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tv   Bloomberg Markets Americas  Bloomberg  February 12, 2018 10:00am-11:00am EST

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♪ vonnie: here are the top stories we are covering. stocks advancing in europe and now in the u.s. after the open, giving investors a reprieve for now. the highest volatility since 2015. president trump releasing details of his info structure plan and a budget that will get traction in congress. barclays facing new criminal charges in relation to the controversial fund-raising at the height of the financial crisis a decade ago. all of those stories, and lots more in the next two hours. we are 30 minutes into a crucial trading day in the u.s.. stock significantly up. abby: we are seeing a rally. we are a little off the high just 30 minutes into the training session. the dow and s&p and nasdaq had
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been up one and 1%. but right now, the s&p had been up 1.4%. after last week's volatility, the question is whether the tip action today will last considering that we also saw frenzied buying friday. we have major averages on pace for two updates in a row. we have into the bloomberg and take a look at the hash -- g #btv 927. much of january, there are updates. the best month since 2016. february hit and we were down. first twoace for the updates of the three major averages since january. right now, the s&p 500 on pace for its best to up days since the election in 2016. leadership coming from names
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including apple, exxon mobil, and j.p. morgan. these were down in a big way last week. apple a trigger in some ways for the selloff we have seen. they had a disappointing quarter around the iphone sales and guided the stock. it is still 200 below the moving average. they are not out of the woods yet and perhaps not the selloff. exxon rebounding nicely. the stock had been down about 17% during the selloff with oil flirting at $60 a barrel or j.p. morgan a rally up less than 1% after the financials have come under pressure with what seems to be a tougher fed. one thing we like to take a look at in the bloomberg, that is g last week on the selloff, we had stocks hitting 52-week lows. put this in the perspective of 2015 and 2016 where was closer to 40%, and also back in 2018 -- 2008.
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last week selloff pales in comparison. the question is whether or not this will last. it suggests there could be more selling ahead. on today's whisk rally, we do have the commodities confirming -- risk rally, we do have commodities confirming the worst week since january 2016. today, we see the bloomberg commodity index of 1% being health marked by oil, copper, and wheat. the question is whether it will last. i am sure mark is debating that question. equitiest european with the last week being the worst week in two years. .oday, we are seeing a rebound you can see green across the screen if you look at the left column. stoxx 600 rebounding by more than 1%. we are seeing gains on the dax of 1.5% ftse 100 is higher as well. see it comes to the fx, you
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the touch of dollar weakness looking at the bloomberg dollar index. higher up 1/10 of a percent. 1.3833.changed at this is ahead of a big week in terms of what we might find out towards brexit. when it comes to yields moving higher in europe, you were talking about oil. you have seen crude up 1.5 percent. we have seen oil rebounding from a bad week. you were talking about selloff in commodities. if we switch the screen and look at the stoxx 600 and look what is happening. you are seeing green here as well during it is a broad-based rally. we talk about how much breadth there has been in the rebound and if and when we get it and if it is sustained. you can see every industry group gaining on the stoxx 600 with materials and telecom leading the gains.
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sterling, it is unchanged if you look at this session paired we have to look at pound volatility. this is three-month volatility surging as trade weighing what was seen as a hawkish boe last week. also the prospects of a disorderly exit. let's look at what is happening in fixed income space when it comes to the 10 year bond yield. where up just a basis points, 75 basis points. vonnie: it will be an interesting week in the markets. we are kicking it off with a new if the structure plan with president trump unveiling a $1.5 trillion plan moments ago. what earmark $200 billion in federal money for local governments and private sector to fix america's crumbling roads and highways. democrats are calling it a bait and switch. we are joined by heaven's early live at the white house -- by kevin us a really at the white
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--cirilli at the white house. what do we know? kevin: it will rely on the $200 billion of investment coming from the government to jumpstart the plan. the second point is that this plan relies heavily on states in terms of reducing the permitting process and the time it takes in order to get your mitts per moved -- approved for plans throughout the country. republicans even backed during the camp -- back during the campaign season said the time it takes for local municipalities to get approved could tend -- end up taking years. they want to see this reduced. there was also about policy it chooses from environmental standards. linkays they are hoping to public and private partnership through the idea known as asset
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recycling, an idea first pioneered in australia. in terms of connecticut, a democratic state, they have viewed some plans. i'm sure you'll hear republicans looking at connecticut as an example. it would allow the private sector and private investment to come in to some of the municipalities that have debt and allow them to purchase the debt and pay interest to the federal government as a result and the state government. that is a mechanism for the government to get funds that they will say will help pay for the $1.5 trillion plan. to keep it short, i got off the phone with a congressman was a member of the freedom caucus. he is frustrated about the budget that passed last week. he called it a "symptom of the sloth." about very pessimistic the idea of passing a minute mental infrastructure bill within the next couple of months. vonnie: who politically is
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welcoming this? it would seem like republicans are possibly annoyed that the deficit would be affected. democrats don't think $200 billion in federal spending is enough. states have a lot to say about it as well. many are already overburdened. the appetite for infrastructure is one of the policy agenda items that everybody says they want. even back in the obama administration, republicans and democrats saying they want to get infrastructure done. on the flipside is the mechanism to achieving that policy initiative has alluded both political parties. whether orn becomes not there could be strange bedfellows and political alliances forming from the likes of the congressional caucus and the freedom caucus. i can tell you that based on my thereing time to scenes, is back channel communications about potentially trying to streamline some type of support for that. right now, it is unknown.
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this comes at a: time with big selloffs in the market and deficits and rates rising which might cause more market jitters. how sensitive to the markets are the politicians that are working on this right now? last week i had an interview and i ask whether the volatility that we has seen will lead to more regulations on wall street, particularly in the crypto space as well as in volatility index. is no serioushere consideration for more regard to reform with the market. lawmakers in the republican party feel the markets will go up and down. , there areto space
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hearings scheduled within the next couple of months and we will have to keep an eye on that. in terms of how lawmakers are seening, we just have not much movement and regulatory reform space. vonnie: the infrastructure plan is out and we are going to have that at 11:00. it is consisting of governors legislators, mayors, and county leaders. it is going to the state level for the medium. let's check in with "first word news." taylor: award on immigration today very the fate of the so-called dreamers who face deportation. some republicans have said they want to help them. president trump says he is willing. in exchange, he wants money to build his wall on the border and significant limits to legal immigration.
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the trump administration is signaling a policy change on north korea by president -- vice president mike pence is ready to engage in talks on the nuclear weapons program. according to the "washington post," they agreed to pursue dialogue with the north during talks at the winter olympics. hence says the u.s. -- vice president pence will keep putting pressure on them. and battle president jacob -- embattled president jacob zuma will step down. a spokesman denies the report. has refused to denied after he was replaced. his nine years and marcus has been marred was scandal. russia investigators are trying to figure out why a passenger jet crashed not long after taking off from moscow. all 71 people on board were killed. to flight was on a flight
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another city. the flight was granted a recorder have been found. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. -- i'm taylors riggs. we will speak up, with u.k. secretary of state for whales. --wales on trade missions. this is bloomberg. ♪
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♪ london, i'mfrom nejra cehic. vonnie: and i'm vonnie quinn. gaining of session highs. joining us who leads coverage for bloomberg coverage.
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it will be an interesting week. i was struck by the comments from deutsche bank saying it is not happen. ed. three consecutive weeks of bond yields lower. mike: there is a first time for everything. there is some solace to be taken from the opening trade this morning. we have been in the green on the equity index teachers since the opening last night. we are still higher today. what is amazing is we are still higher but some noticeable swings off of the highs. i was watching futures premarket, up 8% and a half. i am not sure we are quite out of the woods yet. the longer we stay in the green this morning, the more faith people will take that last week was a temporary spasm. vonnie: with bond yields higher and equities lower, we are looking at cpi data on wednesday
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. is that a potential catalyst for the mark? is in the front of the mine on everyone in wall street this week. if we see this pickup in inflation, that will rattled some nerves. as you said, 3% on the 10 year is a random round number, but it has taken on significance. if people see a breach of that, there would be questioning. that is when people start looking at things like the fed model and questioning looking valuations of equities versus bonds. have we gotten to the point where people are looking at that yet, or are we still hearing about the dip and this is a healthy correction? mike: everyone has a favorite metric. weekhing we watched last was the dividend yield on the s&p 500 compared to the two-year yield.
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those sort of things, i think for the temporary just in the moment trading is a lot less important than trying to figure out where this momentum is heading. wantan blame what ever you , but the low volatility trade and betray less week, looking at had and flows and mutual record withdrawal outflow less week. it is clear whatever it the fire -- lit the fire were people oneed out of mutual funds, big supportive thing you have to watch in the equity market is we are getting over the hump of earnings season, which means a lot of companies will get the green light to buy back their own shares again. that is a supportive thing coming down the pipeline that may keep the market in a
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positive bias, unless something untoward what happen. nejra: that brings us back to the fundamentals we have many narrative over what caused the selloff whether it was fundamentals or short volatility trade which appointed to. i want to take you to a chart that shows you the vix curve. we are actually seeing the vix in back liquidation at the moment. it shows basically that more risk is seen in the market near term in terms of voluntarily rather than for -- volatility rather than what is usually troop here do we need to see the curve come back to more normality before we see a sustained rebound? seen it will talk both sides of the topic. when the spot is above the futures, it signals this is possibly a very temporary freak out of the moment that will
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pass. it is such an unusual thing that we've seen in the past few weeks, especially as it pertains to the volatility market and how it plays with the stock market. -- hard to draw any firm conclusions. thate: bridgwater has said we are in the final stages of a business cycle. jp morgan is saying we are not at the final stages yet and we still have room to go and what have you been reading and seeing when it comes to the business cycles? that all of the models show recession risk are low. there is nothing glaring in your face suggesting a recession this year or early next year is inevitable. the central market volatility does make people assume that the
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market is seeing something the economists don't. how long it takes to bounce back and what happens to the earnings estimates is that do they stay at this level will tell the story. all signs seem to be this was likely a temporary spasm in the market that we will get past. confidenture how anyone is in saying that 100%. .4 percent.we're up not usual momentum, but we will see. mike regan of bloomberg. thank you. up next, the pressure builds on barclays p we break down the new charge facing the bank. this is bloomberg. ♪
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♪ this is "bloomberg
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markets." i'm vonnie quinn in new york. nejra: i'm nejra cehic. it is global banking news time. a new criminal charges over a controversial capital fundraising at the height of the financial crisis. let's bring in stephen morris, a banking reporter for bloomberg news. outline for us first what this new case is about. stephen: barclays was charged by the u.k. in exchange with a $3 billion loan a gave in the financial crisis. they were charged with fraud. what happened today is the operating company has been charged with all lawful financial assistance. we have a less serious charge, but at the operating level, that is where barclays holds its licenses to conduct business.
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the banking license could be threatened. nejra: is that the biggest implication here? stephen: we don't know how likely it is to happen. no british bank has ever been accused and found guilty of fraud before. regard test case in that . it would be an extreme step for authorities to take away the license. this is more bad noise coming from barclays at a time that it doesn't need it. .or results are out next week measure.nother strong they just released the regulatory investigation for trying to unmask a whistleblower last year.
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they have a lot going on on the legal front. more settlements in the u.s. as well. stephen morris, thank you so much for updating us on the latest news. u.k. banking reporter for bloomberg news. coming up to the equity market close in europe as well. we have a rebound across the equity markets in europe. this is after the worst week for european equities and two years. last week was a similar picture for u.s. stocks. stoxx 600 is up more than 1%, rebounding on that. vonnie: let's go to bloomberg business flash and look at some of the biggest stories in the news. defense contracts for general dynamics has agreed to expand information-technology services. is 6.8 billion dollars in cash, a 32% spin. they will soon get rid of $2.8
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billion with the debt. edgewater hedge fund has made a billion-dollar bet against siemens. when against europe's largest european company in a filing. that is the latest "bloomberg business flash." let's take a look at the markets. we want to see how we are faring here on the first day of the third week. a crucial week after two weeks of equities selling off. the s&p 500 is up .2%. the 10 year yield at 2.83%. those are perhaps the two most important metrics. andrew milligan is coming next. this is bloomberg. ♪
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vonnie: i'm vonnie quinn in new york city and we have breaking news on president trump's when he 19 budget. it calls for $1.7 trillion in cuts.
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-- 2019 budget. it calls for $1.7 trillion in cuts. would also have other details and a summary of obtained by bloomberg that has $18 billion in cyber funding. also billions of dollars in savings from medicare over 10 years. savings and af $17 billion in savings in opiate related spending in 2019. lots of details in here. $18 billion for border wall construction. this is highlights from president trump's 2019 budget. stocks don't appear to be moving too much on that. the s&p 500 up 3%. with: let's check in "first word news." spike: interest rates may
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says the u.s. will post a higher deficit this year. mick mulvaney says lower deficits are possible over time because of sustained growth from tax cuts purity call deficits a dangerous idea but, it is the world we live in. british prime minister theresa may is in belfast where there is speculation about the deal about the northern ireland assembly. she visited the aerospace factory earlier today. she is meeting with ireland's prime minister. fell last year over the cost of renewable energy. in south africa, there are reports that jacob zuma has agreed to step down. that comes from a public broadcaster. the spokesperson denies the report. defied to step down once he was replaced. his nine years of office has been marred by scandal. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries.
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i'm taylor riggs. this is bloomberg. vonnie: a fascinating situation as the drama swirls around jacob zuma's future, trading weaker which mize stronger run which likely means the market -- means a stronger run which likely means the markets will be stronger. nejra: bouncing back today after the worst week for stocks in two years. investors getting a reprieve. equities around the world are seeing stoxx 600 up 1%. volatilityuntary -- subsiding as well. there was a four-year high inmate -- amid concerns that the fed might raise rates. with us to talk about this is andrew milligan with standard life investments limited.
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we are down one and two basis points. we have details coming through from president trump is a budget. -- trump's budget. will that beas -- a reduction in selloff equities? there is a lot of fiscal news. the republicans were meant to be a party that like fiscal restraints. that isn't what we have been hearing. we will look at cpi numbers. two, itast month or could be a factor. inflation is expected to remain restrained. that should limit how high bond yields can eventually go. the relationship between mattress -- metrics and bonds
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is,. -- is strong. corporate profits can go up. a decentould be up for rise in 2018 valuations and their more attractive. some are buying thinking that dementias will globally dominate. nejra: one thing because jitters was a view that we might get a faster pace of tightening because of rising inflation than what was expected. are we likely to see any kind of selloff continue? a long way to go for many central-bank feelings that the selloff in markets would affect the economy. usually sell us have to be larger, and we have to be thinking 20% or more.
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this is also on consumer feedback and confidence. the central bankers have been giving hints in the last couple of days that they are seeing this as a technical market correction. the fed move three times this year and whether it is four times will go back to the fiscal surge we are seeing from the trump administration currently and how quickly that feeds back and whether it is going down too far, too quickly. are you selling any liquidity difficulties in your funds as plans call of? -- up? i am not seeing any liquidity problems recently. someweek, there may be
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more. the chinese new year is approaching later this week and large parts of asia will be shutting down. we will be entering a. it period that it could be down. vonnie: does anything look unsafe to you personally? andrew: i think a lot of financial assets have to be thought out carefully against expectkdrop of what we and the degree of selling. region or say any one market is more or less safe than another. investors feel like they have to raise cash. it is not what they would necessarily prefer to sell. we have to look back at the fundamentals which look good and the technical flows and selling which dominated last week.
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there is not one particular part of the market -- if there is one thing that we learn, we saw positions based on the assumption that low levels of volatility or the are dangerous and that will be related and investors need to be careful going into that area. going back to the basics for cash flow, is that sufficient to drive equity prices? we think it is. do your homework about that. nejra: thank you to andrew milligan from stood at. standard life investments limited. view from thee a white house and the announcement of resident trump's -- president atmp's mandatory spending
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11:00. let's go back to kevin. it is not likely congress will react to this after congress passed its own budget. trying toyou're understand what all of the budget proposals mean, essentially it is, the budget last week was an indicator in terms of funding levels for different agencies and the more money and agency is allocated, the more it will enforce its rights -- an agency is allocated, the more it will enforce its rights. it showcases what the priority is. the largest portion of this is that the budget request calls for $716 billion for defense spending.
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it includes a 2.6% pay raise for troops. that will clearly be what the white house focuses in on, saying this is a military first budget and line with troops and this is part of their priority. we should note and caution that of ais much rhetoric document rather than policy. vonnie: when you say rhetoric setting, do we have more about what the priorities are legislatively over the next year? kevin: yes and no. we just saw the infrastructure plan. the white house will meet with some republicans later today. part of this budget proposal does include about $200 billion in funding for infrastructure. another big item is the 17 billion dollars allocated for opioid addiction funding and $18 billion from the wall.
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that is a bit lower than what he had originally hoped for. vonnie: our thanks to kevin cirilli. nows check on the markets as we get the releases from washington. s&p 500 bouncing but in positive territory. it is up more than .5%. the dow jones industrial average of .8%. the 10 year yield has not moved, but it is at 2.83%. the vix today at 28. coming up, comcast and why it that are having a renewed bid for 20 for century fox. -- four 21st century fox. -- for twitter for century fox. this is bloomberg. ♪
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nejra: live from london, i'm nejra cehic. vonnie: and in new york, i'm vonnie quinn. this is "bloomberg markets." time for stock of the hour. for --smaller joining us now is taylor riggs. growth we are looking at others.up with heineken needs to going to markets where they don't have market share to grow that. today and saidt that when you look at profit margins, they look good going forward.
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they are going to expand 25 basis points. some analysts wanted 34 to 40 basis points. you are seeing headwind on the integration of that sale. they said, this is a huge business in a country that is difficult to work with. be related toould earnings this year. wait until the end of next year and we will see how that goes through. taking a breath today. when we look at the top beer heineken is at number two with 23. they produced the number three. they are growing the top line. what is the tone on the streets? are they willing to forgo margins in the near term to get
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the market share and topline growth that heineken is pursuing? taylor: none of the analysts said today was a big event. goldman sachs and jeffries had a by of a price market. they were a little disappointed that the company could not provide a long-term rage of operating profit going forward. they have to wait for the cfo to come back with details. they have topline growth in a wait and see to the end of the year. vonnie: taylor riggs with our stock of the hour. thank you for that. comcast is said to be mulling another bid, coming after an initial offer was turned down with a deal with disney. joining us is the bloomberg intelligence director. we got the news comcast had made theyh higher offer than offer that came from disney.
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how will shareholders react now that this is public? >> they are going to be a very credible bitter. they have -- bidder. rupert murdoch and 21st century fox prefers the disney deal for two reasons. one, they believe it has less regulatory risk than a comcast deal. comcast isn't the most well loved company in washington, d.c., given some of the recent battles. and maybe more importantly, rupert murdoch would prefer to own disney shares here he and his family will be the largest owner of the walt disney company. he likes his position in that hump any better than he would in fox or comcast. would -- company better than he would and fox or comcast. vonnie: is there a price at
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which they cannot ignore the comcast did? and $8 billion is different. >> i suspect they will. they are going to wait on the at&t time warner court battle. that will set the tone. comcast to stick around and really be a player in this transaction. family atrts and the comcast is comfortable doing larger deals. for the same reason disney wants more contentt, get and international exposure. those are the same reasons comcast would want to buy twitter for century fox. what are the other potential targets for comcast? paul: there aren't too many more things of size. viacom is still trying to figure
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out what to do. sherry redstone is putting those companies together. that would be the other asset of size out there. sony also has a big movie studio that might be of interest to a buyer, although sony says a are not looking to sell. this is certainly one if you want to make double down in content and go direct to consumers, you can never have too much content. the assets from 21st century fox are attractive. vonnie: this could get interesting. paul sweeney, thank you. nejra: it is time for the bloomberg business flash. glitch is halting delivery of the ap neil. indigo airlines says it suffered three engine shutdowns. whitney has replaced some of the
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engines. a private equity firm and a dutch pension fund are making a joint bid for a chemicals unit. that is according to the financial times. it is said that the fund would be a minority: investor. -investor. blackstone sold the waldorf. they may be able to own it again. blackstone has had talks about bidding for waldorf. it is being overseen by china's government. that is your business flash. vonnie: still ahead, we are in south africa where the embattled presidency may be nearing its end. this is bloomberg. ♪
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♪ live from new york, i'm vonnie quinn. nejra: and from london, i'm nejra cehic. this is "bloomberg markets." it is a critical moment for south africa. the african national congress party is discussion whether it will ask president jacob zuma to resign. the broadcasting corporation had reported he agreed to step down, but a spokesman for the president denied it. joining us from cape town is a south african ego reporter. reporter. are we going to see him step down today? >> there has been a lot of speculation as to whether the meeting underway by the making -- rulinglling body
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body and what will happen. what we do know is that the deputy president succeeded the hady's leader and yesterday nelson commemorating mandela from prison. he made it clear that all details will be finalized in today's meetings. we have seen the won rally in today's session. what can we expect over the next few days in terms of market reaction if he does resign? >> you are quite right. currency thaten a has surged. it started when the deputy president was elected the leader. assuming the market is liking him and possible new president
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of the country, he has spearheaded a campaign saying that the anc will fight corruption on state owned companies. it will claw back some of the support that the ansi has lost with the election since winning power in 1994. we will just have to wait and see how the markets will react once the decision has been announced. politically, what kind of support does jacob zuma have and what repercussions will there be if he resigned? >> one can't deny that the president seems to have a stronghold in the anc. arenow some of the members very much supportive of president jacob zuma. opposition parties came out and the next don't trust
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state president because he was part of the anc that defended resident jacob zuma's scandal -marked tenure. it shows a deep division not only in the anc but the national assembly as well. we will have to wait and see if there is a stalemate or whether the leaders in the party have a meeting of the minds in terms of is in the's exit. vonnie: what kind of repercussions what it have on the leadership if zuma did resign? into more of aet coalition arrangement with another party? what is clear as that he is keen to step up to the plate and step in as the head of state in the interim. the country is set to go to national elections in 2019. opposition parties have said
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they want to bring forward a motion of no confidence that they lodged with the national assembly that was possibly scheduled for february 22. b nationalists have been given -- the nationals have been given until tuesday whether the motion will be heard or not. nejra: and cape town for us, think you. we are 30 minutes away from the european equity close. we are seeing indices rebound by 1.7% gains. it rebounded after the worst week in two years. this is bloomberg. ♪
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anda: 11:00 new york midnight in hong kong, there are about 30 minutes left in the equity trading day in europe. from bloomberg's european headquarters, i bear chase am na
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cehic. vonnie: and from new york, i vonnie quinn. this is the european close on "bloomberg markets." ♪ nejra: euro the top stories we're covering from the bloomberg and around the world. europe, butnd in u.s. shares are off their highs as investors focused on the inflation outlook and rates. presidentt insight on trump's infrastructure and budget plans from jim messina, former deputy white house chief of staff under president obama. and preparing for post-brexit britain. we see what the u.k. secretary of state for wales about plans to deepen trading ties with the u.s. we are just over 30 minutes away from the start of european trading. let's have a look at where equities are right now. you can see there's a lot of green if we look a

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