let's get a check on the markets. i'm emma chandra. we are looking at an ugly session here in the u.s.. stock in the dow jones in the red. we are looking at more than a 400 point move negative come of the third consecutive day we've
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seen more than 400 point move for the dow jones. also looking at the dax, down 2%. we got that data out of china and germany that really set the tone for markets today. let's take a look at the s&p 500. we can see the roller coaster over the course of the past three days. yesterday's tariff induced rally all but evaporated. almost every single sector within the s&p 500 in the red today. it also means the bond rally is back on. we've got a chart showing you how the twos-tens curve is playing out right now. we got in versions in the u.k. and the u.s.. we are seeing the likes of apple fall, j.p. morgan, and macy's all on earnings. that is your market check. this is bloomberg. ♪ from the couldn't be prouders
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it's a different kind of wireless network designed to save you money. save up to $400 a year on your wireless bill. plus get $250 back when you pre-order a new samsung note. click, call or visit a store today. ♪ guy: let's check the markets and see where we are. we have seen risk assets coming under pressure. we've seen twos-tens in versions
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in the u.s. on the u.k. today. the s&p currently down by 45 points, 1.5%. we have traded lower throughout the session. the dow is down circa 400 points. the nasdaq is where the real pain is. we are seeing tech stocks trading lower, chip stocks trading lower, bank stocks trading lower, and oil stocks trading lower. we are just getting the details of the u.s. inventory data. funnily enough, we've actually got a little bit of a build that is unanticipated. bloomberg users were expecting a decline around 420,000 barrels. are getting a little bit of a build. the crude price initially spiked back on that, but yesterday had a rally, and has been coming
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down throughout the session. we are trading near session lows right now. it doesn't seem as if the data is having any meaningful impact at the moment on the price. a little bit of a move to the upside, but not that much. gasoline inventories down by 1.4 one billion barrels. 1.58.inventories rising they are taking up just a touch on the back of that news, but not by much. crude initially moving higher, then coming back down again. let's get a bloomberg first word news update. here's kailey leinz. kailey: the trump administration wants to end regulation of release for natural gas. italian prime minister giuseppe
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address a vote of no-confidence vote. rministe ime matteo salvini once a quick vote to retain control of the government. argentinian president macri is retrying -- is trying to recover from a primary election defeat. according to a new survey by bankrate, 42 percent of americans decided not to take a vacation in the last year because of the cost. adultsan 2/3 of american opted out of a recreational activity due to cost in the past year. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg. guy: thank you very much indeed.
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joining us on the phone from maroutsos,ck maroutsos,ck janus capital management cohead of global bonds. its august. liquidity is light. do i need to pay attention to this, or can i put it down to a calendar affect? nick: i definitely don't think it is a calendar affect. that being said, you don't need an inverted yield curve. we have week ip data out of china, trade tensions, political dislocations, issues in argentina. the amount of negative interest rate debt. there's sort of a piling on affect at a time where there is decreased liquidity in august, but we are getting to a point where it is hard to stay optimistic in this environment. guy: so what does that mean?
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if you are looking at your book and trying to figure out what to do, you just keep seeing yields going lower and lower? nick: from our perspective, it is just buy duration. while the market keeps trading to keept is going trading lower. the bond markets are telling us that the cycle is ending. central banks are losing credibility. they are behind the curve and increasingly ineffective. i'm going to harken back to mid july, when they said that you don't want to keep your powder dry. you need to move quickly, add more monetary stimulus, and basically the fed is going to have to answer with more aggressive rate cuts then what is priced in, and certainly be far more dovish and more aggressive than what they did last month. guy: so this is no longer a midcycle slowdown. nick: absolutely not, and i
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don't think it ever was a midcycle slowdown. i think that was the fed's attempt to keep rates in check. the thing is, the fed did not really want to cut. they were forced to cut by the market. evenhe market is pricing and more negative stances. i'm not really fully prepared to give up on the u.s. economy. confidence numbers are still strong. growth numbers are still ok. but the problems are outside the u.s.. the u.s. cannot stay immune to the issues happening globally. i think you have to look at the ecb or europe as sort of being the leader of all of this all thisinformation, negative data leading towards the u.s. rallying more aggressively and equities falling. guy: what seems to be catching my eye at the moment the most is the rate of decline in terms of the data coming out of germany,
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and particularly china. it is the delta there that i think is frightening. do you see the same thing, and do you see the rate of decline as picking up? nick: absolutely. europe is sort of the of hit me of this -- the pit of me of this -- the epitome of this. all they've really done is be able to push rates lower. whetherthe problem with a lot of these asian or european economies facing negative interest rates, whether the central banks are hanging their hats entirely on negative interest rates being able to solve the issue. all it's been able to do is really just distort markets even more. taking a step back and looking at things from a more macro standpoint, i would argue that central banks are effectively, particularly in europe and some of these countries that can't lower interest rates more, they are out of ammunition.
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they are hoping that they can spur the economy, spur the inflation, and get the economy on better feet, but it is not proving to be the case. guy: so we get to a recession. normally i would buy bonds. what happens this time? nick: right now, you continue to buy bonds. right now people are looking for any sort of positive yield. that's why you are seeing the u.s. rally far more aggressively than europe. u.s. bonds are rallying anywhere around 10 basis points. german bund's have only rallied about four points. it doesn't mean they can't -- [no audio] nick: -- by the positive yield because i think you will have far more bang for your buck
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owning a negative yield that is going to move more negative. guy: but the session has become more brutal over the last couple years. in the last recession i bought bunds, and it is a great trade. that's what most people did. if we are -80 on the german ten-year when we get to the recession, is that still the place to hide out? nick: people are worried about a return of capital, not a return on capital. optically it doesn't look like a fantastic investment trading at -80 basis points, it doesn't mean it can't go to -120, particularly if the u.s. goes 1% or even lower. you better believe that if u.s. interest rates fall, which we believe they will do, our view has always been that u.s. interest rates are going to move closer and closer to 1% and german rates will continue to move lower. again, it becomes more of a trade-off.
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personally as a bond investor, our view is to own the positive yield and ride that down as opposed to owning some of this negative, even though it continues to move negative. guy: thanks for taking the time to join us today. we really appreciate it. fascinating day to get a sense of where the bond market is going. coheadapital management of global bonds nick maroutsos. let's go back to hong kong. riot police are taking to the streets. protesters were assuming their protests, but this time not at the airport. the point of contact changing. yvonne man, "bloomberg markets: asia" anchor, joining us once again. give us a sense of what is going on in hong kong this evening. it is 10:40 in the evening. yvonne: right. this injunction at the airport which was barring protesters
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from entering the airport has basically prompted these protesters to go elsewhere. that is why we are seeing crowds district.in this this is not the first time these protesters have been at this district. they are surrounding the police headquarters. we saw police firing tear gas earlier as well. yet another violent night here in the city. here in the airport, things look relatively normal, at least slowly getting back to normal. take a look behind me. 24 hours ago, this was the area where we brought you those violent clashes between whoesters detaining men they were claiming work mainland police officers. now you see police are on god here, but looking a little relaxed -- are on guard here, but looking a little relaxed. travelers are coming into the
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terminal. we also hear that security has loosened up a bit as well, where family and friends are able to come with their travelers and send them off at the gates. the operations here are looking a little bit more normal now. protesters, i think i only counted a handful downstairs at the arrival hall. guy: how has the city felt today? last night, the pictures, as you say, were very dramatic. what does hong kong feel like? many of us have friends and family that live in that part of the world. what are they experiencing as they try to go about their day-to-day business? mood here,s a dire given the graphic images that we saw. theremong the opposition, are factions now coming out and apologizing for the actions that some of these frontline protesters had made yesterday. some are just saying that they went a step too far because inse beatings basically show
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a way that they are ruining the whole cause of this at the moment. they need to have some type of code of conduct here where you cannot be attacking medics or journalists who are at the scene. the foreign correspondents club in hong kong also issuing a statement, saying there is grave concern about one of the men they tied up on a luggage trolley yesterday, who they claim was a mainland police officer, but turns out he was a global times reporter from china. we are seeing factions of the opposition coming out and saying this was a bit of an overreaction. vonnie: the president of the united states tweeting out and effectively being the middleman, saying there were troops on the border and that it is a tough situation for china. certainly have seen
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these protesters that have wanted the international community to respond to what's been going on. thesemes you walk around protesters gathering, and you see people holding american flags. i guess it is a signal to president trump to bring up the issue with china during these trade negotiations. china, as we've been talking about, has been ramping up the pressure in the rhetoric, as well. they condemned the acts from yesterday night, saying this is nothing different than terrorism. they say these protesters near to be -- protesters need to be fiercely punished. they also talk about u.s. politicians getting involved, bringing out the language of "a black hand" behind what they call these "riots" as well. vonnie: our thanks to yvonne man, "bloomberg markets: asia" anchor, there in hong kong. live from new york, i'm vonnie
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quinn. this is bloomberg. ♪
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♪ york, i'mve from new vonnie quinn. guy: from london, i'm guy johnson. this is "bloomberg markets." vonnie: it's time now for the muni moment. with a focus on the twos-tens spread, we take a look at how that is affecting the current. taylor riggs has more. of federatedllo investors is here. what does this mean for the twos-tens? rj: right now you have an
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inversion in the muniz curve -- in the munis curve. inversions relative to financing. twos-tens not inverted, and it has never inverted historically. traditionally the muni curve is sloping because of the tax risk in the long run. we don't tend to see muni inversion. bonds hasarket in undeniably affected all high-quality instruments. munis are having an incredible year. the flattening of the curve means being neutral long-duration and owning fixed income has been a real win. taylor: sorry for cutting you off. i'm just excited about getting to talk munis on tv, so stick with me here. given the global bond rally we are seeing, how do munis looked relative to treasuries, rich or cheap in your book?
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rj: all the muni to treasury ratios are generally rich to long-term averages. that said, i think the rally in muniz has partly been supported by the sharp change in the tax code. even though banks and insurance companies don't like munis as much anymore, individual investors and states are still looking for municipal fixed income. i think also, ratios have been driven fairly rich in part because people are looking for positive yielding fixed income instruments in a challenging world. traditional ratios suggest munis could fade some, but i'm not sure that i would at this point in time. we are hoping that rates calm down. there's all this talk about negative yields in the united states. we don't think we are there until we get to another recession, and that's not our base case. taylor: talk to me about that recession. i know it's not your base case, but if an inverted yield curve tells us anything, it could mean
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a recession in the next 12 to 18 months. reform inis typically a recessionary environment? rj: again, i want to emphasize again that is not our base case, but munis start off with relatively favorable performance. as treasury yields go lower, would start to exhibit underperformance due to retail investors. i don't think retail investors are chasing negative yields in europe, and i don't know that they would hear. we know that banks and insurance companies are still going to be buyers. the challenge is to muni credit, ultimately. most states have rebuilt their credit qualities, but if you see a recession in the u.s., you will have some cracks in the muni credit foundation, and that will be a challenging time. as a high-quality asset class, we would do well in the early phases of any recessionary outcome. taylor: so quickly, duration or credit?
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rj: at this point in time, we have increased duration in all of the bonds that has help us ride the rave -- ride the wave of lower yields. we have toggled to a more neutral position lately. at this point, i think you have to believe a u.s. recession is in the offing to get this level. it is quite possible rates will reset a little higher and we enter into a range trade, but this is a fast-moving and vulnerable market, so at least neutral is where you need to be. on credit, we are leaning a little long in munis because we still see the flows coming into high-yield funds. the carry allows for incremental outperformance, so long we have no recession, which is what we expect. taylor: timely and smart, that was rj gallo, the head of the muni group over at federated investors. vonnie: our thanks to bloomberg's taylor riggs.
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this is bloomberg ♪ -- this is bloomberg. ♪
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♪ guy: from london, i'm guy johnson. vonnie: in new york, i'm vonnie quinn. this is "bloomberg markets." our stock of the hour is chinese social media and videogame giant tencent. abigail doolittle is here with a look at the results. abigail: we have adr falling in the u.s. session as a result of the second quarter. the expectations were relatively high because 20 for them was horrendous. there's been this expectation they would turn things around this year. lo and behold, revenue not growing that much. it was less than the expectations of analysts. relative to the different segments of what they do come of what they do, the biggest chunk -- segments of what they do, the biggest chunk
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is their gaming. guy: as you say, this was meant to be better. life was supposed to be getting easier for tencent. the government cracked down on gaming, which has been in place for quite some time. that was coming off. why did it not have the effect the market was looking for? abigail: great question. they have actually lifted a little bit, but it is slower than expected. one of the games "peacekeeper elite" has been green lighted, but the expectation was that once they lifted the lid on that regulation, it would happen very quickly. the turnaround is not happening as quickly as some expected. plus, it seems some analysts are more worried by their ad business. company wither competition coming from that way, plus regulation from china. vonnie: thank you for that. that was our stock of the hour
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with abigail doolittle. it is time now for futures in focus. joining us in the studio is knuckman of is adam agoura financial. what does this mean for inflation? new swing highs in the stock market, and we have given back those gains. if you look at some of the other flight to quality incidents, look at the vix right now around the 20 level, and gold not near its recent highs. you are seeing just a little bit of a pullback. but what does this mean for the future? looking at this inversion, studies have shown there's often a delayed reaction in the marketplace, and stocks tend to drift higher in the near term, so we will have to see. it is a pretty big call to make that assumption that there is going to be a recession. i think this was just an initial
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knee-jerk reaction. vonnie: we have to leave it they are, but our thanks to you as always. agora financial joining us from the cme. a quick check as we look at the inversion in yield curves across the world. the twos-tens spread in the u.s. is positive again, but the 10 year yield is down to 1.59%. that's another several basis points lower than yesterday. the dollar index is very close 98. one of the currencies stronger is the yen, at 108.94. retailers being dragged down by macy's earnings. down more than 7% on the deal.
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♪ guy: 30 minutes left in the
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european trading day. from london, i'm guy johnson. vonnie: in new york, i'm vonnie quinn. this is the european close on "bloomberg markets." guy: what a day. liquidity is light. you've got to bear that in mind, but nevertheless, the stoxx 600 now at session lows, down by 1.75%. the u.k. twos-tens inverted. there's a brexit factor in there, but we also had an inversion on the other side of the atlantic. we are still reversing yesterday's gains. vonnie: in the u.s. looking at an inversion, although we are back at positive now. the twos-tens spread just under two basis points. the dollar index is very close to 98. another currency today that is stronger is the japanese yen. most are weaker versus the u.s. dollar. the s&p 500 down.

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