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has often said that a transition is needed for financial stability. he also says that they are looking at brexit scenarios rather than making precise forecast. poland is the latest country to globalw from a group migration pack, citing national sovereignty as the region -- the reason. the global compact for safe, orderly, and regular migration, which will be legally binding, is due to be formally approved at a u.n. meeting next month in morocco. in brussels the european union held an event marking the 70th anniversary of the universal declaration of human rights. speakers caution against a divisiveness and nationalism threatening human rights across the globe. >> advances made in previous decades have stalled and are being pushed back. even with the european union and its strong human rights benchmark and commendable
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principles in showing independence, in some places it is being eroded. hate speech is being directed at minorities and migrants. mark: "too many of your colleagues and friends cannot be here with us today because they have lost their freedom or their life." the trump administration is looking to add venezuela to state sponsors of terrorism. placing venezuela on that list could limit u.s. assistance and financial transactions. republican lawmakers accused hezbollaha backing and rebels in colombia. global news 24 hours per day on here and on tictoc on twitter, powering 2700 journalists and analysts in over 120 countries. i'm mark crumpton, this is
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bloomberg. york, 6 p.m. in new p.m. in london, one a.m. in hong kong, vonnie quinn. welcome to "bloomberg markets." vonnie: from bloomberg world headquarters in new york, here are your top stories on the bloomberg and from around the world that we are following. problems easing a little, though all u.s. major averages remain lower with equity investors struggling to find things to be thankful for. tom lee on whyth he's -- slashed his fed fund .arget to $15,000 and the match, about a royale, $9 million call showdown between
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o'rourke and nicholson. let's get to abigail doolittle for details on this market selloff. abigail: off of the lows, nonetheless solid declines. the nasdaq is on pace for its third day in a row with sharply incorrect territory, flirting with a correction. take a look at oil, this is really a risk asset selloff, deeply in a bear market with toders and investors wanting get liquid going towards cash away from the robust liquid oil plus stock. in the bloomberg we will see the influence of that on investor competition for the s&p 500 but also note that all factors are lower again and we are having this stock market selloff and a risk asset slide. all of these sectors, even defensive ones like health care and utilities, trading towards the top with energy down 2.9%, techno the bottom.
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anyway that you slice and dice this, the bears are certainly taking control of these markets. if we take a look at the faang how for that,k, off the lows, we did have more green on the screen just about compared toour ago, yesterday's greater than 5% decline with netflix looking slightly higher and we have the by the numbers out here for the faang trade, despite the fact that there is a cross in the overall market place with stocks and charts really breaking us. it will be interesting to see it there is any buying power there for this part of the market, really bearish. that's true for apple in the bear market. popping back into the bloomberg, this chart is really starting to
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work for lack of a better way of putting it. in the last bus cycle in 2016 weather was demand around revenue growth, we see this uptrend channel interesting now, breaking below it on the way to fill a gap of around 170. the bigger question though, will to 120 ine gap closer january? those are areas and pockets were investors have perhaps not enough information and now they are reworking it. have weakness for the retail sector plunging down 11%, missing earnings and same-store sales, which is largely true for these other retailers. tons of red on the screen for the consumer discretionary space , winning tech and energy carnage. not a lot to actually report on. notn: not a lot -- vonnie:
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a lot. who better to guide us through you outlined, several things that are rattling markets, including the continued slide into a oil, additional tariffs, but you are not pessimistic? >> it's hard not to notice was happening with markets, but for this to turn into a late cycle bear market, which is what the market is trying to price in, i think we would need to be heading on a path to a recession and i think that right now the bigger issue for markets is that there is just not enough ,isibility, the policy on trade the federal reserve, movements and commodities have spooked people and maybe the biggest takeaway for us is that the big message right now is you need to be rotating into value. wein: he will get -- vonnie:
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will get to that and a second, but it seems like tech has been trying to sell off for a while. in other areas, though, it doesn't seem like there were many complaints about retail, even the energy sector. >> that's right, the plunge and oil has actually call people by surprise but the selloff feels .ike we were over the risk you could see that investors were just overweight equities, overweight risk, got a little too complacent on inflation risk , i think that part of this is just an adjustment and in reawakening. i don't think that this is the start of a bear market. why has this shift in leadership been so violent? >> a couple of things were happening this year. one was the massive outperformance of saying and the
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incredibly narrow markets. there were only three leading sectors at any point in the year, that's so rare on account of it a sickly happening only seven times in the last 90 years, thing was really causing active managers to chase and i think the chase has turned into a run for the exits. vonnie: as we speak, turning things you are calming down, but talk to us about the defensive from here on in. >> in a falling interest rate environment companies want to be asset light, continuously against the cycle, pushing for
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record gaps between value and growth. this is a year where value underperformed by so much that on a global basis you unwound 45 years of outperformance of stock . in other words, every book written about value since the 1960's has been mitigated because it underperforms so much. late august because of that inflection point, since way valueve seen in a that has been orphaned in some places where people are trying to find and hide outside the em, 60% of the markets is value, explaining why some of them are stabilizing. and you do have stocks right for rebound, but we can't give you those. tom lee is sticking with us, the managing marketer and head of research at one distrust the.
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talking about bitcoin, it's trading below four point $5,000 per coin right now. we will be looking at that with him, next. this is bloomberg. ♪
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i'mie: "bloomberg markets," vonnie quinn. the cryptocurrency markets today, every major coin dropping in confidence in the asset class as regulators try to close in on alleged fraud. still with us to share his insights, tom the, the head of research at the buddhist rossa global -- blue stross global
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advisors. is this just infighting within the community for the most part, tom? >> there are a couple of factors. there have been some regulatory investigations that have's investors, especially ico projects. i think that was also starting to engulf crypto is the correlation of crypto markets to bank and equity markets that are beginning to soar and it may simply be the fact that people who are starting to sell everything not now down from those in silicon valley are also starting to sell crypto. i know that you think that technical theory generates as well, but does it mean that something like that coin is broken? >> well it's much more sensitive
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to technicals. they don't report earnings or have an investor relations department. we have written about how the 200 day is still the most important. once it recovers that's when the institution gains confidence. in the near term, you know, panic ensues when you bring technical, so i would have no doubt that there is a new wave of selling on top of people trying to raise cash anyway they can. i know that you have a target of $15,000, but does that hold given the currency we are in? >> on a long-term basis, bit term trade is embracing mining 7000, saying it should be at 15, but cash power comes down as prices have fallen and it is more miners going off-line. it probably is just a better way to think of it as bitcoin expenses. it bottomed at one-times
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breaking in mining. it's not expensive on that basis. the amount of wallets is still growing and crypto, so it's not like people are getting rid of their bitcoins. in terms of speculation, yeah, it has really weekend because of the technicals. vonnie: are you willing to do year-end call? >> i wouldn't do it here, i have to give it to my clients first. blockchain?t anything taking your fancy, recently? >> one reason why the crypto there arels like other factors behind the price weakness is that someone always sells it at her. like xrt, a settlement token, has begun to really outperform and i think it's reflective of
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the fact that bitcoin itself has some sort -- some specific issues. vonnie: have you been looking at treasuries, for example? >> i think that what is more important is the 1030 has artie started to steepen. the drop in oil, $180 billion in u.s. households stimulus is more than enough to offset the expected $50 billion in tariff increases with china, helping the curve steepen. i think the market is just trying to price policy, trade tensions, leadership rotation. it all resolves to a rally because i think that too much money has been taken off the table.
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tom lee, thank you for joining me again. we have some breaking auto news. according to the financial times, scone is working on a tie off between nissan in the last little while. we know that having been arrested, we haven't heard anything from the team and we are anticipating some of those results to come from a board meeting this evening and from the nissan board meeting on thursday, thanksgiving day. as ofthursday, thanksgiving day. as of now the wall street journal is reporting most recently that he is working on the buyout. they had been in an alliance together anyway. now for your latest bloomberg business flash with the latest stories in the news right now.
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third quarter comparable sales growth that had missed estimates, targeting both margins coming in weaker than expected. meanwhile, online sales dropped 49%. housing starts picked up last month, the market stabilizing up 1.5% with the any will at more than 1.2 million with other multifamily and single-family housing selling for the second month. that is related -- related bloomberg business flash up eight. fueling a predatory lending machine crushing small ournesses across america, bloomberg reporters have documented the problem for the latest issue of business week. rather than breaking legs, these lenders have co-opted the new york court system and turned it into a high-speed debt collection machine. a few are even getting rich doing it. for more we are joined by zach. this is phenomenal.
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the quote, rather than breaking legs and the court system, what does it mean, tell us what it refers to. are familiar with mafia loan sharks that in days of your would lend to small andnesses and individuals -- missed amr. payment, they might get a visit from a muscular individual. those days are over, but what has replaced it is this totally unregulated industry called merging cash advance, where the interest rates are higher than what the mafia loan sharks charge. instead of threatening violence, the court system essentially is co-out -- co-opted to be used without any review by judges or hearings or any of the things that you would expect. thanks to thes
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document called concession of judgment, the little piece of paper that you find where you don't realize the amount of grief that might come down on your head. quick small businesses these smallave to signees -- >> businesses these days have to sign these papers that say that if something goes down, goes wrong down the line, the lender wins automatically, eliminating .ll due process rights in court they can literally go to court, get a judgment against you, go to the bank and take your money out of the bank for you know what's going on. vonnie: which states are more amenable to pushing these over others? thingt's the most amazing , this industry is nationwide. the lenders are lending to people across the country, but they are using the new york state court system.
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borrowers in texas and california are being asked to sign these new york state court documents because new york state is uniquely friendly to the use of this procedure. once the judgment is filed in new york, the lenders can use in new york city official to take money out of the bank. phenomenal story. you can read the entire story in the current issue of "bloomberg businessweek," it's absolutely terrifying. ahead, we prepare for a highly anticipated match, the match between tiger and phil. no second names necessary. my interview to with the two of them, next. this is bloomberg. ♪
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vonnie: the showdown between
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tiger woods and phil nicholson is on. is this friday. let's welcome our bloomberg sports business reporter. this is insane, it's the first time you have had a pay-per-view event for golf. the succeed? frexit the critical moment for golf, a sport that as you know and we have talked about is struggling in some demographic ways and this is a totally new model. gone is the huge tournament with 60 players. two guys, one day, pay-per-view on a holiday weekend, they are testing to see if this is a model that can work in the future. wayse: there are so many to go here. first, there's the gambling for charity aspect. and there won't be anybody on the course, there won't be spectators. and then there is the fact that it is tiger and phil, if you are going to pay to see anybody play
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against each other. >> exactly, you will talking back and forth, betting, and it's going to look like a totally different kind of golf broadcast. it's a test for the people putting on tournaments in the future on television. is this the truck -- the kind of thing that brings people to it? >> what are the odds in vegas? , he had is the favorite that dramatic turning win a couple of months ago. to put down $40 on this, i think you would win 20 of tiger was the winner. who knows, is going to be a partner in one of this, in vegas, there may be live betting as tigerd with this woods and phil mickelson go up a couple of holes. there will be a slew of different offerings tied to the event. presumably this is
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legal? this is being booked. i'm not sure of 20 happen in new jersey, this is them playing around with whether or not the aspect, theambling drones, the mics, the pay-per-view, if this is a model the can be scaled up in the future. be sure to catch my interview with tiger and phil tomorrow, we will be rolling it out then if you want to have a look at that. up, easy and carrots in president trump for the annual white house turkey pardon. this is bloomberg. ♪ . .
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comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers. "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. mark: i'm mark crumpton. president trump says he will not impose more sanctions in the death of journalists come all --
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malta shall be to malta -- jamal khashoggi. he says foolishly canceling another $10 billion in arms sales sm in congress have suggested when only mean that riyadh will only go to other countries to require them and the president said the king and crown prince of saudi arabia quote rigorously deny any knowledge of the planning and execution of the murder. bloomberg has learned that president trump is on track to submit written responses to special counsel robert mueller as early as today. the president told reporters not as lawyers, wrote the responses. it's unclear whether mueller will be happy with the answers or will still try to interview the president in person. german chancellor angela merkel is stepping up pressure of the u.k. government to back and draft right to deal suggesting a european union summit would fall apart if prime minister theresa may reopened the accord. speaking to reporters in berlin
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today, she said it's time to sign the agreement and that she is unwilling to renegotiate. prime minister may return to brussels tomorrow for talks, taking personal charge of negotiations with the eu after brexit secretary dominic rob quit last week. two weeks after election day, florida's election is officially in the books of the elections canvassing commission has certified the results of the november 6 contest. recounts were needed to determine the next governor, u.s. senator, an article for commissioner. republican congressman ron desantis was elected governor over democratic tallahassee mayor andrew gillum by 32,000 votes and more than 8 million cast. global news, 24 hours a day, on-air, online at tic-toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg.
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vonnie: live from bloomberg -- shery: i'm shery ahn. : i'm environmental line. erlichman in for amanda lang. shery: president trump is threatening to curb exports and that could threaten relationships between china. i have to say, despite the fact that we are seeing some retailers missing expectations, we have had a few good earnings beating estimates the likes of
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kohl's or best buy. this is it, after the shopping holiday season, this will be key earnings growth and there's no more to be thankful about. jon: that's one way of putting it. and obviously in the case of target, it comes after a big run-up. we know during this recent selloff come investors are taking profits on highflying names and the case of target, before the selling pressure inan we have seen a 60% move the shares of the last 12 months and expectations are pretty high for the company to deliver with this quarter. high toxpectations very the broader markets as well, given how well the run-up has come until now. take a look with the broader markets are doing because we are now seeing the s&p 500 retailing index falling for an eighth consecutive session on concerns that this might be it. we are seeing at the lows level since april but worth noting that amazon takes the bulk of
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this and amazon falling for the third consecutive session as well. the broader markets are down as well, the dow at one point falling nearly 600 point that has come off from those lows but still down more than 500 points and it seems in the afternoon session, the losses seem to be accelerating. 1.7% and itdown doesn't help that wci right now is at the lowest level in more than a year, falling more than 7% so we are seeing the energy sector also taking a beating at everything being accelerated by those losses in the tech sector with the nasdaq losing 1.6%. shery mentioned giving up the games in 2018, we have a chart that highlights where stocks have gone in recent weeks after those march lows and the rally we have seen now the s&p 500 and dow in negative territory for the year, the nasdaq just managing to stay in positive territory for the year
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but obviously a big percentage selloff off the peak and small-cap stocks, the russell 2000, evidence of that or even the technology area, some of the semiconductor stocks outside of those big selloff we talked about the names like apple, semiconductor names have been hit particularly hard. as a group now down in the neighborhood of 6% for the year. shery: let's get more on today's market action and bring in mike regan, editor for "bloomberg markets's" live blog. the pessimism over the housing sector in general is really pushing that sector down in the markets as well. have mortgage applications been falling to a four-year low and homebuilder shares got absolutely crushed this year. they seem to a found a bottom which i think is sort of a positive signal for a lot of people worried about housing. shares of builders have not
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really been getting crushed the last few days as the rest of the market has. if you are looking for something to hang your hat on, that's one positive i would say. otherwise, it's obviously a very negative pace, negative sentiments. i think it is telling as you pointed out that we arrange the gains for the year but it's not uncommon to have a down year in equities. and we all got kind of spoiled by this relentless bull market in the low volatility last year. in many years we are sort of normalizing back to what the start market take the names like. the high toing at the low point in the s&p 500 this year it's only about 13.5% how that would be the smallest swing sense 2005. totally necessarily ugly year, it's just the recent years we have been accustomed to better things. shery: in some of the stories you wrote when it comes to
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technology, you highlighted how tech names sometimes hung in in the face of some potentially negative news. what do you think changed this time around the back room could not avoid some of the selling pressure we have now seen? mike: they became a crowded trade for a variety of reasons in if you go back to warren , you know this and a lot of time on facebook and they are shopping on amazon and the new pylon to that the momentum that has become a very popular strategy and sort of the perennial favorite of growth stocks, everyone loves a good growth story. that story is looking like it's cracking a little bit this year, especially the last quarter results. facebook's growth is not what used to be, apple's growth is not what used to be. we went from having a very crowded trade where a lot of the
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hedge funds most important positions were in a lot of the same stocks, tech and growth that it's really just a rethink of the reasons why people got into them. kind of a leaderless market now where people are wondering where the next area of growth is going to be. looking around and after this great earnings growth this year boosted by the tax cut, is not and obvious place to go people are trying to suss out where the leadership is going to come from and not finding a lot of good candidates. shery: not coming from retailers. despite the fact it wasn't really that bad of an earnings season and we are expecting sales to grow more than 5% or so in the shopping season, wire retailers responding? mike: targets comp sales came in at 5.1% compared to 5.2% estimates and the stock is getting crushed. target is one of the very
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highflying momentum names that people, simply because it was doing so well, they thought we will get it on and ride the wave as far as it goes. still it is again for the year for a lot of these stocks, they have come down so sharply that it's a painful time right now. i would say investors are clearly nervous about any hints that margins are being impacted, whether it be trucking costs, higher labor costs, trade tensions. a lot of the concerns that margins are going to continue to come under pressure and that earnings growth, it's not going to decline next year but obviously it has eight with this tax-cut fueled boom this year. shery: mike regan with the latest on the markets. coming up, the trump administration pushes ahead with plans to tighten restrictions on technology exports from ai to robotics. what this could mean for china's ahead of the g20. that story next, this is bloomberg.
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jon: this is "bloomberg markets," i'm jon erlichman. shery: i'm shery ahn. the trump administration is pushing ahead with plans to tighten restrictions on tech exports, the move would hit products from ai to robotics and deutsche bank wrote it would have a profound and long-lasting adverse impact on relations between the u.s. and china. for more, let's bring in shaun donovan from washington. neither side is showing any sign to back down after last week's apec summit? we are leading into the
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end of next week and the g20 summit in buenos aires where there is high expectations for a xieting between president and president trump. we might see some kind of positive trade wars. back ande is holding this really aims at something the chinese have complained about for a long time. -- jon: if we were ultimately to seek some kind of cease-fire, what exactly do you think that might end up looking like, especially in the face of what you are now reported on ?ith this tension on technology has in-- jon: the deal everyone mind is a pause in the tariffs, possibly on the u.s. side, the commitment to not adding more tariffs and go ahead with a step trench ofon a big $200 billion in trade that was going to be hit and we are a see a step up from 10% to 25%
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january, that's one possibility. maybe on the chinese side, some goodwill gestures, maybe some soybean purchases or something like that. but really the launch of some kind of negotiation. that is what people let wilbur ross and larry kudlow talked about, larry kudlow saying there toe very detailed indications to indications going into the g20. shery: could we expect domestic politics to pay a part -- play a part in the negotiations? we heard about this fund to subsidize farmers and now we hear reports they're not getting much of that money. any signs of political pressure? absolutely. there's a lot of politics involved in all this and know when you're in washington is in the mood to be kind of friendly to china or certainly soft on china and that's what we see in these export control measures and out the same time that a lot of angry people in farm country got take care of as well. politics are tough. shery: -- jon: bloomberg trade
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reporter shawn donnan. thanks very much. top house democrats are threatening to throw a wrench into the ratification process of president trump's new usmca trade deal unless tweaks are made and for some perspective on american relations we welcome canada's former foreign affairs minister peter mackay. we know tensions are running high between china and the united states and all the more reason to potentially try to get this deal between canada and the u.s. and mexico ratified. what has been your take on some the language from the democrats in the face of this talk about ratification of the deal? mr. mackay: worrisome, and your previous segment about china is not unrelated. as a feeling amongst some of the united states in representatives have moved on, they feel somehow that the usmca is a done deal. it is simply not. and this is where again, is unpredictable. the outcome we know the midterm
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elections have changed the complexion importantly the balance in favor of the democrats. democrats are quite publicly said they see need for change and perhaps even further concessions in the trade agreement with canada and mexico. and they are expected to come forward with more specific language. they don't want, perhaps from the trumpet administration to get a political win, this would be a major compliment for president trump were healed to deliver this. and yet, we are also -- were he able to deliver this. and yet, we are also seeing pressure with a looming deadline of november 30 from mexico. there's more implications the terms of the labor changes the democrats appear to be calling for. the canada once again is in a very difficult position because of the uncertainty that this creates. andrtainty, as you know markets, has a drastic impact, whether it's on the dollar, whether it's on of the decisions that have to be made around interest rates and others. all of that to say, we are not out of the woods yet on nafta
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2.0 or usmca. a clause that caught my eye was members of the usmca can veto were not allow another have a nonmarket economy as ta, a.k.a., china. thisyou have china canada's minister saying there's a way around that. can canada get a trader with china if this deal goes through? that is a massive question that is yet to be answered. the signals coming from the canadian government is that they are forging ahead and we saw prime minister trudeau having these discussions, talking openly about pursuing more aggressively trade with china. if the literal interpretation of what's being called the china just whatears to be you said, that it limits the ability of canada or mexico in the scenario to move forward
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without risking the united states triggering a withdrawal. so this appears to be a forced coalition of the willing vis-à-vis the trade war that the united states and china are edging towards quite aggressively. and so, it is a risk to say the least. if we are to diversifier trade with china, that there could be this very real fallout triggered by that clause. to come back to the issue of tariffs, we still have not resolve the steel aluminum tariff dispute between canada and the u.s. mexico seems to be more hopeful of getting something done soon. when you watching for -- what are you watching for? could there be agreement to voters on production areas to move away from the tariffs? mr. mackay: hope burrs the turtle and the mexicans seem to be more bullish on this in terms of their insistence that the tariffs on steel aluminum are dropped. i've heard from a number of steel producers in canada this is costing millions a day,
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millions of week during is getting very keynoted a very painful. ortas are perhaps a midway perhaps an alternative to having these tariffs as a way to walk it back. but make no mistake, this is a make or break issue for the mexicans, and should be for canadians, quite frankly, as well. perhaps that will be settled in buenosember 11 aires, argentina, perhaps it won't. but there's a very real consequence for canadian steel aluminum while this tariffs remain in place. sheryust building on what was asking about, if canada decided that they truly want to explore free-trade deal with china, do you think at the end of the day, united states was stand in the way of that happening? mr. mackay: my fears there could -- consulates us. auto tariffs, their trade actions taken by the united states because one thing we've
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come to understand is that we shouldn't always assume that the president in the circumstances. we've seen that over the 14 months of protracted negotiations around after that we have seen his trade actions against other countries and china. it's a risk to assume that we wouldn't pay a price for going too far industry diversification with china. jon: good to get your perspective. former canadian affairs minister of your mackay joining us -- peter mackay joining us in studio. market isusing experiencing some shaky ground. that is next. this is bloomberg. ♪ experiencing some shaky ground.
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shery: welcome back. data this week show the biggest drop in u.s. homebuilder sentiment sense 2014.
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numbers are on the decline and homeowners are offering everything from free vacations to $100,000 discounts. homebuilders becoming increasingly desperate here. >> one thing homebuilders don't like to do is cut prices. place i went, to the ,ast-growing city in texas that's a they are starting to do. jon: what is at the end of the ?ay, the primary reason when we a single factor are starting to see homebuilders ?t quite nervous prashant: every market has that coming.
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buyers are paying more for houses because the rates rose a full percentage point for 30 year loan which is about 9% in terms of the additional cost. or more than that. so that is one reason but even if you go from market to market, their other reasons too. capthe tax overhaul, mortgage interest and property taxes in high-cost markets like wester county in new york. issuesfornia, you have related to the stronger dollar pushing away chinese buyers. in the high cost of housing in general. justattle and other places makes it difficult for people to purchase. shery: the we are seeing a labor market. let put more homes and reach? prashant: perhaps, but housing is so psychological.
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if people start to wonder whether it is shaky, it's a little difficult to fix that. momentum is really important. housing market loses momentum, getting it back will be hard. -- jon: great perspective. prashant gopal. joining us from boston with the latest on the homebuilding story. it's official in massachusetts, recreational cannabis is now on sale in the first cannabis dispensaries opening their doors, as some cases, some long lines, upwards of two hours as we continue to see a across the united states moving into the world of recreational legal weed. canada, but itg is just for to 10 states and washington, d.c.. when it comes to medical marijuana, 33 states have legalized it, but even in
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massachusetts, this was a long time coming. it's been more than two years after voters decided to legalize nonmedical cannabis. it's really just in to see this progress towards recreational marijuana or change in that trend moving. jon: absolutely. shery: the figure check of the markets before we go. jon,e seeing in the u.s., that's a lot continue. the s&p 500 losing 1.6% the dow losing 500 points at one point, losing more come almost 600 point and of course, leading the declines of tech stocks as well as retailers. live from new york and toronto, this is bloomberg. ♪ this is bloomberg. ♪
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i am a family man. i am a techie dad. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience.
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my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers. "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. mark: i am mark crumpton with bloomberg's first rule news. to deadly well fires in california could cost insurers. it includes damage to property
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and cars as well as the cost of business interruption. the firing mueller california accounted for the book of the damage, killing at least 79 people and destroying thousands of homes. -- officials in tijuana have arrested 34 members of the caravan of central american migrants for minor offenses. officials say the migrants were arrested on charges of drug session, public intoxication, disturbing the peace, and resisting police. they will be deported to their home countries. mayors of the city isn't comfortable with the caravan that began arriving last week. united states added nine russian iranian companies to an international blacklist for shipping oil to syria in violation of u.s. sanctions. officials say the firms help you'll the syrian war effort of president bashar al-assad and also provide revenue for islam's islamic revolutionary guard of iran the militant groups hamas and hezbollah. blocks ofn the list
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u.s. assets and prohibited american entities are citizens from dealing with the companies. french president emmanuel macron is defending fuel tax hikes that prompted nationwide protests and calling for dialogue to calm tensions. in his first comments says more than .2 5 million french drivers blocked roads saturday. president macron and knowledge but sayse frustrated he is trying to see your country with from fossil fuels and the is promising subsidies for low-income households to buy cleaner cars or switch to cleaner home heating methods. global news, 24 hours a day, on-air, online at tic-toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. but sas he i am mark crumpton. this is bloomberg. ♪
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caroline: i'm caroline hyde. scarlet: i'm scarlet fu. caroline: the tao shedding dow sheddinge points. in the sector slump deepening ahead of the holiday season. all that apply more coming up. scarlet: let's get the markets. we are on a stock skid with the s&p 500 extending losses after yesterday wiping out november gains within the 24 industry groups, only chipmakers are holding up a little better. negativesmh has turned even as chip stocks for the most part are falling less than some of the other sectors. the vix goes up and reached a but we have not
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pierced -- 23.81 level but we've not pierced 24. oil is the big mover of the day. caroline: the except by 2.3 but crude is really where we are seeing a lot of the suffering going on, energy stocks have been front and center in terms of the s&p 500. scarlet: we will continue to monitor the moves, rest assured that energy is leading the way down. let's dive deep are with market reporters covering equities, bonds, currencies and commodities. abigail: let's dig into what's happening for the s&p 500 and oil and as you were just talking about, we are seeing the selloff or both. really a slide to the risk assets and overall take a look at the s&p 500 down 120% a second day in a row and now in a down onon territory and the year by 1%. as caroline mentioned, crude oil really feeling -- stealing the show, down 6.7%, breaking key technical levels on the year, down more than 10%, the bear market deepening and confirming
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the idea that we are releasing a risk off day, the haven dollar really seeing a nice bit of .7%. the divergence between oil on the s&p 500 on the year stands out against both of these, there risk assets. if we take a look at a chart of both of these risk assets over the last year and a half, we see ,or much of this time period it's really trading a largely correlated manner. both selling off earlier this year and then higher into the summer. during the summer, crude oil got choppy in the s&p 500 continue to climb and crude oil wrote to the downside as have the s&p 500 , but you can see that crude oil is really breaking even much more so are -- much more so than oil. if the correlation continues, this chart may suggest that stocks will continue to slide in sympathy with a sister risk asset or crude oil. time will tell. we seeing weakness on
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the retail side as well. when you think about the s&p 500 is down for an eighth consecutive day and it's largely because of this list of quarterly earnings disappointment that continues to grow car down about 13% over this last a day stretch and right now, about 77 of the 85 stocks in this index are lower and that includes the massive drops by l brands, kohl's, five below and ross. one of the basic liners as target and a lot of that had to do with its earnings. earnings growth is ok, retail and same-store sales growth was ok but worries all of the pressures in the margins. margin growth dropped by about one percentage point in that seems to be the narrative for a lot of retailers and a lot of these brick-and-mortar retailers have been investing heavily to grab a bigger share of that ,nline shopping space particularly as we head into the holiday season and that's, and it cost. cost for more freedom and more delivery charges, costs of a
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warehouse workers, not to mention they are still dealing with a lot of apparel cost and other issues. morgan stanley out with a note saying we have not really factored in as investors some of the tariff issues that could actually weigh on this companies as we move into 2019. saying those costs could rise and a lot of these apparel companies and retail companies are just flexible in the supply chain with morgan stanley specifically singled out names like gap, kohl's, and abercrombie & fitch. i'm looking at the risk reward proposition when you look at stocks and bonds in particular, junk bonds, high yield bonds versus the s&p 500. you can see the pendulum has swung back to high-yield bonds from stocks earlier this year, this is basically a measure of the united states versus similar measure on stocks, earnings deals on the s&p 500, investors are earning the most yields to own junk bonds are than earnings yield of the s&p 500 since 2016. this is even as stocks do selloff, at some point by some
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measures, more than corporate bonds. you can see that actually the yield proposition is looking more attractive and perhaps this explains why we are seeing some inflows into a high-yield bond etf that we take a look at the biggest high-yield bond etf in the u.s., we see in the past couple of days that has an influx of hyg, and that info yesterday at $750 million. maybe this is just some kind of trade with derivatives, etc., but also, there is the sort of potential that even though the credits further widening, the benchmark rate of the treasury rates are coming down, and it could balance each other out, apecially if we don't get recession or depression or anything like that in the near term, it could pay off. scarlet: thank you, lisa and the entire markets team. we will stick with the markets right now, let's bring in laura keller cnet and if you look at the different superlative self there for the markets and dow industrials lost 596 points as today, 30 points shine 1000
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points off yesterday's high. none of the three major indexes have made a minute in the black. are we oversold? >> we are basically back down to the average. we been focusing on futures positioning data as you will get u.s. equities futures combined, all the different contracts around mayas that 2018 was the we have not been anywhere close to the 2015, 2016 lows are in it feels like we are group ofdst of a and i think that 2015-2016 comparison point is probably the apt one right now. caroline: is evaluations we need to look at? and what point it looks appetizing to get in? how are you and i think that 2015-2016 comparison point is probably the apt one right now. measuring where we see the stocks falling far enough for us to start thinking about catching that falling knife? >> at this point, you want to see it break into what is clearly cheap territory and we are not there.
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been hovering around long-term averages for a while that than the worst point any of these bad days and we just not area. i think it's interesting the keep hearing people say you have to hold your nose and by, people are pounding the table. i do think generally we get a fine point at some point here i just don't think we are there yet. scarlet: when does the market off trigger a recession? we keep your he how strong the economy is now confident the consumer feels, despite the red and retailers. with going to be a frigate holiday season, yet there's so much concern about growth rate you call the global growth scare. we are hearing from some of these earnings calls a sense of things suddenly change in the third quarter and you go back and try to figure out what changed in the third quarter, it does feel like the tariffs themselves started to have an impact on corporate confidence. i would say we think the consumer is probably going to be fine but if you think about the corporate sector that's really caught up in some of these all of the issues, look at any random gauge of ceo or cfo sentiment, they have taken a hit
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and they are not as high as they were a few months ago. you see theere do most pain still be up to calm and we've seen tech in the firing line energy, which sectors should we rotate into and keep coming out of? >> one of the frustrating things for me is that there really new -- no new opportunities that have opened up. we look at industrial materials sectors they were very expensive on price to cash flow and there, done in neutral and are getting close to neutral in the case of materials within a are not supercheap yet. i think consumer staples is one area that still has a lot of valuation appeal if you look at cash flow multiples. that's one of the defenses we are pointing people to this moment in time. i would say in terms of things that have not really corrected enough yet, they have directed a little bit, if you look at the software and i.t. services space, that's been very weak within the tech complex today and we think that is deserved, it's been one of the most overvalued over owned places that haven't really seen a big relative selloff yet. isould say look at staples in the divine little bit up
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today and the software as services places, you want to be selling. if we are looking at staples is providing an opportunity anyone continue selling software and i.t. enterprises, where does that leave us in terms of the santa claus rally? you can't really get that broader market rally without the anticipation of a check. >> you can if you give financial super dissipate. i can make a list of things that are frustrated me about 2018 and this is one of them. i was encouraged recently though because we looked through the three q 13f filings for hedge funds and we found that the other way to financials narrowed just a little bit i think that is a sector that at least in this reporting season, there was nothing really new that came out as being wrong i think there is nothing to be said for that. caroline: we can dig into the hedge fund analysis you have done a little that. what a steal only about scarlet but because i know she's a woman who loves etf's, have you been looking at etf data as well, and how important is that? >> etf data has grown in importance and if you look at sector etf flows, they really
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kind of exploded on the scene in 2014, 2015 and what we have noticed is areas like financial and areas like industrials, a lot of people, myself included were below upon the beginning of the year but the etf flows just disappeared in the second quarter and we think they are definitely important reflectors of sentiments. we think they are also important drivers of price action it is something that does tend to feed on itself. we focus a lot on etf flows is something is a margin, doesn't drive our sector calls but you ignore them at your peril these days. caroline: i'm sure scarlet would agree. us, she have you with stays with us and coming up, shrieking supply, crude falling to the lowest level in the year as energy stocks slide. plus apple strikes again, weaker demand for iphones is one of the companies that is markets. and target third-quarter earnings miss the mark. writing the retail route ahead
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of the busy holiday season. this is bloomberg. ♪
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scarlet: time now for the top calls and a look at the big movers on the back of analyst recommendations. raymond james downgrading exxon mobil to underperform from market perform. the company is one of the least appealing ways to play the firm's bullish will call. exxon off by more than 3%. a doubleicron with downgrade, cutting shares to underperform from outperform. the analysts saying he expects gross margins to contract for the eighth straight quarter. micron off by two point 75 percent. the analyst lowering the target
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for second time this week, third time this month amid signs of weakening demand for iphones in china as well as other emerging markets, apple off by more than 4% for a second straight day. those are some of your top calls. caroline: and it's in our bear market. hedge funds keep doubling down on a losing strategy. check out this chart on the bloomberg. equity funds are betting on stocks and they lost more than 4% in october as you can see in the blue bulk there. low volatility strategy, in the time, up moresame than 4% in the last month, so the most since june 2016 in the white bar, and still with us is lori calrissian. started to play outcome of the fact that volatile trading situation is a painful trading situation? ori: if you look down to the surface, what we actually seen as they have been getting a little more defensive, a little low-volosed to the
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stocks. one of the screens we run what we look through the 13f filings call thek at what we hedge fund rockets and they are stocks and we found for the 12 top names directly in the consumer stable stocks. i have been doing ownership studies for really long time and never seen any category that investors dump into consumer staple stocks like that the way category that investors dump into consumer staple stocks like that the way they did. it was really interesting. scarlet: as a strong signal they're going defensive. when investors want to make their money back by the end of the year, how much of what we are seeing right now is tied to that? lori: it's hard to know what redemption levels are going to be with her was some fear of that a we're hearing a lot about the deadline heading into last week. it's just really interesting to me, i can see looking in the data today and yesterday that
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some of these most crowded names and these crowded areas, things that had not produce the gotten hit are flat out getting hit, so it's almost like they're moving from one domino to the next, and slowly just taking them off one by one. a crowded trades being amazon, the faang stocks, to stocks? interesting is we have a list that we call the hedge fund hot dogs and when we look at the top 20 names by dollar value that are owned by hedge funds, 70% of those are in ti mt, different parts of it but exit the names of route it to this list this quarter were actually in the soft search space. faang is still caught up in that hedge funds selling but software is right in the crosshairs as well. scarlet: you haven't made any changes to their year-end s&p 500 target or the 2018, 2019 estimates. what would prompt revision from you?
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lori: we sat on the 173 number for next year because what we have some good assumptions and we have been banking on a stronger dollar and i think we have the dxy going in the first quarter of next year. we've also got moderating margins. arguably we are still too optimistic but we've already done a lot of the work to say we don't think margins are going to continue to expand. we feel pretty good about those assumptions and maybe we are a couple of bucks over where we should be based on buyback assumptions, might ask been disappointing. look at the year in target, we feel it markets often have a mind of their own and do crazy things in december. what we have said about our target, we have made changes i think its too late in the year for that. we said we do think it is achievable. if the news for stabilize us. i think there is still time for that to happen. we said we look across our drivers, we have six drivers of market performance we track and most of them are still neutral at this point in time. and we see one that very clearly positive, it's buybacks, deal lancaster fleming, that whole
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thing we think that has the potential to help stabilize this market and just hasn't happened yet. scarlet: look for deals and buybacks. lori calvasina, thanks for joining us. up, carney backs made. the governor of the bank of england backs the prime minister's transition deal and argues for an even longer one. we discussed. this is bloomberg. ♪
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caroline: bank of england governor mark carney gave his the dealeople to agreed by prime minister theresa may with the european union. >> we have emphasized that from the start the importance of having some transition between the current arrangements and the ultimate arrangement. so we welcome the transition arrangements in the withdrawal agreement. and i would say we also take
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note of the possibility of extending that transition e period. caroline: we are hearing from mark carney that he likes the , but many period lawmakers don't like the deal as it stands. maria, how likely is it that theresa may can get a better deal for the u.k.? maria: for days now, we've been hearing brexiteers who still think with just five days ago, theresa may can get a better new and improved deal. isthe prime minister spinning it that way. she says when you look at brexit you need to consider two things, one is the withdrawal agreement, which is something that hasn't gone down what we need to look at the future relationships and often be better for the u.k. we're getting a better deal and
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it will matter. from the european union perspective they do say nothing is agreed until everything has been agreed but really, there's very little wiggle room in negotiations to the year in document a 600 pages long. the political declaration we are hearing from the european perspective, they argue this cannot be a win for prime minister theresa may, today, however, she got back of england to come out and say this is a good thing come in transition we like and that is something that business in the u.k. also argue and they like it because as a little bit of stability in uncertain times. scarlet: when you look at what the u.k. is hoping will come out of the eu, which is the event a little bit, give us your sense of how united the european union members are when it comes to this brexit deal, this brexit craft deal? are united on one front and really this is the one thing that gets lost in translation when you go to the u.k. and back to europe and that's the fact that for the
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european union, by definition, brexit cannot be a success, just clear as day. the french at this point argue theresa may cannot go back to the u.k. and pretend this is a good thing and today we also heard from the germans and the finance minister told over tv at this point, great to this deal is the only option on the table. let's take a look. >> if they would be a hard brexit, this would be a big loss for the united kingdom and also for all the rest of the european union and that would be no winner. it is very good if anyone understands that it is necessary to agree to the things that are now on the table. -- maria: that was all schulz. is really deal is on the table and everyone should take it. and one clear political message comes on the is you are better in being a member of the european union then leaving. usrlet: maria tadeo joining
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from brussels, giving us the latest on this never-ending dramatics tory on brexit. coming up next, looking at the never-ending dramatic decline in oil and the impact of falling oil prices on credit markets, specifically crude hitting the lowest level in 2018. you're looking at nymex crude over a one-year span. for the day, oil is down 6.6%. up a huge one-day move. the nasdaq under pressure with apple in a bear market. target as well seeing a lot of selling after some disappointing numbers, particularly when it comes to growth margins. it's a theme we have throughout retailers. this is bloomberg. ♪ [ phone rings ] what?!
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ready for christmas? no, it's way too early to be annoyed by christmas. you just need some holiday spirit! that's it! this feud just went mobile. with xfinity xfi you get the best wifi experience at home. and with xfinity mobile, you get the best wireless coverage for your phone. ...you're about to find out! you don't even know where i live... hello! see the grinch in theaters by saying "get grinch tickets" into your xfinity x1 voice remote. a guy just dropped this off. he-he-he-he. mark: i am mark crumpton with bloomberg first word news. the united states has nine russian and iranian companies added to a blacklist for violating u.s. sanctions.
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the syrian war effort of president bashar al-assad as well as provide revenue for iran's islamic revolutionary guard corps and has black. >> the united states and continued efforts will not allow these dirty dealings to flourish. iran will not be allowed to looks lord -- exploit the international system to hide revenue streams it uses to fund terrorist activity. andort for militias populations and to destabilize the region. on the listent blocks any u.s. asset and prohibits entities or citizens from dealing with the companies. bank of england governor mark carney says the central bank welcomes the possibility of extending the brexit transition. he was questioned about the split today in parliament. he has often said the transition is needed for financial stability. he also said the bank of england , rather than making precise forecasts.
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poland is the latest company in citing sovereignty and the agreement. binding.ot be legally if you will be approved at the united nations meeting next month in morocco. now dominating a body designed to bridge the ethnic divide. the presidency comprises a muslim politicians. and it night 9 -- through night -- by creating a muslim-croat and entity joined by central institutions. global news 24 hours a day on air and on tick tock on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg.
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♪ caroline: this is bloomberg markets close. i'm caroline hyde. scarlet: i'm scarlet. we're watching oil now. for theerent below first time any year. let's talk to lisa abramowicz for today's fond of it. lisa: the biggest question is why are oils decline so much? but --s an opec asset aspect also a growth aspect. below 2%ted rate fell
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for the first time this year. perhaps it is because of oil prices falling the lowest in more than a year, perhaps it is because of the same sort of growth. this is affecting credit either way. pastan see so far over the few years, oil prices and high-yield bonds have basically traded in tandem. take a look at the chart showing wti versus the barclays u.s. high-yield bond. they really have moved very much together. to give you a sense of how much high-yield energy bonds are kind of driving the action and credit, this is extra yield investors are demanding to home energy jump on bonds not related to energy companies that are the riskiest out there. it has widened out to the most in more than a year, a similar feeling here. more than two years. they are saying look, your oil prices plummet.
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you will not necessarily have the same sort of profitability. this is a significant portion of the overall high-yield bond index. these are some factors behind the weakness which does seem to be's x -- of the accelerating today. caroline: thank you indeed. let's stick with credit suisse now. why they set for the worst year since the financial crisis? todayve a well read story showing it is not just dollar investment grade but euro denominated high investment-grade all fall except those negative this year. how surprising is this? >> it is very surprising. we enjoyed an amazing run over the past decade. losses in the credit market have been very rare. of thedividual segments market. partially because of accommodating central-bank policy in the past few years, obviously the european central and have kept things slow
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but billions of corporate bonds in the market here in the euro for example. they are leaving now. we knew that earlier in the year. risk that started piling into the bond market. we had this issue with the central banks and now we have political risk in issues of potential trade wars, individual names bowing out. all of this put together, you take a step back and look at the market and everything is in red. scarlet: you mentioned central banks and trade p are these are issues you have been dealing with for months. how did things get so bad in the past month? classes something we had and seen the investment grade market in the past couple of years, that is sector specific risk. we had general electric pummeled in the euro markets. investors have been losing faith over the abilities -- the
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company's ability to generate cash flow. back to fundamentals, something we hadn't seen in the past several years where we were looking to outperform the index because we knew the index would do great anyway because of the central bank and everything we mentioned, now back to the basics, we are more skeptical about companies and scrutinizing them even more. you are bound to find things you don't like. >> you go for the safety and cash looks competitive. you're talking about consequences. you subtly get a little discerning and choosy about which means you hope. any up site we can see? any turnaround? >> people, mentioning the level they are willing to buy, just remember it will have been several years that the spreads will have been's -- been extremely low. you say that looks more appetizing like a month ago for example. the trap is that keeps going up and up. it is really hard to see a
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bottom in the market now, especially when so many people have turned more cautious. >> i see what you're saying especially with a couple of individual names. ge, barclays, which have seen the price of its bond dropped ceo carlos.g hit by talk about what you're hearing from investors. are picking and choosing. but do they see a bottom anytime soon? >> unfortunately not. there is a disagreement among investors on how bad, for example, but most people agree we're unlikely to get the rebound. high levels in terms of spreads and funding costs. people have seen the upside for a while now. the risk reward ratio credit has a long time.
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it feels like we will see more risk before we see rewards now. >> more risk in the eye of the storm in brexit, trump trade being fueled once again today with china. how much do politics play into this? >> not systemic yet but if you these for example, the car industry, they slept in october because companies are coming out and expressed concerns about potential trade wars. these for example, the the chinese markets, you saw a number of companies from volkswagen, losing ground in bond markets. issue with the brexit now. british bonds had been pummeled in the past few days. a direct impact, not systemic yet, but it is quite obvious if you look at the right sectors. >> seemingly, your area of expertise is getting interesting. it is a great story to check it
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out internal and online. scarlet. scarlet: we are taking a look at another story that has got a lot of hits. an obscure legal document is calling -- turning new york's court system into a debt machine across the country. it is the cover story of this week's businessweek. with more is the co-author, zeke. walk us through this. when we talk about a legal document, whatever's happening is legal and that is problematic for the small business are worth -- borrowers making payments. >> yes. --re is a merchant caste cash advantage company lending money to small businesses, $3000 to a pizzeria that needs a new oven were already maxed out credit cards. companiesm is these are requiring borrowers to sign a document called a confession of judgment in order to get their loans.
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this concession of judgment means the bar were automatically loses any dispute over whether they repay the loan. scarlet: we look at a graphic that illustrates it. the confession of judgment leads them without -- leaves them without any recourse when things go sour. the: it is an arbitration -- zeke: it is an arbitration. they have discovered the power of the documents and in the last few years, the companies have been filing thousands of them in new york state. theowers anywhere in country. there does not have to be a connection to new york to her they just use those courts because they are friendly to the practice. >> what amazed me in your story was the street -- the sheer scale of it. talk about the number involved. it is 25,000, most of it was done the last five years. realizede company's this was the best way to collect
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debts, they were following these all the time to the bar were only needs to miss one or two payments and the payments are due daily, before a cash advance company will file a -- a judgment against them. once they filed a judgment, it gets rubberstamped by a clerk and the lender can have the borrowers bank accounts. before the bar were even knows anyone has taken any action against them. scarlet: in terms of what is the any state is authority being asked to intervene? what is the recourse for some small business borrowers who find themselves in the horrible situation? >> the industry is totally unregulated. even though they charge interest rates as high as 400% annualized, no regulator has taken an interest. the borrowers have little recourse if the lender files a judgment against them that is not just -- not justified. scarlet: a disturbing story.
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what kind of feedback have you gotten? i have heard from a lot of borrowers who had their lives devastated by these judgments. these people's financial situations were already not good. now they have lenders pounding them and have -- hounding them and having their banks frozen. trying to collect these loans. ruined byives are this. they're desperate for some sort of help. trainingthank you for -- shining a light on the spirit you can read the full story in this week's number is this week. caroline: a gripping read. i urge you to get it. have a look at what is happening in terms of the markets now. well in the red. the dow jones industrial points now. trade tensions, goldman sachs covering it target for a third time in the month -- in a month. check out -- check out the
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dollar in the upside. scarlet: absolutely. it is the same when you look at energy complex. crude oil, brent is putting a or you are energy seeing buying and treasuries pushing yields lower. treasury 3.05%. >> a little bit of selling and italy. concerns all-important as the eu is set to respond in italy. it is concerned about its target. this is the bloomberg ♪ -- this is bloomberg. ♪
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caroline: this is count on to the close. it is time now for the sector spider report. here is emma chandra. the retail select spider etf, 2.9% at the moment. it was down more than 4% earlier today, continuing to see a big selloff in what is interesting day, thedown 48 in the longest losing streak since 2006. we are not seeing massive outflows at the moment. we are seeing a retail selloff. we can see it is doing well as a whole. 12% on the year, when the group was up in september 40% year to date. the number of companies produced
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earnings and investors to not like it. they are down 15% and/dividends. we have kohl's and tjx falling somewhat today. they posted comparative sales but that wasn't enough for investors looking at what is forecast. best buy's rising 3%. videot gains came from games and appliances. we see a tailwind from bankruptcy of sears. talking about target, it is the stock of the hour. we should be able to show you how it is doing today. it was down more than 10% earlier. it missed on some key measures. it fell on a day losing streak. it posted comparative sales growth of 5.1%. seventh consecutive quarter of positive same-store sales. we have a chart we should be
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able to show you that shows that. that would normally be something investors would cheer. but as i mentioned, those came in a touch lower than wall street expectations. if even though things are good right now i may have been in the last three months, investors are looking past that here at what are they focused on? ifthe retailers as a whole we look at the retail any season, margins have come in at -- a bit of a concern. it is something investors have picked up across the board worrying retailers have to spend andinvest too much to win also we have a chart here. see inventories are very high. that is normal for the third quarter as you head into the holiday season. you have much more inventory. you do not want to run out of product is people shop. this quarter infantry, they are
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at an all-time high. stockpiling for tariff and that suggests they are expecting to .et relief there are a few analysts who look at the silver lining for this one. they have beene able to sort of re-think about how they can sell in this highly competitive market. >> yes. target has actually posted some really good earnings. investors are really concerned this might be the peak. we have heard something a lot of people are talking about, that once we get through the fourth quarter, it will be downhill from there for retailers that this is the best it will get. they are looking much further into the future when it comes to retail. blank. in the this month in this quarter. thank you.
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a very red target in terms of the ship -- shale price performance. on targetshe chart all-time high inventories. nowuding how cash is competitive. it is rising the most since 2005. it doesn't have to be in equities anymore. this is bloomberg. ♪
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♪ scarlet: i am scarlet fu in new york. caroline: i'm caroline hyde in london. this is the countdown to the close. a quick check of the business flash headlines for you now. mergerdly planning a before his arrest in tokyo. to the financial times, he was opposed to the idea and looking for a way to stop it.
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be stretchedd to to the titles within days. he is in jail on allegations of financial impropriety. shares of deutsche bank fell to an all-time health in france today. the 230n half of fondled --dled was funneled through another lender unit. that other lender was identified as deutsche bank. that could make the german liable for penalties. in london, stocks have risen to record high. hit by brexit on on affordability issues. it takes the average of more than 14 times. that is your business headline. >> money managers and economists weighed in on bloomberg.
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>> there will not be one summit that will resolve the wider issues with china. and perhaps not even solve trade issues. i think markets particularly emerging markets, asian assets, would respond well if they came up for a framework for addressing concerns in the tariff clock and the united states, slows down in time. >> it would hedge quite well for these types of -- disputes p are that is volatility. the volatility across a number of assets, they have seen it work very well. mostpper tends to be the traded. the biggest see cells there. >> it may well be the end. any part of the china u.s. deal will involve also getting the end up.
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saying we can't stabilize or push china up if we are doing with the manipulated gpm. >> 20 is now is michael mckee. i will not make you guess which asset class it would benefit but whichever you look at, it is not going to have a pickup unless you get the news on the trade front. is no reason necessarily. it is hard to believe you could price anymore negative news into the markets. it is hard to see if there will be a surprise. we didn't think there would be much other than maybe an agreement to talk more. moment, you have analyst at deutsche bank saying profound and long-lasting adverse impact if we saw what currently washington is floating
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between china and the u.s. >> they want to buy high-tech materials but administration does not want to let them. are a lot of restrictions or this would just expand those. it is saying to the chinese, one of your requests isn't going to be honored. it makes it that much harder to negotiate. >> thank you. staying on top of all of the developments. we are looking at u.s. stocks in the red down by two and a quarter percent. ofstal join us at the top the next hour to give us his take on what is driving equities lower. this is bloomberg. ♪
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mark: president trump says he wants ounces on saudi arabia for its role in the killing of u.s. journalist jamal khashoggi.
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in a statement headlined america first, the head -- the president says the u.s. is not the -- condone the killing but foolishly canceling $110 billion as some ines has -- congress suggested, could only mean saudi arabia would go to other countries to require them. the president also said the king and crown prince of saudi arabia, vigorously deny any knowledge of the planning and kitchen of the killing. the trump administration may take another shot on china on trade. the government is considering tighter curbs on technology exports. deutsche bank says that would have a profound and longer-lasting adverse impact on relations between the u.s. and china. in brussels, the european union held an event marking the 70th anniversary of the university -- declaration of human rights. speakers cautioned against a rising tide of divisiveness and
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nationalism threatening human rights across the globe. >> advances made in previous decades have been pushed back. even within the european unions, with a strong human rights benchmark and commendable institutional principles, independence, freedom of the press, staying in some places, it is being eroded. hate speech is being directed to generate and reinforce. >> eu foreign policy chief noted to many of your colleagues and friends cannot be here with us today because they have lost their freedom or their life. saudi: --tween coalition led forces flared up -- undermining they put much at the brink of
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starvation. global news --global news 24 hours a day on air and on tick tock on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm am mark crumpton. this is bloomberg. ♪ 8:00 p.m. in london. 3:00 p.m. in new york. scarlet: this is bloomberg markets the close. scared, allocks major u.s. averages remain deep in the red. the dow shedding more than 500 points. scarlet: foil -- caroline: oil prices plunged to one year lows. and no retail therapy, targeting other big names adding to a slew of this heading to the holiday
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season. stocks are sliding in the nasdaq is holding up the best only off 1.7%. reason why it is not falling as much but nevertheless, the nasdaq at a seven-month low biggest numbers on the cusp of it. in the bear market falling around 4%, more than 4% today for a second straight day, goldman sachs cutting up the price target for a third time this month. caroline: clearly, the tech selloff. the retailers today, a slew of earnings. target falling dramatically hit by trade. though savings are catching a bit. >> the longer dated treasury shows there is a bit and we see yields falling. commodities. into what are you watching, abigail?
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abigail: you were mentioning the stocks. here it is. the chip index, earlier today, down more than 1.5%. down 2.5%, a drag on the major averages earlier but trading higher up 1.5%. now trading around even, a number of stocks are helping out particularly nvidia. last week, plunging yesterday. we now have dippers along with texas instruments and other names. valuation for that sector really drop below the broader markets. it may suggest more pain is ahead. this chart goes back 20%. we see the price-to-earnings ratio on a trailing basis is it 35 times back in 2010. this as financial crisis investors are bidding up the stocks well above the s&p 500 in
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blue, but into 2011, we see the stock's valuation, the pe is going below the s&p 500. at that time, stocks are down more than 30%. the s&p 500 down more than 30%. that was pretty bearish. investors bidding up those stocks with the valuation well up on the s&p 500. we have it back below. this has been the case for some time. right now, stocks closer to 14 point 610, the s&p 500 is 18 times. if we see the kinds of declines back in 2011, there could be more pain ahead for stocks. romaine: thanks. a lot of the pain you are seeing in the u.s. market has strategist said goldman sachs saying to take a second look at emerging markets. they are saying emerging-market equities may return to annual games -- gains for sectors for many years. they predict a 12% rise in
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dollar terms for shares in developing nation stocks. specifically saying some of the things we need to do is improve growth outside of china, cheaper valuations, and an end to federal reserve timing. we all give a boost to some of in names, they gained 35% year weat was its best have seen since the gain in 2009. you look at your screen on relative valuation emerging markets index and the s&p 500, you can see the index is only outperformed in four of the past 10 years. when you go back, from 1998-2007, they outperform the s&p, eight of the 10 years. goldman sachs strategist are saying they could return. down about 16%. lisa: thank you p or i looking
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at how quickly the perceived risk in credit has shot up. at the benchmark industry. the credit default swaps index to investment grade bonds. more to ensure these types of losses or decline in value of investment grade credit. it has shot to the highest since 2015 in the longest streak since 2015. a pretty remarkable increase over this time. take a look at high-yield bonds compared to credit default swaps . it is even more interesting. has been the longest streak for high-yield credit default swaps indexes since 2010 or just to give you a sense of just how abnormal this weakening -- in credit has been relative to the past bunch of years, this really aows it is not necessarily difficult sell off or decline but something that feels a little deeper to some people.
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fantastic context. thank you, lisa and all of our members. -- equityh the at the market come we are joined by the cio of the teachers retirement system. one of the world's largest funds , joining us now. fantastic to get you on on a day like today. stocks ledes, tech to the market. about where tell us we are in this correction -- correction? away and have to back look at the market. and backup,s&p 500 you can see you are below the support line that went all the way back into 16 and we have broken that you a lot of the february, in my case, i get nervous back in june.
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the market rallied another 8%. need a long-term perspective to realize this market is very long in the tooth. it could go sideways for the rest of 18 and into 19. we are still in the long run bear market but i would really watch the asset allocation and rebalance into other areas. for was talk about the rebalancing. where for you doesn't have to come in these volatile markets? will be in other types of assets. the challenge and lisa abramowicz just showed the high-yield markets, there was discussion about emerging markets being an area of opportunity. they are cheap but you really have to be confident more on china than usa because the dollar and u.s. economy will be a challenge.
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there is nothing much around the world it looks terribly attractive in this kind of market. it is about putting your eggs in more than one basket. making sure you have allocation and fixed income, watching your credit risk, and some real estate other areas, someone said this morning, tom keene said on the radio, your 401(k) is now a 201 k. i think it is more like a 301 k. it is the time where you have to look long-term and rebalance here do not -- try to trade these kinds of markets. it'll be volatile. the flow of bloomberg television guys. when you rebalance and look across asset classes, which is leading right now? what you look to to set the tone here? >> i look at the fixed income market first and foremost. i think bonds have the true 6-9pective in the u.s. months. still worried about the fed tightening more. that was the discussion and we
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are now concerned about the market dropping in are we worried about the economy being too weak. i think we are in a pretty strong economy and some companies are missing earnings forecast. i will watch things like copper and some commodities to get a worldwide idea, but in usa, i will watch fixed income and not get the volatility in the roller coaster ride of this kind of stock market. the showing is below it is -- the support level, are there any other technicals when it comes to equity markets that make you realize perhaps now is the time to go back in and risk that all-important thing? >> in our case, we are not trying to trade the market. we are long-term investors. we have a dedicated slice of the portfolio to global equity. we were underweight starting back in june.
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the market rallied significantly in the summer. some of that weight off. we sit here still underweight global equity. you look at this, it will be important to see if the market s&p 500 tests the lows we saw on february around 2580. i do not know if we will get back there right away but if we do, we will want to see those held otherwise, the market would be in trouble. but again, you will have to look at fundamentals. wellare earnings and how does black friday and retail sales going the christmas season, and remember, it has been quite a few years in january and february, the east coast got slammed by nor'easter. it is not unusual to see the economy slowly little in the 2019.ing at then we will have to decide, is the economy strong and running at 4% or hasn't backed off a little?
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the market can handle it easing a few more times. taking in -- things in stride and not reacting. >> i'm glad you bring first quarter weakness up that we have seen in previous years. given how nervous investors are and desperate they seem to be to look for any signs of the weather, firming up whether the economy is strong as has been indicated, how long before we get a clean read on the path ahead? if it is not 20 be a reliable source of data? dataes is always another point but has to be taken in consideration for seasonal adjustments. you had a couple in the east coast where people could not get out and move, let's see how this year portends. a big part of the discussion, the fear last week was the fed would ease -- tighten too quickly. i think we will get some stats to get an idea of whether it is more measured. obviously, those commas recently were a bit more measured and almost dovish. it will look at the data and
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rely on statistics. i think we will get a bit of a santa claus rally. volatility, while it feels more normal because of 2017, if you look back, this is a normal volatility up 1% and down 1%. the market experiences that. the numbers are larger because of the dow jones average. i think that is what investors realized, but the average consumer just here's a snippet of where the dow went without looking on a percentage basis. shape herel in good to those in 18 will be a flat year. as you pointed out. it doesn't mean 2019 might have a positive rise spirit we are not in the bear market. >> important context. the energy to in her you say you are not in the bear market but we are on a significant selloff, currently
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$53 on wti crude. how much further chemist go? how much is related to the u.s. dollar? wti i will back up and look at the fact that we are hundreds of years of suddenly when all the label of the. the fact that we have been back up as high as 50's concerns me because i was worried about rising inflation. the fact that it has backed off a bit, maybe that is a signal the economy is slowing. there are always ebbs and flows and seasonal demand in crude oil. i do not think we are in a bear market in crude mile -- crude oil either. i'm glad to see that easing off so we are not in an inflation cycle. underweightyou are in global equities. talk about where you are overweight. private equity, corporate governance, fixed income, where ?s the buying opportunity
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>> it is really things like emerging markets. back june 30, shift the portfolio to that was the beginning of our fiscal year for us. coming in a bit defensive. if you think we are a large cruise ship across the ocean, we will tilt the ship it little and not make radical changes. we tilt it a little defensive in the portfolio. we overweight fixed income and our strategies. strategies do better when gdp in the markets are a bit.ly -- weaker. this kind of volatility, we have to write through. a long-term perspective. when you think about other asset classes, real estate is priced to perfection. private equity is pretty darn expensive and here. it really is the emerging market opportunity. i think a lot of risks are in that space. the cally have to make
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on the economy of china at this point and there is not enough us to be confident that they will go back under a growth spurt. so we will maintain the cash at or near the target or a little higher and we will overweight those diversifying strategies in this time. >> all about diversification p are great to have your perspective. we thank you. trump has been talking about the need or want for lower oil. by 6.9%, almost 7%. the lowest price for brent in particular in more than a year. notably also wti crude, we're on the downside. from london and new york, this is bloomberg. ♪
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scarlet: i am scarlet fu in new york. caroline: i am caroline hyde in london. this is count down to the close. the market continues to be in the direction but is it too much for investors to handle? erik schatzker's morgan stanley ceo and the impact on the market. step back from what is going on, we are in a tightening process around the world led by the u.s. three and probably four rate increases this year. the fed has consequences. the ability of monetary authorities for balance sheets, and limitations on what they can do, a lot of political turmoil. it is not surprising you have bank stock, incredible
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run-up in evaluations this year. hundreds of billions of dollars you created. it is not surprising to take it off the table. there is a lot of debate the the debate is reflected in the volatility we have seen over a number of things you have just itemized. u.s.ustainability of growth for example, the pace of rate increases, magnitude of rate increases, implications of that theoff administration's undertaking with china, for example. arounde any consistency that debate as far as what you hear from clients? >> a think the most important thing to take away is there is just a lot going on. every morning you get up right is a strong news flow overnight. tariffs, political
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risks, protectionism, anti-immigration. >> you are right. it is a much longer list. >> before you get to what is going on the middle east, before sanctions and rush and the war in syria, before you get to north korea, it is a lot to absorb. when investors are confronted with that on the backup of very strong economic fundamentals, and tightening and clearings -- clearly some corporate credit, let's just say, with corporate credit full, clearly issues is nottriple credit, it surprising the markets are anxious. this is what markets do, with uncertainty, they get anxious. in the long-term, the markets are always right. >> and now, our exclusive interview with james gorman. let's get options interviews with abigail. abigail: thank you. joining us today, steve, thank
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you for joining us. welcome back. we had a wonderful time. here, back and bring it with you. i want to ask you the big question. we are seeing so many indexes and metrics rolling over, stocks and small caps, it doesn't seem at there is anywhere to hide. can we have this type of selling pressure we are seeing at this point? >> if you don't have distortions coming in that we have in 2008, coming from real estate, this is different and basically, you had such narrow leadership in the market. >> seems to go well beyond 2016, and maybe it is comparable to that it what does this remind you of? it doesn't feel like there is a floor. >> let's step back and we are flat on the year.
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what this is closest to but way smaller magnitude is 1999 and 2000. the leadership, you had astronomical evaluations. selloff.he it is early but that is the character. 2008, we actually didn't sell off until the fall. do you think we could see that and then the floor could really fallout? for thisnow, i stand several times. the change here is your unprecedented monetary stimulus. expect this at the top.
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let's see the other catalysts. >> turning to the other big story of the day, that is oil plunging the lowest level of the year. 50 in a heartbeat. with traders like to look forward to is high volatility, i hate to say catch the falling knife but that is what this is. i am not super rate saying let's just so and out of the money put. the way we structure the trade, you can lock in the dollar on the downside. you collect the little money and you want to take advantage of a traitor selling volatility, not necessarily in the market.
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you want to be cautious when you do that. >> great commentary. a little optimistic in a .autionary way caroline, back to you. >> a great conversation as ever. in the red on equity, plummeting energy,hs as we see down on brent p release see money moving on haven, out of favor as they shun the nation's bonds in the buildup to the eu when i meanpaired
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-- ♪
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mark: officials say a man who fatally shot his ex fiance monday night out tied a chicago hospital, before killing two people inside the building, was once kicked out of the city's firefighting a cap -- academy after threatening a female cadet. it included a police officer who police say had once been engaged to the shooter at the pharmaceutical assistant. it is not clear he took his on my floor was killed in exchange of fire with police. said thisyor emanuel just tears at the soul of the city, it is the face and consequence of evil.

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