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tv   Bloomberg Markets Americas  Bloomberg  September 4, 2019 1:30pm-2:00pm EDT

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battery that caused damage that may cost the islands billions. dorian has weekend but is still packing winds of 105 miles per hour. forecasters say it can make landfall as a category one storm on north carolina's outer banks thursday. an attempt by british lawmakers to stop the country from leaving the european union in october without a divorce deal has passed its first major hurdle in parliament. the house of commons voted today to approve the bill in principle, sending it off for further debate and another vote today. pro brexit lawmakers are threatening to stop it by filibustering. boris johnson says britain must leave the eu on october 31 with or without a deal. the leaders of russia and india say the ties between their countries are strong. the russian president and indian prime minister spoke at a news conference today on the sidelines of the eastern
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economic forum in russia a red putin calls india one of his country's key partners. afghanistan is exposing concerns about the u.s. ending its longest war. afghanistan is morning april u.s. troop withdrawal that moves too quickly and without forcing the taliban to meet certain conditions, could lead to total civil war. show the draft to officials this week, saying it only needs president trump's approval. 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. live from bloomberg world
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headquarters in new york, i'm shery on. amanda: live in toronto, i'm amanda lang. our bloombergby and bnn bloomberg audiences. the u.k. prime minister boris johnson gambled and lost as parliament votes to push back brexit and johnson fights for snap elections. parliamentmembers of will debate a law to prevent a no deal divorce. boston fed president eric rosengren sees no immediate need to cut. meanwhile, dallas fed president robert kaplan is watching to see if we can macro economic data filters into consumer attitudes. we will decode fed speak and what it means for later this month. cannabis in canada. we speak to a special guest, the commissioner of the global commission on drug policy. let's get started with a
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quick check on the major averages. we are seeing risk on and green in the market today. the s&p 500 and the dow gaining almost a percent, with the nasdaq up 1.2%. tech shares leading the gains, the biggest loser in the session yesterday. we also see energy being the second-biggest gainer today. crude prices above $55 a barrel. of course, we continue to see this risk on move around the world. u.s. shares following european and asian shares higher, as we see political tensions subsiding a little bit in europe and hong kong. theaw hong kong shares leap most since 2018, that as chief executive carrie lam said she would formally withdraw that extradition bill to china which caused almost four months of unrest. if we can bring up my chart on the bloomberg, you can see for hong kong stocks, this has been quite a relief. a really bad month of august.
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we have not seen such a big loss since last year, and now we are seeing a little bit of green over there, which is how we are doing in the month of september. amanda: one other place we are seeing some of these global crosscurrents show up is in commodity prices. i want to show you a handful of stocks commodities. we are seeing them slump to levels we have not seen since 2009. sugar, coffee, corn. a combination of factors. global outlook, trade tensions is another. you can see, a reflection of the and theconfidence global growth outlook and where we go from here. one other place causing some consternation is brexit. approved the initial stage of a bill to block a no deal brexit. they continue to debate in westminster. the prime minister's strategy has been blasted.
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degeneratedarty has as a snap election now hangs in the balance. overseas, vice president pence is set to meet with prime minister johnson. here with us is duncan edwards with a little bit of insight. it is hard to keep track of how this unfolds. from the point of view of business, the name of the game is, do you assume there is no deal, do you assume there is a deal? what is business thinking about all of this around brexit? >> we are right in the middle of another hugely dramatic week in british politics. in the u.s., we are used to seeing the executive not having control of the house. that is very unusual in the u k. in fact, by definition, they have to have control of the house, but under mrs. may for six months, and then yesterday dramatically in the first test of boris johnson, he lost. expelled 21 of his
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own members of parliament. to answer your question, business is scratching their head about this. this is now three years since the referendum. overwhelmingly wants an agreement, this endless uncertainty is very unhelpful. shery: what do your members monitor the moment? do they prefer a general election in order to get more influence little more for the new prime minister? or do you prefer to continue as is and delay brexit? what would be the best outcome in the short-term? workingwithout now a majority of any form, the only solution is a general election. there has to be a general election. the timing of that will depend on the results of the next couple of days of parliamentary
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activity, both in the lower house and the upper house. the situation is, having called for an election for the last two years, the opposition labor party is now refusing to grant permission because of an arcane pays of internal machinery of the u.k. parliament. it is not as if johnson can just call for an election. he has to get approval of two thirds of the house. they will not grant him that until this bill, which mandates a delay in brexit, is past. so we are stuck between a rock and hard place. we believe that a general election is required. this is preferable to a second referendum. a general election where a new house of commons is elected with clarity on this issue, one way or another. amanda: it seems as though the
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prime minister's approach was to take this hardline to force negotiations to happen. obviously, a calculated risk that may have failed. with the business community like to see that kind of hardline taken? duncan: i think there are some that would like to see that. if ceos put themselves in the position of having their hands tied over a position, they would not like it. certainly,ses, we, would like to see some form of an agreement with the eu. we think we were pretty close with the withdrawal agreement, even though it was rejected by the u.k. parliament. it was rejected because of the irish backstop issue, which touched on questions of british sovereignty. other than that, the provisions of that agreement, although not palatable to everybody, provided
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runways with a two-year uncertainty under which a new agreement with the eu could be negotiated. most business organizations like that, we would like something or -- like that to be passed. but our advice to businesses is to prepare for a no deal exit on october 31. we still feel that is a highly likely scenario. all large businesses have and are preparing in that way. shery: in the meantime, we are seeing the u.k. and u.s. government officials spending time together. if i'm not mistaken, vice president pence is in london this week. how positive is this for your members? duncan: we have seen a real uptick in activity between very senior levels between u.k. government and u.s. government. we have had the vice president coming into town this week. meetings here from
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steven mnuchin, john bolton was here. we have had our own cabinet ministers from the u.k. in washington as well. so there is a real increase in activity at the most senior whichof both cabinets, has to be good news for the u.s.-u.k. trade and investment, business community. it is a hugely important , arguably thedor most valuable between two countries in the world. having real time spent on this matters. mrs.s not working between may and the president. the reset we have seen over the past few weeks has been welcomed. shery: duncan edwards, thank you for the latest on brexit, joining us from london. here in the u.s., it a divided fed. eric rosengren sees no need to cut while dallas fed president robert kaplan says waiting for
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consumer weakness may be too late. to decode what that means ahead of jay powell's remarks tomorrow, let's bring in michael mckee. we continue to see this divergence in fed speak. how should investors take all of this? mike: probably just take a sleeping pill and wait until september 18. we are not seeing anything new out of these officials, giving us what we saw going into jackson hole. it has not changed a whole lot, their outlooks. the data is starting to lean a little bit more negatively. robert kaplan may be leading a bit toward rate cuts, but the positions have not changed among the people who have been talking. take a look at this week's rate cut lineup. a lot of fed speak today. jim bullard last night, again today. john williams, robert kaplan. put them in the category of likely to vote in favor of cutting. eric rosengren last night says
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he still does not see the case for doing that. board bowman from the fed gave a speech today, avoided the subject -- it was a different topic. still to come, jay powell and neel kashkari. neel kashkari, you can put him into the likely to cut category. six people have spoken today who are basically all saying, we are where we were a couple weeks ago. the big one is jay powell on friday. amanda: it feels like we have come a long way from the days where greenspan used to joke about how he was not allowed to say. to be very quiet, not signaling. this is a very noisy fed. is that helpful to the market? mike: it does not seem to be helping. many people are saying that they wish they would speak left. -- speak less.
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what we have seen is the fed is divided into two groups, those who are waiting to see what happens, because they don't think -- that the economy has turned down yet, at least in the data. and those that think we should act preemptively. that is the tug-of-war going on now. those that think it will and should act preemptively are looking at the trade war, saying it would only make things worse. that was the group that prevailed july 31. right now, the markets think they will prevail again september 18. amanda: michael mckee, always great to have your thoughts. we will be talking about this ahead of jay powell's comments on friday. argentina is facing a debt dilemma. why that has foreign investors worried, next. this is bloomberg. ♪
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amanda: this is "bloomberg markets." i'm amanda lang in toronto. shery: i'm shery ahn in new york. $15 billion in provigil bonds are lurking beneath the surface of argentina's already imposing financial debt, threatening to settle investors with more losses. joining us now is our emerging markets reporter. great to have you in the studio. of course, we continue to see this ongoing crisis in argentina. some are saying we could see a repeat of what happened two decades ago. what do these provigil bonds and when it comes to the sovereign debt restructuring we could see? >> on top of the $100 billion in sovereign bonds we have, we also
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have provinces that have outstanding bonds in dollars or euros. the way they are affected by the sovereign restructuring, they rely heavily on transfers from the federal government. also the fact that they have dollar obligations is no good news when the currency is plunging. while there is no cause for that, the federal government does not guarantee those bonds, they will of course be affected. havea: if the provinces do -- collapse under the weight of this debt, what is the relationship between the two? provinces would likely join in a later phase of the restructure, like what happened in 2001. there are differentiations of course between the provinces. some are in a health care position.
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, which hasrdoba metrics already. on the other side, you have allos aires, which has over half of the provincial bonds, in a much worse situation. shery: we see money managers dumping the debt with concerns that this could be affected by all of these changes. how is this going to affect the flow of money out of argentina? of money now is a tricky question because of the capital controls. regarding the provincial bonds, money managers have already started to act on those. most of them are trading below $.50 on the dollar. now it is more of a russian of who is going to buy those, if they are betting on restructuring, if they are going to attract investors. we are waiting to see.
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amanda: one of the big issues here is there are a lot of political issues that need to be resolved as argentina tries to restructure and reform. how is that progress happening, even as a talks with bodies like the imf? , theythe provincial side rely mostly on the transfer from the federal government. the imf stops putting money for the federal government, of course, they will have an important hit there. amanda: thank you so much for that. we appreciate that. some breaking news to bring you. seems to be the latest corporation to hit the bond market. for the first time in two years, apple is considering up to $7 billion in a new bond issuance, ranging in terms from three years to you 30 years. this follows companies like deere and disney capitalizing on
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the appetite for high-grade corporate. coming up from the war on drugs, to a multibillion-dollar material --speak to maria cattaui about the dramatic shift happening around the world about cannabis. this is bloomberg. ♪
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shery: this is "bloomberg markets." i'm shery ahn in new york. amanda: i'm amanda lang in toronto. the it comes to drugs, global mindset has shifted dramatically over the past few years, from the war on drugs to the legalization and now big business of cannabis. i sat down earlier with maria cattaui, who is now a commissioner for the global commission on drug policy, to talk about the shift in the regulation of drugs. she told me about how the
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commission started when she called a interesting moment. >> when former president cardozo of brazil said break the taboo. it was not just the war on drugs, but talking about it. you could not talk about it in many countries. from breaking the taboo, it evolved from stopping the war on drugs -- the ridiculousness of the war on drugs -- and move toward how can you move that toward harm reduction, medical treatment, decriminalization, regulation. today we have arrived at the questions of regulation. realizing also means scientifically the way drugs and psychotropic and other substances are classified officially is kind of crazy. we, in canada, have gone
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further than almost anywhere, full legalization, explore the medical market of cannabis. maria: but not of other drugs. amanda: perhaps in the future. are we an example, or are we a cautionary tale? army a place in other countries will look at and say, how will this work out, or something that others should follow, in your view? maria: it's an interesting question about what they are pioneering here in canada. portugal pioneered the decriminalization of the possession of all drugs. canada is legalizing and regulating a product -- one of the products, canada's -- cannabis. the interesting thing here is we don't have many examples of what works in the regulatory field. we don't know. i think we can look at any market -- you are from the business world.
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you understand you can make a market so regulated, so complicated, so cost ineffective, actually you are not helping the situation because all that will happen is you will diverge into illegal markets. or you can leave it so loose and open that perhaps he will have a monopolization. perhaps it will be not only national but international. large companies dominating. it depends on what the country wants, what the people in the legislature wants. that was maria cattaui, a commissioner for the global commission on drug policy. shery: time for the bloomberg business flash. youtube has agreed to pay record $170 million to settle claims it violated children's privacy laws. most of the money will go to the federal trade commission. $34 million will go to new york state. youtube was accused of failing to obtain rental consent in
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collecting data on kids under 13. itsrk is adding a moment to all-male board of directors mother prepares for an ipo. the harvard business school professor francis fry was a previous vice president at uber. --r says within going public a year of going public, it will add others. that is your business flash update. just a reminder that you can catch all of our interviews on your bloomberg terminal. the function is tv . from toronto and new york, this is bloomberg. ♪
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>> this is bloomberg markets. i'm scarlet fu. in just a few minutes the fed publishes the beige book. headlines --he
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overall we have been in rally mode. we're seeing money moving into the two-year guild at the moment is the yields are coming down money moving in to the three-year bond. the 10-year is still at 1.5%. the u.s. dollar is down against most major currencies today. risk aversion receiving. now we are getting into the beige book. >> the fed says most distances are optimistic and consumer spending is mixed. the economy grew at a modest pace. the despiteins of the ongoing trade war. they did say the fed is expected to cut rates orbit is the backdrop here but we have seen and heard from fed officials of late that they are little resistance to the idea of more cuts asking whether it is going to change what is going on in the economy especially when the consumers


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