tv Bloomberg Markets Americas Bloomberg February 8, 2019 10:00am-11:00am EST
york. 30 minutes into the trading day. from new york, i'm vonnie quinn. guy: live from london, i'm guy johnson. welcome to "bloomberg markets." vonnie: a week of deals, turnaround stories, and more. looking at markets, s&p down by .6% as is the dow. 27%,q, mattel up outperformed across the board in earnings. analysts are very excited about the toy shows. we will talk about the contrast with hasbro. the amazon story, the perfect intersection of politics, media, and business. there is a lot to unpack in this story. 2.2%, and notown
sure if that is due to anything currently happening. another new ceo. lots of stocks on the move. guy: but talk about what the big picture looks like. stoxx 600 down by .6%, continuing the selloff, very aggressive selloff from yesterday. this is a fascinating, the german ten-year has a yield of zero.awfully close to we see yields falling today. btp, italian bond market selling off, yields rising. the bund spreads continuing to widen out and we track towards the 300 basis point spread that
got us excited in 2018. , the german fin tech company, this is a one-year chart. off we havepic drop seen. we saw singapore authorities iding the offices. german prosecutors investigating. this is a company that has had target by market manipulation. this is something the company is pushing back against. we have seen wildcard -- byecard, one you're still up five point 6%, a big move. vonnie: let's get to market analysis at the trading we comes
to an end. we are joined by michael regan. guiding's, positive and negative for asia and much more. what stood out. we are seeing momentum in the u.s. market crack. look at the s&p 500 and it was 14, a from december massive surge in six weeks. there has definitely been alarming news flow, european commission cutting the eurozone forecast. earnings, good positive earnings news. we are now looking at potentially in the first quarter a decline in earnings. inretty genetic cut expectations to about 5% or 6% full year. a lot of that was at the end of
year and make people nervous that maybe the estimates will get cut. the of a ferocious rebound in the stock market running out of steam amid some of alarming to worry some fundamental news. mixtureit is always a of what the fed is going to do and also individual company are doinghat they with there cash and what they are spending, and the fundamental economic picture. what are investors most focused on, trade? tradel: it is focused on and how bad the economic situation is deteriorating. a lot of models -- it is not a slamdunk of recessions in the 12 months, but pretty alarming levels, the highest operability of this biggest cycle that a
recession is coming in the next 12 months. people are hoping the trade situation getting result would be a bonus, and how that plays into the outlook for the economy. people would maybe worry less about the chances of a recession is the trade situation does get resolved. all the commentary and messages i get from traders -- i'm not sure there is much near-term optimism a solution is around the corner for trade. the best most are hoping for is that the u.s. does not increase thatfs on china to 25% and can gets kicked down the road. that would be an initial boost to risk that happens. it is a fluid situation. larry kudlow coming out yesterday and damping optimism about a trade deal getting closer to fruition was part of
the story yesterday. mike, good morning. is 2019 going to be a carbon copy of 2018 iea january rally and trade for the rest of the year? michael: it is hard to say. the big difference is the earnings outlook. weof this point last year, still had a pretty solid earnings outlook for the rest of the year. people worried that was the peak and it was going to slowdown. we have to see the outlook stabilize and at what level it stabilizes that. -- stabilizes at. the last numbers were looking at -- 2019 growth in 2090 earnings. thatord -- that where number deteriorates is where people will get worry. guy: you look at it from an
equity interview, is it your feeling that the bond market is overplaying its hand question ma? if you look at it you think you world is coming to an end. michael cohen the italian yields michael:up and cuts -- the italian years creeping up and cuts. the thing ilds -- fixate on is the short-term bill rates. if that is 2.4%, if an investor has an option to get that kind of yield without taking on duration risk, i think it is competitive for the stock market. that cash is an alluring asset class. for the first time since this bull market began. that is a big overhang until we
get clarity on the earnings and economic outlook. -- is stillstill the big competitor for stocks. usnie: thank you for joining . for all of his analysis, go to mlive.go. we will talk to the senior fellow with more market analysis. guy: let's check in on "first word news." kailey: amazon ceo jeff bezos inc. using the national enquirer of -- basal accusing the national enquirer of trying to blackmail him -- jeff bezos accusing the national enquirer of trying to let mail him over compromising photos. the inquirers publisher says it
acted lawfully. president trump will step up to crack down on huawei. the president is expected to sign in -- an executive order banning chinese goods on networking. another sign that germany's government may be seeking a merger between deutsche bank and commerce. there is portrayed quote national champion in the banking industry. the longest-serving member of congress in u.s. history has died. john dingell represented to 2015, aom 1955 democrat and big supporter of the auto industry, health insurance, and oversight of government agency. john dingell was 92.
global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm kailey leinz. this is bloomberg. guy: thank you very much. coming up we talk to the ceo of the belgian chemical company. this is a company that has heavy exposure into the fast-growing battery technology world and has a good view of what is going on within it. this is bloomberg. ♪
johnson. vonnie: i'm vonnie quinn. this is "bloomberg markets.". taylor: down for the third straight day on all major averages. some of the worst performers were in the middle of earnings season. companies lowering guidance and fundamental issues going on. earnings, mattel is saying that barbie and hot wheels are outperforming. you are seeing an increase from 15 to 12. the turnaround is a work in progress. up 25%. .ody up 28% looking for profit in the second half, a boost from a licensing deal. this is a welcome reset for the company. seeinge good year tire an earnings miss and looking at a redesign of the footprint.
corvo dragging down the stock index, flat growth even with the rollout of 5g. corporal not able to get that done. into my terminal at gtv , lower for the week. all major averages seeing the weakest weekly performance since late december. s&p 500 in yellow, all down for the week. guy: thank you very much. to belgium now. produces anecdotes used in batteries, the ceo joins us on the phone. numbersed about in the the fact that we are seeing a global automotive slowdown. we have seen that in other sets of numbers coming out in the
likes of daimler. can you be specific about what is happening? are we seeing a slowdown in the traditional combustion engine and acceleration in ev? >> that is the exact picture. we see a more pronounced slowdown in the conventional combustion engine, while the move to cleaner mobility is moving at a sustained pace. rose 60% year on year, and we expect another year of significant growth in 2019. guy: and another sector, we are seeing a lot of news speculating about a slowdown in the mobile phone segment. reflected ing that
your business and how long will it last? admit we haveo seen that in our business starting in the last quarter of and it continues for the time being. are rightg where we now in the value chain, it is difficult to make out how long this will prevail because there things i neede of to be worked out of the system sales pickthing -- up again. guy: you said further down the value chain. let's talk about the raw do you haveu use concern about the availability of cobalt? icore is one of the
pioneers in terms of procuring sustainable and ethical products. we are the first company in the value chain that provides materials of a certified, clean, and ethical origin. policy, thisupply means we have access to a more limited number of sources of raw materials. we have to be vigilant and make contract on a long-term basis with viable partners. the requirements that we have for the business. rapidly orloping recycling -- hours recycling capabilities to complement scarce materials such as cobalt.
review of the company from a strategic point of view, in the success will depend on a closed loop approach , where that plays an important role to make sure materials are not getting lost in landfills and can be realized -- read utilized in a sensible manner. guy: i am no expert on chemistry, but can you use less going forward? ofc: this is a trend sustainable products. maintainnt to high-quality performance of the electric vehicles in terms of driving range and battery life over the years, even if you
reduce the amount of cobalt that , thecessary for the car of ev's and the cobalt and other materials will continue to increase. the crucial importance of being able to recycle those batteries when they reach end of life and recover cobalt and other scarce materials. guy: one more question. bloomberg calculates that currently battery prices at kilowatt hours will fall to 100 by 2024. does that compute with what you are seeing? marc: not exactly. i have for 100 dollars per
kilowatt hour for quite a while now. anm afraid it is based on optimistic view of metal prices. metal prices are a key cost component in batteries. as the demand for batteries increases, so will the demand for scarce metals like the ones we discussed a minute ago. their price is unlikely to stay low enough in order to achieve $100 per kilowatt hour. i do not know if we will deviate by a significant distance or not because on the other side are the industry deadlocks and supply chain deadlocks that are going to be achieved without bringing the costs down of the batteries, which should support a more market for penetration of these electrified vehicles.
guy: live from london, i'm guy johnson. vonnie: live from new york, i'm vonnie quinn. vonnie: the largest momentum etf made some unscheduled changes. by tom.oined is it safe to say they don't know what is happening? tom: it has gotten popular over the last couple of years. $10 billion in assets. normally it rebounds in may and
november. there is a caveat in the methodology and if the market gets volatile, it will rebalance. it will adapt what is happening in the market. january ined in response to what we saw in the fourth quarter. a lot of people will not know about it, but it changed the dynamic of the fund. guy: how did this affect single stocks? tom: when we look at amazon, apple, boeing, names that have been in this product for a long time -- they all got kicked out. johnson & johnson come walmart, coca-cola got called in, more consumer staples. the makeup of the fund it changed in response. vonnie: what does the makeup of the fund look like now? etf,when you buy momentum they have been heavy in tech and
that exposure has gotten cut. used to be as high as 41% and is now 16%. stocksgetting utility getting pulled in. now this momentum etf is coming more low volatility fund. when the market goes up, this etf might not do as well as it has done historically. vonnie: that is our etf report, thank you. time for "bloomberg business flash." conic, its on for our was -- arconic will split. ceo and a after the failed buyout by apollo global management.
following and missed estimates worse than expected for hasbro. this comes after the shutdown of toys "r" us stores. that is your "bloomberg business flash." guy: still ahead, president trump says he won't meet with president xi jinping the four -- before the deadline. we dig into the details coming up. this is bloomberg. ♪
let's get to first word news. kailey: the trump administration has a warning for the european danger ofis i unraveling. there has not been good faith and understanding. before the agreement, president tariffs, they retaliated with their own tariffs. if you'd between france and italy could put business at risk. it began when a deputy premier -- french present macron withdrew his ambassador to italy. it could be a $10 billion link and will not go along with the coalition -- when apple had as long as the coalition is in power. new york oil futures down 5% for the week. u.s. output at record levels and pessimism about global growth
have hurt demand. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm kailey leinz. this is bloomberg. vonnie: thank you. president trump and china's president may not reach a deal before the 90 day truce expires. we are joins by james buchanan, senior globalist. -- james mccann. , a senior globalist. structural and fundamental issues. d.c. any way forward? ofes: that is right in terms the difficulty of resolving this trade conflict. we have structural issues around industrial policy, requirements for joint ventures.
it will be a big asked to solve these issues in a short time. we are hopeful this turned down in aggression and temporary truce is extended and that provides more room to explore the issues. finding a large-scale trade agreement will remain very challenging and not within the scope. vonnie: it seems to me the preponderance is that large companies pay the tax, customers of large companies or large companies avoid the tax. the matter what happens if there is more trade war, it hits. james: this is essentially a tax and can be split and taken by u.s. corporate or international corporate or go to the final prices and hit u.s. households at their wallets. another important angle is the sentiment very we saw that
toward the end of last year and markets were concerned about the effects of the tariffs. that affected investments. this affects confidence, business planning, supply chains , and all damaging or threatening for equities. viewjames, can i get your at what you guys are talking about with what is going on with global central banks. ? the high-profile one is the fed. what is with the central banks? james: a number of factors have made them more cautious. they are looking at market conditions and looking at buildant build, -- stress , around global trade and
production cycle and risks to contend with. trade is one of those risks and brexit, european politics, a number of areas of concern. with inflation not biting, it feels like the time to be patient and that is the mantra at the fed. we can take time to see how the economy and political issues play out before we need to move again. guy: james, when we look at the data and think about the derivative, the german rates stand out. one of the things we have been talking about is whether we will see bond yields going lower. does the economic picture justify such a move? james: german activity indicators are worrying and there is a big deceleration in q3 due to the auto sector, but
the rebound has been troublesome and indicates that germany is feeling pressure from global slowdown and the slowdown in china in recent months. i think a good deal of that in the price of government bond in the eurozone and expectations for the ecb are are ready being pushed out -- are already being pushed out. isnie: the bank of england in wait and see mode on brexit. exporters are having to ship without knowing what the trade situation is. what would that be like for the u.k.? challenging. when they think about the largest trading partner, they do not have clarity on what the structure will be over short parents of time, let alone over the longer. it makes a longer economic planning difficult. this week, they cut the
expectations because they see businesses and uncertainty and they are not going to go out and spend on. n capex. vonnie: what are you sing with brexit. james: this is going to take time and things have to be extended beyond the march deadline. it becomes challenging because there are a number of paths that this could take. we cannot rule out a no deal brexit entirely. perhaps there can be opportunity for a new election or second referendum, but there are political barriers and divisive issues. call thellenging to exact position of brexit. a -- tould it go from the ecb? james: there have been
indications that they would want to and it might provide support. restarting same as asset purchases and would not be the same degree of economic support and policy support for the region. need for additional support is by pushing back interest hikes potential he into 2020. even then, the potential for rate hikes is in question for the eurozone given the degree of slowdown at the moment. guy: let's dwell on that. do you think the ecb will hike rates this economic cycle? james: it is a very close call. it would be difficult in the near term. there is possibility that the recent loosening in financial conditions we see rapid by the central bank easing policy providing boost in 2022's short-term cyclical, then that
might be possible. the main messages we won't get a lot of hikes from the ecb due to the difficult macro environment and weak inflation. commissionropean downloaded growth expectation in italy, would you expect to see the ecb deliver on that? do you think the current budget stacks up and you think if it doesn't, we could see italy back in a potential deficit seizure from the commission? james: this is the real concern. economic assumptions and fiscal assumptions which reveals a somewhat shaky arithmetic. this means that into light. the fear would be if there is slippage, it would be consistent with a slow growth will file and
the tensions might rise again. we would hope that policy makers would follow the same path as in recent months, trying to diffuse the situation rather than escalated. this is a reminder that the fiscal issues in europe remind late. vonnie: on china, i spoke with , andman during the week for him, china is a big risk. not so much the trade-off but the slowing of the economy. where do you see the economy going and it's impact going? -- and its impact going? james: we have seen the growing -- slowing, and with some of the tightening they have tried to do to contract that with fiscal easing through personal income , whatd corporate tax cuts we will see is a step back a
more traditional credit easing measures. we have seen they proved relatively good at supporting chinese activity. we look to see evidence that it is opening a little and growth measures taken off and that would single there should be a cushioning in chinese growth over the second half of the year. vonnie: when you see the next recession in the u.s.? james: i would say 2021 feels the most likely. , seniorjames mccann globalist for aberdeen. wirecard shares tumbling again. we will talk about where this company is going next. this is bloomberg. ♪
guy: life of london, i'm guy johnson. vonnie: i'm vonnie quinn. the judiciary committee have been asking the attorney general . includeshe questioning past criticism of special counsel robert mueller's russia probe, which he is in charge of the we are joined by kevin's cirillin our -- kevin in our washe. the acting attorney
general, there were questions he would testify. he is claiming executive privilege preventing him from discussing any of his conversations with president trump. democrats disagree with this and want him to divulge any information about conversations he has had with president trump. this comes during the robert mueller investigation and the backdrop paying the situation with roger stone. roger stone was indicted in part on charges he lied during his congressional testimony. that indictment reverberated here inside of the beltway that a lot of the hearings that we are watching and following at a new layer of intensity because it suggested robert mueller and his team are not afraid at all to indict anyone of lying to congress. guy: there have been a lot of questions about mr. whitaker should be recusing himself. are they going anywhere?
know, that is a great point. in where he is standing with his public comments in the past as well as comments previously made to the washington post, any in the democratic party and some republicans would argue that he ought to recuse himself. that is not something he is going to necessarily do. in his public comments recently, he has suggested that he is going to be an impartial individual as this goes on. but the scrutiny and level of intensity has magnified as we have watched him testify today. vonnie: speaking of scrutiny, i can only imagine the chatter around washington, d.c. about jeff bezos and amazon. we got a tweet from the president as well. what seems to be the primary focus in washington?
kevin: it is a mix of all of these things. relation to president trump's relationship with jeff reseau's -- jeff bezos, that has been well documented. says his ownership of the washington post and the president's criticisms of that in particular have only further than escalated. vonnie: this weekend should see talks for another government shutdown next friday. how likely is it we will see another shutdown? kevin: i spoke with senator richard shelby, a republican, a top lawmaker. he said he is trying to shake things up and get to some type of deal. he was meeting with president trump and afterwards president
trump said he is hopeful they will get a deal. they are going to be working over the weekend. what i would say is two points. one, anytime there is a bipartisan group of lawmakers, they have to sell it not just to the president but their whole entire collective parties. , howconsensus is built will conservatives react and how will the left react? a onthat game of immigration failed to sell it -- that game of -- that gang of eight failed to sell it to their parties. republicans in republican circles do not want to have another shutdown and do not feel it is an advantage into the spring and summer, especially with so many other volatile market events relating to oil
and u.s. and china trade talks. guy: talking about the trade talks, global financial markets taking it in that the president and president xi jinping will not meet. is this poker? kevin: it is definitely poker. president trump has dispatched trade officials as well as steve mnuchin to go ahead of the march 1 deadline. there is a broad coalition in the business community, having a fly in, where all of the business organizations descend on washington and meet with officials this week to urge them not to increase tariffs ahead of the deadline as they feel it will have a negative impact on their industry, and there is apprehension in the business
community about tariffs increasing. that said, every source i talked with at the white house, even in the different divides of mnuchin, feels the president is on the right path in terms of go shading with china. they are trying to convey -- in terms of negotiating with china. vonnie: thank you to kevin cirilli covering all the bases. kevin: thank you. guy: still ahead, what is fueling the claim in treasury rices? next. an answer to that is coming upocus" next. this is bloomberg. ♪
guy: live from london, i'm guy johnson. vonnie: live from new york, i'm vonnie quinn. time for futures in focus. the yield down to 2.63%. let's get to our guest. what do you attribute this to? >> everything around the world is what is doing it. we look at what is going on in germany, the eu as a whole, all of the events going on the president not meeting with the chinese president, and the market gets very concerned about that. all of the sudden, u.s. treasuries look better. a lot of the problem is they have interest rates near zero, the european union has stopped putting new money into the bond
buying program. they may have to revisit stimulus. the same thing is going on in the u.k. as much as they would love to raise rank -- rates, there is uncertainty. policy came out, now they are not raising rates. this has become an event and that is carrying rates lower and lower. vonnie: if we are attached to yield like a germany, where we are seeing yields drop substantially, what is the trade ? how'd you profit? the you buy the brakes in five and 10 years. s in the five and 10 year yields. it is the opposite of what we thought it would be this year. there were so many traders who thought we be at 3.25% and 3.5%.
a lot but the real rate would get over 1%, but every time we 1%,near that real rate of he gets thrown back. neutral, i don't know. we are in a trend in the futures market to the upside. vonnie: ira epstein, thank you for that. the let's get the stock of hour. wirecard, we have been talking about it, shares tumbling today. down around 15% over allegations of accounting fraud. this is to do with the financial times reporting that generated this. alan katz joins us out of paris to discuss. this reporting is a huge response in the wirecard share
price. taking place in singapore and prosecutors involved. it is a company that is no stranger to market and it relation claims. with seen two before. why are we getting such a big response? alan: wirecard has been the subject of a lot of attacks in the past. in 2008, a report of insider trading and money laundering, accounting fraud, now the financial times reports about allegedly laundering and accounting fraud in the singapore. people understandably get worried about this company. financials are obligated, so if you have repeated -- collocated, so when you have these repeated attacks, people think it where there is smoke there is fire.
the battle is far from over. each time it comes out with a story, there are whole set of people ready to sell. they may be the people who own wirecard shares. you also have the whole community who believes that wirecard is overpriced are has compliance issues. they are also ready to sell at any point whenever negative news comes out. vonnie: alan katz reporting. let's take a quick look at u.s. markets. a bit of deterioration, the dow down 1%. s&p down .7%. nasdaq down .6%. this is bloomberg. ♪ this isn't just any moving day.
trading day. i'm guy johnson. vonnie: i'm vonnie quinn. this is "bloomberg markets: european close." guy: european equities finishing on a down note, a big down day yesterday. so down, but european markets down seven tense of 1%. -- .7%. weakness in the italian bond market. strength in the german bond market. 0.03%,n ten-year at awfully close to zero. 0.3% today.another opposite in italy, vtb bond btpad widening out -- spread widening out.