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tv   Bloomberg Markets Americas  Bloomberg  February 21, 2018 12:00pm-12:30pm EST

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ban the assault style rifle used to kill 17 people and their parkland school last week. they told the students and parents waiting for them that they are fighting to protect all students. president trump will hold a listening session about school shootings today and meet with parents, teachers, and students affected by the shooting last week and the shootings in columbine, colorado and newtown, connecticut. the president is a strong supporter of gun rights but the white house says he is willing to listen to gun control proposals. hispresident is attacking predecessor and suggesting he should have done more to prevent russia election meddling. the president said "why didn't obama is something about the meddling?" he took a swipe at his attorney general. during the 2016 campaign, president obama called out russia for political interference but much less was
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known about it and followed up by expelling 35 russian diplomat's suspected of being intelligence officers peered theresa may said her country is appalled by the ongoing violence in the eastern region of syria. stop to the a syrian government attacks on civilians and called out bashar al-assad's biggest supporters. >> not just about the syrian government but his backers and we call on all of the backers, including russia, to make sure stopsiolent -- violence and people in need of help are given help. >> she says the u.k. is working with the united nations to help get humanitarian aid to the area and that president charles on is preventing many of the -- bashar al-assad is preventing many from leaving to get medical help.
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global news 24 hours a day, powered by more than 2700 journalist and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. in new yorks noon at 5:00 p.m. in london and 1:00 a.m. in hong kong. i am vonnie quinn. shery: i am shery ahn. welcome to bloomberg markets. ♪ shery: from bloomberg world headquarters in new york, here are the top stories on the bloomberg. fomc will release the january minutes from janet yellen's last meeting as fed chair, will then upgrade the plant to four hikes? j.p. morgan chase with a new address in the big apple, what the move means for employees in the tri-state area. we will dive into thing stocks through the eyes of the --fang
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stocks in the eyes -- vonnie: taylor riggs with us halfway into the trading day and what is happening with stocks? , alor: mostly green broad-based rally, returning to green after a losing day yesterday. nasdaq 100, large-cap tech stocks are outperforming and small caps outperforming. a broad-based rally. sector, we are charting the s&p tech relative to the utilities index, that is an white. -- in white. outperformed and relative to the blue come s&p 500 -- outperformed and relative to the blue, s&p 500. the general market, i am watching advanced auto parts, up
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10%, even within conservative guidance from management with analysts optimistic, saying they should see sales growth in line with the industry and watch out for the margin expansion, one of the key analysts looking at that stock, up more than 11%. vonnie: thank you. shery: investors narrowing their focus for signs of policymakers what they could be targeting three rate hikes. minneapolis fed president neel kashkari the addition further to the fomc. >> we debate each word change in the statement and further is intended to say continuing the current path we are on. that is the debate we have been having. shery: joining us from minneapolis following the interview is michael mckee.
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what else should we be watching in the fomc minutes? >> a key question is what the fed members think of the stimulus coming on the fiscal side of the economy, not just the tax cuts but additional government spending. vonnie quinn those plans were -- are the tax-cut concern it will drive the economy and -- at a faster place and if it appears to be the read on wall street, we could see a significant market reaction. vonnie: when will be no more? only so much we learn from the fomc minutes because only so much data we have. we have learned more from the data since the meeting? usyes, as neel kashkari told , it will take months before there is a clear view of what will be happening in the economy.
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he looked at the 2.9% rise in average hourly earnings as a one-month blip because there are technical reasons it could go down next month and he wants to be certain it will be a case of higher inflation from faster growth. he said we should let inflation come to us. that will be the view of most people on the committee, not that they want inflation but further evidence in the data that it is happening. shery: the white house released their economic report. is there anything else we should know about where the minister asian plans distant -- administration plans to spend the money when it comes to fiscal stimulus? >> a lot will go into military readiness and a certain amount into defense contracts which will take time to play out. on domestic spending side, it will be interesting to see where the money goes and how fast it goes. there is a lot of money in the
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budget for disaster rebuilding in florida and texas and in the west where the wildfires were. that money will go to the economy quickly later this year and it could be that we see faster growth and it does generate a little inflation. the question is -- will it be the kind that is lasting and will be live through it or will they take it into account? september is when they probably will make a decision on the fourth interest rate move. the markets will probably price things one way or the other long before that. shery: thank you and great interview with neel kashkari. vonnie: for more on what to watch and the fomc meetings today let's bring in michael gapen. another arm of barclays has downgraded the u.s. to less attractive when it comes to equities. what is the overall thinking on economic growth and the outlook
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for the health of the u.s. economy and barclays? >> the outlook is constructive when you consider we are getting a double dose of fiscal stimulus and the tax-cut package coming in year end and the bipartisan budget act of 2018. it will gradually bring in a lot more fiscal spending. billion ining $70 additional spending this year and up to $180 billion next year. that bodes well for the growth outlook. i would agree that the issue will be when the fed thinks about moving from three hikes to four hikes. march is due soon but later in the year you could get the message. shery: we will see financial conditions tightening as the effects of the tax cuts fade away as we go into next year. how much of a risk is there of a hard landing for the u.s. economy? ,> i think the risk is growing
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you are putting a tremendous amount of fiscal stimulus in flight when the unemployment rate at 4% and the fed is starting to normalize policy and financial markets are reacting in a way that financial conditions are starting to tighten. bringing in $2 trillion in stimulus over a 10 year horizon and frontloading a lot of that risks a boom-bust cycle and risk is rising over time. we do not see the results today but the further into 2018 and 2019, that is a risk that may play out. --nie: what do you remake think of the repricing of treasuries and the rise in yields? >> when you put this much stimulus in play and when the unemployment rate is 4%, markets are looking at this and saying it will create a teflon feel to the u.s. economy. it should be durable and resistant to external shocks or even mild anti-trade policy,
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which means market should have a higher degree -- a higher tendency around where the fed funds rate cap is going. it should insulate us and keep the and employment rate going bring the fed into action and that is what markets are pricing. shery: the dollar has coupled that's the coupled -- can we look at the yield for guidance on where the dollar is going? , a viewou can point to that monetary policy outside the u.s. may take a swing toward normalization later this year, less about divergence and policies and more about normalizing at different speeds. the other factor to consider is that we and others believe the external accounts in the u.s. will weaken quite a bit. the federal deficit will rise to over one trillion in our forecast next year and the trade balance showed widen the current account deficit should increase. the dollar may be reacting to
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that. a dichotomy with what you may expect, fiscal deficits and trade deficits generally are associated with a stronger dollar but not this time around. these reasons are a factor in that. forward, jerome powell will be all over the minutes, more so than he has been up to now. what is the risk or probability we see a hot dish -- hawkish fed chair? >> you will not see it in the minutes today? . maybe a week from friday in the report to congress. the risk will rise in june and september. it is too soon to prejudge the outcome. as the tax stimulus and federal spending kicks in later this year. and if the unemployment rate is going lower, they may roll into the june meeting and hike or in the september meeting and hike and guide markets towards for
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hikes -- four hikes. shery: will there be more concerned with undershooting or overshooting inflation and what does it mean for the risk outlook? >> the way we hear it from many people on the committee is that they fear a substantial undershooting in the unemployment. if that is going down towards 3% over time, you will hear growing concerned that it will result in a non-balance in financial market prices or asset market valuations, or in actual inflation. from my point of view it is about where the unemployment rate is going and it will ultimately manifest itself in a risk somewhere else, either financial markets or inflation. vonnie: what are you looking for growth wise in 2018? >> close to 3% this year is reasonable. it will be hard for the federal government to spend the money
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they want to under the budget deal and they may not get it in in time under what they want but the momentum from my perspective it's towards a 3% over the course of this year. vonnie: thanks to michael gapen. coming up, j.p. morgan chase is getting a new headquarters, why the building plans will be a monument to the u.s.'s largest bank but their longtime ceo. this is bloomberg. ♪
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♪ shery: this is bloomberg markets. i am shery ahn. vonnie: i am vonnie quinn. j.p. morgan chase will look
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different, the largest u.s. bank planning to consolidate its new york city opposites and 15,000 workers into a new headquarters on park avenue. the announcement came this morning in a joint statement between jamie dimon and the mayor of new york. it will be the first major project to take it vantage of the midtown east rezoning plan. what is happening? old is turning to new but they are consolidating. is it the same address? >> >> we will see what number they take but the same spot as they are tearing down their current headquarters built in the 1950's, 1960's and was meant for a much smaller staff. they will build it up, a sleek new modern tower about twice the size. this will be about getting all of their people into one spot.
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they have that building and the old bear stearns building with a couple of other around park and madison. it will be a major project. they will tear down the building starting next year and it will be five years of construction. if you work for j.p. morgan, you will be spread out into other offices for the next few years but have a new tower to come back to your -- tower to come back to. shery: when it finishes, what will it look like? bigger, how many more people can fit? will the other offices close and move people to this headquarters? >> they will do some consolidation from many other buildings they have. it will be twice the size in terms of square feet. right now, the building that currently have they said was originally designed for 3500 people and they have more in there for now.
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they will build one that can hold 15,000. a major increase in capacity, it will be more efficient and much taller. vonnie: what this have happened anyway, or does this mean that jpmorgan is bullish on new york as the financial center of the universe? >> in some ways it is jamie dimon leaving a present for his successor, it will be done about the time he plans to step down five years from now. jamie dimon is a native new yorker and this commits them to new york in a big way. they were always somewhat committed to that. they have a large workforce here. it does base them here. in a big way. they have a lot of history here. shery: coming at a time they have a reason owning at least midtown manhattan -- zoning of
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the east midtown manhattan. >> you have to have air rights to build higher. the new plan allows a company like j.p. morgan to buy air right from landmark buildings who will not use it because you do not want to tear down a landmark building. those rightsbuy and use it to build higher in their building which allows them to go from what is a 50 story building right now to something more 70, 75 stories. vonnie: who will be next? part of it is about perception and the attitude that you put out. if jpmorgan puts out a new attitude in two years or three years, other banks will have to follow? >> jpmorgan is that a good position to do it as they are the most profitable bank and have room to do that. goldman moved a few years ago and have a brand-new headquarters.
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i would not imagine the moving anytime soon. there has been rumblings about morgan stanley at times square and they have a couple of different buildings but no definitive plans. there are a number of banks that have a big presence here, citigroup is spread out over buildings. you could see more consolidation. dying to know about the decor but that is down the line. thank you to michael moore. fang stocks through the eyes of the futures market. that is next. ♪
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♪ >> you are watching bloomberg markets. time to drive futures where we
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look into the futures market through the charts and today we look at the fangs, the stocks have been a driver of the volatility up and down. -- .5% ofoughly 21st the nasdaq 100 and a big driver for the markets and it is a matter of sentiments when they tried higher or fall, the broader markets tend to follow on risk on or risk off. fangs doing well today, outperforming. during the two-week stock selloff a few weeks ago, the francine lacqua drop in a big -- the fang stocks drop in a big way and now slightly down from the peak. a lot of volatility for the fang stocks. 6708, a one-year chart of the maryland index -- merrill lynch index. an area of congestion.
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dip, welle the overbought. maybe suggesting this will go to the downside. when we connect this to the nasdaq 100 futures seen as a proxy for the fangs, we will see a similar chart. an uptrend over the last year into the congestion. over the last year, a gain of 20% but the congestion could result in a pullback. -- gainingctive way even if there is near-term volatility. partner at silver pine capital and a derivatives expert outlined a long-term trade idea. in the money and call spread on the december futures contract where you buy the 6650 strike calls and sell
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the december 6700 strike call. typically to a 57% return so long as that futures towards the end of the year, options is about 6700. thank you to david at silver pine capital for that idea. we are charting futures. vonnie: great segment. you can see that segment on social media in a little bit. let's look at the markets, stocks in the green but the s&p 500 up 3/10 of 1%. dow jones industrial average up 3/10 of 1% as well with the vix calmer. dollar index is getting closer to the 90 mark. 107.67.dollar-yen at all of the action -- the 10 year
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at 2.89, down a few basis points from its high but elevated. 210 spread at 63 basis points. at 61.65, down $.14. opec and russia considering extending their agreement. coming up, do not miss etf iq, spaceng on all of the etf and industry data from bloomberg intelligence. and analysis. that is next. this is bloomberg. ♪
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♪ >> i am alix steel and this is bloomberg etf iq where we focus on the assess come risks, access, risks, rewards of the etf. ♪ some critics say the structure has not been adequately tested and we show you why. volatility has been the buzzword of 2018 and we go to the first volatility etf. warren buffett likes to pick stocks with a moat around their business, do you want to mimic his philosophy? whether you

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