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tv   Bloomberg Markets Americas  Bloomberg  August 31, 2018 1:30pm-3:30pm EDT

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speaking to reporters in washington, canadian foreign affairs minister said while the canadian and u.s. teams are working hard "we are not there yet." optimistic, saying canadians are good at finding win-win compromises. decided the trial of a man accused of driving into a crowd of counterprotesters at a rally last summer will stay in charlottesville, virginia for now. he is charged with first-degree murder and his attorney had asked for a change of venue. citing publicity about the case and what she called community prejudice. he faces up to life in prison on the state level charges. he also faces federal hate crime charges. the world health organization says -- officials say some control measures appear to be working but they are still unable to track exactly where the deadly virus is spreading. there have been more than 80 confirmed cases in the latest outbreak, including 47 deaths. detroit, a star-studded
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funeral underway for aretha franklin. guests include former president bill clinton, former first lady hillary clinton, stevie wonder, and ariana grande. the service has been filled with music and prayers. franklin is stressed in a sparkling full-length gold dress for her final outfit. she died august 16 at the age of 76. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm kailey leinz. this is bloomberg. ♪ shery ahn: live from bloomberg world headquarters. >> i'm in for amanda lang could welcome to bloomberg markets to where joined by bloomberg audiences. shery: here are the top stories
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we are following from around the world. escalating trade tensions, president trump compares europe to china when it comes to trade practices and says the eu offer on auto was not good enough. running out of time. prime minister trudeau says no nafta deal is better than a bad one. stubborn differences remain between the u.s. and canada. ugly august for emerging markets. developing economies get punished this month. will september be better? with breaking news. we are now hearing paul manafort former associate sam patten is announcing -- is now saying foreign money was paid to the inaugural committee. mr. patton also admitting to charges in a plea agreement filed in court. this relates to the investigation into mr. manafort's conviction that we got in virginia last week. now one of its former associates, mr. sam patten saying that he sees that it
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caused the foreign money to be paid into the inaugural committee that he is admitting to charges in a pre-agreement -- plea agreement filed in court. on patten has been charged friday with failing to register in the u.s. as a foreign agent for his work lobbying on behalf of a ukrainian political party. we are now hearing that he caused foreign money to be paid to the inaugural committee here in the u.s. we will get you more updates as we get them on this developing story. for now, let's get a quick check of the major averages. we are seeing u.s. stocks a little mixed at the moment with the dow falling 3/10 of 1%. the s&p 500 is also losing ground. the downhe fact that days for u.s. markets, we have seen a very strong august, which could be the best august since 2014. tech stocks gaining ground at the moment. deadline whenrade
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it comes to the nafta negotiations between the u.s. and canada. energy and financials are leading the losses on the s&p 500. take a look at auto stocks. they are underperforming the broader market. ford, which is her this morning, they are canceling their imports of suvs from china, given the tariffs imposed on chinese goods. the 25% and the trade tensions ongoing between the two sides. we have also heard from president trump rejecting an eu per -- proposal to eliminate tariffs on auto imports. the auto sector right now taking a hit. jon: as much as the focus has traden the u.s.-canada talks today coming you mentioned china and the bloomberg reporting on the possible by presidentsh trump looking ahead to next week or we can take you to this chart, taking it to the next. -- to the max.
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the additional tariffs represented by the yellow line, which would certainly change the game when it comes to this ongoing trade battle between china and the united states. shery: as john was talking about, china trade tensions, nafta not the only trade deal possible on the chopping block. in a wide-ranging exclusive interview with bloomberg, the president addressed the many fronts of the global trade war. and even took aim at a court is -- at a cornerstone of the entire international trading system. pres. trump: i would say the wto was a single worst trade deal ever made. if they know cheap up, i would withdraw from the wto. shery: for more, let's bring in michael mckee. mike, this is not the first time we're hearing president trump hitting back at the wto. called: first time he is it the worst trade deal ever made. that was nafta. maybe he is going to get a deal. he is switching gears. the president has not been a fan it takes u.s.ause
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sovereignty to a supranational organization that can rule on whether or not the u.s. was competing unfairly in trade and can impose penalties. he has never liked that idea. most economists say we would be in big trouble without the deputy out the head director general of the wto told us today in an interview it would be one of the worst things possible for an economy like united states which is so connected to the rest of the world. he says we are working on some of the changes president wants to see. mike, is there a way to tie the story together with the idea that some of the tariff battles we have seen and tariffs imposed by the u.s., that there is this belief that if all the trade deals look the way the president ultimately feels is an appropriate way to look, that we would backtrack on those tariffs that have been imposed, does this attic obligation to the possible storyline? michael: it may.
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we don't know. we never know what the president is actually going to follow through on. he threatens to withdraw but he has not he threatened to withdraw from nafta and he didn't. is just luster, it is not an issue. although, the u.s. has been refusing to appoint judges to the wto tribunal that educates many of these cases which has really slowed down their work. it has caused problems. there is an administrative effort to slow the wto if not cripple it under way right now. staying latee today, just because this nafta negotiation between canada and the u.s. are ongoing. are we hearing at this point -- are we getting a sense of where this is headed given today is the deadline? michael: we don't have a real sense. tradehe left the u.s. office, she sounded pessimistic or chi is due back for afternoon negotiations. reporting out of canada suggests the canadians want to stay at the table as long as they can.
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they don't want to be blamed for the collapse of the talks. they are going to make another good effort. we will see what comes of it this afternoon. the administration has said it will send notification to congress today that a trade agreement is coming. they have to do that 90 days ahead of time. they want to get that in before the mexican president leaves office on december 1. they would have to send it today. if the canadians don't join, they will send something that's as we have a deal with mexico and canada is welcome to join. they would have another 30 days before the text has to go up. there is some wiggle room. whether they will use it, how it will play out, i hate to use the cliche, but it remains to be seen. mike, the bank of canada here and canada is very closely watching this because there has been business uncertainty. the central bank trying to figure out if it can raise interest rates this year. how is the federal reserve monitoring these developments? michael: they're watching it in the same way.
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if we get a lot of tariffs, more than we have gotten so far, it would have an impact on growth and on inflation. for both countries. for the central banks, it is something to watch very closely. the problem is you can't really measure it until it takes place. it is very difficult to model the impact of tariffs on business activity. people that the president put tariffs on china, they impose tariffs on soybeans. producers were doing was shipping their product to brazil where it gets a rough processing and then on to china so they are still selling to china. but by sending it through brazil, it takes away the tariffs and therefore, is that something that affects the economy or not? hard for economists to figure out. jon: interesting. thanks for that breakdown. bloomberg's international economy -- economic and policy correspondent, mike mckee joining us. of trade, the u.s. self-imposed friday deadline for nafta is here.
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the negotiations certainly are continuing in washington. turn to sour last night and canadian government officials are now expressing concern that the final deal may not be reached today. justin trudeau addressed progress earlier this morning. >> we will only sign a deal if it is a good deal for canada. again, no deal is better than a bad deal. for canada and canadians and that is exactly what we are remaining firm on. for more, we are joined by perrin beatty, president of the canadian chamber of commerce. mr. beatty, what is a good deal for canada? i think a lot of people are wondering why is it that after a period of optimism, it has felt like so far today, it is getting harder to get to that finish line? perrin: we are certainly down to the short strokes at this point. it is often the case in
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negotiations whether they are labor-management negotiations or trade negotiations that you see tough issues coming up at the last minute. we will get a better sense later in the afternoon as to whether or not the differences can be bridged. the leakng factor was of the interview by the president with bloomberg in the canadian press today. what it indicates is the president was saying that he was negotiating in bad faith. i hope that is not the case. and that is simply the luster we have the come accustomed to. there has to be good will on both sides to make something happen. shery: not just good will there needs to be a trade-off. is the u.s. actually -- if the u.s. softens its demand to the panel, could canada give some concessions on the dairy market? what would you think about that sort of dynamic? i don't know that it is a direct quid pro quo of dairy versus chapter 19. but what happens in these
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negotiations is everything should be put on the table. at the end of the day, there is a process of give-and-take and take. both parties have to accept compromises. the prime minister has already signaled that in the case of dairy, we have a willingness to discuss the issue and find common ground. indeed, in the case of our negotiations with europe, and the case of tpp, canada agreed to concede in those areas. that is doable. what is important for us is ensuring that -- shery: we will have to cut you off for a second or we are hearing from canada's foreign minister. let's listen in. good afternoon, everyone. as we said this morning, we are continuing to negotiate with investor lighthizer and his team. after meeting on -- i will be happy to come out and answer your questions. she has just left, the minister continues discussions with ambassador lighthizer at the u.s. trade representative's
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office. mr. beatty, thank you for sticking around. we have talked about some concessions that could happen in the dairy sector. if the primeime, minister is saying a bad deal is deal, is that also true for canadian businesses? you put the question earlier, but what constitutes a good deal? the same question should be asked, what constitutes a bad deal? what is a worse deal than having no nafta at all? we will have to look at what the final package is. the disappointment in this process is we had an opportunity here, to negotiate something that was much better, much more modern, much more efficient, with deep in the trading relationship in all of north america. the position that was taken by the united states was that we had to have nafta, minus instead of nafta plus. that means we will have to end up with something that is less
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good than we had previously. least have done away with the answer to the we are facing today and could at least ensure that in the broadest terms, the nafta under whatever name still exists, we will have to see what that packages. jon: certainly, there is a possibility there could be some ability for both sides to agree to keep talking and send that to congress so that they can continue talking over the next month. but, are your stakeholders ready for the consequences of what happens if at the end of the day, whether it is today over the -- when the next month, both sides cannot reach an agreement? some of the things we have heard, the president talking about the threat of auto tariffs. perrin: nobody is ready for the consequences of that. everybody hopes he can be avoided. the simple fact is nafta has been good for all three countries. orng anything to undermine to damage nafta or to throw it
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out entirely would have very serious consequences for the north american economy. certainly, for canada as well. is a vested interest that everybody has in negotiating in good faith and reaching an agreement or we trust our negotiators who are skilled negotiators to be able to bridge that gap. the question that is outstanding is, will the united states respond in good faith? will they shove the flex that is necessary to do a deal? or was the president and his comments to bloomberg earlier signaling a lack of good faith? shery: the negotiations have been going on over a year. how has all of this uncertainty affected canadian businesses? than anything else, it has been the uncertainty we have had to deal with. where people simply don't know. if you're looking at making an investment coming you want to know what the rules are going to be. we don't know what the rules will be at this point. ,t means people pullback
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figuratively, the money in the bank, or they go somewhere else, and they put the money into a different part of the world. we need to end the uncertainty. the other thing has been a succession of threats and actions by the united states which have been hostile. the steel and aluminum tariffs would be a case in point where the president knew that he was putting in a legal tariffs wholet canada, that the argument about as being a threat to the national security of the united states was bogus, and he made it clear that these tariffs would go away if there was an agreement on nafta. this was a negotiating tool. that is a very damaging way to negotiate. viewnk, from the point of from the business community, whether here or the united states, we are looking for a successful conclusion that will do away with the uncertainty. youy: perrin beatty, thank for your time, president of the canadian chamber of commerce. thank you. coming up, it has been a rough month for emerging markets with em currencies getting worse. how long with all pain last?
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we will discuss. this is bloomberg. ♪
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this is- jon: "bloomberg markets." shery: i'm shery ahn in new york. the story in the u.s. is stock euphoria. the tail for emerging markets is very different. em currencies were pounded this month with declines in argentina and turkey, sparking fears of contagion. joining us now with more is bloomberg's foreign exchange report appeared great to have you with us. let me bring up this chart on the bloomberg gtv go. this shows you the fx volatility between emerging-market currencies and develop market currencies. look at that are the volatility rising for emerging markets. given alle way ahead, of the trade tensions we are seeing on the background?
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>> yes, shared. it looks like this emerging market volatility is going to be with us for some time. if we step back and look at august, it has been brutal for emerging markets. we see the argentinian peso has lost half of its value this year. turkey obviously very closely behind that. ifthe indian rubio falling to a record. what we are seeing is a lot of pain in emerging markets. the quick -- the key question is , will discontinue in september. will this theory of contagion that is spreading across emerging markets, is that going to take hold the next month? to those it comes trade issues, the specific ones that have rattled some of those seemsors, it certainly like the ongoing battle with china does factor into that underperformance that we have seen. lananh: yes. i think what we are seeing is that there is a shadow that is being cast over the markets by this tension over trade. what that has done is it has
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made this emerging market selloff as a generic risk on risk off scenario. instead of people looking at -- idiosyncratic stories and regards with argentina or turkey and the fundamentals specifically with those countries, they are placing e.m.'s with a broad brush. shery: can you really blame them given that also in the background, we have tightening monetary policies, whether it is the fed, or expected from the ecb? we are seeing u.s. dollar strength playing into this equation. lananh: yes. definitely. what has been driving the u.s. dollar for the past few months is this narrative that the u.s. is doing better than the rest of the world. that is helping to get the dollar a bid for the last few months. what we're looking at going into the rest of this year is analyst thinking that the dollar will begin. if that is not the case, if donald trump expressions a preference for a weaker dollar and imposes nor tariffs, the dollar might get a haven bid.
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that might help put more pressure on emerging markets. jon: even though there has been this pressure, that is not to say that there are not some high-profile investors who have and trying to make a go of it, to see an opportunity in the market, whether it is a blackrock or pimco. lananh: that's right. black rock, pimco, i've also talked to asset management. there are a few investors talking about the selloff creating value because obviously we see in emerging market affect, the selloff has made a lot of these currencies much, much cheaper. the tricky thing is timing the entry point. obviously everyone sees the decline, they see the red on the screen. when is the selloff going to stop and when is the best place going to be to jump into the markets and get the best value? it is hard to time it. jon: we will watch it closely. thank you so much. lananh nguyen, bloomberg foreign exchange reporter joining us. when we come back, amazon versus bernie sanders. wordsch giant has a few
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for the vermont senator when it comes to the treatment of their warehouse workers. we have the details next. this is bloomberg. ♪ g. ♪
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jon: this is "bloomberg markets." i'm jon erlichman in toronto. in newi'm shery ahn york. we are seeing u.s. markets mixed at the moment. amazon is one stock that is gaining ground or six consecutive sessions. pricing close to that $1 trillion market valuation. the matching number right now is 2050 for amazon to reach $1 trillion. beens way up, it has facing criticism. senator bernie sanders, for example, has been criticizing amazon for paying its warehouse workers too little. amazon has hit back at the senator saying his remarks continue to be inaccurate and misleading. toughlso comes with how
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ford companies are never getting political waters we will get more of a sense of that next week with google, facebook, and twitter testifying before the senate intelligence committee. jon: absolutely. there is a way to measure this on platforms like twitter where a lot of the sentiment is born and we can show people very quickly how that criticism of amazon has steadily been building the social media sentiment here. a reminder, bloomberg users can interact with the charts we show . using gtv go. browse recent charts featured on bloomberg tv to catch up on key analysis. this is bloomberg. ♪ is. this is bloomberg. ♪
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caroline: it's 2:00 p.m. in new york, 11:00 in san fransisco, and 7:00 p.m. in london. i'm caroline hyde. lisa: and i'm lisa abramowicz. welcome to bloomberg markets. ♪
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caroline: we are live in bloomberg world headquarters in new york over the next hour. here are the top stories we are covering on the bloomberg and around the world. running hot. the s&p 500 posted its third straight weekly gain, but question is creeping in. -- canada's negotiating team scrambles to strike a trade deal ahead of the trump administration's deadline. talking with trump. an exclusive and review with bloomberg news, the president lets loose on everything from trade to turkey to tech. let's check in with stocks on abigail doolittle -- with abigail doolittle. abigail: very wishy-washy and treading water with investor. the tech heavy nasdaq is up a little more than 1/10 of 1%, up four -- excuse me, five of the
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last x days, and on the week, as caroline was mentioning, the dow and the s&p 500 on pace for the up weeks. today represents a positive the bullish action, and that could be the bloomberg dollar index, the dollar rising, all on trade uncertainties. as for the month, it is the best august for the nasdaq going back to 2000. it is the best month for the s&p 500 and that out -- the dow going back to july. here,y strength year, -- and you will wonder if we continue to have strength. after labor day, this bowl market -- this bull market continues pretty strong. 2009, 10%, 2009, 16%. 013, almost 14%. so after the strength we have had in july and august, it
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appears -- of the history continues going forward and is a tell on what is next, the rest of the year could be relatively strong as well. a big piece of it recently, apple and amazon, if we take a look at this interesting chart, $113 billion is what amazon and ofe has done in the month august. huge, huge gains. relative to apple, it pains in comparison -- it pales in comparison. is now over that $1 trillion market cap and amazon is right behind, but it is interesting to put these tech giants into perspective. on the month, we have across asset classes cannot -- not completely confirmed. gold is a quasi-hated asset, -- -- quasi-haven assets, and the tenure yield down 11 basis points as bonds rally, so it will be interesting to see if this lack of confirmation between stocks gaining in august in the haven begin.rallying to
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and take a look at the big gains on the day, lululemon up nearly 14%, all the beauty, 5%, -- , coca-cola, down 1% at this point offa, andrchase of c tle down 1.7%.ipo thank you, abigail doolittle. let's get the first news with jenna diane hart. jenna: a dramatic move by argentina's intro bank fails stop the route in the peso. send it to a global high a 60%. the peso was down by 209% at one point, lost more than half its value this year. isturkey, president erdogan sounding defiant against the u.s. and president trump.
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he says no one can make turkey neil of dollars are succumbed to economic pressure. president trump says erdogan let him down by not releasing an american pastor held in turkey on terrorism related targets -- charges. the european union and britain are looking at it and parallels trade partnership. -- conference in brussels today highlighted the divisions over who gets the final stake -- say the stake of specific disputes. >> when you look at the relationship that we have created over 2013, years with various third countries, we see what the european union, what the heads of state and government are proposing in the march guidelines -- if we achieve that, then you really do have a partnership with no president. dent.ece >> and both sides are deadlocked on the issue of the northern
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ireland border. the united states and canada are trying to work out a nafta agreement. canadian foreign affairs minister christie of cleveland -- christopher egeland -- chr spoke earlierd on the arrangement. global news, 24 hours a day, on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg, lisa? lisa: thank you, jenna. let's talk trade and get the latest on nafta. joining us now, bloomberg's international economics and policy correspondent michael mckee. where are you with the latest? it seems like the growing consensus is we are not going to reach the deadline today. mike: it is beginning to look like that, but she is in the trade representative's office and they are talking. uncharacteristically, when she went in this afternoon, she said she was going back into meetings
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and would talk to us afterwards. normally she has quite a statement when she goes in and out of these meetings, so it -- reporting from canada suggest that the canadians see this as perhaps the last gasp, the last effort to reach -- at least in principle, before this u.s. imposed deadline. caroline: and it is space-saving for both sides, the u.s. and canada. one stumbling block has been dairy, which kind of babel -- baffled me. it is only 1.1% of overall trade between the two nations. why is this such a political ticking time bomb? mike: it is interesting because it is such a small part of the economynd -- canadian but an influential part that justin trudeau has to worry about. the dairy issue is not part of nafta now, but after nafta was nine, the canadians put in a dairy management system that sets quotas on how much can be produced and imported so milk prices stay high. a subset of that over the past category of a new
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milk, milk proteins, can be separated and shipped across the borders and made into cheese. the u.s. was sending a lot of milk proteins to canada. got upset and put tariffs on it between 200% and and, in one category, 370%, the president latched on to that number and got very upset and wants to dismantle the whole system. justin trudeau and chrystia theland gave some ground on seed agreement with the tpp nations, so they were willing to offer some sort of compromise, but the administration seems to be holding firm that you have to get rid of the whole thing. really quick, this deadline of today, how artificial is it? what happens if we go past it? mike: nothing. the mexican government changes december 1, the new president comes in. enrique pena nieto would like to
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sinus us before he leaves office, and our understanding is that the new president, many -- the newobligor -- president, manuel lopez obrador, wants to sign it as well. to some kind of notification has to be done today, but if they do not reach it, nothing happens. they can keep talking. caroline: the overall mood music is that trade tensions are creeping into some of the concerns we are seeing in the light selloff in the u.s. markets, and we saw a number we have been talking about on the but side of the equation, it is also concerns about being able to import its own suvs from china because of trade issues. impact are resorting to see an individual corporations because of these? mike: it is difficult for them because they do not know where it is going. for was originally going to make this in mexico, but because of -- the uncertainty about whether he would put
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tariffs -- are member when he said he would laugh big tariffs on mexico -- are member when he said he would put big tariffs on mexico? they moved to china, and now they are not bringing it into this country at all. so it is not a big deal for ford, but they feel it will not be profitable. so it is the decisions companies will have to make it a vacuum. it is not going on sale until 2019. will this dispute be over by then? a largerraises question, because every economist we speak to say the effective tariffs might not be felt for a long time. this might make us feel it sooner than we think. if a company like ford is making real decisions now based on the threat here? in theou will not see it macro data necessarily for a while, but the individual decisions companies have to make. a lot of reporting have steel companies, the people who use steel, smaller companies who buy it, they may be not public, but they are laying off people because they cannot afford the
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steel they need to buy the process. so it is a growing situation and the economy is so big, it will take a while to show up in the data, but it shows up in the anecdotal reports. caroline: real questions right now. michael mckee, bloomberg's international economics and policy respondent -- correspondent. can the rally continue into september? we speak with the global technical strategists at the wells fargo -- institute. this is bloomberg. ♪
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lisa: this is bloomberg markets. i'm lisa abramowicz. caroline: and i'm caroline hyde. the major u.s. stock indices are closing the month higher than they started, led by the tech heavy nasdaq.
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can the money really continue to run in the face of concerns about trade in emerging markets? joining us is the global equity and technical strategist at the wells fargo investment institute at st. louis. talk to me about some of your technical calls, because you feel there is room to run on the s&p 500. what gives you that conviction? >> with the market at all-time highs, it is hard to argue that the trend is anything but higher. i anticipate some weakness through august and september, and the market will have to price in some uncertainty. i do not pursue the markets breaking out to new highs until after the election. the fact they have done it before gives it some underlying strength in terms of people -- stocks. lisa: what about the drivers of this equity rally, like apple and amazon -- big tex. does it lead the way into the year and? sameer: we think so, because there is so much innovation going on in the space and growth in a relative basis. it is hard to see how the market
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keeps going without tack, and it is -- tech, and it is hard to see how it will do that. and then you have interest --es, triple credit rates reddit rates in the spread of triple c's. there is a lot of support for the equity market for the fixed income side. on thee: your call dollar is there is more room to run, and i want to know at what point the u.s. dollar becomes a headwind on stocks going forward. sameer: if you look year-over-year, the dollar is not too much that it higher -- higher than it was last year. from a year-over-year standpoint, it is not much higher. it did rally from 1988 to 1989, so in the short-term it is a bit of a head term -- headwind. if it starts to creep up towards the 100 area, that is when you will see companies pull back and say it is becoming a headwind for earnings. lisa: we are looking at small and mid-cap stocks, making a new record high today.
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this seems to have benefited the most from fears of trade kerf luffles. is there much more volatility baked in in the russell 2000 with trade tensions, or will this continue to outperform? sameer: it will continue to go up on an absolute basis, but on a relative basis there is a lot of sovereignty priced in. , whiched about tax cuts has also been a catalyst for small caps. a lot of this probably will not repeat themselves, so we are starting to think from a contrarian standpoint. there might be some value on the emerging markets side. caroline: ok, which emerging-market? sameer: we try to focus on the larger ones. if you look at taiwan, korea, and china, all three of those markets on relative bases have outperformed their peers. lisa: what about argentina and turkey? what would it take for you to say that? sameer: i think it would be a
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while before we find value in those markets caroline: area caroline: it is interesting -- those markets. caroline: it is interesting that you talk about china, because it contributes -- continues to be a concern with $200 billion of tariffs that could be out as soon as next week. why is there potentially some appetite in china? is it because there is more in the nfci coming out? sameer: it has to do with china controlling much of its own destiny. even with tariffs, it is the world largest economy, a huge population that is rebalancing towards consumption, and a great story for the coming 3-5 years. the trade issue will probably impact valuation, but if you can think asked that and pick up stocks on the cheap it is an opportunity. lisa: that is interesting, because taiwan has dramatically underperformed for the u.s., and in general many developed and emerging markets.
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do you think the u.s. equity markets will underperform the other world equity indices heading into the year end, based on how they have outperformed so far? but younot by year end, only have four months left in 2018. no tax cuts coming around again in 2019. the comparisons will start to get worse. and if you look at a surprising season, we have gotten much worse reasonings -- readings for the emerging markets side. so if you are able to think longer-term, that is where the positive surprise will be over the next 12 months. caroline: sameer, how about europe? sameer: the tricky part will be you have political risk, think italy, and mario draghi, whose term will be up sometimes next year -- sometimes next year. so that determines who will take the helm at the ecb. it is also what they will do around raising interest rates, and the currency has been weak. we would say there are some positives, but they are unset i some uncertainties. we would be
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more neutral there. lisa: really interesting, sameer samana, thank you very much. still ahead, the chief executive of credit suisse is shrugging off the trade war. we will bring you his exclusive comments, next. this is bloomberg. ♪
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lisa: this is bloomberg markets. i'm lisa abramowicz. caroline: and i'm caroline hyde. time for our bloomberg was it. isse's ceo is speaking about issues in turkey and argentina in the longer term. >> well-managed economies are safe. is no emerging -- there is no such thing as emerging markets. the economies [inaudible]
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finances their public in order and have significant reserves. the market, when people fear contagion, there is no contagion from poor managed economies to well-managed economies. significant -- often the current account. that makes them vulnerable. important to manage fiscal -- responsibly and be in a current account's office, and [inaudible] of will find that a lot emerging economies are positioned. have come under pressure like turkey or brazil have more fundamental macroeconomy problems. i was in argentina two months ago and i met someone there, and
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it is clear that argentina has some real challenges to deal with, but to extend that to other emerging economies is too simple. >> in terms of the contagion from turkey in particular you think it is being overplayed? tidjane: i do not think there will be material contagion overtime. i think short-term, it is a very strong, spontaneous reaction, but [inaudible] >> and the impact on european banks? tidjane: banks are in a much different situation than they were back then. the size of the turkish economy careers, a very good transaction in turkey. i am very positive medium to long-term. demography is one of the reasons why. no. banks we are-- the talking about have reasonable
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exposure to turkey. >> has credit suisse had to unwind any positions in turkey? tidjane: no, no. >> in terms of italy, we have seen concerns there about that there was a reasonable cause for yesterday's auction, but yields have picked up slightly. markets underpricing the risk coming out of italy? tidjane: that is a tough question. i would be very cautious in any situation to see the market -- say the market is mispricing things. i'm not close enough to that situation to have a very strong opinion. i think we need to [inaudible] do you expect the ecb to potentially step in at some point to support that? tidjane: the ecb has very clear objectives. i think it will do what is necessary. overtime, i think the euro is
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very resilient. i think -- i was never worried during the situations with greece or spain, i was never concerned because history is very important. irope has a rich history think as time goes on -- rich history, and i think as time goes on we will make sure that resiliency continues. thatitching to be ok and question on brexit, it seems like the deadline for coming to coming up,t has been and you must have game plans this. what would you say are the author of a messy divorce? i will not desolate -- tidjane: i will not call the outcome in that. we were all asked to present new plans by the ecb. that was the chief
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executive of credit suisse, speaking to us in beijing in an exclusive interview. time now for the bloomberg business flash, a look at some of the biggest business worries in the news right now. coca-cola is expanding in the hot drinks business by buying a global brand. for is trying costa coffee five point $1 billion -- $5.1 billion. both coke and pepsi have been seeking alternatives while the market in sugary drinks declines. second-biggest u.s. has-hailing company, lyft, hired an ipo adviser to start taking pitches from banks next month. an ipo could take place in march or april. apple and 20 other cash-rich companies used to be the biggest iris of short-term corporate debt -- now they have turned into sellers. according to bank of america, that has left a $300 billion a year hole in the market, which could make it more expensive for
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other companies to borrow. apple and why microsoft are selling, tax cuts are allowing them to break -- bring business home. up, talkingming with trump. more of our exclusive interview with the president. we will bring you the highlights up next. this is bloomberg. ♪
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ago, hurricane harvey flooded texas with record rain. flooded texas with record rain.
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caroline: that is some of our reporting from tictoc by bloomberg, streaming live on twitter. i'm here line height. lisa: and i'm lisa abramowicz. >> president is coming to the aid of a one-time rival. senator and his reelection bid. president trump says he will headline a rally for the texas republican in october. he said "ted has my complete and total endorsement." he also called his democratic
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opponent a disaster for texas. former australian prime minister malcolm turnbull resigned from the week aftery, lawmakers replaced him as prime minister with his treasurer, scott morrison. trembled for -- turnbull warned he would resign from parliament, trickling -- triggering a by election. yesterdays crash by the arizona border killed six people and injured nearly 50 others. the national transportation safety board and new mexico state police are investigating. it is washington's turn to say goodbye to john mccain. the six term republican senator lived and worked in the nation's capital for more than four decades. now he is lying in state under the u.s. capitol rotunda for a ceremony and public visitation. family, friends, lawmakers, and s gathered for memorial
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services. global news, 24 hours a day, on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. caroline? caroline: thank you. president trump sat down in the oval office with an interview -- for an interview with editor-in-chief john micklethwait and jennifer jacobs. let's get to kevin cirilli, our chief washington correspondent. kevin, what struck out to me was how once again, he was talking trade, clearly top of my for him at the moment as they continue to negotiate in terms of nafta 2.0, but also about china and the eu. kevin: absolutely. the president is saying there is no deal in terms of this report that am european countries, including germany, wanted to back off the auto tariffs on
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this particular front of the trade negotiations. with nafta specifically, the president saying he found it easier to deal with mexico and not with canada, but it also comes reportedly at the agricultural sector in the states ises -- united pressuring the administration of potentially change course. we have not noticed much movement in the polls despite some centrist republicans making their case known, senator bob corker from tennessee going so for q4's legislation that would rein in the president on his terror policies. -- to force legislation that would rein in the president on his terror policies -- tariff policies. caroline: the eu has been offering no auto tariffs at all, and here is what trump did they -- it is not good enough. president trump: it is not good enough. nope. because they do a lot more auto business than we will ever do. in other words -- first of all,
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it is not just tariffs. they also have barriers up. they will take the barriers down and they will charge is no tax, but it is not good enough because they will always sell more cars. their cars -- their habits, their consumer habits are to buy their cars, not our cars. caroline: the stoxx was led lower by the auto's -- the sto cks on the nasdaq were led lower by the autos. and this is trump saying the eu is bad as china, just smaller. kevin: and this is actually coming as the comet period -- comments period is set to conclude. the president says he has $200 billion worth of tariffs additionally in the pipeline to be applied. folks in the beltway do not like that. the chamber of commerce does not like it. banking lobby groups do not like it either. so a lot of shifting parts of the president doubled down. this is a populist trump in
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which he doubled down on his positions on nafta and the trade negotiations with the european union, and, of course, china. lisa: did we get any sense of what is going on as far as his date of mind in terms of what he who youing towards, wanted to work with? did you get any sense of that? kevin: one place he is not necessarily want to work for is the wto. the wto was the single worst trade deal ever made. if they don't shape up, i would withdraw from the wto. was all trade, trade, trade, and if it was not china, the european union, the wto, now, there are not many trade deals the administration likes. lisa: but to that point, who is his ally? who is his friend here? who is the person where it is not we want to cut it off, we want to embrace. is there anyone? where it gets
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interesting, because when i talked to sources at the treasury department and economic folks in washington who work frequently with the white house ,n financial services regulatory and geopolitical policy, what they say is from the administration standpoint, they want to see a lower trade gap. they want to see what they are arguing is a better deal for u.s. workers, but there is a divide here, and this is where it gets a little more complex. the is essentially you have executives and the principal politicians themselves who are very critical of how the president is negotiating these trade policies. meanwhile, you have people out in states like michigan, pennsylvania, ohio -- ohio, not much in agreement with these executives and feel these trade policies are frustrating. if you think for one second that the folks who backed elizabeth warren do not like nafta and he more than a trump supporter like nafta, this is a populist streak we have watched unfold.
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much, kevinet so cirilli, our chief washington correspondent. speaking of president trump, these are images of him in charlotte, north carolina. he has just arrived at the charlotte international airport. during an exclusive interview with bloomberg news, president trump says he is considering a capital gains tax break, which would index gains to inflation. take a listen. president trump: thinking about it. thinking about it. >> leaning towards liking it? president trump: there are a lot of people that love it, and a lot of people that don't. but i am thinking about it strongly. lisa: this has been a longtime goal of white house economic adviser larry kudlow. lori davidson joins us now. laura, how much support is there for this change and how widespread with the benefit be? laura: in the trump administration there is a lot of support. larry kudlow has taught for this
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for a long time, secretary mnuchin is looking into it, vice president pence prom today bill that would get it. so in the administration they are all moving with one step in one direction. the issue is really political, how do you make this palatable, the tax bill for last year. not for helping the wealthy too much, and this benefit would go directly to investors and the wealthy. the vast majority of capital gains are claimed by the top .1% of taxpayers, so this is the issue they are weighing. there is a lobbying group that has formed to help the administration decided that they can do this. or is some debate whether they have the legal authority to do this, because they said they would not go through congress. they would say hey, treasury, make this tax cut, right regulations -- right the regulations -- write the regulations. so democratic senators in
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congress are getting very angry about this, saying it is just a further giveaway to the rich. caroline: so there would be more legal challenges, come what may? laura: if trump or to do this -- the treasury department has never found the legal authority but trump can basically go ahead and do this and see if his lawyer and treasury department do not like this, he can replace them. it would be highly unusual for a president to do that, but president. -- but president trump is not your normal president. usual funds would be affected, individual taxpayers, brokers, all of the above. lisa: what is the magnitude of money we are talking about here in terms of what the u.s. elect -- collects that they would no longer be able to collect? laura: estimates vary. we have not seen it clay out that play out and it is not clear whether they would apply to the sting assets or new ones,
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but it could be around $100 billion a year. it is a sizable chunk of change and would be a large tax break, and one investors would very much welcome. caroline: we will be digging into how this story unfolds. laura davidson with all the ins and outs, we thank you. and talking of president trump, he is in charlotte, north carolina today, where he is expected to sign an executive administrationit to make it easier for small businesses to band together to set up retirement aiming for counts. you can check this all out -- retirement savings accounts. you can check the sellout on the bloomberg. this is bloomberg. ♪
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lisa: this is bloomberg markets. i'm lisa abramowicz. caroline: and i'm caroline hyde.
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time for our stock of the hour, and scherzer on pace for the worst day since early february on a bearish downgrade. abigail doolittle joins us more. a brutal day in european autos. abigail: absolutely. down for the sixth day in a row, so bearish trading action for good year. anything with wheels for the past two days, actually perhaps in a fourth day -- for the fourth day in a row. so anything that has wheels, around auto tariffs, and for not bringing in that one suv that has to do with autos, wheels transportation is down, and good year is no exception. call,ere is able to saying the premium tire market will be oversupplied and the are ramping up while some of that your one oneers are also -- the tier players are expanding. so by 2021, it will be 20% oversupplied, which should push down on pricing. lisa: i am thinking that
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goodyear is known for more than tires. they have all sorts of things. the branding is not working anymore. it is interesting that you are talking about that. i have some fun facts on that blimp, it is so fun. relative to the overall point, the stock is down more than 30% this year. it is not just today. these trade war fears, some of it having to do with the cost of raw materials rising on the trade war. second, as we were talking about yesterday as relative to report moranoran -- report matt -- freeport-mcmoran. this is a valued chart from the standpoint of this is the s&p fromuto sector index, 2012. we see out of 2012, this is halfway up from the 2009 lows. we are already up, and we see this long-term range and now for the bottom of the range, this adjustment we could see in the index could creep down.
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so this could be tough where you go. lisa: thank you so much, really interesting. of course, you can check out all the charts, including the one abigail just showed us on gt v. if you want to know how volatile emerging market currencies have been, check this out. it shows how the volatility has surged in emerging markets while the rest of developing markets, not to interesting. or if you want to check out this incredible gap widening between italian and german bond yields, amazing. almost a 2013 high. i could go on and on. check it out. this is bloomberg. ♪
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caroline: this is bloomberg markets. i'm caroline hyde. lisa: and i'm lisa abramowicz. the fda is taking new steps in fighting the growing opioid crisis. there and lamenting a more focused approach to pain medication. -- implementing a more focused
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approach to pain medication. what we announced -- weekll be announced this are a new series of guidance documents we will be issuing that will lay out a more efficient pathway for manufacturers to treat pain that don't involve opioids. so we had guidance laid out in a document we issued in 2014. that document is outdated and laid out a pathway to market that we think with maybe -- was maybe too burdensome. so with developments in new pain innovation, the new guidance documents is to be more focused -- documents, the goal is to be more focused and develop different drugs for different types of pain. if you can demonstrate that your pain drug helped bury the use of opioids, you can get approval on basis of that claim. lisa: it is a very complex issue, even in that opioid use might be slowing a little bit but the drugs they use to get off opioids are picking up.
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how do you measure success for something like that? what are your metrics? scott: that is a great question and this is becoming a very hard epidemic because it is evolving. we see prescribing going down of opioids in the medical setting, restriction drug use -- prescription drug use is going down, but we see the use of illicit drugs, particularly fentanyl, going up. it is extremely potent. if you look at a number of seizures that customs and border protection did of fentanyl coming in through the united states, a lot of it through the isernational mail system, it growing even as it is declining. so even though we reduce overall nate's -- overall rates of new addiction, people who become addicted to drugs and a medical setting are transitioning to are starting on the illicit drugs. we have stepped up our enforcement work in the international mail facilities with postal service and the totoms and border protection
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stop the flow of drugs, there is a brisk flow of drugs coming to this country. what of the metrics? will this be in prescription or the number of drugs you can confiscate at the border? how do you measure success? scott: we will by measuring what what isng at -- happening to people and patients. our overdose deaths going down? are people showing up in ers with fewer overdoses? what we are looking at in the mean term is -- near-term is morphine equivalents. that is how you measure how much opioids you are delivering. so how many opioids are being consumed by the population -- that is going down from prescription drugs. we are also looking at morphine equivalents in terms of seizures. we have completed a big operations with customs and border protection. we will be announcing the results of that soon but we looked at what was coming into the international mail facilities to get a more
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accurate picture of what is coming and a representative sample of how many illicit opioids, sentinel, other things are coming in through those facilities. that will give us a good indication of the magnitude of the problem we are facing. lisa: a good detail there, and the other is a much broader part on simple fine how drugs approved. how do you prioritize your first-time generic approval versus complex generics, and what will be a formula for your? scott: we prioritize first-class we haveapproval, and three drugs in a category. the big price reductions for consumers when it comes to generic drugs happen after you get that third drug in the category. that is when you have risk competition. -- brisk competition. we're prioritizing approval until we have at least three drugs in every category. caroline: time for another bloomberg exclusive -- when
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president trump told you heard -- bloomberg news that europe is a must as bad as china on trade. >> the european central bank, certainly, is not -- the euro. basisarting point, our point of making decisions is based on the economic outlook of europe, both with growth, employment, and of course, achieving our price target. we usually do not comment on othercentral banks, currencies. my reading of the chinese situation is that the chinese yuan has been weakened mainly because of the threat of the escalation of the trade war, not because of any manipulation from the central bank. actually, rather to the contrary. >> do you expect the trade war
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to cause risks to the european economic outlook as well? olli: we do not see a direct impact, and fortunately, they are so far rather limited. on the other hand, we have seen some competence impacted -- confidence impacted. on the other hand, that could potentially reserve growth and implement. but the cease-fire between the eu and the u.s. achieved by july has trump in late some way it 8 -- somewhat eased these concerns. more recently, it has been new concerns. we should not restart this unnecessary rhetoric, and we will not try to escalate the trade war's because that will damage the whole world economy, both for u.s. workers and european workers. >> what do you think about the
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possibility of going in the other direction? it was recently suggested in front of our lament that not only -- parliament that not only could the eu do away with tariffs on cars, but all tariffs could be brought down to 0 if the u.s. would respond in kind. how would that affect the european and the global economy? olli: to my mind, the initiative of the commissioner was a very commendable one and a very important one. it shows that the european union is in favor of free and fair trade, and it would give a level playing field for both the u.s. and european car manufacturers. decide the market will believe who produces -- [inaudible] benefitl succeed to the of consumers and businesses. lisa: that was our exclusive
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interview with bank of england governor olli rehn. up next, silicon valley heads to the hills. trump pumps #s topthebias rhetoric. and reminder, you can catch all of our interviews on the bloomberg. if you want to hear what warren buffett is being -- saying, check that out. president trump wants to put check thatpeople -- out too. this is bloomberg. ♪ s bloomberg. ♪
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>> through :00 p.m. in new york, 8:00 p.m. in london. i am lisa abramowicz. caroline: i am caroline hyde. welcome to "bloomberg markets."
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caroline: we are life and in bloomberg world headquarters in new york over the next hour. your other top stories on the bloomberg and around the world. developing economies get punished this month. will september be any better? getting tough on tech -- president trump tells bloomberg news that the likes of google, apple, and facebook made the and antitrust situation. and coca-cola agrees to buy the u.k. chain costa coffee, stepping into the battle with the likes of nestlé and starbucks. before we get to markets, canada's foreign minister stiaster freeland -- chry freeland has scheduled a press conference and she has left the office of the u.s. trade representative. will canada have ideal to join the bilateral agreement with mexico and the u.s.? lisa: that is at 4:30 after
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markets closed. right now relatively small moves. action for the major averages. the dow in the s&p 500 down for the second in a row. nasdaq managing to eke out a small gain. uncertainty around trade and whether the u.s. and canada will hammer out a deal. concerns.fs it is giving the markets of bearish sense on the day. nine of the 11 sectors are lower on bottom, energy, telecom on top. 3 of 1% of real estate and consumer discretionary. overall, not a lot of buying action happening here. a lot of it has to do with the dollar index on dollar strength. on the day, and interestingly, on the week, most of the week it was website to-- whipsawing to the downside on fears of trade uncertainty.
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now with tougher talk on trade, the dollar responding, up for a second day in a row. upr the last five days,k .2%. stronger dollar pinching stocks to some degree on the day. --ther piece of the story just mentioning auto tariffs. president trump has rejected the , and fortison' saying that they will not be bringing in cross hybrid suv from china as had been planned because of the tariffs. investors are continuing to sell auto-related shares. earlier this week we have all-time highs for the s&p 500. there is a price to this. thecan view the chart using jgb function. -- gene keady function.
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function. the momentum indicator have been overbought for two months. really overextended. back to the record high levels. rsi briefly went about the overbought level of 70 and it may suggest that there could be a pullback. the question is whether we see it bouncing around the 70 level and then the drop, or if we could just see a pullback. but maybetell, lisa, there is volatility ahead. lisa: thank you so much, abigail doolittle. let's get to "first word" news now. agencythe u.n. head of for refugees says the last stronghold in syria could cause new displacement and discourage refugees from returning home. he is appealing to the syrian government to find a way forward that "spares civilian lives."
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he is in lebanon after a visit to syria and jordan. the government of nicaraguan president daniel ortega is expelling a united nations human rights team two days after it told us a critical report accusing the government of all violent repression of opposition protest. the government claimed the report was biased and told them to leave the country. the un security council will discuss the situation in nicaragua next week. detroit, a star-studded funeral is underway for aretha franklin. guests include former president bill clinton, former first lady hillary clinton, the rev. jessee jackson, stevie wonder, and ariana grande. themusic was filled with -- ceremony was filled with music and prayers. of died august 16 at the age 76. global news 24 hours a day, on air and at tictoc on twitter,
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powered by more than 2700 journalists and analysts in more than 120 countries. dagenheart. this is bloomberg. lisa: thank you so much, jenna. riended -- president trump is taking on tech. in an exclusive interview with bloomberg, the president said the firms are in an "antitrust situation." in evansville, indiana, here is what he has to say. ump: look at social media. something called free speech rights. you look at google, facebook, twitter, and other social-media giants. i made it clear that we as a country cannot tolerate political censorship, blacklisting, and rigged search results. lisa: meanwhile, top tech execs like the facebook coo sheryl sandberg and twitter ceo jack
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dorsey are preparing to testify before the senate on wednesday. joining us is a bloomberg opinion columnist. we have heard this tough talk from president trump with the big tech companies before. i guess now that there is a question of what to do either unilaterally or with support from congress. >> i think we have seen a little bit of follow from the president's remarks. senator orrin hatch sent a letter to the ftc asking them to essentially reopen or consider reopening an antitrust investigation into google that the federal trade commission close a number of years ago. i think that could be a direct result of the president's comments on these antitrust to situations involving big tech giants. caroline: meanwhile, conservative advocacy groups are suing google and facebook, billions of dollars in damages they are seeking for what they called conspiring to censor
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political posts. this is not really grounded in fact, but how much can we hear any sort of reasonable argument coming from jack dorsey and sheryl sandberg when they go up on capitol hill to defend themselves? shira: i think there is two issues here. there is the political risk to these companies now when you have these folks on the right, the president and his allies basically saying we think these companies are biased against conservative viewpoints. i don't think there is evidence for that, but it does present a risk if you have these companies being called to task. there is a risk, a, that users stop using the products because they believe they are unfair against their own beliefs. and then you have this risk when you get executives from those companies having to devote time and resources to go to these congressional hearings that are baseless political theater in some cases. lisa: although it is really compelling, because this baseless political theater, as you say, is looking at russian
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meddling in the election and what the intervention has been like -- i don't know, it does not seem like it is exactly in tandem with what president trump is the same. shira: that is totally fair. two hearings next week. the senate intelligence committee is looking into election interference in the united states and the role of social media and other internet companies in enabling that foreign interference. that is a real issue that will be addressed by the senate. lisa: i would like to focus more on that than political theater, surprise surprise, but what could come from that. how can the government get involved in understand better the flow of information from these accounts. shira: there's two things that members of congress could do. is they can ask the
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social-media companies what the government could be doing to help private is enterprise weedt some of the foreign interference, and what the senate is trying to figure out is what can they do in terms of regulation imposed on the internet companies to ensure that we don't have a repeat of 2016 whereby the government's best estimates, you had these russia-backed group trying to sow political division using tools like facebook. caroline: in the eu we are seeing clearly a higher tolerance to wield fines and look to regulate these social-media giants. less so in the u.s. how real could the regulatory environment become in the united states? what could they regulate? shira: there is lots of things that could be done. there is this bill that is languishing a bit -- more disclosure of political-related advertising on the internet, basically tries to unite rules that govern political ads on tv and those political and on the
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internet. that could happen. there could be a federal privacy rule that is more about the data that these internet companies are collecting about us. neither of those deal with the president's pet topics. lisa: talking about the president's pet topic amazon, he has not been shy about exposing displeasure with jeff bezos. bernie sanders from on the opposite side of the political spectrum, also coming out resizing amazon. you wrote a column saying that sanders' criticisms have resonated more than president trump's. shira: he has been talking from fornow about the conditions o warehouse workers -- saying that they don't get paid enough and their working conditions are poor. amazon has largely stayed quiet until this week when they put out this scathing blog post saying that senator sanders'
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comments have been misleading, and he has not come to these warehouses on these own, and the company -- one of the company associatescouraged other warehouses to speak their own truths to senator sanders. it was a surprise, as you said to me given that amazon has said nothing in response to the president's repeated tirades against amazon for all kinds of misdeeds. caroline: amazon still at a record high today. shira: nearing $1 trillion. caroline: shira ovide, we love her opinion on the show. tune in on wednesday when we hear from twitter ceo jack dorsey and facebook coo sheryl sandberg sandberg. full coverage begins at 9:30 a.m. new york time. president trump is in charlotte, north carolina, today, where he is expected to sign an executive order to make it easier for small businesses to band together. he has given remarks saying that
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he plans to study the worker pay issue of the weekend. you can watch this on bloomberg at life go. this is bloomberg. ♪
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caroline: this is "bloomberg markets." i am caroline hyde. lisa: i am lisa abramowicz. sign up for the bloomberg business flash. the founder of papa john's is suing the ceo and board. he says he wants to stop what he calls the irreparable harm they are causing to the money. --stepped down as chairman causing to the company. he stepped down as chairman after being heard using a racial
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slur. shares hit a record high today -- the over where maker forecast net revenue for the quarter at 2% higher than the average analyst estimates. -- sales havest beaten estimates each of the last 8 quarters. google and mastercard credit secret -- cut a secret deal to track sales. selected google advertisers could attract whether the ads they ran online related to a sale at a physical store in the united states. the company never told mastercard holders of the arrangement for that is your "business flash" update. caroline: the imf says argentina has its full support. the peso gained ground .oday on a statement earlier on bloomberg, the ceo
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shared his view on argentina. >> i think the market reaction in argentina caught a lot of people in the market by surprise . i think the technicals where there was some euphoria over macri coming in. many of us do not anticipate how strong the reaction would be when the news got not so good. for those of us who have been in these markets for a long time, i was cochairman back in 2001 to 2005, this is somewhat of a blip. in terms of the fundamental news, the fundamentals are stronger. with the macri administration, it is not a surprise that the imf made the announcement as i was on my way over here. it is important to washington and international institutions that argentina stays stable. -- they will be constructed and try to work with
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the macri government is not a surprise. it is just a matter of timing. what are they going to ask in terms of macroeconomic policies in exchange for the money to backstop the markets? shery: you have been working with so many emerging markets. the g tv chart shows the different approaches that have been taking. argentina raising the benchmark rate to 60%, taking very orthodox measures, owing to the imf for help, trying to tame inflation. and as a result seems to be the same when it comes to the currency. why? hans: there's a great book by a good friend of mine called "the volatility machine." the thesis in effect is that economic policies of countries in periods of global liquidity flows -- it's an overstatement to say your relevant, but this is really -- overstatement to say irrelevant, but this is
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really a market reaction, the perception of contracting liquidity in the markets. you can see the same thing in asia -- malaysia, indonesia, and korea had very different approaches to the crisis in 1997 and then they went down and came back up. you can have arguments of which approach is better. it is more a lack of confidence. while argentina has taken the more orthodox approach, they have had more capital flight. you could make the argument that erdogan is trying to instill some sort of populist support be able to might positive longer -- hold the deposits longer than argentina what. i would argue that argentina would recover more quickly than turkey, despite what i just said, that it is a closed argument because, one, we don't believe we have turned the corner in terms of global liquidity, but two, the market reaction will change
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considerably when they see how far the international institutions are willing to go to bolster argentina as opposed to turkey. when you are talking about asia and the financial crisis in the 1990's, they took so many measures after the currencies plunged. does that make you more confident about asia as an investment opportunity as opposed to other emerging markets where all of this is happening in the background? hans: the tricky thing with asia is there has been so much liquidity out of china that has bolstered the markets. we do mostly distressful argentina, turkey, venezuela, that is what we are doing right now. in asia, you have not seen as much of a backup. there has been some pressure on peripheral borrowers, but there's enough liquidity to soak up bonds when they come down a little bit as opposed to a lot. it is a different measure. i guess the short answer is, yes, we are seeing many more opportunities, we are looking to expand our investments in asia. i would love there -- this
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sounds terrible, but ratchet up the trade rhetoric of it and then solve it. [laughter] vonnie: which seems to be happening to some extent. : venezuela has been in default for a while now. the current situation is unsustainable. something has got to give with the sanctions. we can't negotiate anything. clearly you have a country with $800 billion of oil reserves and external debt of $80 billion. this will be an opportunity to see qualified sovereign bonds trading anywhere between $.10 and $.25 a dollar. the pain capacity is there. it is a matter of timing. of $80 billion. this will be an opportunity to see qualified sovereignthis cou, two-year, five-your play. sooner or later there will be something to do there. lisa: you can find other
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emerging-market-themed charts on gtb go on the bloomberg. for example, you can find out how much argentina and turkey have hiked benchmark interest rates to control their currencies. as you can see, argentina, quite a lot. turkey needs to get with the program. this is bloomberg. ♪
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abigail: this is "bloomberg markets." i am abigail doolittle. insight."options happy friday to you ahead of the long labor day weekend. second down day in a row. s&p 500 and the doubt of the all-time highs. just a quiet day before the holiday, or a sign of something more? >> i think it is probably a quiet day for the holiday.
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this is typically one of the slowest weeks of the entire year. it typically takes one big button pusher to move markets. look at what is happening with apple and amazon. huge names that have been pushed higher by relatively light volume. and they look the way the morning worked out. sometime the headline hits and moves down 12 points in a matter of no time light. volumes are so abigail: we have these big gains and the nasdaq on pace for his best -- it's best august come i should say, since august 2000. that is risk-on. and yet we have the yen rallying also. what do you make of the last confirmation across asset classes? september is typically week. mark: the one thing i would be
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worried about his we are much higher than at the beginning of the month. the vix is around 13. it has been rallying last week. typically when you see the vix and s&p correlating at the same time, that is not supposed to happen, and it typically does break. i don't think it will take a big shift to send us back to 20.5. it talks between the u.s. and canada break down, if things heat up a lot between china and europe, that would be a problem. trade is in the background. if trade things resolve themselves, all the underlying ,isk-off stuff we are seeing that kind of washes away. i think this is just a trade story. they want to see this deal get done, and hopefully it will be done next week. abigail: very quickly, your trade in 20 seconds or less on paypal. you are bullish there.
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mark: we had a block venmo.nd i collected in i think people is going straight -- not abigail: great stuff. we have breaking news. have a great long holiday weekend. caroline: breaking news on canada. according to "the wall street journal," the u.s. and canada talks are set to break up with no agreement. we have another headline on argentina. be cut by standard & poor's. we will have both of those headlines in the market reaction. s&p 500 off by .2%. this is bloomberg. ♪
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caroline: the wall street journal reporting that the united states and canada are breaking up with no agreement on the revamp nafta. is scheduledrence
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at 4:30 this afternoon. missing reaction in terms of the canadian dollar, mexican peso. the u.s. dollar is strengthening against the other currencies. joe: it is. important to note -- it is not massive. less than 1%. throughout this week as various things have gone -- we have to mexico announcement, there have been modest moves. we will see what happens. according to "the wall street journal," no deal at this point, but whether that means there cannot be any deal ever were a modified trading relationship, at this point we don't see panic or anything like that. just a modest decline. you see the dollar rallying against the peso. he doesn't even get us back to where we were around noon today on the peso. context on the size of these moves.


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