tv Bloomberg Markets European Close Bloomberg November 5, 2018 11:00am-12:00pm EST
vonnie: and i'm vonnie quinn. guy: here are the top stories we are covering from the bloomberg and around the world. volumes dominate as investors stay on the sidelines ahead of the u.s. congressional election. the pound taking up the pace, despite weak services. and italian bonds drop. we are live in brussels. let's take a look at where the european markets are. the volume stories most significant takeaway. it is definitely worth paying attention to. you will see something that looks a little bit like this.
arrivals in brussels. eurozone finance are going to be gathering. they are going to be talking an awful lot about what comes next for italy. abigail doolittle, over to you. : the tech heavy nasdaq lowered now moments ago or minutes ago. s&p 500 and the dow also slightly lower. the culprit for the weaknesses the technology sector. down 7/10 of 1%. really dragging off the nasdaq. the big mover, apple. is really a drag on the tech sector. at that point, piling on top of last friday's big losses.
the apple has canceled the production boost for the iphone xr. it also is weighing into those apple suppliers. bloomberg,n to the this company seems to have boom and bust cycles. out of that we have that beautiful ascending channel. in yellow that is the 50 day moving average. it tends to reliably go back to the bottom of this channel. apple is looking for support at the bottom of that channel. it will be interesting to see whether or not the long-term buyers will step up once again to support those shares. here is the bullish trade for energy.
natural gas higher on a cold-weather format. energy is one of the top sectors that weekend. >> the u.s. re-imposing sanctions on iran earlier this morning. the former u.s. ambassador to syria and israel. and the director of the baker institute for public policy. he joins us from houston. >> a foreign policy and strategic move to continue to put pressure on iran. it has more of a political motivation then it does an economic motivation. economic sanctions is to put right -- put pressure on the withe so it will compliant
changing its behavior in the region. >> do such motivations cause a country like iran to comply? deftanians have been very in living with the sanctions and avoiding the full impact of by -- we could use the there areage." various avenues in which they can do that. it will take 1.5 million barrels a day of iranian oil off the export markets. that represent 5% of the global export market. problem if the oil and energy markets were tight. the oil markets are not tight.
the saudi's have indicated they are going to continue the flow of oil. the markets are not tight. i don't think this is going to have a major impact. >> good morning. things thecritical energy market is trying to figure out right now is that there have been eight countries that have been allowed waivers. out whatiting to find the details are surrounding how many barrels we are talking there. how many barrels would you expect those waivers to include? sheetaven't seen the fact that secretary pompeo said there will be more information coming out on these waivers. these waivers are temporary.
he indicated two countries already complying. i have no idea what the numbers are. >> you bring up the temporary nature. for those countries with waivers to comply. i would imagine the trump administration would be looked -- what look to be doing that a little bit quicker. maybe 25% is a number we would be looking at? >> i think that is probably in the range. you mentioned two countries have ceased importing of oil. i think basically what you are going to see is the administration pushing the other
six to comply with a more effective timeline. >> french officials say they deeply regret this is happening. they will continue to do business with iran. how does this impact u.s. eu relations? >> there is a major difference and a rift between the united states and europeans on the whole. the nuclear deal that the president obama administration struck. that includes germany and members of the u.n. security council. this is a major policy difference between the united states and europe and china and russia. the issue is not whether the --p see poa -- jcpoa
that's the fundamental issue. the trump administration saying it was a badly negotiated deal, it did not impact on iran's negative behavior in the region, be it supporting various groups through the vehicle of oil and sanctions, the trump administration is putting strategic pressure to change its behavior. it's anyone's guess if the's sanctions will change the iranian regime's behavior. what bothers me is sanctions alone, while they can be an effective instrument, if there is no area of discussion between the united states and iran in terms of changing its behavior,
it seems that pressure alone is not going to achieve it. at $64 point four cents --$64 and four $64.04 per barrel. let's check in on the first word news. >> president trump has rallies set for ohio on the final day of campaigning before the midterm elections. are to gainemocrats control of the house of representatives. read -- polls have narrowed in recent weeks. using ping has hit back against president trump's protectionist trade practices. she told the conference that the law of the jungle and when take of policies are dead and speed he also promised to further cut tariffs on imports and china's
open market. in indonesia investigators say between the boeing 737 a crashed -- those problems involve the airspeed indicator. and u.s. safety officials to take corrective steps. in the u k prime minister theresa may's cabinet will discuss brexit tomorrow. she probably won't ask ministers to approve the deal. hopes to find an agreement with the european union later this month. powered by more than 2700 journalists and analysts. this is bloomberg. vonnie: coming up, the battle for congress. we would take a look at candidates nationwide in the final sprint before the midterm elections. this is bloomberg.
vonnie: from new york time vonnie quinn. guy: in london i am guy johnson. >> candidates nationwide are in the final sprint as voters prepared to make their voices heard. bloomberg chief washington correspondent joins us now. i have been ready for months. there are some anything's to get excited about. nevermind the amount of races.
>> let's focus on the senate right now. are 35 races in total but it's interesting when you look at the breakdown. then you look at the 26th democratic health seat. they could extend their majority in the senate. democratsrke is the that democrat running against the tea party. president trump was able to carry this in the last cycle. if congressman o'rourke become senator elect o'rourke, this will be a massive upset and a sign the democrats will have a strong night. democrats are helpful. toy need the magic number flip the majority in the house of representatives.
talk and been a lot of chatter about the size of the blue wave. what type of democrats are being collected? theressman andy barr is republican incumbent. even a democrat fighter pilot is tailor-made for this specific world district. this is what she sees on in a district that president trump carried from 55% to the 39 margin. president trump is going to be making campaign stops in ohio, indiana as well as missouri. has a hard race on her hands. >> making some comments
vis-a-vis china, the president saying he wants a china deal or he saying china wants a deal but no deal would be fine tuned. how will the outcome of tomorrow's midterms affect how the president deals with china going forward? >> the president taking that message in the swing of the states we just mentioned. the rhetoric against china is going to play well, particularly against working that -- working-class voters. the was the crooks of coalition that allowed him to extend into the white house. china. tough against talking tough against european allies, it's going to help him. especially with this interesting mix of populism with the populist streak on the left and
populist streak on the right. look no further than senator he's agreeingand with the president on tariffs. i want to pull up this chart. 500 has consistently been outperformed in years with a midterm election. >> that's an amazing number and an amazing stat. there are plenty of problems with saying this time is different. gearing up for our election coverage right here. david westin is going to be leading our all-star team, which includes kevin cirilli. plus market reaction.
european finance ministers are meeting in brussels. what are they arrive at in terms of conclusions? >> it's all about like you've pointed out. we have been hearing reports that suggest the european commission is already preparing to work on sanctions. i have to tell you the european commissioner for economic affairs tells me no position -- no decision has been made. let's take a look. >> we have already taken decisions. step-by-step.
the rules are quite precise. we are to make sure the structural deficit is reduced was the european commission. no decision made. the european commission does not want to get into political fights. >> thanks very much indeed. few sessions and meetings in brussels. we are going to get more on that throughout this week. this is a guy that gained fame. our managing editor for ema
finance joining us now. i think it was over the weekend. he talks about the fact he was shorting to u.k. banks. >> he didn't point out which ones. what you are seeing is some investors are positioning themselves as we get closer to that date for that no deal scenario. readout fromas a the stress test on the u.k. in which there was a greater economic shock in the country. there is some thinking that has been shared among the investors that they may ought to be looking at more closely. >> you did have the bank of england governor saying they are assigned the bank of england and
they assign stressful scenarios. do you have disbelieve what he is saying & co. >> there are a lot of unknowns. how the market might react to no deal scenarios and the immediate we have the operational impact. not enforce anymore because of the fact that they are not in the right jurisdiction. this is a clearly unprecedented scenario we are going into. can take a bearish view of the european banks as well. there is an increasing number of articles landing in my inbox about the concern around
clearing from eurozone banks. they will no longer have access to the clearing. >> this is part of what we have been hearing. and what it can do to help a lot of clearing done in the u.k.. and quite a little detail. what people are desperate for right now. covering all the financial angles around brexit right now. it is an incredibly low volume session. volume low volatility session. elsewhere it has been a very quiet session.
colored in gray. the levels in europe are going .owhere and nowhere in a hurry i want to show you another function on your bloomberg to -- on your bloomberg. thepean volume is way down way you would normally expected to be. the blue line is an average day over the last 30 days. we are significantly below that level. the market up, sitting back, saying we do not quite understand how other investors are going to react to the midterms so what we will do is sit back and not put it a extra -- any extra money to work. these levels, i can show you is now in the market a holding pattern in advance of the midterms good the ftse is up, the dax is down. stocks have come up on the trade story which is given back some
ground on both sides of the atlantic. we had a euphoric session in the backside of last week. paris finishing flat. let's see what the individual market moves look like in some of the individual names we are watching out for. trying to get a sense of what is coming out of this. this is the function on your bloomberg. chemical stocks have had a better day today. some of the battles and mining stocks are in the mix. this is a payment system based out of the u.k., it is trading up 3.57%. check that story out on your bloomberg. a quick look at the bottom end of the market. pandora is trading up. pandora is a heavily shorted stock in today's move those shorts are getting paid off. it is trading down 7.73% at
copenhagen. that is look at the european markets. ,onnie: here in the u.s. clearly tomorrow the outcome is going to change a lot and there are many traders waiting to make sure what will happen and there are plenty of idiosyncratic stories to be trading on and that has the s&p 500 up to 1%. a lot of great performers. the qt is one of the leaders in the s&p 500, more or less on earnings news. there are other companies trading as well. lily trading higher. the nasdaq down 1.1% is taking a beating. we take a look at the 10 year yield before the election. you never know what will look like at the end of the week. it is at 3.19 and crude oil 63.61 after the iran sanction waivers.
global macro movers. g20 movers include mexico and turkey. some of the merchant market countries are doing pretty well equities wise. 6.925, stronger than .as been in the last few days that is all we need to take a look at now. natural gas up 7.8% which is more than likely why eqt is trading well. guy: karsten schroeder, let's start it -- let's talk to him and get a sense of where we are sitting. midterm, thehe market today judging by the volumes has taken its foot off the gas. everyone is waiting to see how the market reacts to the results of the vote. how colored do you think are people's views on the midterm by the way the market got 2016 wrong? back,n: everybody holding
people are super cautious with such a close race. it is very hard to put a bet on. i would say generally speaking we have a lot of geopolitical risk going on. it is not only the midterms. we have a very unstable situation in italy. not totally unsurprising in brazil. more and more nationalist tendencies in europe. i would not be surprised if we would see a confirmation of the trump policy being more protectionist and more nationalist. that could further -- fuel further inflation, not through more expensive import but a more supportive domestic employment market which brought fuel inflation domestically. guy: do you advise people to hold btps at the moment and what kind of risk should i be setting
myself up for? between the eu and italy is a tale risk, but that is growing. karsten: i agree. investors ise to to be positioned to either provide direct protection as far as downturns go, or to diversify the portfolio along with trading strategies, although we do realize that this year so far thebeen disappointing -- transition period we have seen coming off an almost nine-year zero interest rate, very strong equity markets, really, and that transition will pose a challenge to the more trading related strategies. once we come to the end of the cycle, they will show the benefits. of heavyitioning
portfolios is essential because i do not think because at the end of 2018 or 2019 will continue what we have seen over the last nine years, so adaptation is necessary. vonnie: from where into where? karsten: in a way. .e are at an inflection we do not know how the lending will be or how it will materialize. we will see way more to coupling . we can see a different development in europe and in china. as far as valuation goes, the u.s. is still holding strong but we have the challenge with interest rates going up. it will be more of a? as far as europe goes because the ecb has not been as clear in terms of the outlook. we have a better and consistent policy in the u.s. i think eventually we will see interest rates going up in europe as well. what is attractive, what
individual aspect? you say the correlation is breaking down. where do you see the returns being more likely? karsten: i think it is going to be challenging to generate positive returns going forward. i think you have to be positioned in trading strategies. you have to participate on the short side. the short side could become attractive in equities. vonnie: be more specific. -- where side geographically? karsten: geographically it will be -- europe will suffer more than the u.s. we have seen that on the short side in february and october this year. the recovery we have seen subsequently is much stronger in the u.s. than europe. if you look at the intraday numbers, we are much weaker. with all the uncertainty hanging
over the european economy with brexit and italy and other elections, i think europe will be a weaker place. about what ik you do with my currency hedges? do you expect the dollar to go higher and when i am speaking as the european investor and the states, how that changes my philosophy and the united states investor into europe. how big of a factor is the dollar going to be in the second half of the first trump administration? karsten: there is a range of factors. there is the interest rate we have between the eurozone and the u.s. -- we do not know how that plays out. we saw a stronger dollar 10 had -- people
would do the flight of safety into u.s. treasuries and that is a hard one to predict. , for the last couple months, we have seen a hovering around the 115. muchld not expect too volatility in the near term between the dollar and the euro. vonnie: thank you for joining us and the results as they come in. that is karsten schroeder, ceo of amplitude capital. let's check in on first word news with courtney donohoe. courtney: polls show the democratic party is set to win a majority in the house of representatives. a cbs news survey projects democrats will win 235 seats in the house. still, republicans hope president trump's campaigning and tv ads will make a different. the president has rallies today in ohio, indiana, and missouri. granted eight
countries temporary waivers to import oil from iran. the trump administration announced the exemption as it ramped up sanctions on the islamic republic. more than 700 entities were targeted. secretary of state mike pompeo spoke afterwards. >> the regime has a choice. it can do a 180 degree turn and act like a normal country, or it can see its economy crumble. we hope the new agreement with iran is possible, but until iran makes changes in the 12 ways i listed in may, we will be relentless in exerting pressure on the regime. courtney: the new sanctions follow president trump's withdrawal from the iranian nuclear agreement. the u.s. is pressing the united nations to do a thorough investigation into the killing of saudi journalist jamaal khashoggi. -- the trump administration out of the council in june.
the request for an investigation into khashoggi's killing came during an investigation by the un's top human rights body. the supreme court has ended a court fight over appeals of obama's net neutrality rules. the court rejected appeals from the telecommunication industry seeking to throw out a roller court -- a lower court ruling that favors net neutrality rules. the trump has rolled back those roles. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over than 120 countries. i am courtney donohoe. this is bloomberg. guy: thank you very much, indeed. just to say, tune in if you're driving home after this program. jonathan ferro and i will be on air with the cable show on bloomberg radio from 5:00. we will talk about italy, brexit , and a great deal about the midterms.
guy: 44 minutes after the hour. time for our global battle of the charts. you can find all of these by running gtb go on your bloomberg. kicking things off is mike mckee. mike: we have a fed meeting on thursday. nothing expected to happen, but a small possibility we might see a move in excess reserve rates. you want to pay attention on thursday just in case. it could happen in december but
it is a possibility this time. the white line is the federal funds target rate. that is the top rate. the yellow line is the bottom rate. fed funds are supposed to trade in between. the ideal is they trade in the middle. in the last couple of weeks, we have seen the fed funds the , muchive rate trading up closer to the top. the purple line is the interest on excess reserves. that is supposed to be the top. because funds traded to that level, the fed lowered reserves by five basis points, so it trades below the top of their target range and now we are pushing up against that again. there is some feeling and good chance they will lower the interest on reserve rates and other five basis points, so will run 10 basis points below the target range and try to push down on effective funds. otherwise they worry they could lose control of monetary policy
and the market which is it higher. it may not happen on thursday, but it is the kind of move they could do without freaking the markets out. if they think it is a big problem, they could come on thursday. guy: fantastic chart. vonnie quinn, over to you. vonnie: that is one thing to keep an eye on. many things to keep an eye on. i'm looking at the potential for development with china. it will not happen this week, but we already got comments from president xi and you look at the markets to see if they are taking it seriously. takenou can see china has the market for soybeans and reduced imports to the u.s. by almost all, and the beneficiary is brazil. we knew this but it is something to see on the chart. look at how far down china has gone in terms of importing soybeans from the u.s. and look
at how much more it has been importing from brazil. to a been prices are in the toilet. they have been bouncing in the last couple days. perhaps it is on this potential china detente, which is not going to come for a long time. guy: this is a very tricky decision. that is an amazing chart as well. these are two of the best chart i have seen in ages. i am going to give it to mike mckeen. i like the soybean chart. it is something the market is talking about, but when mike about the feds is losing control of monetary policy, that got me sitting up and paying attention. vonnie: that is the headline. be: mark mckee, not meant to that exciting of a meeting, but now you have me paying attention. you can find all of these charts gtvtb go on your blue -- at
guy: live from london, i am guy johnson. vonnie: from new york, i'm vonnie quinn. this is the european close on "bloomberg markets." guy: president xi has hit back against president trump's protectionist trade policies could >> in a world of deepening , practicesoperation like the law of the jungle and winner takes all represent a dead end. inclusive growth for all is the right way forward. ay: president xi promised further cut tariffs on imports and open china's market. joining us is bloomberg's shaun donovan. sound like a man expecting a deal to get done? >> he is dancing the final line
he is been dancing all along. he does not want to be seen to be caving to the pressure from the u.s. at home. at the same time, in that speech beyond the law of the jungle, though he did not mention the u.s. or donald trump, it was clearly aimed to this way. there was some other stuff, pledges to reduce tariffs and open up markets. this was a long speech that had something for everyone, but clearly everyone focusing on that barb. vonnie: you know china has an end goal. what is it? thatis a huge superpower is barreling its way to 2025 and 2030 and it does not matter what the u.s. does, does it? guy: -- shawn: that is a great point. in any of these negotiations, the priority for beijing appears to be to not get derailed and
.ot get thrown off this track this made in china 2025 track which is tried to lead the world , or get into a top position on areas like robotics and artificial intelligence. the ball of the trump administration is to try and stop china in some way, to contain it. we have heard vice president mike pence and others talk about the advent of a new cold war in terms of stopping chinese economic aggression. isre is no way xi jinping going to give into that in no way donald trump will abandon that easily and that is why we have to be careful when we talk about deal or no deal. guy: what is a good outcome for china and the u.s. midterms? shawn: i'm not sure. carefullyatching this
and i think they will look for any sign of weakness in donald trump. how does he come out of this on wednesday morning? there is one race i am watching carefully, and that gets into the chart you had before hand, the losing chart on soybeans. that is the late -- that is the race in north dakota and heidi heitkamp. campaigning actively against trump trade policies and pointing out soybean farmers in north dakota are getting hit hard. she is behind. tuesday andn upset she wins, it will be read as a clear repudiation of trumps trade policies. that is not a bad result for china. that puts things in a different light. vonnie: china is cutting tariffs on other countries. it is importing more goods than it did, no matter what the u.s. does. will china need the u.s. -- meet the u.s. even part of the way with something like intellectual property? shawn: there was stuff in the speech on intellectual property.
xi jinping pledged to crackdown, to penalize people more severely, to have a formal look at the process for intellectual property violations, and that is important. that is a big ask for the u.s. and companies around the world. a few things you can build on if you want to start outlining a deal. the big existential question of chinese industrial policy and china's goals for the future has not changed. nennie: bloombergs shawn don keeping a close eye on u.s. /china trade relations. now it is time for our stock of the hour. we are turning to one of the brighter spots. under armour shares are up by a third. here with a look at the reasons why is romaine bostick. it is the best-performing
stock in the s&p 500 over the last 12 months. if you look at what they did over earnings season, they had a 27% top in their stock the day after their earnings. when you prepare that to some of the other s&p 500 stocks, this is the best earnings we have seen of any s&p 500 stock. part of this has to do with the fact that under armour was beaten down back in october of 2017. it has almost doubled since then and a lot of this has to do with the fact that it dealt with its inventory issues, got rid of some of its less profitable product lines, spent less money signing big-name sports stars, and that is help the financials and is helping these stocks. the the short position going into these numbers? it feels a bit like a squeeze in the stock. there are a bunch of notes that are positive. vonnie: we continue to talk about it in our bloomberg, if
you want to take the bloomberg you a equity fi and you can see what the short position is. we can go back about a month if you want to see the difference. about 8%. >> there are a lot of people looking at under armour as a rebound play. they have lagged their peers like a deed as which were doing things resonating with consumers. they managed to get this cachet back over last few months. we are starting to see analysts upgrades come in and razor outlook for the stock. -- and raise their outlook. vonnie: balance of power is next.
world headquarters in new york, i'm david westin. welcome to "balance of power." stephen gallagher on china trade and midterm closing arguments. from brussels. let's start with cheap and caliber -- let's start with cheap and gallagher. there was quite an exchange about china. the president said it was going the right way and then larry kudlow said do not go so fast and president xi was firm. stephen: there is no quick game with china. china is in for the long game. they want their place in the world. they are a large population. they want their economic power. even if we see current tensions dialback, the game is not over. china wants to be one of the leading and at least equal or on par with the u.s.. we will co