tv Bloomberg Markets Bloomberg December 31, 2018 2:00pm-5:00pm EST
everyone. welcome to a special edition of "bloomberg businessweek." i'm carol massar, along with jason. our last trading day of the year. carol: we will get to it at the end of the show, but my son said please don't see you next year at the end of the show. it's tomorrow, don't be that guy. they said don't get dragged into this by carol. carol: oh i'm going to do it? i'm going to talk to those boys of yours. [laughter] carol: we are seeing a bit of a rally, off the best levels of the session, but what's interesting is the nine-year old run is impacting technically in terms of the weekly trends, so we will see what happens by the end of the close. jason: we will be checked -- catching up with jim ellis about the big corporate stories and 2020 election, getting underway. elizabeth warren, that
exploratory committee. carol: not so far off. that.l get into all of some of those trends, remember, talking big-time about bitcoin one year ago. but first let's get a check on your headlines on bloomberg tv and radio. >> hello, everyone. i'm le pen a. schu. the journal says that there will be a move to taft more customers into amazon prime to our delivery service. the deal between disney and verizon shows there is still a deal between espn and other sports on cable with a lack of -- blackout of a college football game tomorrow. bloomberg learned the disney who a price hike for its programming. u.s. natural gas is
heading for its worst december since 1991, but futures are on track to lose 33% this month with a grease being unseasonably warm weather and smaller than average drops in the natural gas stock aisle. -- stockpile. that's a quick look at your headlines. back to you. abigail: let's take a quick look at the marketeer on the last trading day of 2000 18. volatility with stocks higher at this point. the s&p 500 just took a lag lower, but still higher, up 4/10 of 1%, closer one point earlier this morning. the best a factor for the s&p 500, health care is up 1% with 500ic helping out the s&p and the health care sector. biotech names like biogen are higher. the 10 year yield we will see some volatility there and
earlier today it had been higher with bonds selling off and at this point down three basis points, telling you that bonds are rallying and it matches the volatility that we are seeing. that's a look at the markets from new york. this is bloomberg. jason: and you are up-to-date. i'm jason kelly alongside carol massar here on this edition of "bloomberg businessweek." carol, just trying to catch up on all the headlines today as we come in. we were just here on friday, but a lot of movement over the weekend, including a lack of movement on the government shutdown. the expectations seem to be to wait for the new congress and the new year. i keep forgetting that we started the new year with a partial government shutdown, i believe. this year. isn't that correct? wasn't our guests talking about it? i have forgotten.
the beginning of 2018 seems like a very long time ago. carol: exactly, exactly. talking about the government shutdown and looking at the market metrics, $5.2 trillion was wiped out. the dollar is setting up to gain the most in three years with oil having its biggest the kleins. there are a lot of market superlatives when it comes to describing the market action. talking about superlatives, we have some folks who fit that bill. .lena and vince vince has his feet up somewhere, joining us on the phone, joining with traders, we know. he's our global macro strategist year. i want to start with you, on a day like this, last trading day of the year, what is on the mind of a traitor generally and specifically on a day like this at the end of the year like
this, how are people feeling? the number one priority for traders today. it's been a long and volatile year. not a lot that we are going to see at this particular point. be machineding will driven, to be honest. a lot of guys are going to sit back and cover their clients orders. we are not going to see anyone putting anything into next year unless they get stuck at the end of the day. it's going to be clean trading. carol: talk to us about what we are seeing, elena. it's really like volume. >> the bond market closes at 2 , two hours before the close. .he volume is down 48% now friday wasn't like a heavy trading section, but there is a lot of concern about this year and what next year is going to
look like. but people are gone and a a lot of people are just expecting to see some more volatility with headwinds next year. taking a look at year to date in terms of the metrics for the s&p 500, really kind of conservative plays, health care and utilities were the top performing groups in the s&p 500 for the year. they were the only of the 11 major industry groups in the s&p 500 that gained this year. would you anticipate the macro stories out there being more of the same? >> i think that for january in that direction we will get a lot more of that volatility with traders in the equity market and themachine driven stuff volatility in december, if they
can perpetuate that, i would expect it would continue. probably it would also take a lot from the president. over the weekend you saw that he talked about positive conversations and tends to be overly optimistic. we could easily see this reverse. the swings are going to continue most likely. i can't remember where was here on bloomberg where there was a conversation that this is what president trump doesn't terms of negotiations. makes it seem like it's difficult, one step forward, two steps back until ultimately he gets a deal done. do you have the optimism on it comes the u.s. china trade that this has been bothering investors. >> the growth would china over the weekend, we saw it when manufacturing dipped below 50. they definitely have the incentive to do a deal to get
their economy inflated again. lot terms of be a control, getting closer to the presidential elections. trump is going to need a win. china needs one as well. but the wind is needed in the elections could take a lot longer to get done than people realize. jason: elena, before we let you go, carol mentioned oil. what i the other asset classes and elements going into the year and the less is that you take >> a few changes, chinese companies are up significantly today. also, a lot of technology stocks are up, one of the best-performing today. also one of the top performers on the faang index. i would say that through the technology stocks they could do better next year, we certainly
hope so. vince, happy new year to you both. i did look it up. there have been three government shutdowns in 2018. i knew you were right, i never doubt you. believe me, i learned that lesson. in january,s later but yeah, january 20, i become immune. we will continue to track that to get more news out of d.c. more national news headlines, a lot going on, let's get a check on those headlines. this is bloomberg. uma: carol, thank you. democrats will work quickly to end the partial government shutdown when they take control the house of representatives this week, saying that they will pass six government spending bills and extending coverage to
the homeland security department with those bills having a good chance of being rejected by the republican-controlled senate. elizabeth warren has taken a major step in running for president, launching an exploratory committee that could give her an early edge in fundraising with american because ofder attack a government that is in her words bought and paid for by a bunch of billionaires. the u.k. is reportedly in need of leadership, with woody johnson casting doubt on the chances of a eye lateral trade deal. if prime minister theresa may pushes it through parliament. they say they have met five times to discuss the future of the u.k. and u.s. trade ties. there are reports that a government -- the government has detained u.s. citizen suspected of spying.
reportedly caught in moscow last friday. the u.s. embassy has yet to react to the situation. , onal news 24 hours per day tictoc and on twitter. powered by journalists and analysts in 120 countries. abigail? all five abigail: federal reserve indexes fell in unison this month. andpectedly contracting falling to a two-year low. for more on that, let's get to our coverage of the fed and the economy. what exactly happened and why should we care? >> negative territory is, like you mentioned, it happened in 2016. we should care because primarily the fact that these manufacturing indexes are cooling off at the same time could load poorly for quarter one gdp.
about growth.ing it seems that people are less certain about the state of economic activity in the country. you mentioned the other indexes cooling off. when was the last time we saw these simulated? 2016, the last time this happened we were looking at a situation for oil was kind of leading the charge here. clearly an oil strike. the we also felt economic pain around that 2016 episode, with what you see being that kind of feedback loop in the economy where this one sector touches and manufacturing. so it becomes really more important than a one sector story. abigail: certainly some market watchers viewed as a brief bear
market inside of u.s. housing. about 2019t tell us question mark could we be looking at a possible recession? interesting question. most economists will tell you that we are not looking at recession right now, there's a lot coming down the line with a solid job market right now. but i think we are seeing this cooling off the could result in headed into 2019 with these crosscurrents for downside risk. abigail: at the end of the day we have all of this noise, the fed from a macro standpoint, trade, d.c. drama going on and on, but at the end of the day it trades off into corporate profits and for the first time in quite some time we have a bigce for 2019 with acceleration and deceleration. how does this play into what you're seeing?
an interesting question and one thing that i'm going to be attuned to going into the coming year is what the world looks like for corporations that have already felt most of the market the the tax came online in 2018 and are not going to have that to the same extent coming into 2019. seen these ratios if you look abroad at the s&p 500 and coming back to earth a little bit as of the recent selloff. and i think you have heard more people say that it more closely reflects fundamentals now. that's an interesting point, the temporary boost of a sugar high. but what about how it plays into that trade war? tothat's clearly important what happened. you know that you get a little bit of color and several have reached out. not just in dallas. it brought major uncertainty in the outlet.
it makes it hard for companies to know whether they can invest whether they can hire. it just injects this amount of uncertainty that makes it hard to do any planning. commentary and insight on what happened with the dallas fed index and it will be interesting to see what 2019 brings. this is bloomberg. ♪
carol: natural gas futures falling for the first time since september 28. watching the markets in the news out of washington, we have the shutdown in day 10 and it will be interesting to see what happens when house democrats come back to washington. it's a whole different congress and we will see will kennedy levers they have in terms of dealing with the president. lot tothey have got a
get to. they are keeping an eye on the shutdown and keeping an eye on trade. a different ballgame when nancy pelosi takes over the gavel. carol: kevin, happy new year. wonder what kind of new year's going to be when we have a new congress sitting down with the president to get something done. kevin: right now nancy pelosi has got to negotiate not just with president trump, but also with progressives in her own party which is when things get interesting because the president for his part has tried to put chuck schumer against nancy pelosi. just in the last why four hours he has criticized nancy for being in hawaii. but all of that vacation is going to be short-lived. or not she brings forth
a short-term budget agreement that doesn't fund the wall, that's if the real negotiations get started. and right now it's too early to tell. mentioned progressives and one of the leading ones on the democratic side, elizabeth warren, seems to officially be throwing her hat in the ring for 2020. not anyone.king this is a politician you know well. what's your read on the timing and what it means for the rest of the field? kevin: she announced today that she is forming an exploratory committee to formally announce her decision in the early part of 2019. a very progressive type of candidate. in the democratic primary she would likely be going after similar votes as bernie sanders
or even sherrod brown. said, she hashat frequently criticized large financial institutions and aligned herself with working-class institutions. ohio,ally in states like michigan, and wisconsin. unlike senator sanders, she is a long-term democrat and is someone who has sought to forge relationships within the democratic party in terms of her coat -- her political career. she has also tried to make inroads within the african-american community in south carolina, and early primary state. traveling overseas to meet with military officials with senator lindsey graham. i do wonder if the democratic party has figured out what kind of candidate they really want and who stands the best chance of beating president trump.
kevin: well, buckle up, it's going to you very busy very fast. ultimately every vote is going to count, iowa to in, but keep an eye on california, in particular they are moving up their primary and a lot of progressives i spoke to have their eye on california because it carries so much weight. at the end of the day it is going to come down to 70,000 votes of independents who voted previously for president obama and then crossed over to vote for donald trump. the midterms suggest that those 70,000 votes in ohio and pennsylvania swan back towards the left. that is good news for democrats, but still a ways. a marathon and not a sprint. keep an eye on what's in front of us, beyond the
shutdown, trade, you have been following that closely as well. one of our market analysts was saying that sometimes the president tends to overpromise a little bit, get people a little bit doozy astec about what may be coming. what is your read on the latest trade talks here? how are people talking about it down in washington? positiveings have been ahead of that jeannie rhee seven straight cox with deputy officials in beijing and those state counterparts. look, at the same time, you have got ongoing u.s. japan trade talks and europe trade talks. let's not forget about mca 2.0. that is where the politics of the moment paint the backdrop. elizabeth warren is not so far apart from donald trump, particularly on negotiating with terrorists as it pertains to trade a. from a stylistic standpoint, they are obviously night and day
, but the president for his part has suggested the would rip up nafta altogether. baiting congress to force the issue. on the issue of china it's i jeannie rhee seventh in a february deadline where more global trade talks are happening and then march 1, no final twoement could be met with hundred billion dollars worth of additional tariffs that he's willing to implement. real quick, john kelly on the way out. changes on the side of the administration. kevin: it's all about the debt. the debt, the debt. mick mulvaney negotiated the partial government shutdown in the spring and he voted against the debt ceiling a couple of times. goodness gracious, so much right ahead of us. kevin cirilli, the hardest beltway,an inside the
get some rest. i'd sure we will be catching up with you on wednesday. how busy they see wrap up the government shutdown and how quickly they get into those presidential elections. like you said, there's a lot of candidates out there. there to many people suss it all out. you are listening to bloomberg businessweek on bloomberg television and radio. this is bloomberg. ♪
over allegations that he overstated his impact by tens of millions of dollars and has been seeking bail to work on a defense. short-sellers making $432 million this month, a week month for pot stocks in the last of the year according to data from the financial analytics firm. one of the big targets was that shares were down for the month today. has plans to visit china for the groundbreaking electric carmaker in shanghai, the first outside the u.s.. one of the biggest manufacturing projects in that city. a quick look at your business flash update. back to you. carol: joining me now to talk about this is lisa abramowicz.
the big volatility to the downside started in october with bonds selling off at that time. >> at that point we saw less of a selloff in riskier credit. people were saying -- look at high-yield bonds holding in. they could probably do ok. why was that? in a true risk asset selloff you have the riskier bonds selling off before stocks. usually they are a leading indicator in this time stocks kind of lead, which made people wonder. december having turned into the worst month for high-yield bonds , but perhaps it was as you saw the fed moving away from the combination. a lot of this has to do with the
fed and rates rising with repricing risk becoming the story and it affecting high-yield stocks. i would like to pull that backup, spreads are starting to widen and we connect it with stocks. but we are looking at their in blue is a corporate honda index. we see the downtrend on the , recentlycrisis broken suggesting that we could see things continue to ride for bonds bearish. and with the s&p 500 coming down, you would think we could see that relationship as a stocks selloff. >> corporate debt in tandem makes sense, but the key selloff is will the benchmark rates continue to rise? right now they are not at the lowest level since january.
if we don't get a recession it's hard to see how we get the massive rate pricing that continues. it's kind of a goldilocks that renews itself if the fed becomes dovish and you could see a shift backwards in the relationship that we have seen. is is if there is any positive new to -- news on trade you can see a rise in the deficit deepening in the united states and if those rates rise you will see an ongoing repricing of credit. somewhat argued that has happened -- it has been artificially elevated in a low rate environment. if that's the case you can see things widening much more over the past decade. abigail: without a crystal ball, which case is more likely? areight now people
conditioned for a goldilocks and expecting rates to stay low. abigail: interesting, it often happens with those are not expecting it. lisa abramowicz, thank you so much. from new york, this is bloomberg. ♪ jason: and i'm jason kelly, alongside carol massar with you here on the last day of the year. so, what to make of 2018 and where the heck are we going into thousand 19? political and economic headwinds. to help us to make sense of it, chris campbell joins us on the phone. fascinated by your insights and your background. you were a former assistant treasury secretary and senate staffers as well. if we could from our colleague tevin's are really in washington , you have lived the government
life. did you ever have to live through a shutdown? chris: as you mentioned, i spent several years on capitol hill. this shutdown is different from andious ones, it is partial the exposure to government workers is limited. in shutdown mode everyone likes to watch the duration of the daily drama. i've never been in a shutdown where paid back -- workers of not been paid back. it's a drama, but i have yet to where people go for a long time and they can't
travel because of national parks or whatever. limited in scope you don't want to see a government worker go without pay. a time of never seen the government hasn't held back and paid back those people. carol: if you like we are blind, this iswn the third we've had in 2018. the bigger story i think is the inability once again for congress and the president to figure out something because of dysfunction. when it comes to getting stuff done in washington, this is a reminder of going back to that press conference. your ego go again, we won't be able to get stuff done.
does this portend poorly in terms of what we might see out of washington? lawmakers doing something significant when it comes to policy? in 2019, the body government, especially in a special election you have people , like 20 senators running for president. they start taking those positions early on. that does not pretend a lot of working together. there are some things that with the debtdo ceiling early next year. nafta, they got to do the new nafta. these things are significant. markets, thend the going to come
around funding the part of the government this year. that is going to be can we pass carol: plenty of stuff to keep us busy. chris, think you so much. thank you for joining us on the phone there from new york city. i got to tell you, i took a look at the most read story in the past year? paul and i were talking about it before we got going. number one is the headline donald trump elected for u.s. president. i did it for one year. number oner headline. which is kind of weird, right? it goes back to 2016. jason: people just keep clicking on it? carol: i guess so, i guess so. it is kind of weird.
jason: number two, this is made for a bloomberg terminal customer, isn't it question mark so many things there, like a shortfall. somewhere john is like -- exactly. carol: time that we got into our market commentary. we will hopefully get into that. trading day of the year, we have our movers and shakers, seeing what aron kanaan has to say about where we go into thousand 19 after what was a rough year. it is time for a check on headlines here on bloomberg. hello, everyone. president trump says that he still hasn't dropped his it demand for a concrete wall on the border with mexico. yesterday the outgoing chief of staff was quoted as saying that
the idea was scrapped months ago and that the fight over playing -- paying for the wall led to a government shutdown in its 10th day. paris is preparing for its against aebration backdrop of antigovernment protests. the yellow vests demonstrators asuing calls on social media they are angry about rising taxes and emmanuel macron. france has deployed 300 and 60,000 forces nationwide to counter possible violence. the un's food agency threatened to suspend agencies going to yemen with rebels for not investigating and stopping fraud and food distribution. the u.n. warning that it will affect some 3 million people there. threation, despite the -- the spread of famine in the nation, it's created the worst humanitarian crisis in the
world. greg burke and his deputy today, unexpectedly resigning from their post. it comes in the midst of an overhaul from the vatican communications operations group to address a global sex abuse and cover-up scandal within the catholic church. named aser has been the interim replacement and is the head of the social media for the vatican and reportedly a longtime friend of the pope. global news 24 hours per day on twitter, powered by 2700 journalists and analysts in 120 countries. this is bloomberg. abigail? thank you so much. intelligence analysts have been looking into the crystal ball as the year draws to a closed. fallout fromal 2019 and the u.s. china trade war. >> despite the recent trade , there is a fair amount of
uncertainty regarding the trade war. >> we will continue to see the shift of manufacturing capacity out of china as we get hired supply chain diversity. >> our view is that this will be limited because of the trade tengion wants to continue on, i think the chinese government .ill actually step in >> [indiscernible] it will have repercussions, of course. in our view there will be sectors all over the world. >> prices should continue to remain volatile next year. it's only driving the slowdown.
"bloomberg intelligence" analyst giving us a glimpse of the china trade war. for the year we had volatility forhe day with big names up the dow and nasdaq up at one point. now we have modest to solid gains for each of the averages andhis, the less traveled 2018. half into the bloomberg, let's take a look at the major averages. this is the worst months since area,the box in pink
pretty bearish. as for the sectors that have done so poorly, take a look at energy. in sympathy with oils, bear markets. they often deal in rates that have gone back down. industrials are down nearly 12% around the trade war. health care, a defensive sector, the best sector of the year it down 9.3%. we will be having a conversation about that in the next hour. in december we are seeing a 10 down about 30 basis points, of course telling us that we have a bid for bonds, confirming the risk asset back toand bringing it the day with that bank trade, a mixed picture.
carol: you are caught up on the markets, i'm carol massar along with jason kelly. we wanted to go deeper into the trade right now and we have the perfect guests, the ceo of clear harbor asset management. .appy new year looking forward to see what 2019 brings. the chart that we saw in the bloomberg terminal, it took a
look, took a look at? jason: carol: takes a look? i think i need a nap. it definitely has done a lot of s&p 500 and what's interesting is that for those on radio, taking a look at the nine-year bull run, the weekly trendline has not gone below it. is it significant to you or no? chris: -- >> looking at peak to trough,peak to september 24, i think we had a spread of 19.7%.
it has been quite a move and everyone is digesting where the fed is, where everyone thinks that the economy is at the moment. undoubtedly, growth is slowing and there is a recalibration occurring in the market is. jason: how much is trade driving >>s, one way or another there are a lot of it puts their. before the trade spats really aarted to rein supreme on yearly basis, we saw emerging markets and economic data
faltering. overnight it went to that 50 mark, indicating maybe recession mode. >> absolutely. this has been going on for quite some time with a fed transmissions to tighten. one positive note as it pertains to the fed is that when it commences at tightening cycle it is usually a rate of 250 basis points per year. yes, we are worried that the fed what's been slowing and my view is that fed is much more data dependent.
moving forward a think we can assume they were at the neutral right now. i don't think that they were wrong, a close call we could argue whether they were right or wrong. a 25 basis point rate move, i think we have significantly more concerns to ponder for the future. jason: how do you build a portfolio like this will all of these inputs being so uncertain? the market, so nicely illustrated and skittish. there. comment here or ouras interesting for us,
, someophical approach react differently to the volatility. understanding each client possible understanding of what portfolio volatility does to them. as it fits them it's really important. we have to make assumptions on returns. otherwise we are in a worse economic condition and we realized. are you worried about the narrative changing in terms of the psychology doing what it does to consumers for spending like capital expenditures for consumers? who have really been supporting and propping up the economy to
the point where some of us was a way to minute, i don't know? that in turn can cause economic slowdown. >> some of those ceos, 84% believe that by next year or 2020, it has an interesting point. they can be a self-fulfilling negative feedback. frankly i do not believe we are entering a recession, it's a slow patch. ultimately historically with one exception.
so, when you think about what we are talking about, more and more, spending this time in december, talking like a policy problem. or is it a communications problem on the part of the fed? >> taking a look at the growth trends, i would just say that i the real growth trend is a two handle. the fed has raise rates 100 basis points. very cautious going forward.
carol: live maybe those calls from secretary mnuchin making more sense. >> the earnings potential may be declining, but the multiples reflect that. over $700 million in asset management joining us right here. we will be digging a bit more into the state of u.s. china relations, which has been impacting investors on this monday. from new york, this is bloomberg. ♪ amazon prime video is now on xfinity x1.
"bloomberg businessweek" on the last day of 2018. i am jason kelly alongside carol massar. we will look at the bond market with the team. the 518 joining us on monday to make sense of it -- the friday team joining us on monday to make sense of it. the bond market has been closed for an hour. we will talk eco and other fun stories to get into. carol: exactly. one of the stories that is among the most red on the bloomberg has to do with the wealthy getting richer, but some of the billionaires lost money in 2018. we will dig in to that in just a moment. we will talk more about the bond 10-yearespecially the note. the two-year note with 2.48. interesting to see the changes. remember when we hit about 3% and most folks thought we were going to stay there. jason: i do remember that and you having to explain to me all the mechanics of that command
much smarter people than i joining us in a second. carol: we will talk about the bond market in a moment. we will count you down to the closing bell. let's get your bloomberg business flash headlines. uma: thank you very much. there is evidence that a pillar of the u.s. economy has started to wobble. five of federal reserve indexes all slumping this month. that is the first time they have fallen in unison and's 2016. the dallas region falling the most in five years. a lot of that is due to the 40% drop in oil prices since october. shares of amazon are higher today oh and to "the wall street journal," the world's largest online retailer plans to expand whole foods grocery stores in the u.s. the paper says that the move would allow more customers to prime's amazon two-hour delivery service. the price of national gas is
heading for the worst december since 1991. big reason, unseasonably warm weather and a smaller than average drop in the natural gas stockpile. that is a quick look at your "business flash" update. abigail, back to you. abigail: thanks, uma. we have the market averages higher on the day. the s&p 500 is up about half a percent. that does not tell the full story. entrées for the worst year since 2008. best performer on the date is netflix, up 4.4%. investors buying the tip. on the argument netflix is also higher. -- on the year, netflix is also higher. on the year, down 57%. woes around a tax issue having to do with investors selling of shares. all of this happening on
below-average volume. 500,unction on the s&p bulls are there but not a lot of volume of that is look at the markets. from new york, this is bloomberg. jason: and you are caught up on monday afternoon on this edition of "bloomberg businessweek" carrie live on bloomberg television and bloomberg radio. i am jason kelly along with carol massar. the fixed income markets and the economy, all still very front of mind now. to helpgot the gang us make sense of it. he is busymagine getting ready to watch college football or something, but we are thankful he is taking time to talk with us. let me start with you. what do you see out there that 9,rries you as we go into 201
and don't talk to me about the bowl games. >> ok, i've got nothing. [laughter] no, there is a lot. i don't know what to say. turning it to be quite a year in terms of volatility. trade volatility, market volatility. i will break it down -- the political uncertainty. all kinds of talk out of the --inistration and one guest and congress about this and that and will start weighing on investment if we don't get a clear picture of what democrats in the house what to do and what the administration wants to do. that is on top of what is going to be a discussion around trade. the march meeting for the fed is quite interesting because you have the deadline at the beginning of march on the trade issue and then you have potential hard brexit at the end of the month. it looks like we're going to have no movement in march. days that willof
come up between now and then and you will see strong economic data. if that is enough to quell what has been a turbulent market is very much a question. carol: and we got the trade that we expect. when the equity markets selloff, easy investors moving into -- you see investors moving into treasuries. come on in in terms of the treasury trade. it has become a clear correlation. equity markets selling off and investors move into the safer asset classes. >> a little bit, but also earlier in the year we talked about the risk parity trade. i don't think that is done and you can tell because look at commodities in the way they have been selling off. same thing with equities. they have been moving in tandem. we will see more than being unwound in 2019. carol: what is that mean for yields? alex: for yields, hard to say.
i would like to say more like to quality because you will have investors who are very nervous. talking about market volatility, the one place where it is very tangible, the last day of the year, financing market. repo rates, overnight repo. one of the highest levels since 2001. what this is saying and what people said is oh man, bloodbath on wall street today, financing was really difficult. we could not find cash. carol: talking about tightening financial conditions -- alex: and everyone saying no no no, volatility in the market -- you want no liquidity? this is no liquidity. this has people thinking about 2019 and, wait a minute, what happens if we get another spike? we get a further jump in these rights. carol: just quickly, very briefly, remind us why the repo
markets are significant to watch. jason: she is doing that for my benefit. [laughter] benefit,l, for jason's is how the trades get financials of this is the plumbing of the financial system globally. these are done in the repo market and the overnight repo agreements tend to be the biggest sector. this is what it is a concern. y, come back in because you worked at the fed and you know what they think. if you see markets and like this, if you are jay powell on the crew, his posse, what are they looking at? tim: you get the standard fed liene. you heard it from jay powell of the press conference. market at markets and volatility is the standard fed line. that being said, two months of persistently downward equity movement and that all of this
volatility at the end of the year with you in a place where if we have strong economic data in the markets are not responding, i think that is a scenario where the fed will take strong will take these equity movement into consideration. i sort of think that is a puzzle for the fed to figure out. markets moving so much when the economic data look so strong? it is this uncertainty aspect. i think like you are saying, and alex was saying, if we have this volatility, it will weigh on policymakers. carol: it will be interesting to watch and see what happens. , economist fordy bloomberg economics, looking forward to having parks, and alex harris, thank you both happy new year. couple headlines on the bloomberg terminal. green growth from one of the upstart cannabis companies, reaffirming its commitment to the hostile takeover of all three of announced last week.
over 10% of the holders indicated support for his deal. we will see where this goes from here. one of the dramatic back and forth hostile takeovers. haven't seen one of these in a while. carol: indeed. we have the stock down on the target about 8.5% and we have been seeing a trade lower. that is after a 12.4% rally on friday. investors are backing off on expectation that ultimately this doesn't get done. jason: you wonder what this does to the broader canada's trade -- whatever you want to call it as we go forward. carol: one of the disease sectors in 2019. you are listening and watching to bloomberg. time for a check on your headlines. is bloomberg. on his final days secretary of defense, jim mattis is urging all pentagon employees to "old fast." in a written carol message from
he says that military members and civilians must work together to uphold the constitution. he says the defense department is at its best when the times are most difficult. mattis will handoff duties at midnight to deputy secretary patrick shanahan. chinese president xi jinping is urging self-reliance at a time when the country is facing what he calls changes unseen in 100 years. xi is addressing china's capacity to weather the storm in his annual new year's eve address. he has to beijing next week for the ascension of trade negotiations. jets have and islamic state position in syria, a day after syrian president bashar al-assad authorized neighbors to target militants at will. iraq has regularly worked with the u.s.-led coalition against islamic state inside syria, but the coordination with the assad government reflects the changing battlefield in the country as the u.s. appears to have withdrawn forces. brexit appears to be spurring a
british demand for irish passports. the average board of ministry says more than 98,000 brits have apply for passports in the year alone up 22% from a year ago. the irish passport seen as a shortcut to retaining people write to live and work in europe without restrictions. you can i might lose that right -- britain might lose that right once they leave the eu. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am uma pemmaraju. this is bloomberg. here is applicant with more. abigail: thanks so much, uma. oil is heading for the first annual decline since 2015 also let's go over the year that was and get outlook simon casey, who leads the energy american teen with bloomberg. what stands out to me the most about this, at one point this year oil was up 26% on the year.
now it is down 24%. that is a tremendous move on the year. >> it is a huge whipsaw and it confounds a lot of people. a lot of pundits in this market were talking publicly and quite confidently about the prospect of $100 barrel oil. if we took apart what was going side, we sawply booming production out of the u.s., particularly in the permian basin in texas. showingoday again october with record production of oil u.s. is the world's biggest oil producer. failed toe time, opec convince the markets that it is really going to support the current prices. that was a disappointment. on the demand side there is real concern with the macro picture at the moment. it will affect demand and not just here in the u.s. but in china and other countries as well. this is feeding into a real
selloff. we have the general market the commodities got caught up in. abigail: that is a good breakdown. if you were to weigh it between the supply wing and the demand picture and the risk asset selloff, how would you wait to that --weight that? >> it is a tough question. i would always look closely at demand. trade has become more and more is goingern, how that to impact the u.s. economy and how that is going to play out in china as well. that is not going away as we can see. if we play that forward into 2019 and the economy and take oil was fundamentals, let's look at the chart of natural gas. in the last hour we had this headline about natural gas going below three dollars for the first time since september.
at one point oil was up 26%. natural gas was up 60%. now both lower on the year. does this suggest that there could be a real demand picture & that there could be a recession ? simon: i would caution against reading too much into the natural gas market. fundamentally it is -- if you have a really cold winter, going to burn gas, that is what drives demand. it isok back at that, fascinating because it blew up in october, november time. that was a short squeeze going on in the market. all kinds of strange games going on. couple of hedge funds blowing up. the weather forecast for coming out and it was looking like it would be a lot older than initially thought -- a lot colder than initially thought. now we are in september.
pun -- the heat has gone out of the market for now at least. abigail: certainly an interesting flow of funds. it will be equally interesting to see what 2019 brings and whether or not there is some really global demand recession. simon casey, bloomberg intelligence, thank you so much. from new york, this is bloomberg. ♪
carol: this is "bloomberg businessweek." i am carol massar along with jason kelly. one of the big stories seems to a easing investor minds little bit, trade tensions between the u.s. and china. wewant to dig in to that if may. the director of the china economic and policy research practice joining us on the phone
from washington, d.c. nice to have you here with jason and myself. investors seemed to be a little bit enthusiastic about the possibility that u.s.-china trade talks are moving forward. are they moving forward? is there progress? >> nice to be with you this afternoon and happy new year. carol: same to you. >> we have reason to be positive the next few months a. the two sides are having discussions about what deal averts further escalation middle like in march. it will not get a lot of clarity. of austine trend months with the discussions. -- the last few months with the discussions. the object will be relatively positive. big questions still about how much substance can be achieved with a real and lasting deal.
jason: it is interesting, the contras of the discussion, too, because i feel like a lot of people get caught up because this is what the president seems hiseep harping on via twitter account in terms of trade deficit and tariffs to some extent. it does feel like increasingly we are starting to talk about some of them was substantive issues, whether that is ip especially or technology in regards to that. sever espionage and what -- cyber espionage and whatnot. do you feel like we're making progress on those issues? nicholas: rhetorically, yes, but the challenge is about verification. the chinese government wants to put a deal on the table that addresses existential concerns. but there is a lot of skepticism in the u.s. government about having looked at the relationship and discussions
over the past 10 years, there are a lot of commitments that have not been implemented. those of the question about how the u.s. government is going to be comfortable that the assurances the chinese government is making will be implemented. that is one of the more difficult areas of discussions and negotiations the next couple months, how do you validate this is happening. carol: right, and what is tricky is this goes to the heart of what china is all about right now. how many stories that we talked about in terms of chinese industrial policy? they set of this long-term plan in terms of moving beyond just the manufacturer to the world and developing their high-tech economy. how thater, nick, trips of the negotiations between the united states and china. that particular plan by china. nicholas: right, and look, there is some indication that the chinese government they be willing to modify this -- carol: do you believe that even if they say that? nicholas: no, i think that yeah,
i think it is likely we will see some modifications. whether it is sufficient for the government to say that we are in a whole new landscape were the ability for foreign and u.s. companies to compete fairly in the china market has been meaningfully improved. there will be tweets. it will be very hard for those to be sufficient. we will continue to see a lot of tension over bilateral assessment issues and national security. what you see the last couple weeks is a big representation of that. jason: what worries you the most? using cautiously optimistic -- you seem cautiously optimistic, if i can qualify you there. what worries you the most in the next 90 days, the most critical period we have seen in the negotiations so far? nicholas: there is the existential question of whether china is willing to go far enough, which i am a little
dubious. what worries me the most is there is so much uncertainty about what the trump administration's and game for china is. is this administration going to be really willing to keep a very hard line and negotiations for long enough that the material concessions can be achieved from oral will president trump's side of the market is looking shaky in the u.s. and we have to parse china as far as they are willing to go? let's accept the short-term agreement at papers over the longer-term concerns. that is the big concern here. jason: really interesting context. y at the rhodium group in washington, have a happy new year. can i put out a story that jumped out at me on the bloomberg having nothing to do with china or the markets or the economy? but it does have to do with janice from which you and i love. we go to the u.s. open every year. serena williams and roger
federer will play each other tomorrow. carol: that like a billy jean king -- jason: no, that is what i thought when i clicked on it. there will be on opposing teams. that is must-see tv. carol: that will be a lot of fun, right? -- arguably the most talented players in a generation, maybe of all time. i can't believe this hasn't happened before. they are both excited, apparently. carol: i think that is exciting. to have seen her plate at the u.s. open, such a strong physical player, to have roger federer, unbelievable to watch. jason: so cool. carol: i want to say one thing and i will go back to u.s. -china the moment, but i think that at the heart of this is china wants to be a leader on every part of the global stage, in terms of its businesses, in terms of its technology, politically a player. it is a developing country but
it is moving to play with the big boys. jason: the ambition is deep. it is continuing important to come back to the notion of the timeline, thinking centuries ahead -- carol: exactly. it is long-term planning. this is what they are all about. it is really important. we will see. jason: which want to come and more. she will talk china i will talk tennis, as we continue this special edition of "bloomberg businessweek." you're watching bloomberg tv and listening to bloomberg radio. ♪
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"all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. unstopand it's strengthenedting place, the by xfi pods,gateway. which plug in to extend the wifi even farther, past anything that stands in its way. ...well almost anything. leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. uma: hello, everybody. i am uma pemmaraju with your "bloomberg business flash." prosecutors have extended carlos ghosn's stay in jail.
he has been behind bars over allegations that he overstated his income by tens of millions of dollars. the has been seeking bail so he can begin working on his defense. cannabis short-sellers making $482 million thanks to falling stock prices. it brings short-sellers into the black for the year, according to data from the financial analytics firm. one of the big targets was aphria, whose shares were down 21% for the month for today. plansmotors ceo elon musk to visit china for the from making of the electric carmaker's factory. it would be the first tesla plant outside the u.s. and the biggest manufacturing project in that city. that is a quick look at your "business flash" update. let's turn it over to abigail. abigail: thanks so much, uma. it is the end of an era. jack ma is stepping down as alibaba chairman.
bloomberg's china correspondent set down with ma to discuss life after alibaba. "jack, youed myself are crazy," like anybody. sick,tire when you are you're in a car accident, and that the company gone. au have a system, culture, group of people that can believe the vision we all believe. as i have been doing for 10 years. i stepped down from the ceo position 2013. five years past. fine, right? business is good, revenues are good. customers happy. i look at any problem with alibaba will happen for -- i don't think any problem with alibaba will happen. fully confidence in my team, fully confidence in our structure,, the party structure,
which a lot of investors don't like. so perfect. it is the system which i think is the car question that -- the contribution that i and my team give to this world. it can make the company last long. >> you said you wanted the company to less 102 years. you think back and still have been if you step down -- that can still happen if you step down? jack: oh, of course! i can't be the ceo in 102 years. we have another 80 years for this company. why not let it go? you have to be fully prepared for this. just like kids. 18 years old, kick them out. i went to africa. the elephant -- kick him out. make him live independently. of hours, butid
it does not belong to me. it blocks is society. let them go. she belongs to society. let them go. i love this kind of thinking. >> your key investors are aware and content and happy? ck: i am very happy. people are happy. abigail: that was jack ma speaking to bloomberg. let's get a check of the markets. averages are higher for the last trading day of 2018. if we look at the recap for the fourth quarter, pretty bearish. we are going to see significant the kleins -- significant declines for the dow, s&p, and nasdaq. from the sector perspective from energy, tech newmont pays for the worst wittily performances 2008. discretionary sectors not doing well. let's look at the vix
very volatile fourth quarter. so much uncertainty for investors. .hat is a look at markets from new york, this is bloomberg. jason: and you are now caught up on headlines and the trading day. you are listening to and watching "bloomberg businessweek " on a monday afternoon. i am jason kelly alongside carol massar. carol. carol: yes? jason: when we are trying to make sense of today in this year, there is one man who jumped into our mind who could make sense of all the crazy, especially corporate stories of the year. jim ellis is the assistant editor of "bloomberg businessweek." he has his hands on all the big stories that have moved us through nationa -- i have to say, what a year for ceo's and company news. jim: this has been come after a
long time when people thought that the year was going to build around technology or finance and markets, this is the year when company news became hot again. unfortunately, a lot of that was not good news. this was the year of tesla in a lot of ways, and it was not the pretty tesla news that they would like to have seen. we have this big, messy company that suddenly commended headlines with this notion that tesla is the best that american business can be. that is scary when you think about what they went through this year. carol: we used to kind of joke that there wasn't a week that went by -- definitely a week that went by that we didn't have an elon musk or tesla story. let's go back to the crazy tweets. we are's amazing that used to companies doing discipline just being disciplined. extremely disciplined about what they like to say in public pronouncement. the notion that someone could
muse -- carol: your ceo. jim: take the company private and name of christ, and don't work -- name a price, and don't worry, financing is secure. it started this crazy 2-3-week period where maybe he is doing all of this behind the board was sorta? uh, yeah, kinda it showed a lot about what was behind that, which is basically this hero worship of elon. that is good, but at the same time it shows that in a public company, you cannot behave the same way you do in a private company. i think he got an education in that. carol: investors went on for the ride. the stock hit a low in october and it has rallied 31% since that point. it still has a high percentage.
22%. are shorting, 21, jim: i think a lot of people like the idea that the year ended and they actually did what would justhey would, as there getting the model three into production and not just production but in delivery, and getting cash flow back for the people who put down deposit for the cause. the issue is that, yeah, you have gotten the model three, but there are still challenges to go in 2019. they have to worry about -- they have a convertible that is coming up and they have to keep the stock price i because they don't want to have to go back to the markets to issue more debt. they need to be able to convert that with the price being high. carol: one of the stories in the magazine this year, matt winkler running about tesla specifically, the model three the best-selling car by revenue -- not individual units, but revenue. that is a stat that stood out.
another status without, -- stat that stood out, general electric. jason: you have been doing this a long time. you have seen ge arguably at its peak, and now -- jim: this was a company that people sort of worship. this was back in the day when people look to the notion of a conglomerate -- i know that ge does not like the term "conglomerate," for multi-industry companies are generally conglomerates. this is a company that was in a lot of different businesses and told a lot of americans that we know how to run almost anything. we can run it by the numbers and be great at it. it worked for a long time. unfortunately, like all good things, like miracle cures, they are good until they are not. we discovered that a lot of what we did not look at, because we knew that ge was so great a lot of the things that we did not look at where the things that
screw them up. the accounting -- they would say that conventional accounting does not work for us. it turns out that they were hiding -- let's just say a lot of things were hitting that we didn't see. carol: you have shares of general electric down 57%. one of the things we kept talking about throughout the year was remember when ge was the largest market cap company -- -- world'smust most viable company. carol: i'm guessing ge and tesla will keep you busy for mr. ellis. jim: definitely tesla, the company to watch. carol: jim ellis joining us now multimedia studio. time for a look at the headlines on bloomberg radio and bloomberg tv. uma: carol, thank you. i am uma pemmaraju with bloomberg first word news. massachusetts senator elizabeth warren ready to make a run for the white house. she will seek to become the democratic nominee to challenge
donald trump for the residency. today finance and explode tory committee for president of the united states -- i announced an exploratory committee for president of the united states. i never thought i would run for anything in th my life, but the american middle class is getting hollowed out, and opportunity for too many of our young people is shrinking. uma: two other potential top-tier candidates who have run before, former vice president joe biden and senator bernie 2020ers, are eyeing bids. thecrats will work to end government shutdown when they take control of the house of representatives this week. they said it will pass six government spending bills. a goodthe bills stand chance of being rejected by the republican-control senate. president trump's pick for
attorney general once questioned the value of a wall on the mexico border. apparently said in an and view that a very are similar to the one that president trump is demanding is unnecessary, discovering the idea as "overkill." the justice department declined to comment on whether his views have changed. goldman sachs cutting its forecast on u.s. growth for the first half of 2019. the chief economist lowered his outlook in the first six months to 2%. goldman is reducing expectations for the federal reserve interest rate hikes. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am uma pemmaraju. this is bloomberg. turn it over to abigail. abigail: in a year when u.s. stocks were on a continuous roller coaster, health care remain on top for the year. will it remain that way in 2019?
for more on the future of pharma, we are joined by catherine larkin in chicago. thank you for taking the time. of course, happy new year. what stands out is the fact that health care is an up sector. we use the returns function on the s&p 500 on the year, we see that nine of the 11 actor sectoe lower. energy is down 21%. take a look at health care, up 4.6%. the other one is up fractionally, utilities. earlier this year -- health care is the hot trade. the fourth quarter has been a little bit tough. talk to us about health care overall and what you think could happen in 2019 before we look at the big winners for the dow. >> absolutely. health care has bee benefited from concerns about
trade. comesf the business internally so they are not as exposed to some of the international risks that we have seen hit other sectors such as technology this year. really what we have seen in health care is some of the biggest gainers coming from where you least expect it -- large-cap pharma, for instance, which is not prone to the vix rings we see with the biotech names -- big swings we see with the biotech names. abigail: it is quite extraordinary. there was an article in the bloomberg relative to work and pfizer being top for the dow. merck is on pace for the best yearly performance since 2006. what is going on there? the fundamentals that much stronger's or are investors looking for a place to hide? catherine: we're hearing from our sources that it is a little bit more of the latter. some investors we speak to do
not expect the highflying gains to continue next year. we don't think they will crash and burn necessarily, but we are seeing a defensive trade for some of these stocks will play out through 2019 -- won't play out through 2019. abigail: we think that the health-care care sector from the low this year to the high was up more than 25%, but on the quarter down about 10%. what will be the make or break factor? the fourth quarter earnings report period in january? earnings will always be important, but there is in january the jpmorgan health care conference in san francisco. we have been talking about what the expectations are, everything from the early preliminary earnings numbers to potentially more m&a. a lot of catalysts that investors are hoping to see from that event. some of those don't come through from we could see these gains
erased quickly. abigail: interesting what comes out of the conference. super quickly, biotech, what our expectations there? catherine: biotech is at the forefront of the m&a discussions. biotech also is very sensitive to any potential discussions about drug pricing. congress will be a big focus. abigail: got to leave it there. catherine larkin joins us from chicago. from new york, this is bloomberg. ♪
nice to have you back here with jason and myself. what a year, a tough one for a lot of asset classes. emerging markets, developed markets, there was no place to hide. commodities. what does it tell us may be potentially about what we get in 2019? do you have any indication of his ability? -- visibility? >> i think more volatility. december has created some bargain levels. as you know without discussions over the year, summer we were worried about the momentum names and that everybody was buying as far as the indexes, similar names and the money flows were momentum-type stocks. that was always a worry for us. through the midterms we do not expect much of side on the market -- upside on the market. the selloff could last longer.
buyers wen absence of have got into a situation where it is not just the names that should be down are down part of it -- are down quite a bit, but everything is down in indiscriminate selling. i'm looking forward to 2019, and since christmas eve we have been buying. jason: christmas eve was the turning point for you, then. what did you see just from the levels or specific industries? we will talk specific names in a minute. when indicated that was a good time to go in specifically? alan: purely valuation. we are looking at some of these names and the earnings are double and the cash flows triple , what the stock or company was doing three or four years ago. we are buying at a lower price than three or four years ago. whenever you get those valuations come it is just across the board, whether it is
etf's orrithms or whatever the situation was. a lot oft down these stocks. you can never pick a bottom. let the market come to us, and whatever you have, emotional or panic selling, it creates an opportunity if you are selective. i'm not saying we are at a lows in theber 26 morning or whatever. i'm just saying that some of these stocks, you can buy these high-quality upgrades, and they are going to look like smart purchases years from now. carol: jason and i love to talk names. ---- i sure if unit is don't know if you notice, the selling corporation has been beaten up big time this year. tell me about what it is you like about this name, allen.
i am looking at the balance sheet. you are seeing these and earnings and revenue growth year-over-year. alan: the company is running solidly. it is a situation where the cash flows triple what it was as far as 2013 on the stocks of the 2013 levels. they have had a couple hiccups as far as the pipeline, and thought they might have -- investors thought they might have paid too much. they are digesting the acquisition and it will help as far as diversify the portfolio of products that have. to me if you buy a stock like with the 5%ple it dividend and trading it at two-year lows from it is a great combination of the risky growth -- andf the law solid the more solid plate that has
gone down with the market selloff. can get more speculative and have the barbell approach that i think will do well as far as 2019. jason: one area, when sector that is very close to people here especially in new york, financials have been beaten up pretty badly -- jpmorgan is in a new have been looking at fairly optimistically. tell us about that one. $100, went under down into the low 90's, yield of over 3.5%. i think the conservative investors you are looking at 10, 15% downside come and of to 30, 40% outside. is a little more speculative, they might want to look at some of the preferred -- again, less liquid, but put ibds
underneath the market and you can get incredible yields on some of these preferred stocks in the financial sector. make sure they have the maturity. you know that if you are buying them at 20, you will get that spread in addition to the high-yield. carol: talk to us about the energy sector. lower its light 40% or here and it is 45 and change in barrel. energy names present opportunities? is a yes, down over 20% situation where long-term perspective, you can do well. mobil,atively, and exxon which we haven't bought in years, can be accumulated. bridge, as far as the 7% yield, any of those are good total returns. two-year timeframe, you will be
happy you buy at the end of this week. jason: before we let you go, any sectors you are of what he like the plague in 2019 -- you are avoiding like the plague in 2019? alan: there are a lot of areas down,n though facebook is we wouldn't touch that. you would be selective in tech areas. 2019 will be more of a matter of being in the right stocks in the red compani -- right companies rather than just taking a sector like what we have seen with the 2019 bull market started. carol: i am curious in terms of technology, anything of interest? listening to an interview this morning on "surveillance" and they were talking about m&a, technology. just quickly. alan: we are looking at smaller names. if microsoft word go down further that would hit our list,
but it did not go down in a. the smaller names you will see some m&a and that is where you ha the best risk-reward. it will help big winners and losers just like this last year. carol: guarded dividend of 1.8%. thank you so much. happy new year. z joining us on the phone from toledo, ohio. jason: really nice rundown. there will be interesting to see how much the mix changes for big investors. different year in 2019 stop we are on the verge of closing the last trading session of the year. you are listening and watching bloomberg. ♪
ave gains. lots of volatility not juston year but on the day. s&p 500 up about .3% and the highs.ishing up near 500 and nasdaq lower but on this last trading day of the bulls pushing through been on the year, it was a earish year. let's look at what happened to the major averages in 2018. worst ou see is, the declines for the dow, the s&p 500 and the nasdaq going back to 2008, however that statistic has more to do with the bull run. that big bull market by all those annual gains in 2008 when the declines were closing to 40%. 500 down about&p 6.5%. ou can see that in yellow.
some of the worst performers, gamblewn 67% after their with protector's beauty division well. worked out that victoria's secret continues to stumble. 25.7% on the data privacy scandal. slowing growth return fears as well. electric, down 57% on the year. hopes still stumbling. if you look at a terminal that here, this is the sepp market run and if you throws the rt, it uptrend but if you look at the see the big bull run but also see that the s&p to decline below that trend line telling that you starting to is
crack. sellers stepping in. 19 could be pretty interesting. more volatility and that's a new at markets here in york. this is bloomberg. >> and you are caught up to closing bell here on the last day of 2018. live from bloomberg headquarters in new york, i'm carol massar along with my co-host jason edition of cial business week on bloom berg. a risk-on trade although here. light volume 423 names to the yum sid to the 500. unchanged.ur netflix your number one gainer 500, up about 4.5%. a name we like to keep a watch on. annual n some crazy gains for netflix. up about 39% low the year before
45%. ut jason: and i do wonder on look x specifically as we back on this year many years from now if people start to talk was the year nanette flicks really changed the game in entertainment. our own habits, people we talk to here in the newsroom. cooler shows, i feel like so many of them are on netflix. by accident. they're spending a huge amount ted, the one who ns programming over there, arguably the most powerful personal in entertainment these days. you say that. i think it just opened up a ago. of days or a week i think it was on netflix. box" and ed "bird "crazy" with sandra bullock. pulling in numbers you would normally see on the big it's fascinating to
see, like you say, the water conversations are most amazon.on netflix and jason: i thought you were going say -- i've seen "the chiller," i'm not going to watch "roma" was released in theaters and quickly realized on netflix. watched unbelievably d in contention for a lot of awards. carol: you've heard the closing numbers on wall street but trade for ook at the the tv folks in terms of what we saw but let's remind everybody radio. the s&p up about 21 points, .8% for the lea last trading day of 2018. joge industrial average a 1. 1% gain but let's talk about for
the year. dow was down about 5.6% so far in 2018. 500, it g up the s&p was down about 6:25% and the down about 3.9% for the year. what's interesting, better in in nose the declines major equity averages. jason: if you go back a week and two weeks ago and the carnage we saw in the stock might be think people pleasantly surprised how we ended but you look at those a rollerd you see what coaster of a ride stocks were and for anyone watching their k, it has been harrowing. carol: the major industry groups 500. s&p 11 of them in terms of 2018, 4.7% overall. a per s about a half vent gain. outperformed.ce
everything else is in the red. that, you have communication services. 16.5%. es, down materials down 16.5% and energy about 20.5% , down and we know crude oil has slid from its high this year. jason: we had a nice jim rsation earlier with ellis about g. effort. as we think about ben this year seminal stories, g.e. has got to be one of them. had been in o. who the job at that point 14 months, urning it over to a true turnaround analyst. a second consecutive brutal year performance tock is is a $7.57 stock, general electric. carol: i remember it was up around 40 a share. dramatically. jason: when you look at that chart it is such a dramatic fall
and the narrative matches that. center at brooks supter land has a great piece its, our bloomberg opinion columnist. listened will -- southerland. carol: the outperformers advance microdevices much. up almost 0%. bio medicine up. ort met and advance auto parts up 56%. trim advisor up 56%. performers in tom the semi500 this year. jason: not necessarily a basket you would put together. carol: and general electric is performer on st the s&p 500 overall. ason: wow. volatility is something i want to make sure we talk about. during musing about this the break and i don't think i
how much volatility had gone up over the course of the year. doubling over the course of the year. vix there and the that in volatility and level that shows you in the back half. rom october on we were in an era of much higher volatility. on a relative basis. carol: and we had a lot in this year, for everybody who's listening awl it calleddio and then -- calmed down and then we shot later part of the year. bitcoin, go back a year from and everybody was constantly talking about bit council. there wasn't a day, i feel like december going into january where we didn't bring up the bitcoin in 2007 it was up about 1400%.
year it was down 74%. for folks on tv, they can see a dramatic chart but such a difference in terms of the rformance and again in terms of the conversation around bitcoin and the potential. bills. nd can don't forget can bills. that was an issue and an industry that we watched closely i think it's going to be a fascinating one to watch as well as the big names get into it. over that's e take happening right now. carol: exactly. also on cannabis and the big tech names as well. it is time for a check on the right here on bloomberg. ♪ carol, thank you. i have your bloomberg first word news. says he still hasn't dropped his hand in for a concrete wall on the border with mexico. just yesterday, the president's staff john f of
kelly said the idea had been scrapped for months. shutdown l government now in its 10th day. the u.s. ambassador to the says the u.k. is in need of leadership. casting son also doubts on the chances of a by deal if prime minister theresa may pushes her parliament. hrough e says a joint working group has met five times to discuss trade u.s. ties. alleged terror plot. dump police arresting a in rotterdam on suspicious of involvement with what they're calling a terrorist crime. dutch and german police combining to make five arrests the weekend. hreatening to suspend some agencies to yemen for not investigatesing and stopping the
theft of food theft and istribution. corruption has increased the threat of famine in the country civil war has ar medium the world's worst ntario crisis. this is blook bloom bemplingt an garblingse back up to. abigail: thank you so much. stocks are closing out the worst crisis.ce the financial we had a nice gain at the end of the day, the last trading day of year, it's a much different story. markets equity reporter is joining us now. and thank you very much. we could talk all day, all night right into the new year. we have the s&p 500, the dow and nasdaq all lower on the year, the worst year since 2008. also worst since 2008.
happened here? what was behind this sudden period? oil, commodities. investors wanting out of the assets. investors had a very franky 2017. the stocks were going nowhere but up. pointscks had great data from all across the world. what happened this year is the changing up to the monetary -- not just in the theed states but all across world. we had a 10% correction in ebruary. 10% in november and december. now down 20% for the year but volatility for one year and that is the response to the changing and nments on the fiscal monetary policy, again, all across the world. c.b., japan. the federal reserve. that's where the concern is coming from. those are great comments balls everybody always wants a eason for why stocks do what
they do. in this case we're coming out of a tremendous bull run. the up friend -- trend of that bull run, we see big move upwards. in part what you're saying is too far, too fast and now we a different regime with the fed showing the sellers are starting to take cool. this is a bearish en for 2018 and that sellers might continue to step up? >> the sellers could really be 2019 next year because if you look at the crisis the financial from march 2009 up until the this year, the s&p more than dwaud quadruple. t was amazing. there was a very steady uptrend. of head winds politics.ed, from geo also the slowing global growth across the board.
so ness in china and europe there's not a lot of reason for timism so we could see for weakness and pressure. >> interesting what you're talking about in terms of that for the mand picture economy. that is also foretold by oil. s&p 500 energy sector is the worst, speaking to slowing global demand. we use the group rank return here, this is amazing. we have urth quarter the energy sector if in a bear arket and only two up sectors, utility and health care. >> yes, and utilities is a very sector. health care, the only biggest and r for the year technologies are down for the year that. often. happen too it's usually technology or stocks. discretionary it's either one or the other sector that is the biggest gainer. year. not happening this it doesn't mean that technology is doomed. can see that netflix,
microsoft are up for the year. netflix up by 30% this year so a lot of room for optimism. maybe some room for growth. feng trade, the engine or the bull market for so long were recently down but two of the stocks. microsoft sharply higher. elena, thank you so much for us. ng and from new york, this is bloomberg ♪ e bloomberg ♪ e
>> we're back on bloomberg radio and bloomberg tv. carol massar with my co-host jason kelly. edition of bloomberg business week. certainly one of the big stories was the federal reserve and what the fed was doing. that president trump seemed to put on the head of the fed. i feel solutely and like every week on our weekly business week show we would look
forward to the conversation withr tuesday or wednesday peter coy. great perspective so what better tend year with peter, conomics analyst of bloomberg. we know your thoughts but give a taste of the economic landscape in 2018, especially jay powell lens. >> the market had a bad december actually a very good year. extremely low unemployment, way what would be considered e normal level of full employment. strong economic growth. he second and third quarters particularly. economy a gold locks yet people are kind of moping ust because the stock market fell in december. to answer more directly, the fed
this stage ppy at because it achieved pretty much its objective. employment. full it's just a bit of a miss on is tion since inflation actually still too low, important to keep in mind. raised rates bay times now and is looking for two more increases 2019 and trump is saying no more, stop. the rates are two high -- too high now. it's interesting because i feel there's so much angst coming in and ks talking about the economy. s it going to be that bad in 2019? is for xpectation continued economic growth in tick-up in ly a inflation. a lot depends on, of course,
raising fed does but the funds rate by say, another be ter point should not enough to sink the cruise liner. it does seem -- second person he today who has reminded us that quarter of a point increase is freaking everybody out, hat's the problem? >> right, the problem is for for were perception than reality in point of view. you can argue either way about are r the interest rates getting to be too high but it's t like an obvious case where jay powell is running amuck and intog to drive the economy recession. no, he's trying, the fed get tively, is trying to ahead of possible inflation concern. saying they're right or wrong but this idea that only trump can save us from auto control fed, i think that's a misreading of the
situation. you, because sk you look, obviously, closely at he u.s. but also overseas. brexit still looming. march 29 i believe is the deadline. no deal at this point between the u.k. and the european union. the inputs as it were that changed owing to this uncertainty? you're looking at the british economy then i'd be really worried. the u.s. economy, it's like a second or maybe even effect. rder first of all, overall exports by small portion of g.d.p. thin the exports to the u.k. they're a small percentage and within that they're not going to all these reasons why it should not be a big damper in on the u.s. economy. if there is an effect, it will psychological contagion effect. like oh, my god, the world is
control. e brits can't manage their brexit. carol: do you worry more about china? a concern. more of first of all, much larger economy. purchasing index today. carol: right, slipping below 50. right. and below 50 is a sign of ontraction so definitely a negative for the world's second largest commitment. was ducking china demand from other countries by in g a net exporter but lesser years it's come down to does -- it so it will be a big harm to countries and so on that are big exporters to china. fully explain na he declines in commoditys? the bloomberg commodities is seventh biggest
rop in about 11 years that decline in commodities is that supposed to be kind of an alarm all of us about hey, folks, particularlyonomy, in china slowing down. >> right, it's such a big of oil and raw aterials for its manufacturing complex but the u.s. is a big that would be at as well. if you're thinking of an overall economic slowdown, ommodity complex is one of the first places it would show up. f course oil has so many components to it too. become oes a trump bump a trump slump in 2019? teasing ahead. jason, very clever there. actually, i al-- am writing
that and i believe you could argue that we already have trump slump, especially if you're focusing on the stock markets. since october -- stocks went up and since then significantly down, so yeah, trump slump. to read it. wait tory for , economics ed bloomberg business week. always a pleasure to talk to you. year. ew >> you too. ♪ >> thank you
>> let's check out the markets are the closing 2018. what has turned out to be the worst year for the markets across 2008. it points to the idea it has not ast been stocks in 2018 but risk acid selloff. looking at the s&p 500, down 6.2%, its worst year since 2008. to put that in perspective in 2008 the s&p 500 down more than
38%. really, this is more of a reflection of the bull market. sold offngly bonds also with stocks selling off with the 10-year yield backing up 30 basis points on the year but at the -- the 10-year yield had been closer to 3.25%. it doese year, while not look like it gets confirmed for the fourth quarter, it certainly is. the bloomberg product index down 13% this year. another sign of the risk asset selloff. that yen up for a third year in a row against the dollar. if we hopped very quickly into the bloomberg will see the indices down on the year. the first time since 2008, the biggest since 2008 but really you can see reflection of the big bull market in between. it will be interesting, of course, to see how 2019 plays out that that is how look -- a
hello, shares of amazon higher today. the world's largest online retailer has plans to expand his whole foods grocery store in the u.s. the move would allow more customers to tap into amazon's two-hour delivery service. new evidence that a pillar of the u.s. economy has started to waddle. five federal reserve indices of regional manufacturing slumping this month. the first time they have fallen in unison since 2016. a lot of that is due to the 40% drop in oil prices. canada short-sellers making $432
million thanks to falling stock prices. according to data from the financial analytics firm. one of the big targets was pria whose shares were down 21% for the month to day. >> between a stronger dollar and down more than 10% in 2018. for a look back at a look ahead, let's bring in our commodity strategist. mike, this year has been extraordinary not just for r commodities but risk assets. s&p 500 had the worst year since 2008. oil, a bear market in the fourth quarter after a bear market in 2015. in fact, you know the last time we had two bear markets that close together? an interesting proximity in a way. mike: 2008. a a lot of parallels here. >> yeah, there are quite a bit
of parallels. relative to the selloff of oil, we were having a chat in the last over whether it is supply, demand or risk over selloff. mike: mainly supply. crude oil is oversupplied. we keep talking about supply cuts. there will be cut. i.ould hold around 40, w.t. but also it is the macro. can show it, if we s&p correcting back to its moving average, its average since the fed tightens. that dragged crude oil down. the significance is during this cycle in q4, crude oil and stock prices plunging told the fed not to take it, they still did. >> oil started to selloff before stocks did. you can make the case that oil the risk asset
selloff that got the attention from stocks. sounds like you think it was more investors looking, oil traders looking ahead to stocks, or? mike: the vix is coming up. reverting to the lowest amount ever. that reallyne started down in june, july. so, the dominoes have fallen. credit spreads widening, by neil decline. they are all telling the fed not to. they still did. unlikely to get much below 40. if it does, fed tightening will shift to easing. 50 should be more of a key point for the hang off. >> super quickly it sounds like you think 2019 will be more constructive for the risk access. >> for risk assets like dollar, and commodities. wishes a continued volatility in
the stock market. >> opportunities for the commodity complex. thank you so much for joining us. from new york, this is bloombe rg. ♪ >> you are caught up. let's get in here on bloomberg businessweek. let's get into some of the social trends of 2018. this is been one of the most fun and most read stories on the bloomberg. gina is one of the authors, economics and fed reporter for us at bloomberg. gina, so, make us smarter. you had some fun with this story. gina: yeah absolutely. we had some good ones. we do this every year. we sit down and talk about what made his thing, this is an economic story this year. this year, a lot of them were about urbanization. so, one of the ones that really stuck out to us with sidewalk scooters.
anytime i go to washington these days -0-- you see a bunch of guys in suit and tie writing their scooter. -- riding their scooters. carol: they are electric, right? >> this is an interesting trend because it's based to the fact that a lot of economic activity is concentrating in these urban cores. we've seen that happen throughout this expansion but i think we are getting to this point where folks are trying to think of more efficient and cheap ways to get around and scooters are natural outgrowth of that trend. jason: and cheap and more efficient ways to live. adult dorms. i read that and just thought, oh, jeepers. it does not sound fun at all. gina: my colleagues suggested this one to me and when he said it i did not know it was happening. oh, this is a will surprise. i'm like, is it really? this fee is like so 2018. so in lkine with everything we
we everything line we know. places like new york and san francisco we've seen year after year are really strong rent price growth and we have not seen commensurate wage growth. so, naturally people are having a harder and harder time affording these rents. though rents still slow down we haare still at record highs. carol: people are living together. gina: they have pretty swank common rooms but all of the non- bedroom rooms are common rooms. carol: ihe comes out and says it is time to go to bed. it is going to get worse. i think about amazon building a second headquarters. what a major competition. ultimately they end up going certainly here in new york, another big city. of course, outside, washington, d.c. gina: this is what we thought that spoke to the economy because you know you have got
amazon looking far and wide and drawing bids from alaska and middle of iowtos. carol: and urban areas that could of used it -- urbanthey pick these areas they seem like it would been an obvious choice and for obvious reasons. then, at the of the day, that speaks to the fact that in a globalized economy, you do ofd sort of this base employees, infrastructure, conductivity, all of these things to compete. we are seeing these sectors be on amazon, i'd is not just amazon, we are seeing the sectors very much concentrating job growth in a couple of winner takes all cities. jason: all the cool kids wearing the cool sneaks. bubble.eaker my business school classmates speculate in the sneaker market. if you read online threats, apparently 2018 was peak snaker season-- sneaker season.
carol: this is unbelievable, this online marketplace. i jus look at a whole bunch of themt. you are tracking thousands of dollars for up their sneakers. ina: on one hand is said to have a lot of people out there with some serious disposable income. people are feeling a little bit better economically. i think another thing this says is that, and this is sort of a stretch but i think it is a funny example, a huge search for yield. we are about the hit. our longest expansion on record an interest rate of historically very low. people are looking at asset classes and see what else can i invest in? .arol: you can buy 20 pairs of or you can put a down payment on a home. is to shopping, e-commerce. gina: so, one of the things we thought was really inducing about instagram shopping. just because it did seem to come into its own in 2018.
one of the things that i think is interesting about that is sort of the, the underlying detail there. so, google's most searched ofhion word of the year fashion famous. get millennials moving up to their consumption years. they are not represented by the regular model. carol: this is such a fun read, go to bloomberg.com and check it out. for check of first word news on bloomberg radio and tv. >> hello, everybody. trying to and that partial government shutdown when they take control of the house of representatives later this week. they say they will pass six government spending bills.
bills stand a very good chance of being rejected by the republican-controlled senate. in other news, an american citizen has been arrested in moscow on suspicion of espionage. russia's to muskets security identifying that man as paul whelan. u.s. state department says a has been notified of his detention but could not release the name or provide more details. found guilty on flying in russia's -- faces 10 to 20 years behind bars. for his celebrating annual new receive celebration and ant-government demonstrators are as well. they are angry at rising taxes and president emmanuel macron's pro business policy. francis to point 150,000 security forces nationwide to counter violence in. tear gas tog
disperse thousands of protesters as a began to march towards the presidential palace in kartun. activist are demanding that president al bashir set down. -- step down. dozens have died since the protest began nearly two weeks ago. global news 24 hours a day on air, on tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. abigail: president trump and the federal reserve have had a rocky relation to say the least and wall street sharing and president trump's frustration with the fed earlier this year. billionaire investor spoke about the central bank in a bloomberg exclusive earlier this year. let's take a listen. >> because we have had 8 years of free money and the kind of access is pushing people out on the yield curve. that's created, the time for
caution that you want this bubble to unwind slowly now because if you don't, and let's say these indicators turn red, yo umay have to do a lot more crazy monetary stuff and actually it'll be more of a problem in terms of someone like me who eventually wants to normalize,, wants to deleverage that is the train i have been on. but this isn't an effort to let that bubble out slowly. someone, i believe use the term three or four years ago that this a beautiful deleveraging taking place. i have no idea what he was talking about. how do you have a beautiful deleveraging with u.s. debt going to the roof at the government level and corporate nonfinancial debt growing at the rate it was? what i'm asking for now is not a cut. just to take stock of everything i've said. happened.nd see what
and what i'd really like to think, my business as you know is risk reward. so, let's just talk about the risk reward here. let's suppose i'm completely wrong and three to four months from now none of this stuff mattered. all the financial people were crazy. they were panicking because of some technical factor in the market. and let's suppose the fed did not hike tomorrow. what is the cost? ok. sure what the cost is but the hearse got to be some cost to their credibility, to -- i'm not sure what the cost is but there has to be some costs to their credibility two or three months down the road when they start hiking again. let's suppose that these economic indicators, the stuff we are looking at, the forward-looking stuff, is right and we have big potential
problems brewing, and that they could be even bigger than we stuffbecause there's hiding out there we do not know about in terms of mal investment. . think about the cost if they hike tomorrow, and if they continue to string -- shrink the balance sheet right one of ecb is not offsetting it, i mean, that cost to me is five to 10x. abigail: that was an excuse of interview with a billionaire investor. we did close out with a nice rally on the last trading day of 2018, but on the year take a look at the ford risk assets, the s&p 500 had its worst year since 2008. eld bonds sold off as well. the commodity complex sold off, down 13%, and the hayman dollar bid up. there was a bit of a risk off tone. if we happen to the bloomberg and take a look at the s&p 500 versus the vix
the vix had its biggest yearly spike ever in white. you can see the gap between the s&p 500 and the s&p 500 adjusting upper -- suggesting perhaps some enough to give, maybe some or risk off in the endedar but the -- trade mixed on the year but higher overall, up bout 9% for those samsang stocks. that is look at the markets in 2018. from new york, this is bloomberg. ♪
stories of a day and a look at those closing numbers on wall street for today and also for the year. you are listening and watching a special edition of bloomberg businessweek. i'm carol massar along with jason kelly you and i these are the stories we are beating in the morning and they catch our attention. they are always high on the most red list. this doesn't have to do with the leaders -- this one has a do
with billionaires getting richer and some of them getting poorer. sophie alexander is in our studio in new york. tell us a bit about your store because it was great for some billionaires but not for others. sophie: yeah, that's right. the top 500 richest people lost almost half $1 trillion this year which was a sharp chair from last year when they gained $1 trillion. that does not mean everyone was a loser. like jeff bezos gained $24 billion putting his net worth at $123 billion. he is definitely a winner. data: as you dug into this in there so much you can play around with on the bloomberg, what with the trends that drummed out at you in terms of groups that people who have made or lost money? e waves look at that is countries. and singapore in dollar terms had the biggest winners this year. the richest people in the country gained 2.5 billion dollars this year but that is nothing compared to what was lost in other countries. like in tghe-- the u.s. and chi,
both of those countries had the richest people who lost around $76 billion in both countries. carol: u.s and china. it is funny. go back to jeff bezos. i had to remember that stock ended up 28% to the year overall. i mean, really remarkable and like as you said, it added a lot to his wealth. give us some other folks in terms of where the numbers played out on the upside or the downside. sophie: something we are doing with the bloomberg billionaire index is thinking about what is popular and who is the billionaire behind him. tim sweeney, the founder of epic games. jason: this is my favorite. so glad we got to talk about fortnight on the last day of the year. if we went back and did a word lccloud, fortnight is unbelievable. snl parodies. we were watching it last week.
this guy came out of nowhere. and now he has a fortune of $7.2 billion. jason: down in north carolina? sophie: the other one is the founder of juul. there was recently a deal with altria. jason: this is the vaping company. electronic cigarettes. carol: it played into some of the trends. sophie: one of them is denise coates. the only woman added to the billionaires index this year. she is the founder and ceo of an online gambling company. jason: 10 times richerson queen elizabeth, by the way. carol: that is pretty nice. does she have a crown? she can buy one. jason:. she is a commander of the british empire she got the cbe. she was bestowed that by the queen herself. mark zuckerberg, not a great year for him. we were talking with an investor
earlier who said, i'm out of facebook. and even as cheap as it is, i am not getting back in. he was in quite the spotlight this year. theie: mark zuckerberg was biggest loser honor list, he lost $20 billion. but he is still sitting comfortably with $53 billion. i'm guessing that going into 2018, you and your colleagues were not a predicted that one. for been in the news getting caught up in a lot of the scandals related to russian oligarchs. the u.s. and maybe some behavior that people are not -- e: a lot of that was lost on the fear of u.s. sanctions. carol: i'm going back to facebook. while you guys were chatting -- jason: you guys keep talking. carol: that is what is fun about
the bloomberg. facebook was down 40% this year high to late july almost cut in half. we have had a lot of conversations around the table of just what the regulatory environment might bring in 2019 for your's urge in social media companies. we've talked to folks who say they need to lead the charge in terms of creating a body that oversees them. lawmakers are going to hold facebook much more accountable or this will cost them more to police what they do. is anotherjack ma name that shows up in your story and i think we forget may be that not a good year for him, especially as he starts to exit least exit this stage that he has been in with alibaba. sophie: it really was not a great year for a lot of chinese billionaires. 11. of chinese billionaires.
and billionaires from hong kong were knocked off the list. and fourine americans russians. alexander, wealth team member and reporter at bloomberg. great story, one of the most red on the bloomberg. certainly one that people will be looking at the list you want to be on but if you are losing $20 billion, means you got a lot to lose in the first place. carol: good stuff. ee want to rehash a bit of th market trade we had in today's session but really more importantly what we got for 2018 overall. we did see a bit of a rally on wall street today. 265 points and we also saw again in the s&p and the nasdaq. for the year, no surprise, times of volatility, especially in the last couple of months. but the s&p was down about 6.5% for the year. the dow about 5.6% and the nasdaq was down just shy of 4%.
th outperform ore. -- the outperformer. it was it is a because people were talking about going to the small-cap names, that are not going to be impacted by the trade talks. they got beat up on the concerns about the outlook. then: the bloom came off rose for them later in the year. as we look at what is to come , i know we will be eyeing very closely corporate earnings because as you say, a lot of the big moves, especially around the fang stocks or regulatory concerns, big sort of existential concerns -- but this is pointed come down to really performance of these companies. what are ceo's saying about 2019? carol: exactly in what the visibility that companies have. do they feel confident to either increase hiring plans to spend on products, equipment, to build new facilities? do they feel comfortable enough to do that which then creates
some more economic momentum other? we'll see. jason: and safe to say it was your a to most was politically. we think back to the beginning of the year, three government shuts down. we are in the midst of one not are so many big names, the passing of titanic figures in the political landscape whether it is john mccain or. carol: george herbert walker bush two more things. stocks ended worst year since the financial crisis. and, also, we had the worst december route for the s&p since 1931. it's a long time that. it has been a great year. it is going to be a fascinating year come 2019. jason: i think about the things th year aheador rt and also the bloomberge 50. . we are looking forward to much more in 2019. you have been listening and watching bloomberg businessweek. happy new year, everyone. ♪
♪ >> ladies and gentlemen, thentle winner of the stirling prize for architecture 2018 is the bloomberg building! caroline: bloomberg's european headquarters was awarded the stirling prize for the u.k.'s best new building by the world -- the royal institute of architects. on the one-year anniversary of its opening, we look at bloomberg's office in london as a model for workplaces of the future. welcome to this program about bloomberg's new european headquarters.