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tv   Bloomberg Markets Americas  Bloomberg  June 25, 2018 1:00pm-3:30pm EDT

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bloodshed in the country. representatives including those from the u.s., europe, and middle east met to discuss the possible formation of a constitutional committee to help bring peace. been failedhat has attempts to mediate talks between the syrian government and opposition groups. protesters into ron -- tehran stormed the grand bazaar. the demonstrations are being staged in anger over a ron's -- iran's troubles. our been reported confrontations between protesters and police in front of the parliament. north korea has decided to skip one of its symbolic and politically charged dates on its national calendar, the anti-u.s. lateral. it was designed to strengthen was a national holiday on july 27. north korea has soft and its criticism of the u.s. in recent months in state media is also
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have said to reported on the june 12 summit between kim jong-un and president trump, the first time many north koreans would have ever seen mr. trump. wildfires across northern california force thousands to flee their homes. california for street and fire officials say major blazes continue to expand in route -- threatenas and hundreds of businesses. no reports of injuries or deaths. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. it is 1:00 p.m. in new york, 6:00 p.m. in london, and 1:00 a.m. in hong kong. i'm vonnie quinn. shery: and i'm shery ahn. welcome to the mark." -- "bloomberg markets."
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vonnie: from world head quarters in new york, here are the top stories. u.s. stocks at three-week lows as trade stress rattles global equity. davidson hitting the road morning it is shifting production out of the u.s. to avoid tariffs. the changing landscape of the financial district. we speak with mary ann tighe, ceo of cb. she will talk as companies trade in office spaces. breaking news on toys "r" us. who left in 2013 is said to be getting a bid to restart the chain. it went to hudson's bay and most recently to dortch advisors.
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aboutstarting to talk restarting the chain and he would have to win a bid. he is talking about several hundred retail locations. we'll talk more in a few moments. abigail doolittle is with us. we are half way into the day. take a look at the losses for major averages. down one .5% or more. the s&p 500 and nasdaq both on key for the worst days since early april and the nasdaq down for a third day in a row, the first time since april. the sellers taking control as trade tensions continue to increase. investors wonder what it means for the global economy and could it affect the u.s. corporate outlook. let's take a look at the technicals on the s&p 500.
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uptrend, well above moving averages, telling us buyers in control. this year, different story. moving through major averages and speaking to the uncertainty on the part of investors. today it hit down below the 100 day moving average in yellow. that is the 50 day and testing the 100 moving day in the blue. that tells us buyers are trying to step up and support the s&p 500, but the dow is below 200 day moving average. 500 sectors&p waiting to technology. let's look at the weakness for tech. the u.s. talking about limiting investments from china and perhaps other companies into u.s. technology. on this, the text index down 3.8%, getting hit by the likes of amd, mike brown, and in the -- macron, -- and nvidia.
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something interesting is happening. we have a stock selloff, but we have in the bloomberg cop were -- corporate outlook for the s&p 500, adding all-time high, $159. over the last five years, typically it has traded above that estimate. right now on uncertainty, we have s&p 500 trading below the corporate profit outlook for the s&p 500. investors signaling there is lots of uncertainty out there for sure. definitely. abigail doolittle, thank you. for more on today's market selloff, let's bring in bloomberg editor for the blog. is this all about trade tensions, or is it that we have seen record high for tech companies? >> this is all about trade tensions. this is specifically about investment issues regarding attentional use in a different
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matter. it is the way china is dealing with its own issues with regard to iran and reserve ratios that could play into this. the chart put out tells you everything you need to know. you have a market that does not have confidence in earnings going forward or at least in the earnings day powered because of the potential erosion you will get out of what is happening with the trade battle. vonnie: is it that the members are not on the same page or is it tears and retaliation? romaine: what you're seeing play out has less to do on the u.s. side and more about the potential retaliation you are seeing from chinese and potentially what we will see out of europe. we know what the u.s.'s position is. the big? to gether we were going capitulation on the chinese. the action they have taken is
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that they will not given any time soon and the fact that on the u.s. side we are considering going harder, definitely means the chinese probably will not give in. shery: what has changed? we have seen trade tensions and the markets weren't as bad. romaine: there was a lot of sense that this was rhetoric and that the u.s. had the upper hand and our trading hard nerves would give in demands or at least acquiesce to some extent. that does not appear to be the case and it has to be priced in. this is more than just about tariffs. this is about the companies currently invested in china that will deal with a lot of bureaucratic issues. it is about chinese investments that would have come into the u.s., which have dropped to nothing. a couple of years ago we had $53 billion in chinese bids coming into the u.s. market. last year, it was $9 million. this year, we are tracking below that.
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that is what people are reacting to. this a capitulation or could it be gay correction or worse? amaine: we have to look -- be correction or worse? romaine: we have to look at the outlook of what the companies are giving and how that is factoring in very positive outlook we are tom is not going on onehere -- we banked not be there. there may be a correction downward. abigail talked about support. what is supporting this market? the corporate buybacks are not going to be there until we get corporate earnings to the season. you're asking people to come into the market based on faith. i don't know if you will that between now and mid-july. shery: we had talked about small caps doing well. the rest falling today. we are not going to get the momentum coming from smaller companies anymore. romaine: today, there is no
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rotation. everything is down. there is no safety within equities. even large caps have rolled over. you look at amazon and apple. netflix was a teflon trade. it was down 4%. you mentioned small caps that was considered a safe haven. at least for today, people don't want it or you are seeing profit-taking and people saying let's wait a little bit and see how this plays out. maybe we wait to earnings seasons before we see a big bid. vonnie: is it strange? romaine: it is strange. forie: romaine, editor bloomberg's blog. thank you. we want to bring more on the breaking bloomberg school. haver toys "r" us ceo will a big bid to restart the chain along with other investors. it had been taken private and went to bankruptcy.
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he would have to win back ip in a bankruptcy auction. we welcome matt townsend. what are the likely chances that this happens? he has investors willing. is considered a longshot. this chain store liquidated months ago. part of the issue is you have to pick up the pieces. we are through the first half of the year, so christmas is a longshot to get the stores open. there is movement to save some part of the company at this point. he ran the company for seven years. we look at the introductory -- trajectory of the company and it was doing well under him. but when he left, it slid. shery: you said it was a longshot, right? getting all in order will be huge. why go about trying to do this? matt: the thing with toys "r" us
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is that everyone thought there was a viable business, it just had a lot of debt. that was the story of this company. it failed washy the debt. u.s. no longer has a national all the -- stores in malls. toys "r" us had six been dollars or $7 billion of sales in the united states each year. who is going to pick that up? a lot of investors see an opportunity to get some market share back. vonnie: during his tenure, it rose to $1 billion in sales and then private equity took over and everyone watched it degenerate. tore was a financial crisis deal with and other cyclical and secular factors. we always thought there was something there and that it was a shame and he left in 2013, and
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thought it could have been saved. matt: that is right. he left whether you was having differences with the private equity holders. -- whether he was having differences with the private equity holders. the different was that most people thought there should be a nationwide retailer, maybe not as big or as many stores, but reporting says several hundred stores when it filed for bankruptcy. believes there is some sort of future. vonnie: what kind of price tag would it take? matt: that is not something we found in our reporting. we reported the story that he has been talking about getting space if it comes to fruition. vonnie: maybe we will be playing in stores soon. shery: i miss those stories. thank you so much to matt townsend for the scoop on toys
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"r" us. davidson moving overseas. why the american icon is heading to europe, next. this is bloomberg. ♪
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shery: this is "bloomberg markets." i'm shery ahn. vonnie: and i'm vonnie quinn. harley davidson moving some motorcycle reduction overseas to dodge retaliatory tariffs. this move is an early sign of a possible trade war to both sides of the atlantic. joining us is the chief u.s. economics economist. is this the first of a wave of companies -- clearly they have their own issues separately?
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>> the question for these business managers is whether the restrictions will be a permanent fixture or just a passing fad that could be rolled back as early as the midterm elections or relatively soon. reorienting this light chain and workforce elsewhere around the globe is very expensive. some businesses if they have the capacity to move one to the other, they might do it. other businesses may simply just try to wait it out rather than take on expensive endeavors of reshaping supply chains. shery: shifting production will be costly, but the rationale here is that will still be better than producing in the u.s. and getting hit with tariffs. if businesses have that rational, are they moving more production overseas? carl: you will see some u.s. companies doing that to be
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competitive index row markets. you'll also see the converse and we have seen stories in that regard of plants moving back to u.s. soil or within the nafta zone. the problem is uncertainty. economic confidence and animal spirits have been a critical driver over the past two years. see somed finally to evidence of the spirits actually picking up production gains in the economy and stronger demand more broadly. we can squander that as quickly as that came about. theoretically, each of these is a one-time adjustment, right? we don't know when each company would make an adjustment or if any company will. these announcements haven't even happened yet. how on earth would you plan or read an economy or how our monetary policy makers supposed to know until you know what the
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companies do? carl: it is difficult for you have to watch and wait. jay powell alluded to this when he was speaking at the conference. he acknowledged there was concern about him -- among business contacts at the federal reserve. they are delaying hiring an investment on important decisions because they are unsure of what is happening on the trade front. he acknowledged it is not showing up in the reported data, that he is concerned that is coming soon. that is a telescope into the future as the australian sector bank governor mentioned at the same conference that this week the focal point will go into income and spending data and the feds. it will be a primary focus. instead, analysts will look to the confidence in sentiment metrics. things like tomorrow's consumer , you don'treport,
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order big-ticket items if you are worried about the outlook. even something like savings rate on friday will become more important than the inflation metric as we watch to see how to this.s respond same in the sentiment survey. we are hearing lots of households expressing concerns about tariffs and trade wars. broader senseheir of concern and we will have to see how it plays out. shery: thank you so much for that. our bloomberg economic chief. realg up, manhattan's estate maker worries firms are moving to hudson yard. we break down the state of real estate in new york city. this is bloomberg. ♪
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shery: this is "bloomberg
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markets." i'm shery ahn. vonnie: and i'm vonnie quinn. kkr,street firms like blackrock, and wells fargo are leaving the financial district and move along the west side rail yard. for more in the state of office leasing, let's bring in mary ann tighe. welcome. we love talking commercial real estate in the city. dying to know where we are standing pricewise. mary ann: as you lead with hudson yard, what we are seeing is a very dynamic market right now. last year was the second-highest level of leasing ever in new york, 28.5 million square feet. the peak was 30 million square feet. inare way ahead this year terms of leasing over last year. we may break the record. that said, everything has shifted on the island of
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manhattan area people are looking everywhere from the battery all the way up to what will soon be harlem. as a result of that, pricing in midtown has never recovered from its peak. whereas, the number one submarket for commercial markets in new york is midtown south. the space between 30th street and chamber street. downtown is at an all-time peak as well. what we are seeing is a shift in how people occupy space and also how they have come almost agnostic south of 59th street in manhattan as far as where they go. shery: i am surprised you say that. i would have thought the shift was down and west, given hudson yard and manhattan west. you are saying that is an all-encompassing move. is is that? mary ann: what driving that is the age of the building stock.
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i also think when you come from abroad, you come in and you get a few of the city as you come over the bridge or whatever they call it. when you look at the city, it looks like a 20th century city. but hudson yard and the world trade center and manhattan west, look like 21st century cities. vonnie: who is occupying these cities? is it tech companies? is financial occupation going down? mary ann: overall, yes, financial service occupancy which is still the number one occupier has not recovered from its 2007 peak. 470,000alking about folks. you think about 1.6 million office jobs in york -- new york. the growth is to your point
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exactly, happening in tech, media, or information based. spotify -- what year was it founded? recent timesal in to go to world trade center for 500,000 square feet. it is transformational. group m, founded in the late 1990's, moved in to three world trade center. these are technology companies. you will see large-scale financial service and everybody jokes today that all companies are digital. in six knots as a tech package, are using impact in new york? mary ann: yes, we are. all the as much as people say, roll with the punches because everyone he wants to be working at the center of the financial universe or creative universe. people are thinking hard. vonnie: how much of the money
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that is being spent is private equity money and how much is from revenues of companies themselves? mary ann: private equity as a whole represents relatively small amounts in the financial service area. inditex area, even their -- in the tech area, even there, it is a different equation. tighe: thank q2 mary ann ceo of cbr in new york. -- thank you to mary ann tighe. shery: stocks continue to plunge . nasdaq falling the most since april. tech taking up the most decline on the s&p 500 purring -- 500. this is bloomberg. ♪
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mark: i'm mark crumpton. here is "first word news. supreme court ordering the court to take a new look at the case of a florist to refuse to provide services for the mending of two when because of religious
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objection to same-sex marriage. the justices ordered today means the court will not rule on whether business owners can refuse on religious grounds comply with antidiscrimination laws that protect lgbt citizens. that is the same issue they passed in a recent ruling in favor of a colorado baker who also objected to same-sex marriage on religious grounds. turkey's high a look toward real board has declared president erdogan the winner of the presidential elections. authorities say more than 26 million of the roughly 15 million ballots were cast for president erdogan, meaning there will be no need for a second round runoff will. iran is suing the united states over the freezing of $2 billion of its assets, saying that blocking its funds is illegal. in 2016, the supreme court ruled that the asset of iran's central amonghould be estimated
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survivors and relatives in those killed in attacks in the u.s. a ,on-iran, -- blamed on iran including an attack in beirut. a california fire captain was shot and killed while responding to an explosion at a long beach retirement home. the second firefighter and a civilian were shot also. they are expected to survive. authorities leave a resident of leave a resident of the senior living facility began shooting at firefighters as they were searching the building. investigators are looking in to whether the shooter intentionally lowered them -- lured them to intentionally shoot them. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg.
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shery: live from bloomberg world headquarters in new york, i'm shery ahn. amanda: mliv from trenton, i'm amanda lang. -- and live from toronto, i'm amanda lang. president heard one is taking executive new powers following his election victory -- sunday.nd shares of campbell are hot as interest in buying the company. hopingeo elon musk is outside committees will help the electric carmaker make more model threes. let's start with a check of major averages. u.s. stocks faltering but the dow falling for the night -- of 10 days.n out
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we have heard harley davidson saying it will shift production outside the u.s.. the s&p falling 1.5% are the only sectors up our defense and tech. by reportsng hurt that the treasury department plans to curb chinese investment in tech equities. the nasdaq falling 2.3%. emerging markets getting beat lowestth them at the level since august. if you take a look at this chart, you can see while in em stocks down 4% this year, fixed income market counterparts are off to the worst start in history. the second panel is a correlation suggesting there could be more pain ahead for emerging-market equities. we'll get into this more. one reason is the dollars strength and debt in those
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markets has some nervous about what comes next. it is what it looks like for the u.s. first canadian dollar. -- versus the canadian dollar. we see a flight to safety most days. one tech group and it is interesting to see semiconductors leading the declines on the nasdaq. it is a look at semiconductor index overtime. you can see the last few sessions that. today is brutal. justossible reason is not that the u.s. would take, but possible retaliation to close off the impertinent chinese market to companies. we are seeing that priced into those stocks. shery: a lot of strength for emerging markets, turkey has seen relations as the longest ther getting reelection in presidential and parliamentary elections. president erdogan hailed the result as a win for democracy. many investors worry that it
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will rain inflation. the fears wiping out earlier games as high as 2.1% in the lira. heretofore insight in what it means is we welcome morgan harting, senior portfolio manager for multi-as it income strategy at a be -- ab. we cannot ignore the broad market followed seen because of tensionanges -- trade between u.s. and its allies what does this mean for emerging markets? what is clear is that is not giving the incoming president the benefit of the doubt. they are worried about the central bank and the ability to address higher inflation and fiscal spending. seen this year from the chart you showed earlier is
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the read through from concerns argentina onand to broader emerging markets. it is particularly heavy in the morse indebted country -- and the most indebted country like argentina and turkey. the equity and ask -- index is higher in those in china, taiwan. one we see is a after thed moved overall sentiment. back to turkey, is that a market that might be appealing to investors when em is falling out of favor, or is that economy into much trouble? morgan: it could become more appealing because the interest rates the tenure at 17% are some of the highest in the world. to the expense -- extent that they talk about inflation, that could it attract interest rate
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for investors and equity investors. in the meantime, the important thing to focus on be the new cabinet and a listing of the state of emergency which might be some concerns about institutional strength. shery: e.m. has seen depreciation of the dollar, but as trade tensions continue, what can we expect for the dollar and its impact on emerging markets? morgan: investors have been talking about this. the dollar has been appreciating versus emerging currencies and other g10 currencies. than 2013.ferent this is affecting all non-us countries. i think what we could find is an improvement in sentiment as the dollar stabilizes. i think we will have a heavy calendar between now and the u.s. election in terms of the by the president with regard to china. it will remain volatile. strategies that address that volatility are more diversified
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would be the way to approach emerging markets. in a longer structural way, will we see changes made for emerging markets? you look at harley davidson saying they will produce elsewhere. will they look at a low cost jurisdiction for that? morgan: what you're getting at is supply chains may actually countries like china towards places like perhaps vietnam or korea or japan or countries with better relations with united states. this is why it is important to be selective to be looking carefully at individual countries and individual companies. is important to recall that within china may be are alsoct, there attractive investments because the underlying demand in china remains quite strong and we are seeing some of the strongest earnings growth in china as we
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are around the world. shery: i was asking my colleague from our live blog about the trade battle being fought in many different funds. we thought small caps would be safe, but there is no rotation in the markets. are there any assets aside from cash that are safe at this point from the trade tensions? morgan: if we focus on companies that have more domestically oriented businesses, they would tend to do better. stephanie -- companies that have better relationship with u.s. could hold up better in the tensions. shery: morgan harting, thank you for your time today. month after campbell soup promises strategic review, a major player may be interested in the company. we will have the details next. this is bloomberg. ♪
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amanda: this is "bloomberg markets. i'm amanda lang in toronto. shery: and i'm shery ahn. campbell's soup may be having a bid to be bought. a tie up is giving shares age-old -- jolt. we are seeing reaction in the markets. is that because this could make sense? there this has been out terry craft believes they have to do something. they need another deal. we are starting to see names to go out, general mills, kellogg. you will see rumors about all
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these. the companies have struggled of it. there was a story in the near post saying it was interested in campbell's. there are some reason why campbell's is a tough acquisition target. there is inside ownership, family control. the family would want to have to want to do it. it is also small for craft. the market cap is $13 billion. people are trying to analyze something that may not be happening. on the analysis i have seen kraft, but if they were going to do it a target is seen as fairly weak would not be something investors would welcome. does that make sense? craig: just the size of campbell's is the question there. it was felt that kraft could
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take over and cut the cost. that is what they wanted to do. campbell's is a small company that has problems. there's also not a ton of international exposure. wantedlieve that kraft something overseas. need an m does kraft & a right now. togetherese guys got and the private equity firm got together with warren buffett and bought heinz and cut the cost and got margins up. two yearsought kraft later. there was a feeling that they want to combine companies and cut rather than organically grow sales. now it has been three years and the feeling is they need to do something to get back at reducing costs and reducing margins. that was a major stumble for them. amanda: canadians know the story well because what are the moves
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they did was pull out of the canadian processing market for tomatoes cut costs. a little bit of bad pr. in terms of what they might do, how much of an effect our trade wars on a company like this with international supply chains and input? mind rights top of now. food makers have been insulated to a certain extent. you take a look at campbell's which is mainly u.s.. kraft peasants in the trade war concerns it show up in the food. it is more and commodities. for packaged food, it has not showed up much to this point. you are right that the world has changed. whether that changes their thinking is a question going forward. shery: thank you so much for that. elon musk looking to on a promise to turn
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out 5000 model s sedans are weak i the end of this month. to do that, he has constructed a massive tent housing an assembly line will help you meet the goal. it has left industry officials baffled. stephen walsh is -- david walsh is with us now. you can never tell if elon musk is a genius kind of crazy. there is wicked analysis about constructing a production line like this. is it possible he can pull this off? david: they have been waiting for the first of the short-sellers to compare him to pt barnum for a number of reasons. he really opens up for it. iny have an assembly line the factory that has too much automation and didn't work as well as they thought. they had quality and productivity issues. they built an auto line under a tent to get back up to 5000 cars
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a week. it will be a real challenge. he has a week to get there. it is an all , built outdoors, recently put together. they were only in the first quarter they weren't even at 1000 cars a week. they have had weeks where they were up over 2000. we will see how they are when they report this. it will be a big challenge under the circumstances. it raises other questions as well. shery: doing all if the line is operational? david: he is saying it is a great line and they are getting it rolling. we will see just how operational and how many cars are getting now in a weeks time. -- weekly time. -- week's time. it means a lot for this company because the machine that builds
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it was supposed to be one of his big secrets. it was one of the things that was supposed to make electric cars profitable. at a minimum, we know the automation hasn't gotten working. apparentlys are running with more human hands on the machines. interviewing people and those who have reviewed production lines globally one was quoted as saying i wouldn't want to be a buyer of these cars, the implication being quality won't be there. is there a way to know if consumers can tell if this line is as good as it is supposed to be? david: anyone buying these cars -- anyone who is enthusiastic about tesla will take the car as soon as they can get one. a lot of people have said that the unwritten rule about any car was you never want to buy in the first model year. i would think consumers will be
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thinking that this time around because they had a lot of problems on the line before it was under a tent. now that they have had to redo it and move it outdoors, i would say they had to start from's grant or reengineer -- from scratch or reengineer, there are terms of how quickly they are going to get it started. it raises questions about every vehicle coming off the line. amanda: great to have you with us, david. up, saudi women take the wheels. the ban on women driving comes to an end. we will take a deeper look. shery: u.s. stocks off session lows, doll -- the dow falling. s&p 500 is lower. we have reports about the treasury department to curb chinese investment in technology terms.
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the nasdaq fallen for the third consecutive session. em currencies taking a beating. the turkish lira down after a short round. we had the turkey election reelecting president ertl on their. this is bloomberg. ♪ -- there. this is bloomberg. ♪
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>> that is streaming live on
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twitter. this is mark." i'm amanda lang -- "bloomberg markets." i'm amanda lang. shery: bloomberg economics saying this will change the constitution of the workforce because right now, only 20% of women in saudi arabia work. bloomberg economics think women driving will also mean war women working, and that could add $90 billion for economic output by 2030. that would be huge. amanda: in the u.s., the percentage in the labor force is 66 -- 56%. time for the bloomberg business flash. ukraine's biggest dealmaker says tariffs by the trump administration will eventually hurt u.s. consumers. the ceo discussed the long-term effects of the trade war today exclusively on bloomberg tv.
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>>e short term we benefit from tariffs but the price will production does. and a longer-term, u.s. consumers will have to pay for this. they will have to pay for the high price which means there less competitive internationally. carnival fell as much as 7% earlier today after the cruise liner cut its earnings forecast for the year. honorable blames the cut on fluctuating fuel prices in foreign exchange rates. profit expectations for the third quarter came up short. shares of the cruise line are down for the year. a weaker than expected outlook also dragged down industry peers. at&t's plan to transform to a media conglomerate continues to take shape. aey have agreed to buy business.
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viewing addresses allows at&t to be more competitive. at&t closed on an $85 billion deal to buy time warner. that is your business flash. shery: the market fall continues. tech shares leading the decline in the u.s., making up about half of the s&p 500's flop. facebook and apple down for three consecutive sessions. live from toronto and new york, this is bloomberg. ♪
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>> it is 2:00 p.m. in new york, 11:00 in san francisco, and 7:00 in hong kong. julia: i'm julia chatterly. julie: i'm julie hyman. welcome to "bloomberg markets."
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julia: we are live in new york over the next hour. here are the top stories we're covering. nasdaq havingthe its worst day since april as trade tensions hit equities. speaking of trade, china and europe say trade war could trickle a -- trigger a global recession. how serious is the threat. and the royal welcome, president trump due to meet making of jordan in a few moments. and in the meantime, checking on where the stocks are trading with abigail doolittle. >> here is the pullback for the major averages. declines for the dow, s&p 500 and nasdaq. the worst day since april for the s&p 500 and nasdaq as trade tensions continue to hit. and it is interesting to note
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that we just have this continue to risk off sense, especially for the dow, down right now. the week is young, but this is for the third week in a row. we will take a look at why it is underperforming. this has to do with the fang trade, this chart shows the selloff we are seeing for those stocks, which are lower on the day. here is the chart. and lots of volatility, both in k'gains and declines. this is its worst day since the middle of march. that was when facebook was down sharply on the data privacy fears. but i also want to make the point we have the fang down for the third day in a row. so the risk off is not out of the blue. it has been here for the third day, the worst slide since february, when we had volatility. julie: we were just looking at
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pictures of the president grading the king of jordan, who is visiting in washington, d.c. right now, going into the white house along with the first lady there. we will bring you any comments from their meeting together as we get them. now first word news with mark crumpton. --k: president trump julie: i think we're having some technical difficulty here with mark's microphone. we will bring him back in a moment. back to the markets. we want to bring in peter cecchini here with us from cantor fitzgerald. as we see the selloff going on. thank you for joining us. so you have been talking about this sort of false safe haven premise over the past several weeks. that we see money going to the
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russell 2000, for example, but that that is not really a safe place for people to be. we seem to be seeing that today, the russell 2000 selling off with everything else. peter: it is an extra convenient narrative. those companies tend to be domestically oriented when it comes to revenue streams. they will not be as affected by tariff concerns. ont applies to some extent its face, but when you dig deeper and you think about how small cap companies are positioned, they supply the large cap companies. and if you look at history, small cap companies are not isolated from global slowdowns. morect, they tend to be sensitive to them once the slowdowns actually begin to occur. julia: we have had a great run up. you look at february of this year, but on the whole we have a great chart to show it, actually come it has been volatile relative to the s&p 500. who was also a place of dollar
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strength, as well. what are we looking at as we go forward, particularly with the headlines that were talked about today, as far as the tech sector, which has come under pressure again today? it is at the epicenter. mark: i think so. as we look at sort of the small cap narrative and how it has been fallacious. we have been on the wrong side of this for a few weeks. and we also called a short trade in semiconductors as well, which we were on the wrong side of for a couple weeks, but it is doing nicely today and for the past couple days. with all that said, sometimes these things take time to revolve.that is because of -- to evolve. very early in the year we talked about small caps coming under pressure as rates began to rise. rates began to rise, and they did not come under pressure, and that is because of the safe haven narrative. i think what ends up happening, even though initially they are considered to be safe, people to pick up on the fact that over
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time they will start to record late. and tech is no different. a lot of companies under fire today that had been somewhat isolated, if you look at a historically, they are not a safe haven either, they are subject to the same forces as a lot of the industrials that have been beaten up. julie: let's go deeper into the trade perception today. as we see the selloff, which we have been talking about, it is now spreading. last week it was in pocket, like industrials, materials, those affected directly, with harley davidson being the example today. luke -- said maybe it is a , but in aup full-blown trade war nobody is safe. do you think that is accurate, or at least the perception right now? mark: i think that is well said. if you think about the drivers of global growth and what they have been over the past several years, not just this year, it is
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really the idea been emerging markets have taken the baton from developed companies. peter: we have been in 1% or 2% growth in the united states and europe and what has been driving growth is productivity and in emerging markets, innovation within those emerging markets. as emerging markets begin to slow, and they will, because what has happened is currencies come under pressure and central banks are forced to raise rates, which slows growth, which has a real impact on global growth. emerging markets make up 65% of global growth, so when we talk about the emerging markets lowdown being sort of meaningless with respect to the s&p 500, for example, that is simply not the case. they are too important over the long run. julia: china and europe both the that ultimately what we see as far as protections are a concern as far as the ending global growth -- denting global growth going forward. at what point does it go back to
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what you are saying, because it is true what you are talking about, the performance of small caps stocks, that is a classic late stage trade, which kind of had other things overriding what ordinarily would be a winning traded this point. peter: exactly right. and i am very careful not to get to bearish too early in the cycle, because you can be on the wrong side of that. cyclete stage, the late equity market rallies can be some of the most powerful, so you can get run over pretty severely if you are to bearish. the reason why we started frankly becoming more bearish of semi's and cyclical tech, is because they tend to roll over earlier and you can see it if you crunch the numbers. and it sort of makes sense. ex thatd all this cap has pulled forward growth and demand and they typically are
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early in the value chain so they roll over first. julie: at some point, it have to run out a little bit. i have a chart that illustrates what you are talking about. take a look at the bloomberg. this looking at the s&p 500, the lowest line, the blue line. purpl. stocksi in and you had a short call on semi's on the 18, then we had a then in early, june we saw a peek and really roll over. so when you crunch the numbers and look at history, what does tend to be the time lag before the rollover and the tech rollover, and to the rest of the market? peter: it can be six months to a year. now, that is a univariate analysis, so i am taking everything else out and i am looking at some in isolation, not considering growth paradigm, whatever the growth paradigm might happen to be, i am not
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considering rates and all these other factors. but in the specific case, because we have the rate rising off what i think is a forever low, they will never get lower than the negative rates we had and we are no longer in a secular bull market for bonds, i think that will actually pull the cycle forward a little bit, so i'm probably on the shorter end of that, maybe 6-9 months. it is really a traders market. you have to be careful if you are short, make sure you are covering your shorts in a timely fashion, do not get too negative too early. julia: how worried you think china is. ? they have cut their reserve requirement, we have seen the yuan weaken as well. how important is this at this moment as well? this is showing, you can see the blue and yellow line, domestic and chinese cnh, the offshore as well, both weakening versus the dollar. mark: it is very cash peter: it is very important.
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i came into the are not particularly concerned with the meltdown in china. that was not my conrn. i was much more concerned with short rate volatility. but now it is interesting, because they cut the reserve ratio for a reason. i believe it is now 15.5, down from well over 22, i think at the beginning of the year it was over 22%. the reason they are doing that is because they do not want companies to expand the kind of pick up and falls that they would otherwise experience. part of what they will use the lower reserve requirement to do tofund debt to equity swaps banks. so banks will take equity in the bad loans to companies to whom they have lent, rather than let them go bust or refinance them, so they will own the companies and in a result they need headroom in the reserve requirement in order to let them do that. it is a double-edged sword.
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good thing from the standpoint it does not allow financial collapse to occur, but from a signal in perspective it means that chinese authorities are obviously concerned. julie: they are concerned -- concerns. peter: so it appears. trade concerns exacerbate this, but i think these dynamics in terms of default, we saw them picking up last year and a day of worsened this year because of trade concerns. julie: ok. we will leave it there. are you staying with us? peter cecchini, thank you. [laughter] julie: we will check back in with mark crumpton to get to first word news. campaign former chairman for donald trump appealing -- while he waits on federal charges. paul manafort also appealing in order -- an order of a civil suit. federal judge amy berman jackson
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revoked paul manafort's house arrest earlier this month. and ethiopian state media reporting that the net is rates has sent fbi investigators to look at the saturday's deadly attack on a rally for the country's new prime minister. witnesses said a man wearing a police uniform tried to hurl a grenade at this stage after the prime minister addressed the tens of thousands in attendance. two people were killed and more than 150 others injured. over 30 arrests have been made. and turkish president erdogan has dominated the country's politics for the past 15 years. that will continue as he extends his role and takes on sweeping new powers. the high alert scoreboard has declared him the winner of the dual votes in the presidential and parliamentary elections. nato allies have expressed concerns about the country's setbacks in democracy and human rights. but today, the nato
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secretary-general congratulated erdogan for his victory and to the turkish people for the high turnout. for nato,s key ally for many reasons, not least because of its strategic geographic location bordering russia and in the black sea, but also iraq and syria to the south, and turkey has been very important in the fight against terrorism. has spokenso said he about nato's core values to officials in turkey. european union lawmakers have uploaded for launching action against hungary over allegations that the prime minister's government is breaching the bloc's fundamental values. they voted today to allow triggering of seven over concerns about judicial independence, media freedoms and the harsher treatment of migrants.
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the procedure could result in the prime minister losing e.u. voting rights. global news, 24 hours a day on air and on tictoc, powered by over 2700 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. julia: thank you. coming up, we take a closer look at how president trump is planning to restrict china and other countries from investing in u.s. tech firms. we are live in washington for the latest. this is bloomberg. ♪
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julia: this is "bloomberg markets." julie: trade tensions have been adding to pressure on risk
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assets, as we have been talking about. let's talk about the source of the trade tensions. joining us is jenny leonard, bloomberg trade reporter. tell us the latest on what bloomberg has learned about the u.s.'s plans to curb chinese investment. >> on friday, we will see that the treasury department is going to announce a framework to curb chinese investment in sectors that china has sought to to expand in its made in china 2025 program, including aerospace, new energy vehicles, this has been in the making for a long time. the u.s. trade representative's started their investigations into chinese intellectual property practices last august, so this is one of the responses that is part of that investigation. we already saw tariffs moving forward, and that is sort of the other part that is coming. the president has said that he wants to announce that by june 30, so we will see that on friday.
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julia: so the treasury secretary pushing back to some degree that china will be specifically targeted, but really any country looking to make benefit from intellectual property from the united states. to have any sense of who could be in the firing line, other than china, if it is a broad policy? jenny: so that tweet was a little bit odd, given the entire 301 investigation into chinese practices of course targets china, with the tariffs and investment restrictions. other actors, according to sources, could potentially be russia, or north korea, but there is just not that same kind of investment that would be targeted here. said that is something that we are chasing. as the treasury secretary wanted to defendant himself, it is a setback that the restrictions are moving forward. and for months he has tried to take a softer approach with china to find a negotiated solution to try to figure out
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some kind that would, some kind of deal that would maybe even not put in place the tariffs. now we are moving forward with the tariffs. so this is a setback. we see it as him defending himself, and of course chasing whatever else is going on behind the scenes. julia: clearly, a fluid situation. julie: any sense of what is at stake here? what the chinese investment in u.s. companies has been, and also pending investments, right? so it is unclear if those will be affected. can we get our arms around the dollar amounts we are talking about? jenny: the pending investments, it is still unclear what the scope will be of this. it will become if implemented as we have reported, it will be not applied retroactively, so all the investments that are in place will not be undone. the chinese right now, the reaction from the chinese has been, from the president's top economic advisor, who met with the europeans, and they are kind
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of just teaming up, saying the u.s. is going to cause a recession for the global economy because they are moving forward with all of these protectionist steps and we are all just responding. why they are getting -- hearing from the european union that this resonates with them, is because we just put tariffs on the european union for steel and aluminum that were obviously not, i mean, capitol hill, the cabinet, the dod, there were a lot of people who said, do not move forward with this, including the e.u., and now the european union is starting to retaliate. so of course china's rhetoric is resonating with the world, because we are heading all of our allies -- hitting all of our allies. julia: i was reading an article on friday from the new york times, laying out some of the concerns of u.s. businesses saying, we have a problem here with the effective intimidation
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from the chinese. it was interesting and you understand from the administration's perspective that they feel ultimately something has to be done. oh, i had a good question, but the president is a speaking. let's listen in. president trump: you know, mexico holds people for four hours, five hours, and they are gone. we have people for five years or six years, and never leave. what we have is a simple. we want strong borders and we want no crime. strong borders and we want no crime. the democrats want open borders and they do not care about crime. i care about our borders. myself andbehalf of my people, thank you so much. president trump: he used the word humility, so i am very
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happy with that word. probably the nicest complementry have been given. the job you do is fantastic. yes, we spend a lot of money, but we spend a lot of money and a lot of places and people do not do the job that you do, so i want to thank you very much. thank you very much everybody. >> mr. president -- >> thank you, we are leaving. >> mr. president -- president trump: no, the executive order was great. it was something that i felt we had to do. we want children staying together. the law has been this way for a long time. you would understand it better than most, because of the great job you do in your country. there was fake news in the new york times. just the opposite, i wanted to sign that. i was saying yesterday, before the phony story, that i was very happy that i signed that. shows that wet
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are all talking about humanity, whether it is what you are doing in jordan or what we are doing here, the laws are obsolete, the laws are horrible in terms of security and taking care of people. president obama had a big problem. a lot of the pictures they used, i thought, i do not know what you guys did, but you used pictures from 2014. but the bush administration had the same, it is the same laws. they are a disaster. the laws have to be changed. whether it is north korea, or somebody different things like trade, we are taking care of a lot of problems that should've been taking care of over the years. one of the highest on the list is immigration and we have to change our laws, we have to make them sensible, and they came to see me last week and they said, we would like to hire 5000 more judges. 5000. have you ever heard of anything like that? judges.
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we are appointing 104 to five judges and everyone goes through the extreme vetting process. talking about 5000, where do you find 5000 people to be judges? and you know where it leads? it leads to a lot of other things. we want a system where when people come in illegally, they have to go out. and a very simple system that works. mexico holds people for four hours, two hours, and they are gone. yearse people for 5, 6 and they never leave. we want to have great immigration. we want strong borders and we want no crime. strong borders, we want no crime. the democrats want open borders and they do not care about crime, and they do not care about our military. i care about our military. that is what we want and that is what we're going to get. we are going to get it sooner than people think. thank you very much. thank you.
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>> make your way out, let's go. come on, let's go. >> thank you. president trump: thank you very much. [shouting] >> thank you. >> ok, let's go. we are leaving. president trump: we are doing very well in the middle east. >> thank you. >> wendy you want to release -- ? president trump: we are doing very well in the middle east. a a lot of progress has been made. and it really started with that into the horrible iran deal, that deal was a disaster. and things are a lot different since we ended that. thank you very much. >> ok, thank you. we are leaving now. thank you. let's go. julia: that was a quick question and answer with president trump and the king of jordan. and melania trump.
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just sitting and talking about immigration. the president saying we need a system where people who are entering illegally must leave. he felt compelled to make the executive order. jordan has huge experience with the refugee crisis, at least 10% of their population now syrian refugees. so interesting, that experience. but still with us, jenny leonard. let's go back to what we were talking about before we listened in to the president, that was the chinese and europeans and what they are discussing, just in the last 24 hours. interesting the suggestion that perhaps the chinese could look to buy more airbus aircraft. we have seen reaction and we continue to see the reaction from boeing, as the offset to that. so how alarmed is the administration on the prospect of not being supported by the european union. in fact, the european union
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looking like it is trying to get benefits from the relationship. weny: we have seen -- jenny: have seen it with japan and other allies. but i do not think this white house cares so much about the implications. we have heard leading up to this trade war we are in right now, we heard members of congress, we have heard industries like the agriculture sector, plead, saying, please do not do this because we will be the target of retaliation. and what they heard was, i am sorry. i know that you are in the target line, but that is not going to deter me from going forward and protecting our crown jewels. and you have seen the rhetoric over and over again. and the more hawkish side of the white house is winning the internal battles. that is why we are going forward with a this. they might acknowledge those things, but they do not care as much -- that is not deterring them. julie: that is an interesting
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point, because we have heard from a number of different industries and companies as well, harley davidson being the latest. we heard from daimler on the european side. and it is interesting, because this is a white house that has billed itself as a very business friendly, that was one of the main things behind the tax bill. it was not just about american consumers getting a tax cut, it was about businesses getting a tax cut and being a business from the environment, so what has been, you know with just the thank you for your input but we will do what we are going to do anyway? jenny: it contradicts itself a lot, right? we have seen gary cohn in his first interview after he left the white house saying, i am concerned about what we are doing on trade. it is offsetting all the benefits we are trying to get through tax reform. and you hear a lot of republicans on capitol hill say that, you have heard a lot of businesses say that. it is contradictory and it seems like the people who are
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advocating for a softer approach on anything on trade, they are just getting less and less. there are not many people left. if you have steve mnuchin on the one hand, he may have lost that battle internally, but now who else is there? larry could the is not there -- kudlow is not there right now and the other ones are not allowed enough. peter navarro, of course the ultimate decider in anything will be the president and we know that his stance is, i want tariffs and i do not like china, or i do not like china on trade. so we need to do something about that. if he is the ultimate decider, then i mean, yeah. julia: remember the sequencing. you have to understand perhaps that there is a short-term pain here for a longer-term gain, if it is about tackling the social property theft. it is a sequencing problem, as you rightly point out, managing
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the message is a top one. thank you for that, jenny leonard joining us from washington. julie: now we want to bring in one of our highlights from tictoc, a bloomberg's scoop casting light on the brexit vote that took place two years ago. >> the countdown clock -- >> two years ago as the world awaited results from the historic vote on european union membership, a statement came from nigel farage saying the campaign had probably failed. >> we spoke with nigel farage and he has given us this statement. turnout looks high and it looks like remain will edge it. >> then it political analyst came on with exit polls backing up nigel farage. >> we now expect the united kingdom will remain part of the european union. >> the predictions proved to be a stunningly wrong.
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-- simpson in in london. >> a market has been shocked in a big way. >> in the morning, one of the biggest currency wrapped. >> 82,000. >> than the results plummeted. trillions in asset values where wiped off of the books. but there were a few winners. as bloomberg reports, a small group of people had a secret advantage. hedge funds had hired at least six u.k. polling companies to serve and help them profit from the market tumult. pollsters stole advanced information about the vote, including exit polling data that would of been a legal for them to give to the public. favorite poster was involved. you can follow me on twitter at cam simpson news, and get all of
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your update at tictoc. julie: that was one of our highlights from tictoc, really important bloomberg scoop there that you can read about online. and now time for charting features with abigail doolittle. >> thank you. diving into the futures market to the charts. trade tensions increasing once again between the u.s. and china, so we will be taking a look at another way for investors to be prepared for another possible trade war. this is not new, considering trade tensions have been simmering for months, but on the possibility the u.s. may limit investments from other countries and u.s. tech, and a stocks selling off in a big way. take a look, even the russell 2000. the s&p 500 and russell 2000 all on pace for their worst days since april on these fears. and it is interesting to see russell 2000 selling off for a third day in a row, because of coarse this index, investors thought it was more insulated,
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but not so much. in fact, let's take a look at the difference between the s&p 500 and the russell 2000 on the year. you can view this chart using the gtv function in the bloomberg. it is a year-to-date chart. in blue, the s&p 500. the last time the s&p 500 all-time made was back in january after the tariffs were announced for washing machines. and then the two indexes correlated quite a bit. now a divergence with the russell 2000 up 7% on the year, s&p 500 up less than a percent on the year as investors think that the russell 2000, the small cap domestically based revenue index is perhaps protected. but take a look at the dip, maybe investors changing their tune. and to talk about that possibility, i want to bring in steve sosnick. last time you joined we were talking about small caps versus the s&p 500. are you surprised with today,
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especially with the russell 2000? >> this is one of those events where a lot of people were wondering when this would happen, when the ice would break. i think the heart of italy -- at a the harley davidson move was one that broke the camels back, because it became much more tangible, not so much a war of words. this is not the intended affect, moving jobs overseas. >> take a look at the way that you would recommend to investors to trade this. >> we discussed this last time i was on a we noted that the russell 2000 had been outperformed by the s&p 500 and the spread has narrowed a little bit, but i think that there is still room for the spread to come in further. the way we have it here, it is a 3-2 ratio chart. you would be selling russell, buying s&p futures, do it in a three-to ratio. so 1700 versus 2300. so you can see here that what we
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talked about, the spread was roughly a little bit above where it is now, and it has come off a little bit, but there is room for the gap to close. i am of the belief that the russell 2000, people have been using it as a flight to safety trade, which is perverse. >> mind-boggling. >> but the feeling that you alluded to, it is insulated from trade fears, it is a safe haven, a domestic safe even as opposed to an international stock, but you really cannot look for safety in a small cap index. that is why figured we can talk about the spread collapsing again. >> so that is a hedge trade, but for those who are bearish you are talking about the idea of buying up futures. take a look at that chart. and take a look at that. today, through the 50 day, hitting down on the 100 day moving average. >> we are hard against the 100 day moving average. we had a little bit of a bounce, off of the lows, but what i am
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saying is it triggers more particularly bearish and today is not the day to enter that trade because they are working against you. but somebody looking ahead, you could use -- there are options on the es mini. and you could purchase something around the 200 day moving average, which would allow you to basically collapse the spread into a bearish position, even if the spread titans, you would be -- tightens, you would be unhedged, but that is the disaster insurance. >> so not a total collapse. >> again, this is not a crash scenario, but you would be targeting lows around the 25-50 range. >> thank you again for your insight. back to you. julia: thank you. ok, first word news with mark crumpton. mark: the supreme court will not
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take on a new case on partisan redistricting, at least for now. the high court will instead said the dispute over to north carolina's heavily republican congressional map, back to a lower court. and in a similar ruling last week, justices declared wisconsin voters who sued over claims of gerrymandering, had not proven that they had the right to bring their case in court. justices did not address potential violations of voters constitutional rights. north and south korea discussing the relocation of the north's artillery from the border. prime minister lee spoke during a ceremony marking the 60th anniversary of the beginning of the korean war. reportsfirmed earlier that south korea meet the demand during a meeting with north korea hundred 14. military officers of the two koreas also agreed to fully restored their military hotline communication channels. italy is promising to do everything it can to help libya
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stumbles -- stem the flow of migrants. they're in syria minister insisted that new proposals have been made to create a file in my certification centers for would be refugees must be located, not in europe, but in libya. he also promised to help libyan authorities assume control to prevent migrants from leaving. and west virginia senator joe manchin may have saved the life of a colleague. says that the lawmaker performed the heimlich maneuver on missouri senator kay mccaskill when she began choking. it happened at a luncheon for senate democrats last week. the spokesperson says mansion was able to dislodge the blockage in her throat, but cracked one of her ribs in the process. a spokesperson says she is grateful.
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global news, 24 hours a day on air and on tictoc, powered by over 2700 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. julie: thank you. president trump may be slamming opec on twitter, but russia is continuing to ease anxiety on oil prices. we spoke with the russian oil minister to discuss the decision to boost output. >> the level is currently around to it or 50% and the division has been made to take it back to 100%, which means we would be adding around one million barrels per day of extra production. those countries that have the beential to do so would
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closer to one million barrels. >> when we sat down right after donald trump tweeted, and he tweeted again yesterday calling out opec, what is your response to the u.s. getting involved in opec? >> well, i mean, i would like to say that the united states is the largest consumer of crude oil, but at the same time it is one of the largest producers of crude oil. ere ares means that thr different views on the topic. it is a very good example of a country or of an area where consensus need to be found. when we look at the market situation, when we do our research, we take a global view, which means we study in whole countries in terms of their demands, in terms of their supply potential, and we look at the overall balance, the global balance. and afterwards, we make decisions. so when we talk about stabilizing the market, we mean
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that we stabilize it the benefit consumers and producers, not a single group, but both, because if we just work for one group like producers, we cannot achieve long-term stability and balance. so coming back to specific states, when we sat down -- dates, when we sat down again say that our proposal to start easing -- we have started to discuss that with partners, long before now. and after looking at it -- and we look at it months before that. >> i sat down with the minister yesterday and he said they are working on ways around sections for iran. are you helping iran on ways around sections? >> i think it is too early to say, because we have to wait and see what happens and how it happens. but talking about stations in general, of course we do not support this instrument and we
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think it is actually a very harmful and imaging instrument, not just to the countries it is imposed on, but for the global economy and for everybody involved in the process. it does no good for global stability, it does no good for energy security and stability in the emerging markets, and that is why we do not support such instruments and we would never do anything like that. julia: that was the russian oil minister speaking with annmarie hordern in vienna. let's give you a look at how the equity markets are performing. here is a picture of the s&p 500, not that and dow. the nasdaq right now the underperformer, but there is a whole range. the energy sector down 2.2%, materials under pressure by more than 2%, and the gain, the consumer staples utilities holding in the green. so it is a cyclical risk off, as you can see, and the u.s. tenure losing -- ten year losing two
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basis points. plenty more to come. this is bloomberg. ♪
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julia: this is "bloomberg markets." julie: time now for the stock of the hour. looking at gray television, surging today on the news it has agreed to purchase -- media. shares on pace for their biggest gain since september 2015. our columnist dave wilson joining us with more. it is not always the acquire rising. >> absolutely not. in this case it is about putting two companies together and getting two plus two sequel five. industry that has
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been consolidating for some time and it is clear now that gray want to be part of that process by buying raycom, becoming the third largest owner of stations in the u.s., and having coverage over 24% of tv viewers. julia: and in terms of -- julie: i was going to say, these are local tv stations, right? is that a profitable business? dave: it is. not just because of advertising, either. it is all about retransmission. if you are a cable company, if you are a satellite company, think about comcast and directv, you have to pay these stations for the right to carry their channels. and that is where the money is. if you look at greg, 31% of the revenue last year came from these retransmission fees. that is a revenue stream, you might say. go back a decade, it did not even exist. so it explains why it is that this particular area is so
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lucrative at this point. julia: great to have you, as always. and another spectacular tie. back to the markets, where stay for stocks since april. kevin, great to have you with us. we have been talking about the effective safe haven trades we have been talking about, the small caps, for a number of reasons like dollar strength, the regulation, tax beneficiaries, now we see some pressure. so is this a change in of risk position? >> i think it is perhaps safe to say that the markets got a little bit complacent over the last couple weeks. one of the things i like to watch is the correlation across the stocks in various industries, looking at the s&p 500 which is obviously the large-cap index, what we saw was the real life correlation across all of these stocks, reach its lowest point since the whole traded tensions thing blew up. that was last week.
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even as the market was declining, the market trading was idiosyncratic, which would be like owning small caps on the basis of a theme. so we have seen this correlation severs and again today, which is like baby in the bathwater type stuff. so in that sense, the story does not really, the story that would support one sector over another might not matter as much as just paring risk, as you suggest altogether. julie: we had the pboc cutting reference rate, and i have the chart on the terminal, you extrapolated the daily moves in the chinese currency versus the basket of currencies. now, when we look at the selloff today in stock, how much of it is trade concerned and how much of it is concern over chinese the evaluation, and -- de valuation, and can you separate the two of them? >> if you talk about the last
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week or so, i mean, today it is more the trade and also the restriction on capital with the -- the, you know, with the potentially restricting foreign ownership or purchases of the strategically sensitive u.s. companies. that is new. i also think news from harley davidson potentially needing to take manufacturing capacity out of the united states, that is also a bit of a warning shot. julia: this is real impact we are talking about, where before it was more like pontification. >> and symbolically powerful in the sense that harley davidson, you think of guys, you know, kind of making america great again types of guys with no helmet, cruising down the highway, and the fact that they are being apparently sufficiently impacted by the
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potential reprisals of donald trump's trade program to move -- to move production and potentially jobs overseas, i think that is a shot across the bow to administration about their trade policy that could have negative effects. julia: thank you, kevin. york,our, -- from new this is bloomberg. ♪
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julia: saudi arabia's ban on women jarvis has officially ended. jordyn holman talked to the founder of the arabia foundation about the move. >> the psychological impact of the decision has a huge impact on the integration of women into life and into the workforce. in other words, women have started to be integrated already over the past nine months in a much more extensive fashion than they were before. so for saudi arabia, however
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strange that may look to people outside, it is a momentous decision in terms of social and cultural reform. >> should we consider this a turning point for the kingdom? ali: it is a cultural turning point, a social and cultural turning point, and a tremendous step ford for the integration of women into daily lives. and this had become a wedge issue for the religious right, if you want. they thought this was the last barrier that they could put in front of women being integrated into the workforce, into daily life, having the ability, have a much more freedom. and so that has been broken. >> what economic impact to use the coming now that this ban has been lifted? ali: it will be the material economic impact. first of all, it will increase female participation in the workforce. and that is going to increase consumer demand and consumer
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spending, because women will have more money. saudi arabia that, has about 1.5 million foreign drivers. so many of them will be sent home. and that foreign exchange outflow that used to take place will be retained in the country and will also increase, you know, domestic money supply. >> how does the generational difference between the women impact how they are responding to being able to drive now? ali: obviously, this is disproportionately impacting younger women, because they are more open to it, many of traveled abroad, so if you look at a lot of the videos that came out from the international media on saudi arabia yesterday, the vast majority were younger women. older women have been set in their ways and it is a bit more difficult for them to take that step. but younger women are ecstatic. >> and while saudi women took to
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the road on sunday, the women who have campaigned for years to lift the ban are still in jail. so what can of impact will this mean for those women's freedom? ali: that was unfortunate, that the government arrested them a few weeks ago. i am not -- they have not disclosed the accusations against them. they seem to have technically broken the law in a number of areas, but i think maybe what was driving it, psychologically, is that feeling by the government that they have to show the conservatives a bit of balance. you know, a few weeks before the driving decision was announced last september, the government went ahead and arrested about 17 hard right clerics. one of them has 60 million followers on twitter. so i think they have been fighting a very aggressive,
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religious conservative right for the last nine months. and as part of the political balance, they had to show that they were also not allowing the liberal left to take too many political freedoms in this very sensitive environment. you know, social and cultural change is always risky for a society and it is stressful. and i think the government is grappling with holding the ship together and balancing tis different constituencies -- its constituencies. julie: that was the founder of the arabia foundation. from new york, this is bloomberg. ♪
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>> it is 3 p.m. in new york, 12:00 p.m. in san francisco, 8 p.m. in london. julia: welcome to bloomberg markets.
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julie: we are live and bloomberg world headquarters over the next hour. here are the top stories we are covering on the bloomberg and around the world. the outperforming sector now having its worst today since march. the treasury department plans to release fresh curse on chinese investment in tech companies jerry at has netflix hit its peak? to play theuss how streaming giant. in ge sheds assets. we look at the beleaguered manufacturers latest deal. the close hour from of trading. let's get a check on the markets with abigail doolittle. there is an attempt at the bounce from the lows and we went back down again. abigail: major averages having their worst day since april. the dow had bounced back a little bit from those lows as
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had the s&p 500 and the nasdaq. a pretty decent selloff for the major averages. take a look at the tech heavy nasdaq. julie was talking about the heavy selloff that that is hitting the tech heavy nasdaq at the low. rather classic quest. that is where you see stocks selling much more than bonds. you might expect that all 11 sectors would be lower. at this point, nine of the 11 that yield does drop. as julia was mentioning, 3% at
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this point and energy and consumer discretionary sharply lower. take a look at some of the movers. amazon technically a consumer discretionary name right now on pace for its worst day since march. that is facebook and microsoft. all sharp declines. facebook really leading the way down 3.9%. it was hit by the data privacy. these are the biggest pointers. we have a bigger percentage weakness. macron down 6.9%. the chip sector and the tech sector overall, the possibility the u.s. may limit investments in u.s. tech companies. those components going to everything.
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harley davidson on pace for its worst day, moving u.s. production to avoid eu tariffs. consequence the white use was intending or expecting. the vix soaring today. the biggest spike since february. the gtb function. it has been flatlining. the spike higher, breaking out of it.
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the vix is setting up for a true super spike. julia: and now we go to mark crumpton. protesters rallied outside attorney general jeff sessions today defending the trump administration's immigration policies. he delivered a speech in nevada to the national association of school resource officers in reno. the attorney general called on congress to act and insisted that many children were brought to the border by violent gang members. immigrationd our and having open borders would be dangerous. the united states sent fbi investigators to look at the saturday deadly attack on a rally for the country's new prime minister. that thousands
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were in attendance. two people died and more than 150 others were hurt. over 30 arrests have been made. tuskuncil president donald is talking to theresa may ahead of a meeting between european leaders. and it leaves by march of next year. columbia is cultivating more of a plant used to make cocaine than ever before. while colombia is an important u.s. ally in latin america, the recent boom in coproduction has created tension.
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tensions are rising and president trump had previously threatened to decertify columbia as a partner in the war on drugs. global news 24 hours a day on air and on twitter powered by more than 120 700 journalists and analysts in over 120 countries. i'm mark crumpton. busy monday as is not a typical in the world of deals. telecom, media, and industrial front and center in the headlines today. here to break it down is our bloomberg deals reporter. let's start with general electric trying to slam down. the unit to a boil $3.2 billion. this is what everyone wanted to do and the stock gets punished. >> they do want these asset sales.
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of weeks,t couple outlining his grand vision for the company. lostwas a company that $140 billion off of the market .ap over the past year it what investors want him to do is a breakup of the company. the aviation assets, thinning out the health care business, selling the bank state which they said they would do. but for investors, they're waiting to see what the grand plan is. this is a $20 billion plan of divestitures they are talking about. all of that work still has to be done. and we make the point tough. >> they are getting rid of that tomorrow morning but the price here is the other issue. is a company that is facing
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a massive cash crunch. people are worried about if they fund the dividend or not. julie: an even larger, the local tv business. tv is doubling down on the side there. off theoment i just got phone with the television chairman who is telling me the company has tripled in size over the last five years. and this is an important deal for them. continue toy can't survive in the way that they have. one of the big drivers for them has been advertising revenue for political campaigns. remember how president trump moved his campaign last time? people traditionally going to the television and he has used twitter and social media.
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they are hoping that bulking up in scale will help them get more subscription fees from the likes of comcast and others, and also give them a bit of an edge when they are dealing with content providers. julia: you have also been following very closely what is happening in the xerox negotiations as well. what is the latest? they walked away from the deal. they got a court order to block .t and fujifilm's trying to revive this deal as xerox came out today and said if you think you -- that is al strong way to say that. julie: a lot of rhetoric and that deal. up, we willoming give you another quick look at the stock markets, in particular the s&p 500 just trading around the lows of the session, down
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1.8%. you see the nasdaq down by 2.6%. the most crowded trade in recent weeks. julie: and even with the magnitude and selloff in stock, the 10 year not seeing that much buying. only a two basis point move there in the 10 year yield. julia: tough to buy bonds when the fed is raising rates. technology, that suppose it's a haven, also losing ground in the session today. plenty more on this to come. from new york, this is bloomberg. ♪
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julia: this is bloomberg markets. thee: another check on
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market here because, as we mentioned earlier, there was sort of an attempt on the part of the three major averages. we still have all three majors trading near their lows of the day. tech consumer discretionary and material serve a classic cyclical low -- rotation. and utilities were up today as were consumer staples. going into the last break, the 10-year is seeing some buying. only a two basis point decline in the yield. talking about fang stocks that have been at record highs, selling off. julia: time for the bloomberg business flash, snapshot of some of the biggest stories in the news today. ceo of the now defunct toy store has been working with multiple investors to reboot the retailer in the united states. reportedly advising with fairfax financial.
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to successfully revive the train. they have to win a bankruptcy auction with intellectual property. drugsregulators improve made from marijuana plant extract. the fda sanctions the medication to treat to rare forms of childhood epilepsy. could spur more research in the cannabis. community is calling time on theresa may. the business lobbies urged them to make progress and negotiations with the eu or risk losing jobs and investment. a comes after airbus warned last week that it would reconsider investments in written walked away without a deal. bmw is also asking for clarity. it is giving a summit deadline before it is making alternative lands.
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and that is your business flash update. julia: the largest consumer the largestlie: consumer focus equity firm is making a big bet on makeup. $30 million into the makeup brand. at the firm's portfolio including -- already includes equinox. managingwn with the partner and asked what he looks for when it is time to invest. >> consumer growth broadly defined. retail, growth, beauty. anywhere in the high-growth categories. yield, a bit of arrangements. the teams can scale them. categories.on is growingy itself over 30% and we look for brands within them that are
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distinctive. beauty overall is going on a national level and the global level. we look at that and say that is the business we can get behind and build a brand on a local level. >> how important is it to have retail stores? thehow much the tracks from -- it detracts from the business? >> we opened a store in new york. adding two or three more stores this year but it is giving the experience to try that product. the change in the category broadly, the brands grow much faster in e-commerce and through social media. strategy,u decide on how do you decide if that strategy can go?
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>> we want to have that experiential touch. a lot of women don't enjoy that experience. right now, exclusively online. >> we are talking these days about tariffs. >> i imagine that that is not as important to you but what you see in terms of the emerging china consumer for example? >> what we are seeing there, not surprisingly is mobile technology affecting brands much faster and at a much higher clip that it has a u.s.. actively looking to expand, around things that are health and wellness. beauty categories and still a
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desire for u.s. products there. we are mindful of what is taking place. most of the businesses are not affecting. rose opportunities, what is the rate of return that your eyeballing? >> we can talk about the returns because of the fundraising we are doing now, but what is important for us is that we are looking at driving the returns from the underlying growth of the company. over theage company last decade is drawing 25% a year. but a strong growth and we are reinvesting that capital back into the company. >> and how long do you stay in a company? >> our average hold is about four and a half years. a lot of those and of being acquired by strategic law financial. and that is what we're seeing more broadly. we're seeing 90 of the top 100.
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other consumers today. >> there is a fragmentation and consumers are experiment and more today. they have tried a new brand. people are experimenting more. as opposed to one billion to $5 million in revenue. >> the private equity firm. you can tech out -- check out gtb go and you can -- btv go.
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you can catch a funky analysis and save chart the future of just popped into the numbers showing the relative outperforming with a smaller cap iscks and as you can see, it why this is being used as a relative safe haven trade. morgan stanley and equity strategist saying that for all the reasons they discussed, the , the pairing of risks and cyclicals like technology like energy. from new york, this is bloomberg. ♪
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julie: joining me today is just
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trigger from a cam partners. we of the things that noticed is that we once again have a fixed version. we have a chart of that on the bloomberg. has been some sort of volatility shop to return. is this at? >> we act like it might be. the narrative this all year is that we were coming into a regime change. five years of extraordinarily low volatility. the cycles tend to last five years. but given the shot in late january and early february, that was the transition into a high volatility environment. , most investors are very much anchored to the last five years. we have spot vix approaching 19.
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it will go down from here and they want to buy the debt. that is not the environment we are in. so treat this impulse of volatility as intensifying. we think it gets above 20. more and more would be 25 to 30. but ultimately act like and appreciate we are in a new regime and it is of a higher frequency. what about the clients that have not necessarily gotten the message. there was a little complacency coming back into the market. >> we had 14 weeks to the last several months.
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we haven't seen that in a very long time. toer 14 weeks, we are back the short little volatility exposure. those did not happen at all. julie: it is one of the poster children, netflix is coming down pretty sharply in today's session. what is the strategy when it comes to stock? canther structures were we help manage risk. if you look at the bones of the s&p 500, twitter and netflix ranks second and third year today. both up about 100% and extraordinary when you think we are six months into this year. if you are a long netflix and you want to stay long, how can you manage potential risk of an even deeper pullback with what we had seen today and what we look at here is the costless collar. julie: we have the chart of
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explaining how to walk through it. >> your long stock and you turn around with that strike call. if you find one call up there. buy a 370-330 put spread. you have the opportunity to participate. down 2% to 14% hedged. julie: back to you. julia: if you want to do it today, do it in options. we are lower, obviously. we'll continue to talk markets. this is bloomberg. ♪ what's a gig of data?
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well, it's a whole day's worth of love songs. 300 minutes of baby videos. or, it's a million chat messages. a gig goes a long way. that's why xfinity mobile lets you pay for data one gig at a time. and with millions of wifi hotspots included,
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you'll pay less for data. it's a new kind of network designed to save you money. click, call or visit a store today. mark: president trump's former campaign chairman is appealing a judge's decision to jail him while he awaits trial.
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you are also appealing the judge's order that dismissed a civil suit and a fort broad earlier this year. robert mueller's authority to prosecute him. invokes theackson house arrest earlier this month. the turkish president everyone has dominated country's politics for the past 15 years. andill continuously extend take on sweeping new powers. turkey's high electoral board today declared erdogan the winner of sunday's new votes. expressing concerns about my country's set that -- setback in democracy and human rights. congratulated them for the victory in the turkish people for a high turnout.


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