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tv   Bloomberg Markets Americas  Bloomberg  December 24, 2018 10:00am-11:01am EST

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caroline: these are the top stories we are covering -- steve mnuchin says markets are stable, the treasury secretary called wall street banks to confirm the liquidity and contain the fallout for tensions between the fallout in the fed. china announces another round of tariff cuts, lowering impact -- import taxes on more than 700 goods and what a good me to the global economy. some opec members and that production costs could deepen and be extended. equities were hurt with the worst selloff on record. right now, let's check in with the u.s. markets. >> good morning. afternoon, markets are
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under pressure today. the dow jones and s&p 500 and nasdaq are down more than 1% after last week, they closed their biggest weekly loss since 2011. the s&p 500 is down for the fourth consecutive day of more than 1%. let's talk about the government shutdown. do the market -- does the markets really care? chart here shows the history of the shutdowns in 2018 and what you can see is only just the markets brushed it off. 1/10ly cost the government of a percent every week they were shut down. we don't actually have the charcoal there it is. markets have actually jumped after we had these other shutdowns. there may be some concerns but it looks like the market is brushing the soft stop i'm
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looking at the bear barometer. as far as the sectors across the s&p 500, we begin with seven of 11 sectors with energy down nearly 30% from its peak this year followed by financials and industrials and tech, seven of 11 of the consumer groups are in a bear territory. it's not a very merry start to christmas and the end of the year. speaking on energy come i want to take a look at the volatility we see in the oil market. it's a seesawed this year for the price of oil. to what this comes down we saw earlier in the year when the u.s. was saying they would not put sanctions on iran and than they did and speculators were saying we will see $100 oil. trading around $45 per barrel. will opec cuts really start to
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materialize? we have heard from the ministers this week saying the cuts have not begun but they could cut deeper and how they will do thats shale mckee peering the cure for low prices is just low prices. caroline: especially when they hit a three year low. mnuchin is set to convene the president's working group on financial markets. the head of the nation's six largest banks. in light of the partial government shutdown. we go live to the white house so talk to us about how rare or common is it that the secretary of the treasury will pick up the phone to call the banks? >> this is pretty rare this would happen. we are in a holiday time before christmas so for these calls to go out to six big lenders over
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the weekend, it shows there is some concern within the trump administration of what we have seen in the stock market over the past few weeks especially in the last week and continuing on a to today where we have seen large drops in the stock market, multiple days of drops of more than 500 point on the dow and a lot of volatility. i had an opportunity to ask the treasury secretary about this last week when he came to our washington office for an interview. he said he believed the volatility in the stock market have a lot to do with fast traders and algorithms and high-speed trading happening. the call that he made yesterday, he is trying to take a more of a proactive effort to make sure the markets are calm. it does not appear that is working because we have seen the markets continue to fall today. caroline: the dow jones is
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currently offered 1.6%. accentuating the concern out there. let me get your take on what is chaos in the market but also chaos within the white house itself and the divide happening currently in the senate. are we any closer to the fact to the might see an end government shutdown widgets in its third day? >> we are not any closer. there are no negotiations you expect to see if you are going to see the government shutdown come to an end. is not discussion with members of the house because many of them have already left of the christmas .oliday the leadership has left washington to spend christmas with their families so we will be in the shutdown until at least december 27 and after that, one more week before democrats take over the house so
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they may have more of an incentive to dig in their heels and wait for nancy pelosi. after that, they can pass a clean funding bill and passage of the senate than the senate will have to decide whether to stick with the president or end the shutdown by passing a clean funding bill, the same thing they passed a week ago. it remains to be seen whether the president will cave or decide the shutdown is not in his best interest but right now, the two sides are no closer. caroline: no festive spirit it seems, thank you very much. president trump has expressed dissatisfaction with jerome powell and the fed. when back to october donald trump cited than a wells fargo strategist who said if the fed backs often stops talking more dovish, i think we will be 20 -- 2009to the target for the s&p 500.
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what does he know make of the latest fed action and the trump reaction. his office now from in st. louis. thank you for joining us. see to us about where you the current reaction to the federal reserve. what about the feds rate hike? was it right? we would argue it was unnecessary but we did believe they would hike rates. i will mention that we did trade seems aner 3 which attorney ago but its three weeks, we were inside that target range you mentioned on december 3. at least in our opinion, the treasury secretary, when he spoke to the economic club of new york, that was good and the initial g20 meeting with trump and presidentxi was good but the
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concerns since december 3 certainly have been concerns most of this year, comes down to some basic things. a the fed going to make mistake? the market is not convinced of that. then, is global growth going to slow down? there are many underlying parts whether it's the shutdown or these of the things you can bring up. the two basic concerns that we have been talking about with clients all year is a fed mistake and global growth slowdown. caroline: how much does it worry you these reports that trump is even considering trying to let go of the fed president? much more of a worry or relief would that be to markets? is an federal reserve independent entity. that's the way we want it to be enough the way it should he. the president is certainly going to voice his opinion but as jay powell told the markets in numerous interviews, they have
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to do the job as they see fit. we continue to believe the fed will remain independent and will make those decisions. we may or may not agree with those decisions the what we are trying to do is figure out not what we want the fed to do but what they will do. that ourfed tells us tone is a little softer but we are still talking about two hikes next year, one in 2020, clearly, the market did not think that was as dovish as they were expecting. caroline: has the market overreacted? we are in the shoot first, ask questions later mode. weeks, thisast two is about as close to panic as you can get at least in our opinion. treasury secretary mnuchin, you would expect him to be talking to banks very frequently and he talked tohen
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these banks over the weekend, the administration thought it was a good idea to tell the markets that that's what they did. the market is, not taking that is a good thing. you would certainly expect the treasury secretary to be in contact frequently with these big financial players. caroline: how much do you think that is a concern today? did you really need to hear from steve mnuchin that he was reaching out to the banks? did that had to liquidity concerns? >> the liquidity seems to still be there. what the treasury secretary found out from these large banks is what you would expect. they stand ready to provide liquidity but it may have been
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and if you look at the way we have opened in trading, the market did not like to do that news. before i came on, you guys were arguing whether or not that should have been kept quiet. andably, the administration the markets are looking at them saying they are doing something in there working behind the scenes that things are in place and liquidity is there if we need it. caroline: and yet still the nasdaq falls further. we thank you. let's check in on bloomberg first word news. the death toll from this weakens tsunami in indonesia has grown to over 370 and their warning that number could climb. he nor but -- a nearby volcanic and under --ggered
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was triggered by an underwater landslide in the national disaster could hurt the indonesian tourism solution -- tourism market. other news, defense secretary james mattis will be leaving the job two months earlier than expected. president trump reportedly decided to make the move sooner after the criticism for the secretary's recommendation letter. shanahan will be the acting january 1. security is high in barcelona following u.s. warning the city could be at risk for a terror attack. an alert posted online and sent to u.s. citizens in spain's second-largest city recommends exercising hiking caution around buses in public transport. barcelona's downtown area was targeted last year during an by a islamicd
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state melas that killed 14 people. the israeli government coalition resolve the to parliament with elections originally set for november. it's suggested a new vote wilson -- will bring a big change in government and the prime minister will win a fifth term as head of the conservative government. hours a day on air and online, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. back to you. thank you. let's get a quick check on the markets as we had to break, it's a shortened trading day but risk aversion is front and center for the fourth a, we are lower on the s&p 500, the lowest level since may, 2017. steve mnuchintary has been putting in phone calls to the biggest lenders in the
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u.s.. the dollar goes weaker as we worry about the federal reserve and we have seen the bond rising. risk aversion and search for haven. from london and new york, this is bloomberg. ♪ ♪
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>> this is bloomberg markets. caroline: we are back with scott wren. looking at a brutal month, the worst month the s&p 500 since 2008.
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i'm sing it was the worst week since 2011. when will we start to see signs of cup that generation? when will we see signs of capitulation? we are seeing that this morning and if you look at it right now, we broke every trend of a lot of horizontal support, as i would call it. the next trend line off the 2011 right and that 2300 -- 2315 area. we very well could trade there. it's mind-boggling expectations. the trendline will probably act as a magnet. some capitulation
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with decent volume. as i mentioned before, there has been panic and we are bottom fishing. it's hard to pick targets but you still have one for the s&p 500 for the next year? we had a target range initially we said that was the midpoint around 2900. ,ou look at where we are now that is a big return. we, like many other houses on the street, are trying to say what can we realistically get to. the trends argue for meaningfully higher market and we expect that but we expect a
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good year next year because we think the fundamentals are still good. does the u.s. outperform or underperform globally? at the beginning of this year, it was about the outperformance in the has quickly eroded. >> in late september and early october, we stuck hon the war -- stuck eight tell in the water in emerging markets -- a tyoe in the water in emerging markets. emerging markets of outperformed since then versus the s&p 500. whenever things down, that does not make you feel all that good. caroline: on a day where we get some good news out of china, they are looking to open up the economy to reduce tariffs on 700 goods, will china do enough from help theirctive to economy and slow down the slow down.
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gooder time, we expect news from china and the european union. the negotiations will not be as easy as they were with canada and mexico but we are the best customer of the eu and the best customer of china. this likely they make some accommodations a we expect good news there through next year. caroline: how about the geopolitical risks? i'm looking at italy starting to quell their issues but paris has been an area of discontent. how do you see that affecting the markets next year? europe is a mess and that will probably not change soon. the politically uncertainties there -- we knew since the greek problem, we would revisit these issues over time. they had been on the back burner and now they are on the front burner. we don't have a lot of interest in the eurozone so we are downplaying exposure there but certainly in the emerging
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markets and the u.s. large-cap and make cap side is what we like. it's a key question of whether we see momentum leading is higher and whether it's about the safety play like real estate and utilities. >> the way you will lean, you -- if you are leaning the way we financials, industrials, consumer discretionary, we like health care, tech -if you like those sectors come you have to believe this expansion is not over and that it's unlikely we see a recession over the next 12-15 months. that's the way we are leaning and we think fundamentals are still growth and you will's -- you'll probably see growth 2.7%. we are leaning toward sectors that will benefit from a continuation of the expansion. we do not want them hiding and utilities have done well this
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year but that's not the kind of thing we think will do well over the next 12 months or so. caroline: you are saying you're not seeing a recession. i'm looking at the economic forecast and we are not seeing a recession from the economists out there. they are seeing 2.6% growth next year. throughst a slow down 2020. how much do you think the economy will support or surprises in 2019? >> i think everyone expects a slowdown from this year. is that the economy hangs in better than the fed. the fed is at 2.3% and we think it will be better than that. the fed might be surprised that the economy is doing a little better. we are not expressing much on inflation so good growth, modest inflation, valuation attractive
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-- that's one of the reasons why we like stocks. calm amida voice of signs of panic, great to get your opinion and we thank you. let's get a quick check on the markets as we head to break. he was talking about signs of panic. we are down by one percentage point on the nasdaq, further into bear market territory with crude oil off by 2%. where is the support for oil even as opec promises to cut production. money is moving into the havens. gold, thedigital crypto indexes up 23%. this is bloomberg. ♪
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caroline: time for the bloomberg business flash.
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bt group is removing gear from a $3 billion project for emergency response. they are worried it could enable chinese spying. bt is big in the u k with assets in the u.s.. there is a definitive agreement to be acquired by vista x with a deal valued at $2 billion. it's a 68% premium. from new york and london, this is bloomberg. ♪
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this is "bloomberg markets." now let's check in on the first word news. >> thank you. the partial u.s. government
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shutdown now in its third day. president trump remained in the white house after lawmakers left for christmas with no resolve to fight for funding for the funding wall -- for the border wall. mick mulvaney is saying the shutdown could drag into february. the body of a seven-year-old girl who died while in u.s. portal custody has arrived in her native guatemala. she and her father were traveling with a group of mike wetzel arrived at the new mexico border earlier this month. the father alerted them his daughter was sick. she was flown to a texas hospital, where she died the next day. guatemalan officials are demanding an investigation into the child's death. theresa may is urging coming together as opponents look to kill the deal she negotiated. in a letter to a newspaper, she said, "it is time to put as our differences and focus on what
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really matters." she writes the parliament agreed on the right transit deal -- brexit deal. in sudan, violent antigovernment .rotests entering a second week calls for the president to step down. country's army pledged its loyalty to the administration. eight people have been killed since the protests began. globaglobal news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. caroline, back to you. caroline: thank you. now, of course, amid the volatility, a deal can get over the line in 2018, the merger
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between t-mobile and sprint. last year, the time you won u.s. approval. the companies need approval from the federal communications commission and the doj's antitrust unit. in april, jon lester sat down with vonnie quinn and set up in detail how the deal will benefit consumers. >> what we got in today is the start of doing two things. one is, talk about this deal, talk about the value to shareholders. the second is, talk about why now and how it will get approved. those two things together will drive shareholder value. this deal, you said $26.5 billion. it is actually a $145 billion valued company. billion to $57 billion of revenue. it will grow 2% annual.
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up to margins of 57%. ae fun part is the synergy to $6 billion run rate and a cash flow by 2025 will be $16 billion to $18 billion so if you are a shareholder, this has huge value. people are asking the question, why now? and will it get approved? that is my job starting day one. i'm so confident of the plan that we have. it is in three buckets in washington, and i will be there after we finish. i will be there quite a bit. three points. what is different now? 5g. it is an imperative. the nation's leadership in 5g his at stake. we have fallen behind china. t-mobile and sprint are the only companies that can change that. second, the un-carrier. that.l supercharge
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customers can look forward to a broader range of service, more rural competition, more broadband competition. last of the three, jobs will go up. that is why it will get approved. vonnie: right. these are the three pillars of what you will pitch to regulators. a job positive martyr. -- margin. benefits to the consumer, particularly the rural consumer. that is something squarely in the administration's course. and defending the china and korea. >> sure. yes. vonnie: will that be enough for a regulator that has given the go-ahead to one media deal? the others have had a lot of trouble. >> listen. the statistics are -- our leadership in 5g spurred so much innovation. trillions of dollars globally in the global economy driven by
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what we did. uber, snapchat came out of the 4g leadership. amazon, these companies grew because of it. we will investw, $40 billion over the first three years. and create a mobile layer and drive leadership. we will of course at&t and verizon and others to invest significantly because what is happening right now, we talked about this last time. deploymenteter wave verizon and at&t are doing, if they wanted to do that? this rollout they are doing is a scam. caroline: that was the t-mobile ceo back in april. let's have a quick check on how the markets are performing today. remember, it is once again risk aversion across your indices. the s&p 500 currently down one
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percentage point. we are coming off the lows. dow jones industrial average lower. nearly every single industry group in the red. from new york and london, this is bloomberg. ♪
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this is "bloomberg markets." let's get you to your business flash now, a look at some of the biggest business stories. saudi arabia's largest bank may be getting even bigger. merger -- on a it is working on a merger. no transaction is imminent, but
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the coordinator has contacted the central bank. seeing a value of an endowment reached $31 billion this year, according to data from bloomberg, the second biggest in the u.s. the university controls more than 2 million acres in the world in an oil-producing region. weekend'smade the biggest splash over the weekend, taking in more than $67 million in the u.s. and canada through sunday. poppins"by the "mary revival. box office earnings 7.5% from up 7.5% from last year. meanwhile, china has announced another round of tariff cuts,
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lowering import taxes on more than 700 goods as part of an effort to open the economy and lower costs for domestic consumers. we are now joined by bloomberg trade reporter in washington. this is the third time they have done this this year. how big of a deal is this? >> it is a big deal for the chinese economy. the chinese ministry of finance is considering this part of president xi's work on the economy. for the u.s., it is not that big of a deal because the retaliatory terrorist stand -- tariffs stay in place. this is not an action that is specifically tailored to u.s. goods. this would affect all members of the world trade organization. it is a big deal for china. a step forward. definitely good news for the trump administration and some here who care about lowering tariffs. for the hawks, that may not be enough. caroline: in some ways, it is
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responding to the tariffs because they are responding to the u.s. soy and having to see new ways to bring in cheaper meals. can you talk to us about the way in which they are responding to the current tariff scenario? jenny: they are trying to find other ways if they can to bring soy in. that is a big part for some in the trump administration who are interested in more chinese purchases of u.s. goods. however this does not address the structural issues that have been laid out in the report on report.ion three this is, like i said, a step forward. it is good news for the bilateral relationship in a
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sense, but it has to be accompanied by more action. shoulde hawks here consider it meaningful. theline: talk to us about action on both sides of the equation because we expect meetings in january. jenny: exactly, yes. we heard from secretary mnuchin last week that the next face-to-face meeting would be in january. the two sides have been in touch over the past couple weeks over the phone and emails. a lot of action going on behind the scenes. the meeting in january will set the stage for a potential may be extension of the deadline. -- maybe extension of the deadline. we heard president trump talking about extending it passed march 1. -- past march 1. we will see what happens in january in the meeting and even maybe a follow-up meeting on that and see what the progress
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is an justify it to give the tops more time. -- talks more time. caroline: thank will be a busy scenario for you . meanwhile, coming up, more on the markets. we are looking at one stock in particular because amazon is really starting to crawl back into positive territory. point was down at 5%. we are now 7/10 of a percent. that is helping lead the nasdaq higher. the nasdaq is now in the green and is your top performer. from london and new york, this is bloomberg. ♪
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this is "bloomberg markets." now, of course, holiday season
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is in full swing. but there is still a little time to buy last-minute gifts. you are really late if you are. here to unwrap spending trends is marissa from austin, texas. year, what, this stuck out to you as a different type of buying that we saw from this time last year? marissa: a few things so are. it has been a -- so far. it has been a really long season. shopping started in october so retailers had to be ready for the long haul of discounts. with e-commerce growing at such a high rate, the shipping wars stuck out. when you look at what amazon was doing and brands and retailers like target and walmart, the shipping rate wars became a thing very early on. the third thing that stuck out of interest is while many people talk about e-commerce growth the store is still alive and well
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-- growth, the store is still alive and well. millennials look to do shopping in stores. the stores were booming. caroline: who benefits, particularly in the last minute dash? is it higher-end goods? more expensive ones? or visit a specific area that tends to do well -- or is it a specific area that tends to do well? marissa: the stores benefit this weekend in particular. apparel, toys, she was, an electronic --shoes, and electronics. and gift cards -- shoes, electronics. also, gift cards. i know i felt it. e-commerce is getting higher and
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higher, but i'm not always the quickest. starting to charge you to ensure your good get there on time. how much will we see it drive up margins through the panic your parcel may not arrive? marissa: the shipping wars i mentioned earlier are definitely a thing. retailers are happy to absorb the margin cost of not only free ground shipping but free expedited shipping because many retailers where guaranteeing you can get free shipping until friday of this week. it is a cost retailers are trying to balance and absorb, but they are also being creative. buy online and pick up in-store has grown 50% this year over last year. it is interesting to see retailers are finding creative ways not only to deliver expedited shipping, but encourage you to come into the store with programs like buy online, pick up in-store. even at discounts because they know you will spend more as you come in. cleverple of a really
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program this weekend with old navy partnering with lyft to drive you into the store to pick up your items as an additional encouragement. retailers are being very clever. caroline: very clever, and great analysis from you as well. marissa, we thank you. check out our turnaround at amazon. quite substantial. we were down as much as 5%. now amazon up better than one percentage point. the nasdaq bouncing off of its lows. a focus on one particular area of oil. opec members saying the block will extend production cuts but the markets don't care. let's go to alan lipman. is he there? >> hello there. good afternoon. caroline: great to see you. i want to get your perspective on the turnaround we are seeing in sentiment on the markets, whether it is a quiet death whether -- whether it is across
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equities. >> the markets are very oversold. there will be some bargains, holiday bargains, but will people step up and buy after the selloff we have seen? obviously, this decline has pretty much been in tandem to the downside. it has been a loss of faith in the global growth story. that has been seeing this unwind. we have done this before, where we have big pullbacks in the market over the last eight or nine years of this uptrend bull market. we have pulled back but if you look at the sideways trade of the s&p, between 2600 and 2800 for nine of the last 12 months. now we have gone below the range in the s&p, so that target is 2400. that is about where we stand now. we want to see if that holds at a super support level and we can rebound as we have seen every time in history from these selloffs. caroline: let's get your perspective on oil because we are still down almost 2%.
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when will the bleeding stopped in that particular area? alan: this market is very overdone. the downside has been $30 straight down. but if we can look at it, 2015, 2016, 2017, oil traded between $40 and $60 so we are back in that range after the breakup in 2018. back in the trading range. i am not an expert on how the cartel will make adjustments, but every time in the past, they have stabilized prices. i look for that to happen again and think oil will have some rebound, maybe to the $50 to $60 level in the next couple months. caroline: thank you. alan, we will be returning to you. for now from oil, let's talk autos because they have endured a tough year. news that china and the u.s. are taking the first steps to removing tariffs is a really. this from the porsche ceo. >> we have to think about what
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we will do. and today, we have not decided yet. i think we will find a good solution for our customers and for our brand. opening aou consider production plant in the united states of america? have you looked at that option? >> up until now, we did not think about it. we did not think about it because production in the u.s. depends on the volume. istion is selling -- porsche selling around 60,000 units a year in the u.s. a profitable production in the u.s., you need normally around 50,000 units. is difficult to talk about production in the u.s. bigger volume, manufacturers,
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easier to do that. -- bigger volume manufacturers, easier to do that. >> we have seen it drop five months in a row in china. what can you tell me about porsche sales in china? seeing a slowdown in your sales there? >> we don't have a very good here in china with pay increase over 10%. in our verypecially 911.r cars like the a big increase. we have progress with the new cayenne. we are looking forward to the next year with another record year in china as well. oliver,ver, we have --
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we have just written a story -- that heprove to will look to improve your process. you talk about efficiency and cutting costs to boost your profitability. tell me how the transformation program may take place. is it more cost-cutting or new products? how will you achieve this kind of boost to profitability, 750 million euros? thisr: the title of program is resolved improving program, and we are concentrating the whole process in our company here. we start with engineering, go over to production. improve is to 2025 to our results. 6 billion euros. the lower margin with the
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electro-mobility. a material cost higher than about 6000 to $10,000. -- $6,000 to $10,000. so we thought to start now when we are in a very good position. we want to remain our profit margin of 50% for future. and therefore, we went into this program. caroline: porsche ceo oliver bloom talking in november. now let's check what is happening right here, right now. the nasdaq almost run to get into the green . this is bloomberg. -- almost trying to get into the green. this is bloomberg. ♪
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>> 11:00 a.m. in new york, from london, i'm caroline hyde. this is "bloomberg markets."
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care line: here are the top stories from around the world. u.s. stocks are hitting a low as treasury secretary minimum children tries to calm the markets. president trump treating the only problem our economy has is the fed. shares of mind body soar as the company enters into an agreement to be arequired for $1.9 billion. and some opec members hint production cuts could deepen after oil prices suffer their worst quarter since 2014. the worst selloff on record. meanwhile, let's check in on how the markets are performing. volatile trading, we have been in the red and the green, but notably volumes are higher despite the shortened trading day. >> that's right, caroline. we are seeing high volumes on many usually say this says a lull and a shrugging off this day in terms of the


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