tv Whatd You Miss Bloomberg November 12, 2018 3:30pm-5:00pm EST
mark: i am mark crumpton with "first word" news. in her first interview since being named head of the san francisco fed, the president told bloomberg that u.s. policymakers should be gradually lifting interest rates. she says that will help bring an economy that is running above potential in for a soft landing. daly voted for the first time at the fed policy meeting this month and will vote again in the mid-december gathering. officials are expected to hike for the fourth time this year. a florida judge says he has seen no evidence of wrongdoing in vote counting in broward county and urges all sides to "ramp down the rhetoric."
the judges said that during an emergency hearing today there is a need to reassure citizens that the integrity of the florida recount is being protected. governor rick scott was leaving the senate race against democratic incumbent bill nelson, has shrunk to 0.4 percentage points, said on sunday that nelson wants fraudulent ballots and those cast by noncitizens to count. democrats say the goal should be to ensure that every vote counts. >> what we saw over the weekend, starting thursday with the governor's has conference and continuing through the weekend with statements from the government, senator rubio, and president trump, is an attempt to undermine people's faith in what is happening in florida and ultimately undermine people's faith in our democracy. that is the wrong approach. it is a dangerous approach. 67k: all of florida's counties face a thursday deadline to complete the recounts. ojettamy veteran richard
has announced he will run for president in 2020. the west virginia democrat lost his bid for a house he last week. runupported donald trump's for the white house in 2016 but reversed course to become a critic for the president. ojeda joins maryland democratic huntsman john delaney being among the first to formally announce a 2020 bid. french president in mental macrontoday -- emmanuel today met you might secretary-general antonio guterres for talks. it came a day after he and angela merkel opened up his former in paris commemorating the 100th anniversary of the end world war i. terres one forum, gu is that the world today has several ingredients that led to the failure of peace after world war i, including trade conflicts, polarized politics,
and the failure to solve inequalities exposed by the true thousand eight financial crisis. i am mark crumpton. this is bloomberg. ♪ scarlet: from bloomberg world headquarters in new york, this is "bloomberg markets: the close." i'm scarlet fu. caroline: i'm caroline hyde. it has been a brutal day. we have nearly all the industry groups in the red the moment. we're seeing a three-day losing streak continue. what, one a laggard that's a laggard -- apple, what a laggard. it goes to the rest of the
market follows. scarlet: absolutely. technology is the worst performer. crude oil has turned around. to 11extending its losses straight days. it is in a bear market, and opec agreed to production cuts, but it is not working. crude oil below $50 a barrel. caroline: at the moment it seems to be trump cutting on talks of supply cuts. when you have a strong u.s. dollar as well, global geopolitical tensions are casting a light on whether we get global growth. scarlet: important perspective. you are seeing a bid for the etf that tracks long data treasuries. it is veterans day in the bond market is closed. one big loser we are keeping an eye on his general electric. it has been ugly for ge.
down the 14th time in 16 days. institutional investors may be capitulating, cleaning ge out of their portfolios. as it is one to watch almost eight dollars per share. one bad apple is spoiling a bunch of suppliers. it is leading supplier losses, all following amid fresh signs of an increasingly weak demand for iphones. apple shares are plunging as well. what do you make of this momentum announcement that one growth, onereas of of their key clients saying, look, we are cutting down our orders, and we assume that has got to be apple. >> tough to say, given apple's size. it is definitely not good news. one thing to keep in mind is apple's strategy with the iphone hinges on driving a price, not unit shipment.
my thought when i saw the news is this really reflects the emphasis that you have. 10s's are 10s, both more expensive than the 10, and the xr is more extensive than the iphone 8. apple is moving upmarket in terms of price to make up for the volume shortfall. scarlet: apple is not giving unit sales numbers either, supporting the idea. what is altogether -- put this all together. this is where apple needs to hit it big. they do need to hit it big. i'm glad you asked about that. we are in the holiday selling season now. the action really happens after black friday. i don't think that apple or any other retailer as a really good view on how christmas is going
to go this year. i think apple personally isn't a very good position, having -- 10r, ore 105, or xr as it is sometimes known. it comes in a variety of colors. they are going after the consumer market with this. interesting to see how it sales through. scarlet mentioned that iphone shipments can we will not get a breakdown. how does that help or hinder you from being able to analyze where the future path is for apple and what the pricing information is going to be? >> i took it is nothing but bad news. i don't really in a way understand the move, because you are reducing transparency and the timeline frankly come as we have been talking about, the core product, shipments are
slowing, and your strategy is to boost price. if you are no longer revealing average selling price for unit volume, for and analysts and investors, it provides less visibility, and friendly, wall street does not like the uncertainty. scarlet: john butler of bloomberg intelligence, thank you so much. missing apple later the way lower -- we are seeing apple lead the way lower. coming up, it is not just the tech names. financials are in the red, along with other sectors. we will get a check on what is driving the banking industry lower. this is bloomberg. ♪
wells fargo is boosting the price target to a street high of $55 a share. analysts say it is one of the most interesting names heading into next year. next come and apple a blanketing downgraded to neutral from -- and apples of player getting downgraded to neutral tfrom buy. finally, bank of america-merrill lynch downgrading our company -- company to neutral. those are some of your top calls . scarlet: homebuilders and tech not the only sectors getting burned. banks are in the red, with goldman sachs leading the way. you can see goldman is off by 7.3% at the moment, trading at the lowest level in two years.
financials, red across the board, but gold in particular getting punished. >> what is the reason for the weakness in financials? a lot of them all point to the on mdb scandal. the finance minister in malaysia said they would request all the fees they pay goldman sachs to be refunded. that is why we are seeing some outside weakness in goldman sachs. worst day for goldman since 2011. at the same time, you are seeing across the board. the s&p 500 financial sector, only two companies in the entire index are higher. goldman is not the only one taking a hit. caroline: we don't have the bond market open. we have etf's showing that there is a bit of buying out there. is this just what happened over the weekend? more evidence of geopolitical
tensions? sarah: it seems that people are very jittery. one of them is that the fed is raising rates. some people always look to that as a reason for financials to do better, but at the same time, andle have the yield curve i spoke to someone at pacific life advisors and he said that if you look at financials at large, for the most part they are in line with the client -- with the declines across the market. if you look at how much financials are selling off, it is in line with what the rest of the market is doing. scarlet: this is a pretty broad retreat. the russell 2000 is falling quite a bit. it is in the red. usually after the midterm elections, people feel more comfortable. should be the makings of some
early. -- some early. what are you hearing when you talk to people? sarah: everyone seems helpful, they keep mentioning the santa claus rally. we have been lower in the fourth quarter five times. everyone seems hopeful. they keep looking to these statistics from saint eventually we will get back on track. for the time being, concerns that remain ahead of them in terms -- the midterms we are still dealing with trade. maybe we will get movement forward at the g20 meeting between president xi and president trump and that could spark the santa claus rally. scarlet: we have just over a week of this to go before we get some kind of resolution, perhaps. caroline: a week of talking about it. we are likely to see lower volumes. sarah: when you have lighter volume, you can see large moves one way or another.
potentially that is what we are seeing in certain areas. however, we've seen stocks lower , but it markedly in the past two days or so. just today. i don't think we can blame the lighter trading day. it allows the investor sentiment to shine through. scarlet: ge is something we are keeping a close eye on. it keeps sinking and sinking. interesting with big shareholders dropping out. sarah: the market is open today and we saw ge going even lower. it was pretty amazing. yes, ge has been struggling a lot lately. people were hoping that the new ceo would turn things around. clearly it looks like investors are not very happy, and they will be putting a lot of pressure on him. they probably set the bar very high you will need to see a change. scarlet: thank you so much. as sarah was just saying, u.s.
caroline: this is count down to the close. and caroline hyde. scarlet: i'm scarlet fu. joining us is not joe weisenthal -- he is overseas, but remaine -- romaine bostick. not a great date to you are the equity markets. romaine: amazing day, though. you think of how many sectors are down, but the first email i got was from a colleague saying you see how many stocks are still in correction territory.
inthe nasdaq 70 stocks correction territory. three quarters. half of the s&p 500. names -- the big apple, amazon, home depot. caroline: amazon is nearly bear. romaine: they are down 19% from their session highs. you have apple down 16%. scarlet: there is a broad reassessment going on in u.s. equities. you can see it in today's sector performance as well. off byogy of the bottom three 1/3%. caroline: it is veterans day and the bond markets are closed. scarlet: bond prices are doing a
little bit better. we started out lower and we cap to sinking lower. 10 minutes to go before the off., nasdaq we are just moments away from today's close. let's dive deeper into the equity action. romaine would get us started. romaine: thank you, from a new position here. this idea that the s&p 500 typically rallies in the fourth quarter of each year. that theory has been fairly consistent about 25 times in the past 30 years since 1998. six ways back into the fourth quarter and we are down 6%. usual -- usual we had to dig out of. -- huge hole we had to dig out of. we may not even find a floor until we get to the first quarter. there was hope last time we started off the fourth quarter.
that was in the fourth quarter of 2016. we have been on a rally of 7% over the remaining weeks. when you look at the mixture of companies that are above and below the 50-day to 200-day moving average, it gives you a little bit of hope that we could finish of the quarter. if we finish positive, one piece of it will be the airlines. 1.9%, significant, up after goldman sachs gave an attractive rating, saying that growth from the bigger airlines help to the sector and american airlines with a buy rating. it could outpaced interest expense headwinds. perhaps they will be a bright spot for the stock market towards the end of the year.
take a look at the 10-year chart. while they are not exactly inverse, out of the 2009 bottom we have oil trading sharply higher. theairline torpedoing along airlines are -- the airlines are peter a lot. as oil has been trying to weover the last two years, have oil going back down and the technicals suggesting we could see it go lower. it could perhaps be another positive for the airlines. >> alongside airlines we are seeing the more defensive areas of the market outperforming today. i will bring you a chart showing maybe how nervous investors are. what you are looking at here is the price-to-earnings ratios for procter & gamble, almost the most space you can get.
the company that sells diapers, cleaning supplies, things about some -- things of that sort. the ratio is above that of the nasdaq 100. investors are willing to pay more than for risky companies like the nasdaq 100. the spread is indeed growing. caroline: thank you, sarah. we will have analysis on the extensive losses we are seeing across the board. we've got headlines in terms of tariffs on the auto sector. we understand that trump is planning meeting for tuesday with the treating on the auto report. there traffic a report on auto tariffs. people are-- three speaking to bloomberg. chrysler under pressure. d holding its- for on the starting to lose ground.
scarlet: adding to the trade tensions that have been percolating. let's move back to technology. that has been the loser of the day in sector performance. caroline: worst performer of the day, falling by the most in three weeks. drag on they a key sector right now, looking at reports that it is cutting more from its apply. >> most definitely. if it continues, it will be a new phase for tech. borings more of your tech in that it usually trades around the market or below the market. fightors like to throughout this for -- hid out throughout this recovery. it would be a sign that the tech rules are broadening. romaine: what is interesting is
that the tech sector is not as high as it used to be. luke: definitely not. essentially because the reset that happens with forward p's around the turn of the year, the extent to which it it opens the s&p 500 is at its lowest levels. we are in a situation where were defined evaluation for tech? -- where do you find the valuation for tech? it is basically hired than it would be at any point for 2016. you can be disappointed for a while, but potentially based on the past years of history. scarlet: you are going to stay with us, because with 2.5 minutes to go before the close we want to bring in the director of folio strategy. i look at technology, and there -- an earlier point summer we're looking at tech falling. can the market stabilize without tech participating?
>> when you break leadership it will be very hard for the s&p to move higher in a way that investors have become used to over the last let's call it 10 years. we broke leadership and it is hard to get back because we are finding out that the fundamentals are not as terrific as they were. earnings down on several large companies during the earnings season. those two things are enough to break it. romaine: how do you factor in the recent rise we have seen in oil prices? we are still seeing that persist and weigh on not only a lot of companies but assets. >> it has weighed on assets. since the u.s. is an oil producer now, it tends to be more of a positive than a negative. you get a lot of investment and earnings, for us right now. so i'm not worried about that so much. i'm worried more about the fed and china.
caroline: with the fed situation, and when i want to gr take on the banks today. at one point, goldman off by 7%. obviously mother is concerned of a scandal surrounding what is happening in malaysia, but is there more to that in terms of the banks? seen i think if we had what we sell with a fixed income space, that did trop today in terms of treasury futures, you probably would've seen the yields come down and perhaps more of a flattening of the curve. not exactly where the banks would like to see it. as long as we are talking about dollar strength in conjunction with the tech leadership, this kind of raises the story that this is more about a slowdown in global growth. but goldman sachs is one of the most globalized companies in the world, so this will hit them along with it. scarlet: you are long financials? alicia: we are. the balance sheet is
fundamentally healthy and we think you can hide out here for now. caroline: hideout is probably what you need to be doing. the bell is ringing. and the s&p 500 is almost below 2%. and tech is clearly lacking. scarlet: i am looking at the worst performers in the dow industrials. four gainers out of the 30 stock measure. goldman sachs, the worst performer, off by almost 8%. apple is the second worst performer. an incredible they we have the 10th worst decline are in the dow off by better than 2%. ibm losing 2.5%. caroline: and just how many of these companies now entering not correction territory, but bear market territory. what was the biggest mover? romaine: we have talked a lot about tech, but you saw the financials, you saw other companies taking a hit, and you wonder are there fundamental factors why they are selling off, in particular like the
financials, or is it that indiscriminate selling we saw in early october? caroline: let's dive the deeper with abigail. what are you looking at? abigail: as you are talking about, apple is the point of pain today for the market. take a look at this chart, apple down more than 10%. a correction right here on the month. and more than 15% off of its all-time high. this is from earlier this month, after they reduced their holiday quarter outlook, confirmed by the suppliers also having weaker outlooks. but we have been looking at the technicals ahead of the report that suggested a drop could be possible. let's take a look at a chart we looked at before. we have been looking at this, telling you that out of the last bus to cycle when they reported a revenue decline, the buyers were in control. although it was in small amounts. earlier we looked at it in relative to the 50 day moving average, clearly below that, but
we have replaced it with a 200 day moving average, because apple right now is hitting down on the key measure of support. the question is whether or not it will hold the bottom of this channel. take a look at the rsi we added to the chart. may suggest a little more pain ahead, but over all this could give an opportunity for the buyers to step up. but if they do not come it could be people not just for apple, but the overall markets considering may suggest a little pain the weighting it has. caroline: thank you. >> interesting. i am watching the tech space, looking at xlk. apple is its biggest holding. that was down around 3% today. and we have similar weakness in something -- in some faang funds. abet and owns alph netflix, and we saw a record outflows out of that fund on friday, with investors pulling
$389 million from xlc. and the fund is down around 8% since october. investors are concerned that the weakness we see in the tech sector could be here to stay, and that includes some of the concerns over unsustainable profit gains, rising rates, and of course the trade war with china. joe: ok, border 50 companies have reported earnings. -- about four to 50 companies have reported earnings. romaine: but this does not tell the story. you little revenue growth and you had about a .4% revenue growth, a percentage point less than in the q2 reporting season. and when you look at guidance, we are looking at about 6.25% revenue growth for the fourth quarter, same for the first quarter of 2019. and think about some of the guidance we got. last week, we had 30 to companies in the s&p 500 that issued guidance. 13% of them guided up. that is 20%. and on the revenue side, 35
companies providing revenue guidance, 19 of them guiding down, six guiding up. so what we see is a lie waiting toward moving investor expectations down, whether it is on the etf side or on margins. caroline: great breakdown. i want to bring you up-to-date headlines coming from theresa may, who is speaking at the moment at a banquet in london. she is expected to address the state of russian intelligence capability, but of course she have to pay lip service to brexit. she says they have been working through the night on the remaining issues in the brexit talks, "that they are significant and negotiations are in the endgame." the pound has been under pressure today. check out more on your bloomberg. scarlet: that to the u.s. markets. we still have alicia levine with us and luke sticking with us as well. i want to talk about the conditions overall. the monetary conditions, because they are tightening -- i do not
want to say they are tight, because historically they are not, but they are tightening and they will get tighter as the year goes on. alicia: we are seeing the effects of that in the emerging markets. you are saying that when the corporates and countries barred at a low rate, countries kept coming back for more. and as rates are going up, that is no longer sustainable. so we're going to have tightening in europe, we have tightening here, and it will be a problem for the global economy. caroline: fantastic. something to be thinking about. talking about the emerging markets, they have stumbled and it is so much related to the u.s. dollar strength. the dollar was higher again. do you see as a one-way bet? alicia: in the near term it is, but not forever. primarily as long as the trade war with china goes on, the dollar will remain strong. europe has a problem with italy, and they have a problem with brexit, so as long as you have
these front and center the dollar will remain strong. this could go willing to 2019. unless there is some breakthrough with china. and i am not betting on that. romaine: we talk about e.m. as a donket thing, but if -- do we have sort of the good em's or a bad em's? alicia: there are different emerging-market economies. brazil is looking interesting now, india, even china, even though it sold off 30%, we think it is at risk simply because it is not really clear where the fight with the administration is going. i tend to think it is less about buying goods from us and traded deficit and more about intellectual property and china 2025. that is an existential thing, so it will not happen over at the g20. i think that this will go on for a while. scarlet: luke, one thing that
joe often talks about is how the u.s. is looking more and more like an emerging market. so especially when it comes to political risks and things that could throw the entire market narrative off course. we certainly see that today with the president's comments, whether it is on oil or anything else. luke: i think it was a risk a lot of folks in the energy space were looking out for, the idea that saudi arabia can try to establish itself, or reestablish itself as a producer, but have to navigate its own relationship with president trump, which is ever-changing and eovaldi -- and evolving. stocks, itd e.m. becomes tough because even if you look at how bad u.s. techs have been doing lately, they have been met and it is a leverage play on the exchange rate is how bad it has been
doing. until you get that stabilization, which it china is trying to make steps to give us the market that it does not need to defend the yuan, until there is a buy in, it is difficult for chinese tech to perform. caroline: we have been talking about china and the u.s. and those concerns there, the fact we can see it adding to the cost coming into the u.s. at the moment. and the auto sector -- what do you think about inflation at the moment? alicia: we think it is welling third here. -- well anchored here. we do not think it will be spiking higher. but the question is how long can the tariffs go on? because we have started is the input costs rise, as british costs rise, and labor costs rise, and that will either have to be eaten by the corporate or passed on to the consumer. romaine: i think what gives you a view on how little or how much oil dominates the inflation
conversation right now, if you have inflation caps that protect against inflation at the higher, or lower than 2%, essentially the pricing and production for downside on missing the inflation target to the downside is now what is on the rise. and cost is up as you see wages kick into higher gear. so that shows how much oil can overwhelm whatever prevailing narrative there might be from the u.s. economy on inflation. romaine: about the fed. are we going to get to a point in the tightening cycle in the u.s. where over in europe and asia they are actually going to move at the time when we will be going the opposite direction? alicia: that is right. you have to ask, is that feasible? i do not think it is. what we see is the fed raising two more times next year, then a pause. if that happens, the ecb will not be raising rates. it will be an awkward situation. we are worried about growth and the ecb growth. i do not see it happening.
so that is why see the dollar menu stronger, longer, because the ecb will keep pushing this out. a year europe is a really long time. [laughter] caroline: don't i know it. scarlet: we have been talking about how last year, earlier this year was the year the divergence trade. the u.s. went off on its own, everybody else bumbling along. now we have convergence, is this how it will play out with the u.s. coming down to everybody else? alicia: it seems to be that are markets are more in line with what happened in the rest of the world. however, it is clear the u.s. is driving the growth in the global economy. the global economy is still fine, it is not exciting, it is a little bit worn out and not as good as it was in 2010, but we see some growth next year and that is powered by the u.s.. romaine: when you talk about divergence, the narrative seems to be the u.s. can continue without strength in europe or china or in greater asia, do you think that is possible?
alicia: i see strength in europe. i do not see a recession, and i do not see the end of growth. i see slower growth. as long as you have growth and growth in the emerging markets, and in china -- do not forget, 6% growth is still growth -- so as long as we have that we can be fine here. the issue is coming who goes first? who rolls over first? caroline: we will need your investment management expertise, so you are saying it looks nice on financials? is now the time to buy? alicia: you have to have a strong stomach. having been around this, i would say that we are testing 2600 on the s&p. and i would not have said that a week ago, but with the trade action in the last few days, it tells me the market is not done, not done testing the level where it is comfortable. i think we will go to 2605 first. scarlet: how quickly? alicia: i do not like calling
how quickly, because it is a technical, structural think. i think it will retest the lo w. if it holds, then we can move higher and buy. if not, investors should be aware of another leg down. markets do not go down 10% and stop because everybody is uncomfortable. there could be another leg down here if the old lows do not hold and in the old lows are 2600. scarlet: thank you so much, talking about how the s&p 500 o could test the 2600 level. and of course, thank you, luke. we will continue our coverage of the market selloff. the s&p 500 and nasdaq falling for a third straight day. and we will look at oil turnaround, now in the red for an 11th straight day. this is bloomberg. ♪
theline: breaking news, west in the markets have seen since october 24. when you look at the s&p 500 and nasdaq, closing in negative territory, two percentage points lower. and s&p 500, nearly every industry group in the red, led by technology and apple sold off along with its suppliers. and the nasdaq was significantly lower. i am looking at was had -- what has been happening year to date, because we are even be the gains on the year and it is the worst day this month. and for many we see an erosion of where we were in november. scarlet: we should mention the russell 2000, which was positive for 2018, now in the red as well. so you are seeing small stocks,
we might as well throw -- under there as well. stocks down today. so there is really just nor do hide in equities. caroline: and financials. goldman, we have not seen it since 2011 in terms of evidence, so this is clearly went to watch. romaine: absolutely. and the oil market also was in play today as well. wti crude falling for an 11th straight day. that was following the opec decision, which gave the market a little bit of pop and did not hold on. we have john authors, bloomberg senior editor for markets. when i look at wti, we are below $60 for the first time since february. demandoking at this as a story or a supply story? john: at this point what has been leading things is supply
and you did not get the waivers -- or you did get the waivers for iran sections last week -- sanctions last week, and that to people by surprise because other supplies ahhad adjusted. you did not get the sharp reduction from iran, so a lot of that went into inventory. in the short term, this is about supply. in the long-term, this is about demand. people love coming up with big macro strategies, the narratives to fit what the market has done recently. years ago, it was pink oil. supply had reached an all-time high. no it isw peak demands. people do not need to build factories and drive cars anymore, they are going to have a lot of fun using their computers and serving each other and use less oil. that is the sarcastic take on
where people are now, now that we have reached peak demands. scarlet: you gave the short-term answer and long-term answer, but there is also a knee-jerk reaction to the stronger dollar. we saw the dollar pick up momentumwe saw the dollar pick p momentum here. when i look at -- looked at earlier it was firmer against currencies, now it is firmer against nine out of the g10 currencies, with the exception being the japanese yen, which is what you go to -- caroline: which is basically flat. john: you have to be careful, because weaker oil can help the dollar. , oilave -- if you have oil transactions in dollars, and oil trading hands at a lower price that means you have less dollars needed to be sold as people convert back into their home currencies. the recycling of the factory dollars. so there is a correlation between the very strange, long-term, but close correlation
between the dollar and oil does move in both directions. and another thing, there are so many things supporting the dollar at the moment, which i suspect is a problem for this country. caroline: i am looking at what happened over the course of the day with oil, wti was a supported by opec, saying we will make cuts. then comes a donald trump tweet and we get into negative territory. the market is not meant to get numb, but they do not seem to be, so how much power do think trump has with the supply of oil remaining in the market? john: i suppose you have this dua duality between donald trump and saudi arabia, are they going to do him a favor, you know, in return for his not pushing them as hard as morally most of us think he should do it over the jamal khashoggi murder. so that might mean that if he is
sending out a signal like that, the oil traders who are less inclined -- who have had less intervention from the presidential twitter account than some other markets, might taken more seriously than others. you are right, in the immediate aftermath of the election, remember he said he wanted to renegotiate air force one and boeing's shares dropped. so people in the stock market have certainly learned to live through or look through the presidential tweets. at this point, i guess you can make a construct of case why a trump tweet on oil, given his relationship with opec, might make more sense. i do not want to try to rationalize or defend market traders, i have spent most of my life doing the opposite, but you could say that this makes more sense to listen to this particular tweet than it does to some of the others. caroline: a cynicism always
no trading in the bond market because of veterans day, still we see these outside moves in the stock market. romaine: we are looking at 26% of the stocks that are above their 200 day moving volumes, no trading in the bond market because of veterans average, the key level we are always looking at. and the nasdaq and s&p 500, under 50%. 46%. so some could read that as a sign we are about to fall off a cliff. scarlet: alicia said perhaps the next move is to test 2600. if we tested successfully, it could be a buying opportunity, but below that their news to be another support level that needs to be discovered. romaine: at leased from -- least from other people -- scarlet: she did not sound like one. i am looking at a key breaking headline. this is a company that is looking to restructure to a certain extent in north america, making organizational changes, saying that they are exploring
the sale of a cookie business. and let's go across the atlantic, because brexit turmoil is worrying investors, sending the pound dropping. and u.k. ministers dropping as well. it was reported the prime minister may lose for more of her cabinet members. resigning over contentious of brexit plans. she spoke earlier on the matter. she has been talking at a key event in london saying brexit negotiators are working hard through the night. kiret's welcome jacob kegaard. from thefellow peterson institute. we might get an agreement in terms of topline negotiations, the how do we see this deal getting through the domestic parliament? jacob: i think it looks extremely difficult for theresa may, but we should be clear that the deadline this week is a deadline that is essentially for theresa may, it is not a
deadline for the e.u. therefore, they are unlikely to offer a particular concession to get a deal in the coming 48 hours, as opposed to as late as mid-december. which means if we get a deal in the coming couple of hours or days, then it is basically likely that theresa may will which willed the -- make it more difficult for her to get it passed the actions of her party. -- factions of her party. romaine: isn't there some pressure on the uber and union. we -- european union. we saw the member nations of the wto ask for more clarity and compensation, if there is a messy brexit, and these countries get the short end of the stick. jacob: there is no doubt if there is a new deal outcome it will be problematic for the e.u. and they are
likely to have to compensate other members. but in the grand scheme of things, i do not honestly think that this is a particular concern for the negotiators at the moment. what they are worried about is really setting a precedent for whether or not a member who chooses to leave the european union can sort of set the demands for the rest of the club, that is what they want to avoid. and so far, i think they have been holding their own. scarlet: i want to get perspective from you on how the markets are affecting the discussions or willingness of parliament to pass the package. we are looking at it off a percent this year, the pound losing 5%, so do the fallen markets matter to theresa may and parliament? jacob: i do not think it counts that the -- it matters.
>> i'm mark crumpton with first word news. the california wildfires have killed at least 31 people are among the worst in history. high winds and a stream conditions have driven flames across dry hills and mountains. 40 not per hour gusts are expected in southern california through tuesday, fanning flames and carrying embers onto rooftops and roadways. hundreds remain missing. nearly 7000 structures have been destroyed. and the flames have already caused roughly $19 billion in damage. and at the vatican's insistence, u.s. capitol bishops postponed
the plan to vote on proposed new steps to address clergy sex abuse. the group was instructed to delay action until after the vatican convenes a meeting on the crisis in february. u.s. bishops had been expected to consider implementing a new code of conduct for themselves and for the creation of a special commission to review abuse complaints. new york city today marked the 17th anniversary of the crash of flight 587. the plane was heading for the dominican republic when it went down shortly after takeoff from jfk airport. all 260 people on board and five on the ground were killed. >> we take comfort also from the fact that even in the midst of that tragedy we saw heroism. we saw the men and women of the tod and fdny come forward do all they could to save lives.
that heroism reminds us every day of the good in humanity. mark: the crash took place almost two months to the day of the 9/11 attacks. and is issued a press reports that stan lee, cocreator of superheroes spider-man, x-men, and our man has died. he was 95. he passed today los angeles as the top rider at marvel comics, and later as its publisher, he was widely considered the architect of the contemporary comic book. lee hit his stride in the 1960's when he brought the fantastic four, the hope, spider-man, ironman and numerous others to life. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. caroline: and as you are
hearing, back to back billion dollar wildfires. and they are threatening california and utility companies. share in the two largest companies plummeting today on reports suggesting other equipment may be to blame for the deadly wildfires now burning at both ends of the state. david is visiting us from san francisco and has a story here, one that must be personal to you. we realize that tragedy of it. but there are also corporate ramifications. and corporate capability, it would seem. >> yes, these companies are huge. tehy employee -- they employ tens of thousands of people. everybody in the state is a customer of one of these utilities or another. and we have seen escalating wildfires over the recent seasons that have been often tied to the equipment from these companies, in particular power lines sparking in a windstorm, we have seen that buyout -- that play out time and time again.
and the legislature tried to come up with some kind of fixed for it was supposed to pay what , when a power line to start a wildfire, but they did not tackle all the issues. so there are still -- there is still uncertainty on who will end up paying. romaine: it is an issue that power lines are doing this because this is what they do, but they are not built to standard? david: there has been argument about that and many people want to harden the grid so it will not start wildfires. romaine: it would cost a lot of money. david: it would. we already have high standards in terms of keeping the power lines away from tree limbs, our standards are tougher than any other state, but that has not stopped at the problem. scarlet: what happens next? how with the company defend itself? or right now it is just trying to get on top of the situation. david: we do not know is that are the most recent round of
wildfires, however on friday edison and and pg&e put out reports strongly suggesting their equipment may have played a role. there has been no official declaration, but we are already at the point of wondering, ok, it looks like there is a link. it will end up paying? -- who will end up paying? scarlet: in the past, there has of people starting the fire on of people starting the fire on purpose, and it later on it spread and some power source got involved, or it spread to that effect -- at some point the equipment would always be involved, so do we know whether it actually sparked the fire or at any point it was involved in could be liable? david: we do not know if it's sparked fire -- it f it the fire. california has a legal doctrine that if utilities equipment started the fire, even if they acted prudently in managing the
equipment, they are liable for economic damages then adnd there. if the initial ignition point comes from a transformer are a power line, then they are on the hook for economic damages. romaine: how do you assess economic damages, something that is a -- a monopoly, extension of service, so how do you penalize them at the same time not shooting yourself in the foot? david: that is something the legislature started to wade into, but never really fully resolved. so they came up with a workaround solution that has different rules depending on the years the wildfire started, and how the costs can and cannot be shared with customers. it is complicated and utilities were not happy with how things ended up in the legislature, even though their critics thought it was a bailout of the companies. so it looks like sacramento is going to have to go right back and deal with the issue again,
because it did not put it to bed. caroline: i am looking at every core and the placeholder on his latest camp fire. jpmorgan put $17 billion, that is what pg&e has already faced and liabilities. have you gone back to see how much -- or how large in scale these can be? gure i see today is the summer between $4 billion-$5 billion just for the camp fire. but we do not really have a great sense of that yet. scarlet: these pictures are extraordinary. like you said, this happens regularly, every year it feels like. are we at the beginning, middle or end of the wildfire season? david: usually come are wildfire season would end at the start of november. but this month is when we should be getting the first real rains of the season, and we are not. we do not even have any in the forecast.
we have been dry since the first week of october. and before that it was like five months. so we should have been out of the woods and we are not. romaine: we heard pg&e's ceo earlier this year mention climate change. and she framed it in the context that a lot of problems we are dealing with were outside of their control. how does the state address this? they are aggressive when it comes to climate issues, so how do they address that? david: a lot of the company's critics cried, this is a dodge, you are trying to get away from responsibility, but state officials agree that this is an aspect of climate change. jerry brown was at a press conference last night saying, this is climate change, this is what it looks like on the ground . so a lot of people in the legislature do feel responsibility to come up with long-term fixes, but i do not think they know what it is.
scarlet: we had a banner day when it comes to selling in u.s. equities. ou can see that she could see red arrows for the dow, nasdaq and s&p. nasdaq losing 2.8%. worst day for u.s. stocks this month. nasdaq wiping out gains for the month of november. more on the decline, bringing in vince. the treasure market is not open,
so no place to hide when it comes to treasuries. do you think that exacerbated the declines today in equities? >> i do not think so. this felt real. of a was not even a sniff bounce at the close. it kept coming and coming. large order to sell at the close as well, nobody stood in the way. romaine: when you see that, what does that mean for the following day? >> it does not bode well for the following day. it does not look good for asia going into the asian markets. this is -- i think what we are looking at, and i was talking to the equity guy, there was a speech on friday which was really aimed at wall street, talking about the trade with china. and he basically said, the only reason why china is profitable is because they still technology. it makes it really hard -- steal technology. it makes it really hard to see a
deal coming up with donald trump and xi at the g20. it is not being talked about much, but investors are looking at trade being a major issue. caroline: we have names in the financial sector like goldman sachs, worst day for goldman since 2011. is that baked into geopolitical risk, trade tensions, what is going on with those? >> when you look at financial stocks, you might see flattening of the curve, or the anticipation of that. tomorrow when the markets open, in treasuries. the financials were doing better last week. so a little bit of a reversal. romaine: earlier today, when we talk about commodities and the dollar, we did see the dollar and oil for a short amount of time -- and oil going off. so what does that tell you about what traders are doing in that situation when you see those two things correlated like that? >> it was after the conversation with opec and oil up 1.5%, and
you think to yourself, well, this should hold. it was off 10 days in a row. here is something they can hold on to. caroline: and then donald trump tweeted. >> it was fading before. he put the nail in the coffin. if there was any chance of oil coming back up, that tweet killed it off. scarlet: so earning season for the most part is ending. retailers reporting, but that is really the end of the season. g20 will be a catalyst, but expectations are low. so what will be the thing that will let us test the downside or make a recovery, will it be the fed? >> jerome powell speaking on wednesday, and kaplan fielding the questions -- i think the fed will make a statement on point to where they said before. whatever jerome powell, and again we have kaplan asking
questions, it is like jerome powell is writing the questions himself. saying, i want to make a statement. so that will be important, but i do not think he will stray from the message. the data this week should be important. retail sales are supposed to do well. if we see a downward move a retail sales, it will make it sketchy for the economy going into the holiday season. scarlet: so what will be the thing that will prompt the fed to rethink the hike schedule? >> it would have to be substantial. maybe europe fall off the rails with italy. the euro commission, maybe brexit getting nastier than it is going these days. and more so i think the u.s. economy would have to split. and without the latter, if the u.s. economy continues going, i do not think they will back off. romaine: how much in play is a something like brexit or italy on the minds of investors, specifically in u.s. assets? >> it has to become a because
when you look at the global growth picture we see china's slowing down. and if the european union starts to shake up a little bit, brexit becomes a bigger issue, you see a slowdown in europe, in china, and inevitably that will be a slowdown in the u.s. caroline: china was an outlier today. signaling they would be tighter in terms of currency. so what will china have to do to stop this rut? >> what they have done is they made a statement to the banks and said lend more. be more part of the picture. and smaller banks have given a mandate to lend even more than a larger banks. the market is looking at that as a sign of desperation. so until that plays out completely, i think we will still see china overall in a slower growth picture. teamet: maybe the national will come through in a big way. romaine: we need them at this point. thank you, vincent. we will turn out to cannabis amd
the canadian companies -- and the canadian companies, four of them reporting earnings for the first time since cannabis was legalized in canada. and we will get canopy on wednesday. this morning, we had a laura. now we will bring in christine, our reporter who helps cover cannabis companies for us. from toronto, christine -- it looks like the stock was doing well this morning, but then it started to fade off. i wonder if that was because of anything said during the commentary by executives. christine: that did not seem to be the case. i think the weakness is part of a broader selloff. you saw it fell as much as 7%, then it closed the day down 5% in the u.s., less than that in canada. the broader weakness, the commentary on the call was relatively positive.
we have been experiencing supply shortages in canada, ever since it was legalized. so aurora said their products have been selling well. they have been responsible for 30% of sales in ontario. and they have the top four dry flower brands. but they are holding back despite the shortage, because they want to supply the medical market and the european medical market, where they get higher margins than in canada. caroline: we're looking at how the intraday performances were for the rest of the sector. we did see relatively decent pops. how does aurora shine a light on what we might get for the rest of the week in terms of the earnings from other players? >> it is early to get the post legalization numbers. from us companies, they are reporting up until the third quarter or first quarter. so we are looking for the commentary from management as
opposed to the numbers themselves. aurora only reported $30 million in revenue, a small number. but tilray closed higher today, an indication of the u.s. investor appetite. they report tomorrow after the bell and they will be important to watch, because we have seen some of the volatility in the stock. one of the highest valuations in the sector. but early days for them. any commentary they provide on how the recreational market is progressing, and their views on where the u.s. market is headed, because that is the holy grail for these companies, that is what will investors will be watching. scarlet: to these move on earnings numbers? do they have a direct effect on how the stocks perform, or are they separate ideas completely? >> great question. in the past, they have not had much impact. you have seen the sector move up together, sell together, the correlation is externally high. a plot of investors i have spoken to have said that will change and we will see a
diversion's in these stocks. we may be saw a little bit of that today. we will see how that plays over the next couple days as we get more earnings from the sector, but this quarter and the next quarter, the first quarter of 2019, we will see the clear winners diverge from the losers in canada and internationally. these stocks will no longer move in tandem with each other in the pretty near future, so investors will need to be more selective in what they are buying and selling. romaine: what is the main metric that will lead to that divergence? >> cost of sales, sg&a, those are metrics people are watching closely because companies -- a a lot of people who have said -- people have said anybody over one dollar a gram will find it difficult to compete in canada and internationally. some have costs higher than that. they say it will come down if they bring more production online, but a lot of analysts say they will be watching
caroline: biggest selloff in more than two weeks, how will it play out in the asian markets? we have shery ahn. we are assuming even though we saw some reprieve yesterday in terms of asian market trading, it is likely to go lower, isn't it? sherry: we have seen the asian stock struggling, and in the last session it was muted. though, now that we see a selloff we are expected to feel the impact as we do every time we see a selloff in the u.s. of course, we also had a news from the pboc yesterday on the
monetary policy report, for the first time not talking about the importance of a market dynamic when it comes to the chinese yuan. so investors took that as control on capital outflows, tighter control on the chinese yuan, despite the fact a few days ago we had heard from goldman sachs that they would not intervene that much and would let the yuan get past the seven level, the psychologically important seven level. scarlet: it we also had apple suppliers last week, the reports out of asia that apple suppliers are seeing fewer orders for the apple phones. and the same kind of story today. this will continue to put pressure on the asian tech companies. sherry: yes, in china, south korea. and of course we have japanese manufacturers that supply to apple. this is interesting because we holdings that they
had received a reduction in shipments. and they did not specify that it was apple. but 30% of the revenue comes from apple, so they are going to take a hit. and chinese, asian suppliers also expected to actually react to that. and we know that, as you can see from scarlet's chart there that asia gets a lot of those revenues coming from apple. romaine: part of the issue with apple and suppliers is demand, the consumer demand was not there, and they did cite demand from asia, that it was not as strong as they thought it would be. how is consumer spending in china holding up in the face of the turmoil we have seen? shery: when it comes to what is going to happen to the future of chinese stock markets, is where is the consumption. and a lot of analysts, when they see the uncertainty stemming
from china, they say consumption is still strong. we look at retail sales data this week from china and it should give us a better gauge on what is happening. but we just had singles' day. caroline: record-breaking. shery: it looks great, but at the same time when you speak to analysts they say they have had different discounts, different prices, different goods that go on sale every year, so the year on year comparisons are cyclical. even though we had a great singles' day for alibaba, people are skeptical of what is happening on the consumption side in china. you see the pmi slowing in china and all the crucial data is slowing down as well. caroline: thank you for breaking it down. shery, if you want to see more of her, do not miss daybreak australia. now, do not miss this. forrrow is the deadline set italy to revise their budget.
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"activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. haidi: welcome to daybreak australia. shery: i am shery ahn. i am sophie kamaruddin. we are counting down to major market opens in asia. ♪ haidi: here are the top stories we are covering. --. stocks fell, talk shares tech shares tumbling on the week iphone demand. apple among the big losers. the nasdaq fell for a third straight day and the russell small-cap bench re