Skip to main content

tv   Bloomberg Markets European Close  Bloomberg  February 12, 2018 11:00am-12:00pm EST

11:00 am
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 across the regional picture here on wn go. the dax see gains of
11:01 am
and the cac 40 in france up 1.5%. the ftse 100 higher as well. really we are in the green here after the worst week for european equities in two years. if we switch it up and take a deeper dive on the stoxx 600 and see what is happening in terms of the industry groups, it is green across the wheel. seeing every industry group gaining here with a rebound in crude in today's session as well. telecom following closely. on the downside in terms of underperformance but still gaining his real estate and utilities. really it is a breath to this rebound in europe as well as the headline index level. if we take a look at what is happening in the credit spaces, there have been a lot of questions as to how far this route that sort of started in equities following concerns of what is happening in the bond markets could spread through credit and emerging markets in
11:02 am
other parts of the investment space. high-yield's widening here. you can take a look at that at g #btv 7826. finally we were talking about south africa with our reporter out in cape town and iran has been gaining today on that potential prospect of zuma stepping down. trader still bracing for volatility for rand swings as zuma enters the endgame here. i'm looking at one week volatility on the rant and that has been spiking. abigail: we still have a rebound rally on our hands. major averages on this monday are trading higher. we have the dow, s&p 500, and the nasdaq up a half a percent or more. with hugews last week volatility of the biggest weekly declines. the rebound rally losing a bit of steam. the s&p 500 had been up 1.4% and
11:03 am
now up less than half a percent. take a look at the russell 2000 and the small-cap index had been higher as well and now reversing lower. the s&p 500 look at many futures overnight to see the volatility, something we are familiar with after last week's up and down. the question is whether the dip will last. overnight the futures were higher, up 1.4%. almost lower just moments ago and now higher by about 4/10 of 1%. the question is whether this will continue. the piece of this is certainly the technicals. they have been a big piece of the selling action. this is g #btv 4176. jonathan at m camp partners says the question is whether or not this will turn out to be of the bottom. this is the russell 2000. last week it did real technical damage, dropping below its 200 day moving average.
11:04 am
the 50 day moving average is starting to around down. that is how the sellers are really taking control. the bottom we have seen over the last recent years -- there's one in august that led to a big rebound rally back in october as well. is this a rebound rally or not? this is more to me like a breakdown in the making. time will tell, but that certainly could be a question. one spot where we do have thength and some solid buy dip action is industrial names. if we look at caterpillar and u.s. deals, healthy gains here after president trump did finally revealed his infrastructure plan, a 53 page how $1.5that details trillion will be invested in bridges, airports, roads, and other plays on infrastructure. nejra: thanks so much, abigail. markets remain on shaky ground even though we are seeing this rebound in europe following last week's tumultuous move in equities. joining us now is mark gilbert,
11:05 am
call this for bloomberg gadfly. -- columnist for "bloomberg gadfly." if you actually strip out what happens in january, how bad is this actually looked? down 1.3% or one point 5% on the u.s. major stock markets and the nasdaq is actually up for the year. similar for europe, if you took away january, you have been asleep all the way through january and will not be worried about this. it actually surged in january. it is kind of oversold. it actually went through that in janeway, but if you take away january again, looking ok. we are back sort of that neutral levels. nejra: it is one of the big reasons for the selloff and it was the bond markets and concerns about inflation picking up more than people are expecting and how the fed reacts to that.
11:06 am
does that mean we actually could see the selloff get a lot worse or does it mean that now the fears about inflation are so well telegraphed that actually we are going to see a rebound? mark: if it is concern about inflation, it's the best you have ever seen. this is not 2007. obligations and all that. it's not that super concern we saw when banks look at the wrong allen sheet and realize their neighbors have the same toxic kohl's in the market is basically petrified. it's about when they collapse. it is not that scenario at all. inflation is dead. takeve seen central banks their foot off the accelerator, but no one is stopping on the brakes yet even though the fed is raising interest rates. this has to be one of the most well flagged, well advertised ships and policy that the markets have ever seen. you have seen some selloff, but we are seeing it kind of gyrating around.
11:07 am
we are not seeing a sustained selloff. if you took january out, you would not be concerned about this. vonnie: it depends on what you look at. if you look at forward pe, the last time it bottom around 15 or 15.5, a great chart shows this. if we were to meet that same level, and s&p would actually drop another 8% from where it is now. mark: if you look at the fundamentals and the economic forecast for growth for europe and the u.s., they have been taking up all year. the background here is generally quite favorable for the economic outlook. that is exactly why central banks feel they can take their foot off the accelerator. it's a nascent economic recovery. it's not fairly and trucks yet and that is why we are not seeing them tightening policy by as much as you would expect to see in this kind of stock market
11:08 am
environment. our things over done a bit? given the economic ou backdrop and outlook for central bank policy, it would seem that way. vonnie: you have to ask the question of why are not ten-year deals higher? we have great pretty lost occasions on growth globally over the next year. -- for cost occasions on growth globally over the next year. we have an infrastructure plan that may or may not see the light of day and oil prices are low. there's so much to be said for higher rates. why aren't we seeing them? mark: because the balance sheet support is still there from the central banks. the fed is not tricky its balance sheet yes. t. -- shrinking its balance sheet yet. until you see the balance sheets shrinkage, you have a cap on yields. there is a buyer of last resort's if you are still in the market and still out there, and
11:09 am
still holding those treasuries. ecb is still holding. takenyou see that support away, there is a cap for yields . nejra: given that we have what is extraordinary support, if the selloff was to get a lot worse, i kept asking people about the powell put. our central banks in a position to step in and help given where rates are right now? mark: qb forever. that is a phrase that is going to come into play if we do see the selloff worsen. qe forever. that is there in the toolbox, always available. the fed has raised interest rates and has some to cut as well, but we are ways away from talking about that. in terms of the expander armory of its from its available for the central banks, qe is a permanent feature of the landscape. the powell put is still an available option if this were to
11:10 am
develop it to anything that threatens the global economic recovery. we are ways away from that, but those tools are still available and that toolbox is now expanded to include quantitative easing going forward. nejra: we talked equities a government bonds, but credit, we have got to mention that. have we seen any signs of stress? mark: the default rates are historically low. moody's forecast says the default rate actually declines. if interest rates were to rise in a shocking way, you would see those zombie funds revive themselves, but at the moment, does not look that for credit. nejra: mark gilbert, thank you so much for joining us. a go on column at gad the bloomberg. vonnie: let's take a look at the first word news. courtney donohoe has more. courtney: president trump may struggle with that promise to spend $1.5 trillion to fix the
11:11 am
countries crippling infrastructure. funding would be used to spur state and local governments and the private sector to come up with the rest of the money. democrats call that "bait and switch." in south africa, the fate of president jacob zuma is likely to be sealed at a meeting of the african natural congress top leadership. he has defied pressure to step down. his nine years in office have been marred by scandal. his spokesperson denied a report that he has already agreed to quit. the senate begins a rare debate on immigration today. at stake is the fate of the so-called dreamers, the young undocumented immigrant that faced deportation. democrats and some republicans say they want to help them and president trump says he will, too. in exchange, he wants money to build the wall on the border and significant limits to immigration.
11:12 am
london city airport has been closed after the discovery of an undisclosed world war ii bomb. carriers including british airways and city jet were forced to cancel flights and the airport is expected to reopen tomorrow. global news 24 hours a day powered by 2700 journalists and analysts in more than 120 countries. i'm courtney donohoe. this is bloomberg. vonnie: coming up, license to send. as president trump releases budget and infrastructure plans, formerk to jim messina, chief of deputy staff under president obama. this is bloomberg. ♪
11:13 am
11:14 am
nejra: live from london, i am nejra cehic with the european close minutes away.
11:15 am
vonnie: in new york, i am vonnie quinn. president trump is discussing his just released infrastructure plan was state local leaders at the white house now as we await the official release of his 2019 budget. we did get a look from the white house. it called for $1 trillion in cuts the mandatory spending. ,e are joined by jim messina former white house deputy chief of staff under president obama. he is also now advising the tories in britain. thanks for joining. talk to us about this infrastructure plan and the details. $200 billion in federal aid and ever thing lance on public-private partnerships and the people at the white house right now, governors and state leaders. jim: it was really a big moment for trump. this is the one bill that a bunch of us have been calling on him to launch a year ago. this is something that could get bipartisan support and is incredibly needed in the united states. we have over $5 trillion of underfunded infrastructure needs.
11:16 am
instead what we got today was kind of typical trump. it was a tweet and a press ofease, but $200 billion federal funding is barely more than we are funding now and it localhe state and governments and private investors to do the rest of the $1.5 trillion. members of both parties have come out this morning and said is this it? vonnie: you would think that he would need more people at the white house. is this just the opening for ay? will be positive about this and they will bring in the private equity guys and the business people he is hoping to partner up with for public and private partnerships. how does this work and get implemented? jim: i was surprised by the optics of this event. i would add a job site and create jobs. instead it's a boring white house announcement.
11:17 am
the way this gets done is by funding to incentivize a bunch of the state and local governments to issue bonds to go out and finance it on their own. you really need the buy-in of the private sector. this is a bet on the private sector that they will come together and really fund this. all being said, there's a couple really good things here. he is streamlining the approval process to two years, which is a very welcome advance for people who watch some of these things get funded by the seven years in the premier process goes out for 10 years so i don't mean to criticize this entire thing. this is donald trump looking at the lowest approval ratings any president has ever had in this term and saying i've got to do something bipartisan here and infrastructure bill has been sitting here for a very long time. being that thing he could do. that is all it was today. it was a political statement and very little detail. jim, let's make a
11:18 am
seamless transition from president trump to prime minister theresa may an in the u.k.. she will outline her position on brexit this week. thrown that the eu has the prospects of that transition deal into doubt. there has been a lot of tory infighting. how does theresa may unite her party? jim: look, i think that is what you are going to see in the next few days. the prime minister is going to lay out very clearly what we need out of the next stage of negotiations. i think some of the back and forth with the eu is just a business deal negotiation. everyone on your show knows that the deal gets done in the end and the details and back-and-forth is not really that interesting unless it's the eu saying there's going to be chaos and people say this fighting inside the party. in the end, this thing is going
11:19 am
to happen and going to get done. the tory partyfy is to be very specific about how to get this done. i think that is what the prime minister has done and will continue to do. i think the speech coming up for her is very important. nejra: you say this is going to get done. are you talking about the transition deal in particular? if that does not get done before the end of march, that is one businesses start enacting their contingency plans, moving businesses and jobs out of the yo u.k.? jim: there's real impetus on both sides. as you know, i worked for four or five presidents and prime ministers and other european countries so i know this negotiation very well. it's of everyone's best interest to have a seamless transition and to get a transition time that makes sense. the eu has been very specific about this as has the u.k. i think it's going to get done. it's a both sides best interest to get it done. vonnie: what about the idea of
11:20 am
the possibility of another referendum gaining traction? why is prime mr. theresa may so against the idea? jim: as you know, i worked for the anti--- vonnie: talk about a cliffhanger. do we have jim in san francisco? no, unfortunately. we will have to come back to the question of why theresa may does not want another referendum. perhaps we can ask our next cairns.lan you will be talking about trade between wales, the european union, and the united states. this is bloomberg. ♪
11:21 am
11:22 am
nejra: live from london conveyor chain pitch with the european --
11:23 am
live from london, i am they are chai they are chain which with the european close minutes away. to expand its information technology services. the prize is a 32% premium. general dynamics would assume $2.8 billion worth of debt. blackstone group sold waldo first doria to anbang insurance. now the firm may get the chance to on the landmark again. according to people family with the matter, blackstone has talks about bidding for the waldorf and other anbang assets. the sale is being overseen by china's government. broadcom has lined up one of the biggest debt commitments ever to fund its proposed $121 billion takeover of qualcomm. 12 lenders have agreed to provide $100 billion worth of credit facility and bonds affiliated with silver lake and
11:24 am
cbc capital will provide $6 billion to convertible notes. qualcomm seems poised to reject broadcom's offer all the same. in italy, the high-speed train operator had a surprise takeover bid from a new york investment firm and called it a vote of confidence. the ceo spoke with bloomberg tv. >> i'm not pessimistic at all. it means that somebody coming from the united states with a huge amount of money that they believe in italy. vonnie: it accepted the $2.4 billion offer last week. that is the latest bloomberg business flash. let's get a check on u.s. stocks now. we are two hours into the session and holding onto those gains. we are adding to them. the s&p 500 up 9/10 of 1%. the dow is 1.1% higher. no lack of volatility again today. at 27.32s lower now
11:25 am
and we are seeing those yields grind higher. and the the 10 year two-year is at 2.07%. nejra: let's take a look at where european markets are trading as we head to the close. we are seeing that rebound in europe and the stoxx 600 has been gaining more than 1% after the worst week in two years last week. broad-based gains when it comes to the regional benchmark. the dax leading the gains up 1.7%. you've also seen broad-based gains when it comes to industry groups on the stoxx 600. all that gaining on europe's equity benchmark. fx has been a little more quiet. we have seen the euro pretty much unchanged, but it's up 2/10 of a percent. eurosterling is something you want to keep an eye on. it's a big week for brexit and you are seeing the pound weakening against the euro. also off against the dollar now,
11:26 am
down 1/10 of a percent. to the fixed income space, we have seen yields edge higher, particularly on the 10-year gilt yield and we are pretty much unchanged on the 10-year bund yield right now. the 10-year gilt yield up almost three basis points to 1.6%. this is bloomberg. ♪ we use our phones and computers the same way these days.
11:27 am
11:28 am
so why do we pay to have a phone connected when we're already paying for internet? shouldn't it all just be one thing? that's why xfinity mobile comes with your internet. you can get 5 lines of talk and text included at no extra cost. so all you pay for is data. choose by the gig or unlimited. and now, get a $200 prepaid card when you buy an iphone.
11:29 am
it's a new kind of network designed to save you money. call, visit, or go to nejra: from bloomberg's european headquarters in london, i am nejra cehic. equities finishing up the day in european trading and after two weeks and then deep red and a
11:30 am
two-week selloff that has a race the annual dance for european equities and took germany's benchmark it correction, we have seen a rebound at the close to the. gains across many of the regional benchmarks with a lot of them, most of them in fact, trading more than 1% higher. the dax closing 1.7% higher. we are seeing gains of more than 1.5% on the cac 40. both the core and the periphery really have been a broad-based rally if you look across the region. if you look at what is happening with the industry groups on the stoxx 600, if we take a deep dive in the grr function on the bloomberg, overall the stoxx 600 gaining more than 1% at the close. every industry group an agreement led by commodity group producers up top. with thete stocks industry groups, but even they have gained more than 5/10 of a percent. really we are seeing breath to this rally today.
11:31 am
take a look at what is happening in the fx space here. it has been quiet here with the euro flat earlier, but it is higher against the dollar by some 2/10 of a percent. at76 is where we are looking euro. the euro-dollar is the most traded currency pair. take a look at what is happening in the fixed income space as well. we have seen yields generally move higher with the 10 years on the sovereigns. the 10 years was up by five basis points and we are higher by two basis points on the 10 year yield. we saw this quite a bit higher after that hawkish hold from the bank of england. 1.59%-year gilt yield at and as you look at the european markets. vonnie: over here in the united states, we are looking at yields that might give us a sense of direction as to where we are going to go over the next week. this week is crucial. it has been 10 years since we
11:32 am
had three consecutive weeks of equities lower and bond yields higher. we are starting with bond yields higher but not equities lower could equities are higher as well today. the two years at 2.08 is also rising. we have a to 10 spread of 77 basis points and eyes quite light in comparison to where we have been the last several weeks. you can see money moving into the end. crude oil is back below $60 a barrel. that will be interesting when it comes to cpi inflation data on wednesday. lower oil prices are going to have an impact with that data. looking at other pieces of data and saying that owners of oer is what we should look at wednesday. stephen engle under saying that it's more immediate and may not be as distorted as the cpi. let's take a very quick look at wn for world markets. in latin america markets of a
11:33 am
mixed. some lower and some higher and very definitely in the green in the united states. north america and canada even more green. nejra: let's check in on the bloomberg first word news. courtney donohoe has more from new york. courtney: the trump administration is signaling a policy change on north korea. vice president mike pence says the u.s. is ready to an in talks on kim jong-un's nuclear weapons program. according to "the washington post," pence and south korea's president agreed to pursue dialogue with the north during talks at the winter olympics. 10 says the u.s. will keep putting pressure on north korea. more problems for embattled movie producer harvey weinstein. foryork state has to 10 creating a hostile work environment that allegedly included pervasive sexual harassment, intimidation, and discrimination. that can make it tougher for weinstein to sell his studio. many of the allegations are without merit is what his lawyer
11:34 am
said. investigator's are china figure out why a passenger jet crashed not long after taking off from moscow. people on board were killed. the plane belonged to a regional carrier and was on flight to the city of north. both flight data and cockpit reporters have been found. theresa may is in belfast where there is speculation about a deal to break the deadlock over the northern ireland assembly. may visited in aerospace factory earlier today and is meeting later with ireland's prime minister. now northern ireland's assembly fell last year over talks of renewable energy initiatives. global news 24 hours a day powered by 2700 journalists and analysts in more than 120 countries. i'm courtney donohoe. this is bloomberg. vonnie: british prime minister theresa may is trying to forge tory unity on brexit policy. the conservatives are launching
11:35 am
public brainstorming called the roadmap to brexit wherein key figures in the government and party will make addresses discussing their ideas for leaving the european union. cairns, now is alun secretary of state for wales. it should be noted he was appointed why david cameron so pre-theresa may. i'm wondering where the government's stand. you are in a difficult position. you are not necessarily for brexit, but you have to play along. alun: we voted in the referendum as the united kingdom. nikkeind the voted to leave the union. we will work for something that works for the whole part of the u.k. and the european union. we want this special partnership. part of my reason city in new york today is about using the new establishment of the u.k. board of trade to ensure that we
11:36 am
are seeking new investment opportunities. attracteeking to investment and to the u.k. to ensure that every part of the u.k. benefits from the new opportunities as we leave the european union. andie: that is great definitely the tory party line, but welsh people are not necessarily full throttle when it comes to support for brexit and the process. wise theresa may against another referendum? alun: there's a awful lot of noise out there at the moment. there has been a referendum and we have an obligation to deliver on that referendum. if you look at exactly what is happening and investment, to the coming to the u.k., it was stronger than was uplift in the last quarter and we are determined to deliver this smooth transition. you heard jim mussina earlier on in the show talking about the deals. no one predicted we would get such a positive deal at the european council and our focus now is getting a transition agreement arranged and
11:37 am
negotiations do carry lots of productions and commentary out there, but the prime minister is absolutely focused on delivering implementation and that is what much of these speeches will look like from cabinet colleagues. vonnie: the withdrawal bill is currently in the house of lords. they are seeking legislative consent from wales and scotland. how are you going to win over the first minister of wales? alun: that's a good point. there are differences and we are different political parties. we are delivering a smooth transition that works for every part of the u.k. and ultimately we can believe we will win over they support of the welsh government. prime ministers and northern ireland today and that is a major positive step. we've not yet got a deal come about we hope we will. eu deal, we want to get the support of the welsh government. i'm working closely with the first minister and i think we
11:38 am
can get there. nejra: it is nejra cehic in london. do you think there is a charge of a constitutional crisis over this bill if they do not approve it? alun: i think we are focusing on getting the letters of consent motion that we mentioned a moment ago. it's only by ongoing relationships that we can get to that. i've had expenses in the past of taking bills to the house of commons and parliament in general where and again it was predicted i wa would not get agreements by the welsh government, but by active consideration and imagination, we will get to the outcome. it is in the interest of wales and every other part of the u.k. that brexit is a success as it is in the interest of the european union. now we focus on the new opportunities, the cable and of trade has been reestablished for the first time in 200 years. it demonstrates that we want to be a global britain leading and free trade. are youow optimistic
11:39 am
that the u.k. will get this transitional deal by the end of march, which is when businesses say they need it otherwise they start implementing their contingency plans? alun: businesses in the u.k. rightly say they need it and that is why the promised are highlighted this as a priority for her. it is also true that businesses in europe say they need this transitional plan as well. our supply chains are pretty complicated. and theomplex economy interrelationship between the european union and the u.k., it's the right thing for europe and the u.k. that is why am optimistic that we will get this implementation. of course what we would really like out of that is the opportunity to start negotiating free-trade agreements around the world during that time. at the moment i can be here and talk about the opportunity a free trade agreements, but we cannot talk about the details surrounding the. vonnie: it must be hugely frustrating. very, veryabsolutely difficult to have any kind of serious talks with counterparts
11:40 am
around the world. also, what about wales? wales is going to suffer more than the rest of the united kingdom as is scotland if this all eventually does happen, for which there is not a roadmap yet by the way. alun: for scotland and wales and northern ireland, the success of the u.k. economy is fund mental. vonnie: they want guarantees immediately. they do not want to wait and see what gdp growth is like in five years time. alun: 80% of output out of wales goes to the case on the basis that the u.k. economy is growing, so will wales. isthe u.k. economy growing, scotland will as well. the prime minister is determined to make sure that brexit works for every part of the u.k. rather than anyone sector or geographic part. this is about getting a deal that works for all parts of the united kingdom. vonnie: you have a wonderful lapel pin of the united states in britain. how many bilateral trade
11:41 am
agreements will be u.k. have to make? alun: that's the exciting opportunity because we are determined to be global leaders and free trade. the culture between the u.k. and the u.s. lingwood twice is pretty tight. on that basis, we want to explore the opportunity positively for both nations. we are also talking in very preliminary scoping the scotians as to what -- discussions as to what could be opportunities with other nations. we've got that agreement with the european union, but how much further can we go there after? these are the exciting plans and the new opportunities that come about from leaving the european union. i do have to ask first -- who's going to win? alun: i was there on saturday when england sadly beat wales. i think the odds are in england's favor at the moment. vonnie: i disagree with both of your scenarios. nejra: i'm glad we brought it back to wales.
11:42 am
i might be a london now, but i did spend most of my first 18 years growing up in cardiff. i do remember the night of brexit that it was really clearly wales that did want to vote to leave. the majority of wales and some areas in the south. what do you think it would take to get jones on board? alun: we are actively negotiating with some scenarios out there that we are speculating around. we are working to get reassurance that this is a powers will turn from the european union from where the best sit. we want to protect the integrity of the u.k. market. at the same time, we want to respect the devolution settlement. the first minister is highlighting concerns with the powers are where he believes they should be sitting in cardiff and belfast. we can demonstrate that the frameworks at the moment is the european union with the
11:43 am
framework around 28 nations. when we leave the u.k., we need a framework that works for every part of the u.k.. i'm optimistic we can get there. there's a lot of confidence in the process because we have gone systematically through the new areas of legislation together and i think that by further work that we get to that position where they will provide letters of consent motions. nothing is guaranteed until we get the final vote on the floor of the welsh assembly, but i'm optimistic we will get there. vonnie: congratulations on your work in united states and on behalf of oils. that is alun cairns. let's get a check now on the markets as we touch to an half hours into the trading day were not quite. we did see stocks bounce around a little bit earlier, but they are firmly higher now. the s&p 500 up 1%. deals news helping out there with s&p 500 best performer right now is cfra.
11:44 am
the dow is up 280 points. we are firmly off those lows set last week. nasdaq is up 1.3%. put a pin in it. the 10 year yield is that 2.85% and rising ever so slowly. this is bloomberg. ♪
11:45 am
11:46 am
nejra: live from london, i'm nejra cehic. vonnie: i vonnie quinn and this is the european close on "bloomberg markets." president trump releasing his 2019 budget proposal a little while ago. the blueprint calls for cutting a trillion dollars from entitlement programs like medicare. and it's looking for billions, $18 billion specifically to
11:47 am
build a border wall. we are joined now by michael mckee, bloomberg's economics and policy correspondent. you cannot get an image of the president saying i like a little bit of that. michael: like a chinese menu. vonnie: is there anything that will emerge from this proposal? michael: maybe a few little things. i've been doing this for four years and every president budget is always dead on arrival on capitol hill because the president proposes and congress disposes. they reached a two-year budget agreement that basically already set their priorities. the president is coming late to this and they do not have much time to take that into consideration. there are a couple of areas where you might see some presidential guidance. some of the areas in defense, he embraces the $716 billion in defense spending that congress agreed to. the idea of a larger navy has been a trump initiative. congress looks like it might go along with that.
11:48 am
he wants $23 billion for border security and $18 billion would go to the wall. republicans will probably try to push that. whether they can get that through the democrats or not remains to be seen. then there are changes in medicare and medicaid. the budget calls for cutting medicare significantly, $237 million and $1.7 trillion in entitlement spending cuts. those won't be adopted, but some parts of medicare they would like to adjust come including being able to negotiate for prescription drugs, they might be some aspects of the trunk budget that to get incorporated into -- trump budget that to get incorporated into law. vonnie: the plan that got released today is not balanced within 10 years. that has always been a tenant of republicanism. michael: they talked about balancing the budget for decades and when they had the opportunity, they have cut taxes and blown out the budget deficit. you cannot take them seriously in that regard, but this is the first time a republican
11:49 am
president in my memory has ever submitted an unbalanced budget. even if they are not going to do it, they give lip service to the idea. vonnie: michael mckee, thank you very much for that perspective. 40 years -- i'm not sure he's been doing it for quite 40 years. time now for our stock of the hour. shares of airbus are lower as the plane said it's a 20 year a 20 yearlowed -- jets are flawed. joining us with more now is taylor riggs. this is deadly serious. taylor: it is an this is another setback for the company. they experienced other problems as well. what investors are frustrated with his airbus in recent months has come out and said we are past that and feel really good and that we hit the snag last week. what's interesting is that it's a narrowbody jet and does not have the big alert that the big
11:50 am
a30 superjumbo has, but it's much more profitable. when we look at the share price going back a year, airbus has underperformed relative to blowingoing probably because of the snacks they keep hitting. it was supposed to be their new fuel-efficient model. they have been in this horse race with boeing. this is really important. vonnie: airbus is trying a deal further a3 80's. does that offset the bad news about these faulty engines in terms of stock price at least? taylor: you would hope. we came in this morning and the a3 80 news was the big news. the key is to look at the profitability and the a320s are more important. we showed the orders of these narrowbody jets. they fell last year, but they
11:51 am
have been increasing and there are more orders than the wide-body jets. what seems to be key is looking at the profitability that they get from the narrowbody jets, which makes it more important than a 380 deal. vonnie: taylor riggs, thank you. airbus down 1.2% now and france. nejra: coming up, it's battle of the charts. ise.ious metal mala why did gold go missing in last week's equity selloffs? that charts next. this is bloomberg. ♪
11:52 am
11:53 am
nejra: it is time now for our global battle of the charts where we take a look at some of the most telling charts of the day and what they mean for investors. as always, you can access these charts on the bloomberg i running the function featured at the bottom of your screen. kicking things off his ed ludlow. ed: why did haven assets like
11:54 am
gold not rally when we hit that equity market selloff last week? you can see the yellow line is s&p 500 and the blue bars are gold etf holdings. investor selling off, losing $1 billion of value. it's about liquidity. etf investors are selling gold to offset their losses on stock markets. it's not about safety. it's all about cash. why? investors need to answer margin calls on one position. assets like gold in the swiss franc are a bit susceptible to markets like that. the thing about gold is that historically it declines less and then comes back somewhat. gold is up 6/10 of 1% that had a weekly lost last week of one point 62%. gold canthe role that play when we get the markets we saw last week. g #btv 75 760 nejra. nejra: a vonnie, what have you
11:55 am
got? vonnie: hated or love it, the underdogs on top. that's the lyrics from a $.50 song. it is not the real curtis jackson, but you can always pretend. finally had his trade pay off and he paid $.50 for 50,000 vix options and saw a huge spike up and volatility last week and got to cash and a little bit. he was adamant about paying $.50 on a fixed number of contracts. according to macro risk advisors, it's because whoever one way large income earning portfolios of risk assets and was used to hedge against the downturn. it is not quite clear how much of this was profits, but it was a $200 million winning bet for this particular bet. unfortunately it was not the real 50 cent. maybe it was. nejra: that is cool. you almost made me with that,
11:56 am
but ed, it's time to party like it's your birthday. you are the winner. [laughter] vonnie: coming up, here's the picture for the dow, s&p 500, the vix, and 30 year treasury's. we are higher for stocks and lower for the vix and a little bit higher in yields as well. stay tuned. "bloomberg markets" continues. this is bloomberg. ♪
11:57 am
11:58 am
11:59 am
mark: i'm mark crumpton with first word news. president trump's budget for next year, fiscal year 2019, was delivered to the house budget committee today. the president is asking for
12:00 pm
billions in new spending to build a border wall and fight opioid abuse. the budget estimate the federal trillion. about $1 angela merkel is defying critics in her own party. she says she is determined to serve another full-term. merkel is facing a backlash following last week's coalition agreement. she sold out to the social democrats in order to extend her 12 years in office. a week of conferences is get aid to kuwait to rebuild iraq after years of fighting the islamic state. authorities estimate iraq needs more than $88 billion to restore the country. among the hardest hit areas is muzzle, which iraqi forces aided by a u.s. led coalition recaptured in july. the united nations estimates 40,000 homes need to be rebuilt in muzzle. emergency crews outside


info Stream Only

Uploaded by TV Archive on