tv Bloomberg Markets Americas Bloomberg December 31, 2018 10:00am-11:00am EST
york, 3:00 p.m. in london. live from new york, i'm vonnie quinn. here are the top stories we are covering from bloomberg and around the world is new year's eve. was in of the year that the start of the year that could be. reportst donald trump big progress in trade talks with china as he presses for a new congress. can they a partial federal shutdown. day of a partial federal shutdown. is there life in cable yet? lots more to come in the next two hours. checking u.s. majors now, lots of market in europe but in the u.s., a nice bounce. the dow is up nine cents of 1%. the s&p 500 is up 7/10 of a percent. netflix the top performer of the
day. the nasdaq is up three quarters of 1%. we want to get to use the performance in markets across asset classes, but let's look at the month that has been. abigail: absolutely. it has been pretty bearish. we might have a small rally on the day, but there is a monthly move for the monthly averages going back. 10% for the nasdaq. that is the worst monthly performance for the nasdaq going back to november of 2008 for the s&p 500 and the dow since 2009. the bearish glitter we have had, the worst for the major averages and year since 2008 really culminating in this december almost uncertainty for investors. if we break this down sector for sector, 4 of the worst sectors on the month of december, all 11 of the s&p 500 sectors lower, but the energy index,
financials, industrials, and health care. they are all on pace for their worst monthly performances since between 2008 and 2011. something that stands out here, energy in sympathy with oil being in the deep bear market. but health care, one of only two sectors up on the year. a defensive move and safety play. health care not getting that reprieved. not surprisingly, we had the 10 year yield falling. even bonds are rising. the 10 year yield down in the month of december. up on the year. in december, investors looking for some sort of a reprieve, a haven, plus the idea they may be less aggressive in terms of their normalization path. we have gains for the major averages on the day.
day. technology, we have some buy action. amazon, some speculation they may be expanding the whole foods aspect. this points to the idea some investors are brave, buying a dip despite the bearish december we have. -- abigail,rding thank you. we are joined now by mark grant. he is in fort lauderdale, florida. thanks for joining. mark: happy new year. vonnie: not quite there yet.a few hours left of trading . is the sending a signal? i think it is: sending a signal there is large concerns. one, of course, is what the fed is going to do. the fed has made a mistake.
the economy contracted by 2/10 of a percent and they raise rates. i think that was wrongheaded thinking. the other major concern in the united states and this is not a political comment,, this is a market comment. if the democrats tried to impeach president trump, i think it is going to cause all kinds of consternation in the market. people are concerned about it. so are big institutions. i can definitely report that to you. will get to that part of things at a moment, but first, the fed. if the fed has done the wrong things, why our markets stabilizing? people are a lot of hoping that the fed may change course and stop raising interest rates. on fearets obviously and hope and prayers.
a lot of people helping the fed will slow down and pay some attention to the fact that our elected officials, congress and the president, are trying to grow the economy. was if it raises interest rates, it slows down the economy. given where inflation is, there is no reason to do that at this point. didie: so mohamed discussed the fed and sets of interesting things. >> even the event is understanding it needs to communicate better. it needs to do two things in particular. one, show it is more sensitive to markets and what is happening outside. this risk of still back. get a better feel for what is going on. second, the fed has to realize it cannot keep a really important policy tool on automatic pilot. that it needs to be more sensitive to what is happening.
i think the fed can regain control and we can stop these self-inflicted wounds. vonnie: sounds quite the criticism in some ways. i'm curious as to whether you think it would be enough for the or to change its messaging if it would actually have to do something more. personally. mohamed a bright guy. he hits on a couple of excellent points. one, the balance sheet. no reason for it to be on autopilot. in fact, causing a bunch of liquidity problems by moving so quickly. we are also seeing, as i know that people concentrate on equity markets, but we are also seeing very bad markets in high-yield. weare seeing that markets in investment grade as they widen i treasuries. this is also a big concern. i think the fed needs to understand some of the governors have talked about returning to
normal. there has been no normal in 10 years. you can return to something that wasn't. the concept is wrong. say,nk the fed needs to let's just impact for a while, not raise interest rates. let's not take somewhat -- so much off of the balance sheet so quickly. minus the two things i said ,arlier, an impeachment process and if there is a hard brexit on a global basis or this game of thrones with china keeps continuing, that is going to be hurtful to the markets. marketswe see the performing relatively well again minus those things. vonnie: i want to ask you about the possibility of impeachment proceedings. why are institutions asking you about that? nancy pelosi looks like she will continue her role and has said that is something the democrats don't want to do. mark: because a number of
democrats not nancy pelosi have said that is what they do want to do. we are into politics here. what happens in politics has very little to do ultimately with economics. so who knows what these people are going to try to do? you feel as though they may try to do something. vonnie: with that continue the ?ridlock what are investors saying in that situation? to doif they actually try it, it will be a disaster for the markets. we can see the markets drop 7000 points because that puts the american government in this gridlock. and it would also not be good for our currency. and it would frighten people and institutions alike. and hopefully it does not come to pass, but it is there and you cannot ignore it. vonnie: a quick question on europe.
we have seen a really disastrous 2018 for many across europe. what is your outlook for 2019? any improvements? mark: i have sent all in you should keep money out of europe. that turned out to be a good call. i continue to think that. several things going on. brexit. if it is a hard brexit, it could be very difficult, not only for the british banks, but the european banks. you have the problems in italy company cellini and wanting to have a different budget than the european union, and the european union can do something back. it has been far worse in europe this year. also, with the central banks stopping their program, which has prompted a lot of the sovereign -- propped up the a lovely sovereign a lot of- propped up
the sovereign nations. mark, i hope you make lots of news resolutions that you can share with us in january. let's check in now on the first word news. senator elizabeth laurent has taken a major step to running for president.the massachusetts democrat is launching an exploratory committee that can give her an early edge in fund raising an organization. she says american families are under attack from every direction because of a government that is "bought and paid for by a bunch of billionaires." president trump says he has not dropped his demands for a concrete wall on the border with mexico. just a day ago, john kelly was quoted as saying the idea was scrapped months ago. the point for funding for the wall has led to the partial government shutdown now in its 10th they. optimistic start to a make or largestar for the two
economies. president trump reported big progress with xi jinping. saturday.a phone on u.s. trade delegation goes to beijing for talks next week. re hassia, reports the been the capture of a u.s. citizen accused of spying. he was reportedly caught during an espionage operation in moscow. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. vonnie: all right. thank you. let's check the majors now. we are just about 40 minutes into the u.s. trading session. stocks are higher with the dow up 1% now. the s&p 500 up 7/10 of 1%, led by netflix. the nasdaq as well. let us cities
can and the shutdown. talking about what is acceptable to both sides of the aisle. thingt going to be the that breaks the tie, marty? it feels like the definition of a wall is not -- it is not. donald trump has moved to the definition around. he said it can be a barrier, not a wall. but it is clearly democrats are in no mood to negotiate with donald trump at this point until nancy pelosi, the presumptive speaker, takes office this thursday. vonnie: argentina republican moderates that could push the are there enough republican moderates that could push the number? marty: that's not the issue. the issue is what donald trump will actually sign. until they are sure that whatever they pass will meet the
president's approval, it is just an exercise in futility, and mitch mcconnell has refused to take any vote unless he has assurance the president will sign it. vonnie: how do we get that assurance?rule the president put on paper what kind of figure will be acceptable?he stuck with $5 billion, but that is not going anywhere. marty: it is not just the $5 billion, but the language on how that can be used. democrats have indicated they are willing to spend more on border security. are not willing to spend it on a wall they consider wasteful. it will be difficult to see that ending anytime soon. i think this can drive out for not just days, but weeks. vonnie: is the idea of some kind of funding for a wall or something barrier for immigration, is that palatable to the president? marty: yes, i think it is. the question is, he has to make
a decision on whether or not this is the rent line he will not cross for his base. he has basically signaled he would accept just a straightforward extension of national security funding but withdrew it when he was criticized by the conservative media. so just what he will sign is kind of in the year. -- of up in the air. vonnie: let's switch to elizabeth warren, the first democrat to all caps say she is running for president. does it give her any kind of an advantage? marty: today, she has the advantage. a well-written story on the bloomberg terminal. a lot of people on wall street have taken a key interest in her candidacy, not necessarily in a positive way, because she has been a very vocal critic of wall street in her announcement today. she criticized billionaires who
control the political process. she has an advantage in the sense that she can start raising and do the things that a candidate needs to do organizationally, ultimately, this is going to be a crowded field. onen't think that one or day or one week gives you much of an advantage. it is way too early. vonnie: exactly. too early to handicap whatever performance she will have. --have some and a platform some kind of platform, to restore the middle class. does she get the advantage with that messaging? marty: today, yes, but you have to be careful making presumptions about the strength of the candidate this far in advance. who knows what the economy will look like a year from now, the world stage? there are hotspots everywhere world.the it could be completely different political environment a year from now or a month from now where she would have an
advantage or disadvantage. vonnie: the dnc will have a huge role to play as well. what kind of platform could be the winning strategy for a democrat? marty: well, this is the very interesting debate that the democrats are going to have to have. do they nominate someone who is ideologically pure in the sense of being a progressive? or do they nominate somebody who is electable, who can actually beat donald trump? that is the question they have to answer. vonnie: very important to figure out how to enter the question because i not sure it was entered the last time correctly either. marty: it obviously wasn't. vonnie: marty, thank you for joining. let's get a quick check on the majors now.it is the last session of the year . typically stocks advance. they are advancing today like normal with the dow jones industrial average up nine cents 1%. 910 of 1% -- 9/10 of 1%.
vonnie: live from new york, i'm vonnie quinn. this is "bloomberg markets." well, college football will not go dark on new year's day. disney and verizon nearly over to a blackout when the two companies agreeing to a multiyear agreement. of course, also those new year's eve celebrations tonight from times square in new york city. joining us now with the details is crayton.
how important is new year's day? if you live in the new york area, philadelphia area, subscribing to the verizon tv service, you are looking at a potential blackout hda these companies -- had these companies not reached a deal. vonnie: it is the age-old war. we came to the wire, and there was a deal. doesn't it prove there is like to cable still? every time you see one of these situations over a carriage deal when a cable network and the reader have a contract in the history do, it is a question. do cable companies still depend on these banking on networks like espn? tried to forgo them and have smaller packages that subscribers may want to get and still happens like discovery and cbs and whatever else? the answer so far has been no.
espn has been losing subscribers but still have a lot of them.still one of the most watched channels, especially the younger demographic. that matters to the cable distributors. they know they will lose subscribers if they don't have those channels.so far , the legal system is still intact even though we have seen it raining over the past years. -- fraying over the past years. it is really trying to own all of sports. is that the last frontier? crayton: remember that disney has launched the espn plus services, which is direct to consumer and has a lot of sports you don't get in a normal cable package. if you ask somebody like discovery, which does not have a lot of sports rights in the u.s. but does in europe and has been vetting very heavily on sports,
they are really focusing on sports as their future in europe. that tells you a lot as a company that sees it both ways, what it is like to not have sports and what it is like to have sports. vonnie: you could not cover these companies and not have a prediction on the rose bowl tomorrow. crayton: i guess i'm going to kies,s that is -- to hus but that his friends and affiliates. vonnie: it is time now for the latest bloomberg business flash, some of the biggest business stories in the news right now. in japan, another setback for the former nissan chairman. once again extended his stay in jail for 10 more days. he has been locked up since november 19 over allegations the understated his income by tens of millions of dollars.he has been in jail so you can begin working on his defense. the quote of oil since tony 14 comes to a close today. crude plunged almost 38%, dragging ne futures.
investors are not sure of the catfight opec and its allies will counter booming production in the u.s. regulators and china have approved 80 new videogame titles after the freeze. china's gaming industry was hammered by the decision to hold the approval process. one of the biggest producers saw its market value fall by $200 billion. that is your latest bloomberg business flash. still ahead, we are going to be looking at commodities. a painful summer for agriculture.a harsh winter for oil as well . we will look at the year that was and the year ahead.this is bloomberg . ♪
fears, and commodities suffering in 2018 from all of that. 2019.talk about all the issues i mentioned really stuck it to crude oil, that was one of the worst performers in 2018. tell us about the features of 2018 that might not be present for oil? mike: first, the trade war. the worst of that is probably over. metals anded soybeans. and the dollar is the best-performing major asset on the planet, up 9%. that's been a major asset. crude oil, the key thing is it's near 40, that's a pretty near low area and crude oil is probably a bear market. it's going to gravitate towards 50 and wti.
vonnie: if you take a look at the chart, it's on the worst quarter for oil sense 2014. -- since 2014. mike: it got too expensive. when it was getting near 70, w ti, something was wrong. they got to 76 and people were calling for 100. two extreme. we are going to see the opposite on the downside. i don't think it gets much below 40. for that to happen, it is very deflationary and would lead to fed easing. the stock market collapsing and more of that. which dragged crude oil down the last few weeks, the plunge in the stock market. vonnie: natural gas is up marginally this quarter. talk to me about the year ahead. mike: should be more of the same. blips way overdue for that
, traders are conditioned to sell rallies until it stopped working. the big picture is that band -- demand is catching up to supply. when we use natural gas for everything now including electricity, it is a steep backwardation. investors can buy further out natural gas products and 20% discount and roll into that, which is pretty positive for people who buy-and-hold natural gas. vonnie: how does the correlation work? has it been affected with opec and opec plus? is natural gas dependent on the price of oil? mike: a little bit probably true but i don't even look at that anymore. it is so disconnected. natural gas is still very domestic u.s. and that's changing, but still very domestic u.s. and there is excess of supply the demand has really caught up and that's what's changed. we heard positive words from the president on twitter over china talks for the weekend.
how much will this play-by-play about china impact commodities, particularly carbon commodities and things like energy commodities over the next couple of months? mike: the worst is probably over and i think the market gets that. both sides have to get the proper rhetoric. it's just a matter now of where's the beef? there's no soybeans left in the world except for u.s. for a few more months, so that's probably going to help the soybean market until we start planting. vonnie: what about the correlation between equities and complex? where the complex go, does that depend on equities, to what extent? short-term, it is significant. when the stock market plunge like it did in q4, if that continues, everything is going lower. key factor is the commodity market in addition to equities told the fed not to tighten and they still did. now we have to deal with that next year. and the vix was the lowest the
longest ever just a few months ago, that is just reverting. it's a bit of a problem but i think what that does is the u.s. equity market is lundbeck a little bit of it puts pressure on the dollar and takes the fed out of the picture which is supportive for commodities. vonnie: let's move to something entirely different. year, downon the very slightly today via dollar. where does gold go into what is gold correlated these days? mike: the dollar, negatively correlated. it looks like natural gas did a few years ago. i'm afraid of a potential upside. it's compressed with a very narrow range of the broad drivers are positive. shoulddollar peaks, gold have plenty of upside and it has a lot of fuel because it is stuck in a very narrow range. when gold goes up it usually not so good further assets like the stock market. vonnie: how much of a safe haven trade is gold? the dollar it not been
up 8%, the dollar would be up 20%. it is somewhat unchanged on the year, but still a safe haven assets depends on how much bonds were. on the year, the yield is still higher. mike mcglone, thank you great coming to us from bloomberg intelligence. let's check in on first word news. trump ispresident doubling down his decision to withdraw u.s. forces in syria. residence at his efforts is not what he calls never-ending war shouldn't come as a surprise because he campaigned on the issue. aftereets coming is public and senator lindsey graham said the president may be open to changing his. strategy. -- his syria strategy. jong-un wants to resolve the nuclear impasse with the u.s., according to a spokesman for
south korean president moon jae-in. there is increased by just -- skepticism that came is willing to with the -- willing to dismantle the nuclear armaments. xi jinping is urging self-reliance and a time when changestry chases unseen in 100 years. a u.s. delegation heading to beijing next week the resumption of trade negotiations, xi speaking with president trump and mr. trump said that progress is being made towards a deal. goldman sachs cut the forecast on you as growth for the first half of 2019, the chief economist lowering his outlook for the american economy from 2.4% in the first six months to 2%. goldman also reduced expectations federal reserve of different hikes. global news, 24 hours a day, on-air, online at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana machado. made their newve
year's resolutions in the koreas . they celebrate new year's 36 thises ago and you can see is the north korean celebration, pyongyang there celebrating. but as 12:36 in north and south korea. coming up, a powwow with powell. will the fed chairman meet with president trump after the president criticize rate increases and the federal reserve's job? this is bloomberg. ♪
several top administration officials and cleared out of their offices. kevin cirilli joins us with a look at how these departures will impact president trump's ability to govern in the new year. kevin: it's not just new bases in congress, is also new faces and president trump's administrations. take a look at these high-profile departures the dominated the headlines within the last month trade general james mattis, u.s. secretary of defense. patrick shanahan is likely going to be the acting defense secretary following his departure. because of the difference of policy opinion with regards to the president pulling out troops from the middle east. he is being replaced by david bernhardt, who is just acting in that particular capacity as number two. the reason you are seeing so many number two's ascend to the
position is because they already been senate confirmed. sources close to the administration say they don't want to have to go through another potentially bruising confirmation battle, especially given the new dynamics in congress. general john kelly, acting chief of staff mick mulvaney already hard at work negotiating on the partial government shutdown. he was a cofounding member of the freedom caucus and he is going to also be negotiating raising of the debt limit it will be another contentious fight in the next first quarter of this year. and the nikki haley is being replaced, someone will have to go through a senate confirmation, the former fox news contributor and anchor now finds herself on the geopolitical world stage. vonnie: the president may even have bigger issues to worry about, a whole new congress to contend with the day after new year's day. kevin: absolutely. with the government remaining partially shut down, like least nancy pelosi is going to have to firm up votes for her part as
well as turner negotiation tactics not just of president trump, but also to the progressive members of her party. likely what we are expecting us for there to be a government funding bill advancing out of the house of representatives that does not include the $5 billion worth of funds to bolster security along the u.s. -mexico border. it's anyone's guess as to how long the partial government shutdown will continue. vonnie: kevin cirilli, thank you. let's keep the spotlight on washington, d.c. fed president jay powell says he's open to meeting with president trump after the president criticize the fed raising rates. peter, when this started, it was a distraction, sounds like something that wasn't going to go anywhere and now it feels like the market is taking a lot betweenice of the spat
the president and the fed and federal reserve in general. even if it is more on the president's side than the fed's side. and what point will the fed have to stop ignoring this? peter: it is true that the two of them needs, you can't ignore a meeting with the president. if the president invites him to the white house, he has to go. as we wroterilous an article a few days ago, you never know what trump is going to ask powell to do. heell has got to do what believes is right for the economy. coy. there are a lot of people who think the fed is raising too much. like -- is in a spot here. if you suddenly does back off the rate increases, it looks like he is gaming the president. he also do want to be raising
rates unnecessarily. on the third hand, the very procession itself is influencing markets. the ideal of the president can have an impact on markets has begun to impact markets as it before didn't. does the fed chair calculate that in some sort of model? the presidential effect? guy andowell is a smart he has worked in wall street, he's been an investor. he's the kind of person if anybody's going to go into a meeting with the president, you want somebody like powell to do it. he is not going to cave. he will probably have it well planned out every step of the way. the meeting ends, they come out, couldents are made, trump end up saying things that would be a different reading from what powell perceived in the same the meeting, that's one of the dangers here justin different perceptions of the same
conversation. vonnie: you imagine powell would be the fed chair that trump likes. it's a -- of the market were to rally, with powell be off the hook? peter: i think he would help. trump does pay a lot of attention to the market. i'm writing article for the magazine they get into that. markets start to look good, trump looks good, so be happy to share credit with jay powell. the jay powell doesn't want to be the latest fed chair to be for theof having a put stock market. where somehow they will rescue it from any decline. vonnie: we had a crazy week last week. a massive amount of money, huge flows and these huge swings. your writing an article for "bloomberg businessweek," it will explain all of this. what's amazing is how
little volatility was for so long. it was below its long-term average for trump's first year in office until october. his started to edge up in the day before christmas its fight -- it spiked. the vix spiked very high compared to 15 through the summer and fall. you wouldnd of what expect great a volatile president and like you more just like him, he is a boundary breaker, he shakes things up. you would expect that to be associated with higher volatility. , volatilitymarket generally as low and you get a gradual steady march upward. when volatility breaks out, it tends to be with the markets are falling and they have trouble finding their new footing and that's exactly what's happening. volatility rolls along with the decline in the stock market. why would trillions of
dollars set themselves up to do the same trade at the same time with the least amount of liquidity? ater: which is what you get the end of the year. melvin subject to the volume today but i'm assuming it's below average. that's a great question. i wouldn't want to be in a withion of making big bets the markets hours away from closing and having to go put that on my balance sheet friend of your 2018. for end of year 2018. vonnie: we are under 80% of average. thanks to you when we will keep an eye out for that article, that is bloomberg businessweek's peter coy. a look at some of the biggest business stories in the news right now. cannabis short-sellers made for richard -- $432 million this -- thankso stalling to falling stock prices. as according to data.
wasof the big targets aphria. verizonrom disney and shows there is still support for espn despite the growing pleasure -- pressure on cable. there registration agreement and disney won a price hikes for its programming and verizon agreed to carry a new sports channel. "man," was. movie box office champ in north week in ar the second row. it took in $51.6 million. "mary poppins returns," was in second place with $20 million. that's the latest bloomberg business flash. barrel,ing below $42 a down three quarters of percent.
vonnie from new york, quinn. this is bloomberg. the first annual decline since 2015. let's go to reaction from the year who was with joe q zach -- joe cusick. happy new year. tell us about the year that was in wti. mr. cusik: recruitment $75, he didn't see it other than the fact that everyone was anticipating that equity markets
were going to continue to see forward. $75 toa pullback from $45 and this is going to be a battleground right now, at $45 level is some wear -- is somewhere that we didn't anticipate it getting this fast. this is a battleground right now and we did not anticipate this kind of volatility include. vonnie: how you approach the first month of 2019 knowing this is what's in the background? this is what you need to do, look at the crude option markets and there's a lot of subjective pieces of information as far as crude stocks and what opec is going to and when youports
look at crude options over the next 16 days they are pricing in a four dollar move. with crudelly means going into the january expiration cycle you can expect that crude could challenge 41 or could get as high as 49. as a 40% probability of a touch. looking out of february is about as far as i want to go with this kind of volatility in the market. looking at a five dollar, six dollar range and in the subcontract seminary jacoby looking at the march crude contract for wti, it could be somewhere between $51 and right $40 to $39 level. that's what i would be watching going into the new year. vonnie: we are not going to ask you your new year's resolutions. joe cusick, thank you.
the stock of the hour is an american legend, but now it's in a battle for its corporate life. ge lost $90 billion in market value this year and that spot in the dow industrials as well. it has stopped the decline for now after a key analyst removed to sell rating. ubelhart. think larry cole, the new to, is going to continue move the timeline forward for actions to raise cash. he will probably sell more of that. business, it care was going to be a year and a half out, that can be pulled forward. it's all about raising cash and stabilizing power in 2019. vonnie: talk to about the analyst move and why that is so important. karen: sentiment started to
shift in the fall and there were a couple of upgrades to hold and after a multiyear over two years selloff on the stock all the way down. over andhe worst is nothing material has changed, really, but the fact that maybe the bleeding has stopped that was a big deal since he had been negative in right for so long. cnnie: what will larry ulp's first jobs be in 2019? karen: yes gives a better feel of where he is going to raise cash. there are couple of things you could do, the sale of baker hughes, and even if he ipo to portion of health care which i estimate enterprise value at $65 billion to $70 billion, if the ipo would even 20% of that, that is real cash. because what is in ge credit and what else could catch us by surprise?
if he could paydown some debt and stabilize the financial side as well. vonnie: one of the stocks down lower to close on a tough year for ge. i thanks to karen ubelhart. let's get a quick check of the markets as we had in to the end of the last session before the new year. you can see that stocks are still higher but they are raising those gains in the s&p up .2%. the nasdaq up .1% in the dow is up .6%. hong kong about to celebrate its new year. this is bloomberg. ♪
vonnie: you're the top stories we are covering from the bloomberg and around the world. u.s. equities higher in the last day of trading of 2018 and so december --t been a it has been a december slump. most of europe is closed. president trump reports big progress in trade talks with china as the president france for a new congress and the year ends on a 10th day of partial federal shutdown. it's been a milestone year for the telecom industry. we are looking at what to expect for 2019. check u.s. markets -- we want to check u.s. markets. with low volume so far, the dow jones industrial average up .6%.