tv Bloomberg Markets Americas Bloomberg August 31, 2018 10:00am-11:00am EDT
vonnie: markets mixed, many lower as trade talks between the u.s. and canada continue. we do have breaking data. let's get to abigail doolittle. the consumering at confidence index for the month of august, the final reading coming it at 96.2 versus the survey of 95.5. a little bit of strength. 100 butnt high above back in the dark days of the great recession below 60. not a lot of influence in the major averages, small moves going into that, mixed markets. we have that. for aw and s&p 500 down third day in a row, the nasdaq higher for the sixth day in a
row, .2%. gains week, we've weekly for a third week in a row for the dow and s&p 500. a second up week for the nasdaq. if we take a look at movers to the downside, lots of weakness as president trump has rejected the european union called to eliminate auto tariffs. selling shares in the fear that could slow demand or bring on next or cost. strength within the retail sector. ulemontake a look at lul br=eauty. they did signed a distribution deal with kylie medics. the shares popping higher. lemon, uphigher, lulu
15%, china was strong, growing by 55%. this is an interesting chart. they have recently had the s&p 500 at all-time highs. the last series of all-time 500s in january for the s&p and the point being made at that time, we have the pe for the s&p 500. this is normalized. at 100% ofrading where it had been at those highs. the p/e ratio, 92% of where it had been. we have stocks rising as the corporate outlook improves, one reason investors are looking past headlines. vonnie: thank you abigail. trade a key topic as we join president trump in the oval office. joining us from london is john micklethwait who conducted the interview along with margaret tallis and jennifer jacobs. did you get the sense that the
president? he even says confidence. been a different trump a the one people see from the outside. most of the people think of someone who is under pressure, legal inquiries, democrats look likely to take the house. he has got the trade in all these things going on around him. from his point of view, life is great. the american economy and wall street at record highs. he has got the mexicans into nafta. he is going to get the canadians and he is moving on without much of a pause to whacking the chinese and also the europeans and the wto. he thinks of himself as a two term president. he says if you look at the
midterms, his ratings are doing well. he was not prepared to go on the record saying that the republicans would hang on to the house. it is fair to say he does not lack for self-confidence. hasie: do think he concerned about the house flipping? if it were, would that change him in any way? the answer is some people would be worried about that. have much of an agenda at the moment and it is unlikely to be progressed if the democrats are in. you have the shadow of impeachment begins to rise. on that he was more outspoken than normal. he said you cannot impeach a great president. he gives himself an a+.
not makeargue it would much difference one way or another. it is hard to believe there is not self-doubt. know the president holds grudges against people, including jeff sessions, not to mention for leaders. did he have anything else to say? on jeff sessions, he said jeff sessions was ok until the midterms, not a ringing endorsement. he did not jump to say he was safe beyond that. we know from talking to other has been evincing frustration about jeff sessions and how he wishes jeff sessions would place more blame on the democrats and russia. it looks like he is on the list of people who have disappointed him. in terms of foreign leaders, all
these people he has a crack at. about theteresting way he views the world, it is a time when people view currencies going up or down. his currency is his approval. at the moment, he is not impressed by people like erdogan and other people. he is facing so many challenges in different fronts. how confident is he he is going to win against china in the trade war? john: that is interesting. china hask at china, some of the better cards in this , a more autocratic regime which does not face middle term elections. -- midterm elections. he says america has a stronger economy and he is determined to deal with china. he says i'm prepared to deal with the pain that comes with it.
it is interesting, this issue of trade. donald trump has changed his mind about lots of things but on trade, he has been in the same place. think china is something he needs to change the relationship with. to be fair, there are business people in america but also europe and parts of asia who are wishing he succeeds. the question is, does he take this too far? vonnie: the business roundtable that aying on the issue nafta type deal should remain in place over china. do you get the sense the president is listening? john: a little bit. he talked about indexing capital gains which is something that is going to help businesses and chief executives more than people in manual labor.
he has got that on his schedule. the interesting thing about the nafta deal, we could argue about how profound the deal with mexico is. business people will be relieved it is not worse than it is. , if you lookng bit at it, you look at the provisions, a lot of it is aimed at china. if you look at cars, it is going to make it more difficult for mexican factories to use chinese to make cars that come through to america. there is a clear picture in this. there are some people in the sights in china is near the top. is a president almost two years in office. you have interviewed most, if not all, the leaders around the world, not just of countries but of organizations.
what did you get the sense of from donald trump? has he changed as a person? how does each are you as a member of the media and who does he remind you of? i think donald trump reminds people of donald trump. you can love him or hate him. it is difficult to think of anyone who has the full range of emotions and behaviors that he does. berlusconi has a few. he is different to every other world leader. most other people are more calculated about what they say. he goes for it on every answer and even the areas where he is trying to be disciplined. should he has learned he be disciplined about what he says about the fed. you can sense the frustration on his part that he cannot say
things more directly. he cannot say he wants to control it does he is learned it is not a good thing -- control it because he has learned it is not a good thing to say. he goes for it. message ising someone who does not see him as often as mike colleagues -- my colleagues is someone who is different to other leaders. he is showing no signs of retreat. he is doubling down on what he is. his only way forward is to keep doing more of the same and that is what we can expect. that should change the way people look at trump. people who keep expecting him to stop have been proved wrong. chief johntor in micklethwait.
i would encourage everybody to read all of those stories. thanks again. breaking news, paul manafort's associate is caused with a violation, violating the foreign agents registration act. manafort had been charged with as well. patten,ciate, sam charged with this. let's check in with the first word news. here is kailey leinz. iley: according to a toronto newspaper, negotiations hit a roadblock last night. canada has offered concessions in an attempt to maintain independent trade mechanisms but robert lighthizer will not go for it. erdogan erdogan is
sounding defiant about the u.s. and president trump. he said no one can make turkey neal with dollars or succumb to economic pressure. president trump said everyone let him down by not releasing an american pastor being held in turkey on terrorism related charges. president trump said the iranian regime may collapse because of policies. when he took office, it was a question of when it would take over the middle east. now it is a question of whether the regime will survive. president trump pulled the u.s. out of the nuclear agreement and reimposed economic sanctions. the president says democrats should not try to impeach somebody who is doing a great job. strong economy, his performance on foreign policy and the danger of setting a precedent of making it too easy to remove future presidents. that is a decision about if the democrats will be able to impeach trump. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is "bloomberg."
-- shery: thank you. the imf has released a statement amid the argentina crisis saying the imf supports argentina and that it is confident it can overcome its fiscal misdeeds, will meet imf chief the treasury secretary of argentina next tuesday for loan talks. we had heard the president asking the imf to speed up disbursement's from its credit lines. we see back in june it had received loans. the peso gaining ground after falling to a record low. more coming up. this is "bloomberg." ♪
vonnie: live from new york, i'm vonnie quinn. shery: and i'm shery anh. this is bloomberg markets. mixed on thestocks final trading day of the month, the dow, s&p 500 and the nasdaq setting records. joining us now is michael could gino. we have been talking about the stocks, tech stocks. how much more room is there to run? michael: we're in a sweet spot data,trong economic economic rates are rising gradually but not too fast. strong and gdpis was revised up and indications are we are going to continue to have that.
there is a lot of good indications that there is a solid foundation for stock prices which would allow them to rise further and expand multiples. there are risks. the interest rates, how far, how fast, the trade issues. there are always risks and you cannot not pay attention. the strength of the u.s. economy is obvious and that should propel stocks further. vonnie: is there anything surrounding those stocks i mentioned that concerns you. are you getting out of any? we areixa: -- michael: not invested in faang other than facebook. these are good businesses. they are cash flow positive, they are growing revenues. the metrics are fantastic. there is a reason they are going up. you are getting concentration where more money going into
index etf's, these are market weighted so they make a bigger weighting of the index so more money comes in and more stocks get bought to keep the index. of do have this funnel up fewer names recording most of the gains. that is a risk to those names going forward. if business conditions change, we're hearing a lot about regulation with technology, hearings in congress that are going to put this in the headlines. there are risks and the laws of growing to the sky. willme point, growth moderate and earnings will not be as strong. business conditions may not be as strong and some of these are based on advertising models which, if you get a recession, advertising gets cut. there are risks but they are good, solid companies. shery: what about commodities? we have seen they have taken a beating.
library for our viewers, agricultural commodities have been hardest hit, not to mention precious metals have lagged. does this signal opportunity or concern? michael: lagging more than a bit. that is an understatement. it is an indication of the interplay of the fed interest rates and trade issues. commodities have showed off early-- sold off since june. that is related to the ongoing headlines of trade. good news, they go up a little bit. we had a bump in gold, bad news, they go down. in a strongulted dollar as investors have gone to u.s. assets. that impacts commodity prices to the negative. there is a reason that has happened. in the long-term, that does
provide a compelling long-term opportunity for investors. this area has not kept up with the market. classice looking, the mentality and you can weighted out, we believe in this, this would be an area you want to wait it out and you will be rewarded over the long term in a variety of areas. how important is it to invest in sectors that are close to the economic growth here in the u.s. we are seeing monetary fiscal stimulus kicking in. when do you expect momentum to cool? michael: that is a good question. some say we are at the beginning of another leg up. ofre is a snowball effect the lower taxes, the depreciation roles, the higher capex spending, the strength in
the u.s. and how the rest of the world has not jumped in yet. if you get global growth going, it could be another leg. has beenple say it nine years and the yield curve is starting to flatten. that is true. stock prices are the highest they have been in years. this is true on both sides and there are always risks and issues. you try to sort through it. we play in the middle of the road where we are looking to preserve capital or limit downside risk in all environments plus look for multiple avenues to profit in multiple environments. we tend to not get to extended at any one time. time ifd go for a long you can keep the set of conditions in line and improve them. that is going to be the question. vonnie: our thanks. this is "bloomberg." ♪
>> this is bloomberg markets. i'm abigail doolittle. time for etf friday. we have newer etf's that may take on the well-known gold etf's, gld. talk to us about these newer etf's. when i think about that gold etf, i think about gld. >> one of them is cheaper. can lower basis points and money is flowing in by the billions. in the gold space, we have functionality coming out. the best look at this is aaau and it takes advantage of these characteristics.
the goldtore differently than the way most will. it will store it in australia. most stored in london. another aspect they offer is doorstep delivery. you can have gold in an equivalent amount to the shares you own delivered. the last one is that it is backed by the australian government. gld, theing back to prices off the highs. you have an interesting observation. if we look at a chart your prepared relative to flows compared to the price, here is that. can you talk about what makes that so interesting. had over $80 billion in assets. now it sits around $29 billion. more of that is from the price of gold. the price has gone down. what we have noticed is that as the price goes up, money goes
in. as the price goes down, money leaves. this is the opposite we see in crude. we think that is because gold etf's, the assets are spot traded. there is no way to do that in the energy sector. of it is access to futures and derivatives which opens you up to -- traders are using it for hedging. as the price of oil goes up, flows leave and that is how it works. >> great observations on goal. back to you. vonnie: thanks to abigail doolittle. stay tuned. august is turning ugly for em.
talking about the european union as though it is likely to be his next trade target. he said the e.u. was as bad as china, just smaller. the president rejected an offer made to eliminate transatlantic auto tariffs. president trump is preparing to ratchet up pressure on china. the president wants to move ahead with a plan to impose tariffs on $200 billion of chinese imports as soon as next week. when asked, the president told bloomberg it was "not wrong." now it is one of paul manafort's associates facing legal trouble. been charged with failing to register as a foreign agent. the announcement could signal the could be a plea bargain. former australian prime minister resign from parliament today. a week ago, lawmakers replaced him as prime minister with his treasurer. he warned he would quit parliament, forcing an election
that would cost the government it's majority. in london, the east-west crossrail will miss its planned december opening day. a spokesman said services not start until autumn. crossrail said more time is needed to make sure the railway is safe and reliable. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is "bloomberg." vonnie: thank you. moments ago, the imf said argentina has it support. the peso gained ground on the statement. the currency plunge this week, reminding investors they landscape for emerging market -- the fragile landscape for emerging markets. i want to ask you, at one point,
you are cochair of the global committee for argentine bondholders. do you hold any at the moment? >> we do. this would not be a bad time to get more involved. shery: why? you have confidence the imf will quicken its payments and that will help? >> it is an interesting framework. i think the market reaction caught a lot of people by surprise. technicals, there was euphoria. i think many of us did not anticipate how sharp the reaction would be when the news got not so good. for those of us who been in these markets a long time, i was 2001-2005, this is a blip. of the fundamental news
relative to market reaction, fundamentals are stronger. with the administration, it is not a surprise the imf made the announcement. washington,ant to to the international institutions that argentina stays stable. that they will be constructive and try to work with the government is not a surprise. it was a matter of timing. the question is, what are they going to ask in terms of policies in exchange for the money to backstop markets? have been working with so many emerging markets. and turkey.ntina this chart shows the different approaches. measures, going tamee imf, trying to inflation as opposed to turkey and yet the results seem to be
the same when it comes to currency. why? there is a great book called the volatility machine. the thesis is that economic policies of countries in global are almostlows irrelevant. ins is a market reaction terms of reacting to contracting liquidity. you can see the same thing in asia, malaysia had different approaches to the crisis and they all went down and came back up. the reality is, it is lack of confidence and while argentina has taken the more orthodox approach, they have had more capital flight. you can make an argument that erdogan might be
able to hold the posits longer than argentina. in the background, they are exacting other measures. i would argue argentina will recover more quickly than turkey despite what i just said that it is a flows argument. have turnedlieve we the corner in terms of global liquidity. reaction will change when they see how far the international institutions are willing to go to bolster argentina as opposed to turkey. shery: when your talk about asia and the financial crisis where they took so many measures after currencies plunged, does that make you more confident about asia investment opportunity as opposed to other emerging markets? hans: the tricky thing with asia is there has been so much liquidity coming out of china that has bolstered markets. we do distress.
argentina, turkey, venezuela is what we are doing. in asia, there has been pressure on peripheral borrowers but there is enough liquidity to soak up bonds when they come down a little bit as opposed to a lot. it is a different measure. we arert answer is, seeing more opportunities and we are looking to expand investment in asia. --ould love for there to be ratchet up the trade rhetoric and then solve it. vonnie: it seems to be what is happening. talk to us, you said argentina, venezuela is what you're doing now. what does that mean? hans: venezuela has been in default for a while. the current situation is unsustainable. something has got to give. you ofot negotiate but got a country with $800 billion
of oil reserves and external debt of $80 billion. this is going to be an opportunity and use -- especially when you see sovereign bonds trading. the capacity is there. it is a matter of timing. this could be a 1, 2 year, five-year play but there will be something to do. vonnie: you have not bought anything in venezuela? hans: we have been involved for years. vonnie: something new, in recent years? hans: we have been working hard to courtney creditor, -- coordinate creditor, to establish, we are keeping the dialogue open with the people in the sea and the international institutions. vonnie: what about turkey? hans: it has been more of a trading opportunity for us. i would argue there is a much greater chance that argentina
has bottomed. turkey has more structural things to do. the system might be under stress. is, turkey is an opportunity but not a long-term yet. vonnie: you mentioned brazil. anything going on? hans: just looking at corporate opportunities. shery: how do your calculations get affected by what is happening in the political sphere? it is mostly about politics. what is happening with the venezuelan immigration crisis, but brazil, heading to another election in october which seems risky. hans: thank goodness it is all about politics otherwise i would not be able to run the portfolio. we are in this stage of the market cycle now where it is not
about analyzing spreadsheets. the probability of political reactions and you're right, the outcomes are going to be dictated by politics. the imf stepping in for argentina, the rational for that is political. , i would argue there were structural problems before but this is a political issue. he has been trying to consolidate power and has been sacrificing the economy. shery: the same with venezuela. hans: absolutely. offzuela would be better resolving its problems with the united states. if you need to rebound in the oil industry, the best partners are the u.s. oil companies, not the indian, not the chinese, not the russians. the path of least resistance for economic revival is reintegrating with the u.s. shery: is there any danger we
could see a repeat of what happened in the early 2000's where we saw the argentinian peso crash. i was living in bolivia and it was bad. we are seeing from both fronts, whether it is argentina, brazil, is there a chance there could be such a crisis? vonnie: and don't forget the fed has to raise rates 10 times more this year. the central bank is going to want tightening next year. the argentina crisis was a , and the general are merging market conditions, it did not have that much impact. you could make some argument it laid the groundwork for 2008. i would argue that argentina came on the back of asia,
russia, and then argentina. when i saw the headlines about the largest aid package from the imf or -- ever, the last time that happened was 2001. this is different. the numbers for the argentine economy suggest this is something they can manage. this is more liquidity than solvency. there was a real debt to gdp and a problem with crashing, revenues coming from soybean exports. dollarization, the peg on the currency. i would argue this is a crisis of confidence in argentina and bad technicals on investments. i would anticipate many similarities, the differences are critical. i expect that argentina, this is
more of a buying opportunity than 2001. vonnie: we cannot have you in the studio without asking you about tesla. it is waiting for you to collect, is that correct? hans: i just want to make sure i know where i can park it and charge it. i've never had a complaint about the performance. news about howe the stock trades, i know elon musk has issues in terms of temperament. i think he is smarter than the guys who try to trade around his stock. vonnie: there are other electric vehicles and we were speaking to the head of volvo. will you continue to buy tesla? hans: there's no question. when they open source be supercharges, the other companies should have jumped on board. the charging network makes it so you can use the tesla throughout
the united states. you can drive throughout the country and your driving -- charging your car. the other networks are not anywhere close. it does not matter the engineering of the car. i say the tesla is ahead of competitors. in terms of the maintenance and the ability to drive, tesla has got them be. shery: how smart is their bet on china? they want to open their factory in china. g8 summit int the shanghai and they had superchargers in the city. they have got a network and that was the first country i saw that they had charging centers. infrastructurehe of tesla beats the local competitors easily. it theree will leave
vonnie: live from new york, i'm vonnie quinn. shery: and i'm shery anh. this is bloomberg markets. italy's bond markets is rating for a review after markets closed. a downgrade is unlikely as the government has yet to detail it spending plan. we are joined by bloomberg's rome bureau chief. it is about next month' us budget. what are we expecting? >> that is the thing. we are not sure because the representatives keep saying
different things about what they plan. everyone is waiting. it probably will not be a cut because they do not know what is going to happen. as soon as the government presents the plan, it will be easier to decide what they think. today, analysts are expecting harsh language from fitch because of the way the economy is so weak and the fact the government does not seem to know what they want to do. they say they want to break past and thatdeficit limit is creating tension on the market with the spread between italy's bonds and german bunds rising. suggestedis report that the premier would not seek a second term and then saying he did not say he would not seek a second term.
is anybody taking any notice? >> it is disturbing because we keep seeing this. case, it was a report in the newspapers and officials said that is not the case. there are more serious things such as the budget with different parts of the coalition. this coalition is formed by different parties. the league is more business is more and five star worried about people and this is creating confusion. some say we should spend more. today was one of the statements toe by the under secretary the government and other say we have to help business. they need to get their act together so the markets know what is going on. shery: take out the uncertainty. thank you. a quick check of casino
vonnie: live from new york, i'm vonnie quinn. shery: and i'm shery anh. this is bloomberg markets. vonnie: time for futures in focus. the u.s. dollar is poised to end august for a fifth straight monthly gain. -- a fifth straight monthly gain, are you surprised? bowl, i would like to think we have seen a blowoff top. on a weekly basis, the markets are unchanged. we did have that reversal with that all-time high and then a
lower weekly close. the benefactors of that have been the commodities markets. i am looking to think that that could be the final gasp in this market. in bounce has only been 2018. we have seen the dollar index bounce half of those losses. vonnie: what will you be doing as regards the dollar? is there anyway you can take advantage of it? alan: as far as trading the dollar, i would think you would rather trade the euro. in the bigger picture, this is a positive for all markets, the commodities markets especially. we saw oil do a u-turn. i had a 10% bounce off these recent lows. gold as well. those were made directly opposite of those highs in the
dollar. vonnie: what about oil? $70, didn'ting with break any kind of resistance and is that important -- did it break any kind of resistance and is that important? alan: let's talk about the overall tone. we have got the dow and s&p up 20%. we have seen a rally and continuation of this trend. let's not forget crude. crude is in a strong uptrend. higher anderies three times in 2018, we have seen declines and then the bounce back, just like the stock market. level, that the $75 targets a $10 move up to $85. the dollar index could be part of that catalyst to get this market moving to the upside. vonnie: thank you.
have a wonderful long weekend. shery: it is time for the stock of the hour. lemon are rising after the company raised its forecast. it is a good sign for the ceo who took over this month. joining us now is taylor riggs. >> when you come into my terminal, we are charting sales, up 19% this quarter and they are maintaining that momentum. it was about 19% the previous quarter not necessarily a one-off story. it looks like that momentum going forward. they have raised their full and profit sales guidance. analysts happy about that. the good news is, they had a 47% jump in digital e-commerce
business and the revamp of their website helping. we have a chart showing the jump after earnings and it is there 6th straight gain after earnings. 14.5% today. they have a goal of a revenue target by 2020 of about $4 billion. this fiscal year they're looking at $3.2 billion. analysts are thinking they might be able to reach that. vonnie: how is it doing compared to its peers? taylor: it has been mixed. you can have a stock that sells up. when we looked at it relative to nike or under armour, even though they have a stretch about ua should that is about double what the s&p 500 is -- valuation that is about double what the s&p 500 is, analysts are saying it in greece in the
margins by 320 basis points. rbc calling it a blog quarter. nursing growth -- blowout quarter. thank you so much. vonnie: we have news crossing the bloomberg. schattner suing the pizza chain and the board. assistance forr stopping irreparable harm to the company. papa john's down about .2%. this is "bloomberg." ♪ .
here are the top stories we are covering. indexes are fluctuating slightly higher as trade talks advance. technology shares are advancing. a fifth monthly high for the s&p 500. we will speak with omair sharif about president trump's threat for tariffs on $200 billion of chinese imports and how it could inflect -- affect inflation in the united states. --exclusive interview with 90 minutes left into the trading day in the united states. abigail doolittle is with us. >> small gains for major