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tv   Bloomberg Markets Americas  Bloomberg  February 11, 2019 10:00am-11:00am EST

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york, 3:00 p.m. in london, and 30 minutes into the trading day. vonnie: live from new york, i'm vonnie quinn. guy: live from london, i'm guy johnson. vonnie: more shutdown talks or non-shutdown talks. trade on the agenda. ahead, the ceo of spirit airlines on the earnings and how a second partial shutdown could affect the business. we are looking for direction this morning. over.1%.up plenty of individual stories, including electronic arts, analysts saying it has the potential to be fortnight's competitor. another gamer is not doing so well today. we will follow that throughout the day and there are a few caveats. at athe pound is trading
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129 handle. early on, week data coming -- weak data coming from the brexit uncertainty. spike in the dollar. debbie ti and brent went lower. down 1.26% on brent. we will talk about that later. european stocks more bo buoyant. the narrative worked its way into the european trading session. a strong move up. two very negative days thursday and friday last week. the crash was a earlier in the swiss bank. japan out today. we seem to be increasingly seeing overnight during the light liquidity phase, when you
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have a major market of japan out that you have the risk of this happening. this is more and more normal to see. . very strong move these liquidity events are something the market has to deal with time and time again increasingly. vonnie: that would be a topic of conversation during the next two hours. a fresh round of u.s.-china trade talks. a cohead of equities for the americas joins us from denver. agenda? the top of your are you looking the earnings we are getting? destructivee have a trade between the two biggest trading partners, u.s. and china, that bodes poorly for earnings for companies all over the world.
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it has to be resolved in a constructive manner. if we get it resolved, we can think about corporate fundamentals and earnings growth. that is a positive, optimistic thing for investors and markets in general. vonnie: with a stalling of the process help, or are you effectively on pause until biscuits sorted out for the longer term? george: continued pause and delays is problematic. we have seen damage because of the economic uncertainty as a consequence of the pause i. we had the threat of increased trade tariffs. business wants to see resolution so they can plan and make long-term forecasts. without that, it is hard to invest and grow. we will continue to weaken economies over the world, particularly in china and the united states. it is hitting europe and latin
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america. this needs to get resolved. important --more work out in terms of the markets right now, would you say trade is more important than the fed? george: i think so. the reason the fed has become important is this trade friction has caused a lot of economic uncertainty. when you have the fed tightening through 2018, it was not a problem. it became a problem when trade negotiations became hostile and we ramped up the rhetoric. that is when the fed became problematic. you have the trade wars which are inherently concessionary -- recessionary, with the tightening around the world, that is two inflationary forces happening from a governmental perspective and it through people off. it is not the fed, but the fed needs to pay attention to the fact that there are other disturbances.
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i was very fearful the fed was tightening and tightening, just so they could go on autopilot so to speak. meanwhile, ignoring the friction and uncertainties happening because of trade issues. trade resolved, the fed can go back to a more tightening regime, but not before then. guy: george, earlier on we spoke to the noble lori at -- at noble aurette and he was concerned about a recession in the near term. take a listen. >> the current treasury secretary is now hank paulson. we are in much worse shape. a crisisly do not have of that magnitude, but we are in much worse shake to deal that shape to deal with it then what came along years ago. guy: there is a recession
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indicator and it is good at predicting a recession coming down the pike towards us. we can put the chart up and show everybody. we are getting levels that start to predict a recession. is a recession in the u.s. a near-term risk? george: it is clearly a near-term risk. if we can't get trade negotiations result favorably come with weakening investment. given the political issues in the united states, there seems to be little appetite to get anything done. it will get -- be hard to get expansion done. with that kind of uncertainty economy, over the recession risks are going to elevate. if you get trade result -- resolved, then you can see risks diminish. i think what he was talking about was the fact that there
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was less central-bank ammunition to fight off any recession or financial crisis that we had in 2008. we started out from higher rates and we didn't have the level of balance sheet size that we do now. a lot of the actual economy muchde of that is in healthier shape. i am less worried about a fundamentally oriented -- balance sheets are strong, employment at historically high levels. the fundamental elements of the economy are good. if we have a recession, it won't be like 2000 and eight -- 2008 at all. we don't have the kind of leverage we had back then. if we don't get trade result, you will see disruptions and see a recession over the next couple of years. that is a risk we have to be attentive to. vonnie: when you gathered at the
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meetings, what are the types of , with that are attractive new ideas potentially? george: we are getting great ideas for many different sources what is interesting is in a period where we have volatility, it is just a fundamental precept of what we are going to be dealing with. the volatility usually good opportunities to invest. opportunities always appear and it is our job to take advantage of them when they do on behalf of our clients. it comes in various sources, whether in the mining sector. i happened be bullish on copper looking at the supply and demand. we will be insignificant deficit -- in significant deficits on copper which we need for building infrastructure. teck resources are attract -- resourcesrces -- tech
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are important to me. secular growers will have great 10 year growth horizons that are somewhat unparalleled. they have been selling off because of a worry about a month or a quarter. the semiconductor in holland is a tremendous monopoly player over the next years in terms of equipment fabrication processes will be unbeatable. alibaba in china is to center mediating -- to cente disintermediating. you can invest in companies around the world that become defensive and it becomes -- creates opportunities for those willing to wait longer. vonnie: we are not finished. we will continue this conversation. maris stays with later today, founder weighs in
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on u.s.-china trade talks. guy: let's get to the "first word news. kailey: president trump expected to sign an order today that will direct prioritizing on artificial intelligence research and development. an official says it will counter china's ambitions to dominate the sector. while the order does not outline funding goals, it will push ai training for the future workforce area a truck driver accused of killing 11 people and morning seven on eight attack on a synagogue has pleaded not guilty. he entered the plea in federal court today. a new indictment has 19 additional counts. crimes,lude hate obstructing religious beliefs, and using a firearm during crimes of violence. congressman walter jones has died.
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he was known for his voice and voting record within the gop. he was the only republican to vote against the tax overhaul. he said it would inflate the deficit. he also called his early support of the iraq war a mistake. jones had been absent since he september. entered hospice care last month. he was 76. theresa may trying to buy herself more time to renegotiate the brexit deal. she sent a letter to jeremy corbyn offering more talks after you proposed a february 26 deadline for her to win support for her deal. she is prompting parliament to have a say over what happens next issue cannot set and accord by late march. 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. we speak with the ceo of spirit airlines, ted
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christie. is he concerned about the prospect of another shutdown? this is bloomberg. ♪
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guy: live from london, i'm guy johnson. vonnie: live from new york, i'm vonnie quinn. -- abigailttle doolittle is here. >> major averages slightly higher. nasdaq up 3%. the doubt now higher. nasdaq had been out .6%. not seen the risk rally we are seeing in europe with the dax higher and other indexes. look at the shanghai composite in china come up 1.4%, the best
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day in three weeks after being closed for the lunar new year. small moves for the u.s.. looking at the 10 year yield, perhaps the us will follow europe and asia, up and bond selling off and pulling back. that could be an indication stocks might trade higher. hoping the nasdaq outperform to the major averages, let's look at movers including electronic arts, up 7% after massive volatility. they were down 13% and then up 21% combined tween thursday and friday. -- between thursday and friday. aipac legend could be competition for fortnight. buy, ofgraded up to a in 2019 haslysts fewer concerns.
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mattel, following the strengths of last week. at the nasdaq, while we have strength over the last year, we had a sideways trend, encouraging the down trend over the fourth quarter broken, similar to the dax. absolutely. let's talk about europe. uncertainty pulling down u.k. investments, the worst since the financial crisis. still with us is george maris. outsidehis is slightly but the u.k. is dealing with brexit and a slowdown in the continent is eye watering as well. why go abroad when you are a u.s. investor? lot of first of all, a those companies located in europe, whether the united kingdom or the continent, our
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global companies, whether siemens or glaxosmithkline. they're not just selling within europe. their sales are greater around the world and within europe. you have great companies and opportunities in europe that are attractive. if you look at the demand situation in europe, it is weak and continuing to weaken. we have had a raft of weak data coming out. we also saw data out of the united kingdom today, growth continuing to slow and perilously close to negative growth in a recession in the united kingdom. , theremerican investor are great companies to invest in. you want to make sure you invest in companies who have diversified revenue sources from a geographic perspective. guy: if you take a look at that and step back for a minute, many of the companies you mentioned have significant exposure into a
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chinese economy that is slowing quickly and dragging asian growth down with it. your growth, as you mentioned, is anemic at the moment. the only engine at this point is the united states. george: that is absolutely right. part of the reason you saw european shares rally today is because you get more construction of -- constructive talks. that is one of the issues europe has is the domestic consumption -- their own ability to generate growth is weak. as an american investor, if you dabble in europe, you want to dabble in companies that have their own unique growth characteristics or growth avenues around the world to invest in. one of the futures, given all the uncertainty in europe currently, is more and more home country bias among u.s. investors. the u.s. is a growing and looks
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like it will accelerate next year coming out of a weaker q4, especially if you get the governmental shutdown conversations to diminish. , theu get trade with china u.s. looks like a safer place to invest, especially if you have the issues happening within europe. clearly, brexit is a big overhang, but we cannot ignore the issues in italy, french -- france, germany. we have economic issues and it makes it a tougher place to invest and also in other places around the world. vonnie: one of the bigger funds you see is an overseas fund which has to incorporate securities. is it harder to pick countries where you see great growth potential in the shorter term? george: it is not. what is interesting is given the short-term focus of the markets right now -- we have a 24/7 news
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cycle. every since the financial crisis, markets are short-term and nervous and you can buy fantastic companies wherever they are located because there are long-term fundamental trends in their favor. i mentioned the mining companies a few minutes ago and the technology companies out there. there are great health care companies to invest in, no short of companies with which to invest. we have to be careful about navigating some of the macro economics. invest in companies that can surprise and do well despite difficult macro economic uncertainty. vonnie: what are your thoughts on the banking sector outside the u.s.? is when yousubishi are bullish on. george: banking sector outside the u.s. is compelling.
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evaluations are cheap and capital positions stronger than before. dividends are increasing. looking at yield curves outside the united states, europe has rates across the continental near zero and negative, saint in japan. china is not -- same in japan. with economic activity being weak and weakening, it is hard to generate fee income. or native -- orientated revenues are weak. you are not generating spread income or capital market fee activity and that makes it tougher
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guy: live from london, i'm guy johnson. vonnie: live from new york, i'm vonnie quinn. this is "bloomberg markets.". stocks plummeted. we are joined by our tech analyst. this is something we knew from apple and the guidance but it comes as a shock to get the official figures, right? it is. they are struggling with weakness in the region. a lot has to do with a weak economy and conditions. guy: do they have the wrong price points are the wrong product for china? john: that in my mind is the biggest issue. over time they have pushed up the price of the iphone and my feeling is they have really hit a wall in regions like china, where average incomes are quite
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low so people cannot afford the phones. looking ahead, i expect apple to push that low-end of the portfolio down a little bit. there is talk they may introduce , but that would be a move in the right direction. vonnie: what will competitors do to profit from this? is this market share that is going to some of the house, or is it just that the middle class hasn't arrived at that point yet that we achieve saturation for what the chinese in can afford? john: it is a good point. -- thing about china is apple is up against competition there. vivo, allhuawei, companies putting out great phones. when you have a raging trade war with china, you get nationalist sentiment rising up and does not
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work in apple's favor. they are doing what they need to do and what they can do, which is try and offset the currency inflation a bit to keep iphone prices stable or moving down a bit. really doing their best to market the iphone to retail stores there and the apple brand image. much,hank you very indeed. john butler from bloomberg intelligence. the ecb board and your group giving support. that is the euro group. that will go to the are piecing -- european council. this is bloomberg. ♪
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vonnie: live from new york, i'm vonnie quinn. guy: live from london, i'm guy johnson. this is "bloomberg markets." vonnie: your group finance minister agreeing to nominate ireland philipk
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main for the board seat. it will be vacated because his term is coming to an end. seats, one is the president of the ecb is currently mario draghi. beenp lane has long considered one who would play a role as having a whole career in academia and political economy and then in central banking. it looks like he will now be the next board member, which is an interesting decision. it will not be finalized until march and takes him out of another job running. guy: he is rocket science smart. the perfect job for him is to be the replacement for the chief economist on the board. it will be interesting to see how he handles that. what is interesting is the way he has been unopposed. this has been incredibly smooth
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for him to assume this role. it has to go to the council and parliament needs to get involved. it raises questions around the dynamics of the world place mario draghi. the fact that this has been so smooth many gives us about who could potentially be in the running and who wants the job. germany is critical in this area its angl angela merkel want to move back of the odds table and getting that position? that is what we move on to. it has been so smooth for peter lang. he is a rising star. forakes him out of running ecb president. he has definitely been talked about in those cycles. guy: so qualified for both.
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let's check in with "first word news. china accusing the u.s. of playing tricks on the eve of high-level trade talks. according to reuters, two american warships sailed through waters in the south geithner guests south china sea. a foreign ministry spokesman did not say whether the move would impact trade negotiations. they are expected to get underway tomorrow. president trump heads to el paso, texas to visit a campaign rally. a trump campaign advisor said the president sees the rally as it opportunity to reshape the debate around the proposed border wall. it will be held at the border fence to mexico. mike pompeo in hungry on the first leg of a five nation tour. he is talking about the concerns of growing tensions.
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you will highlight the presence of huawei in hungry. venezuela's administer made a surprise visit in india. he was trying to secure closer facingth opec producers harsh sanction. as the firstemerge customer to give the nations willingness to taper crude and cash. 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. congressional lawmakers working to avoid a second partial shutdown after border security funding talks meltdown over the weekend. we are joined by kevin cirilli, our chief washington correspondent. will there be more chances before friday? tell you the can
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full expectation is that lawmakers will negotiate this deal between now and friday. president trump headed to texas later this evening to deliver what is sure to be a doubling down of his critique along the u.s.-mexico border. shelby caught in the middle of all of this, the senate appropriations committee chairman, who has been working around the clock over the weekend to get to some type of deal. guy: is the still about the wall? is about thegely wall, but there are other more financial regulation matters attached to this, including a tax expander package. democrats united behind speaker pelosi, but the same battle lines and consistent battles that have been drawn for the past several weeks. republicans i spoke with are apprehensive of launching into
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another partial shutdown following the 35-day shutdown. the president at odds in terms of the political calculation. republican leadership apprehensive to dive into another partial shutdown. vonnie: can the resident afford to do this? he maintains he can and is speaking in el paso and will probably say the same thing. in reality, can he? he believes he can and his staff and administration officials believe they can. and you look at the polling how that impacts policy, particularly the forecasters in the next two and four years, independent voters largely blaming president trump for the last partial shutdown. look at the time, calendar, other items on the calendar that are coming up, whether it is the trip to vietnam, debt ceiling, or tictoc in terms of getting trade policy and ratified on
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usmca. when you shut down the government for 35 days and that becomes the dominant story out of washington, it makes it difficult for them to galvanize on other issues. the texas talk is due at 9:00 this evening. thank you to kevin cirilli. guy: one person paying attention to what is happening vis-a-vis the government talks will be the ceo of spirit airlines, ted christie. he will be talking to us next. this is bloomberg. ♪
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guy: live from london, i'm guy johnson. vonnie: and familiar, i'm vonnie quinn. this is "bloomberg markets." guy: let's turn our attention to spirit airlines, double share and profits. revenue growth to slow in the first quarter of your tech christie, the new york stock exchange. i want to ask you -- ted joins us from the new york stock exchange. i want to ask you -- it was more about can we add airplanes? demand has been strong and we are happy with that. broadly, one issue we
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saw last time around was with atc. are you concerned we will see as aterm damage caused result of what is happening here? could be a real problem if there is a long-term stoppage. it would be difficult to recover. i am optimistic that does not happen and we can remain focused and working with leaders to come up with a solution that helps the airline industry move forward. is pleased market with some of your recent financement. how would you carry through the year? ted: it was difficult to hear your question. vonnie: how you continue to carry through your promises in what will be a volatile year? ted: i cannot pick up on what you are saying.
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things are going ok. guy: can we talk a little about your decision midway through the year to renew your fleet? you have talked about taken the a320 family significant higher, but now you are talking about looking at the c-series. why would you go for a mixed fleet, what is the advantage? ted: we are looking at a mixed fleet if we can overcome the cost of complexity by writing efficient operations. we want to get the right price for the shareholders. guy: in terms of what you are seeing in fuel, what kind of hedging are you putting in place , how much volatility are you expecting in the key metric in your business this year? ted: fuel is trouble for the airline business. we are in a natural hedge and one of the most efficient in the
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industry. we can actually hedge cost of full as it rises and falls. vonnie: i hope you can hear me now. ted: it is very difficult to hear you. i'm sorry. vonnie: you are adding new routes, what are the medium terms for those potentially more routs? ted: i think you asked about new routes. vonnie: correct. ted: we are excited. we will announce austin and then raleigh-durham. this is a high-growth airline with lots of opportunity and we are excited to push that forward. u.s. --n you see the where do you see the u.s. consumer right now? do you see more concerned with the u.s. consumer? you are more when it comes to vacation roots. is that more about -- routes. is that more volatile? ted: did you ask about slowing?
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guy: how do you see consumer sentiment right now? ted: it is a very tough connection and of having a hard time with the connection. guy: we will leave it there. we apologize for the connection. that was ted christie, the ceo of spirit airlines joining us. vonnie: we will continue conversation on targets, trade, and the partial shutdown that could be potentially in the works. also "futures in focus." this is bloomberg. ♪
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guy: live from london, i'm guy johnson. vonnie: live from new york, i'm vonnie quinn. this is "bloomberg markets." guy: time for "futures in focus." the swiss franc had a crash last night. japan is out. we are joined now.
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let's deal with the issue of the crash last night. you get light liquidity overnight and currency bounce around all over the place. technology,l love but sometimes there are negative consequences. this will be one of them and it will not go away anytime soon. it will happen more and more often. what investors need to do is accept the fact that it will happen more often and instead of being afraid of them, be ready for them to have some idea on the table of what you want to implement so you can take advantage of commodities and stocks when they go on sale in the middle of the night rather than being afraid. guy: the problem with that is you end up getting stopped out. that can blow through most of
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your investment one way or the other. they wake up on a monday morning in europe and found that they have been out of their positions. -- yes,at have those you will stomped out of a position you are we had but i am saying if i want to buy something five percent lower and i have an order in, i should be happy with that order being triggered at 5% lower. without getting too much in the weeds, there are ways to reap benefits from these rather than be afraid of them. on should have stopwatches positions in the market. if you want to initiate and buy things cheaper, there is nothing wrong with having something below the market at 5%. guy: let's talk about the crude market. i am one where the next capitalist comes from and getting crude. we are moving around by the currency market.
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what is going on here? is it opec plus extending? how much is in the price? scott: we got off to a great start. a lot of what we had happened in the park of last year was because traders got behind $80 oil. that went horribly wrong in the market imploded around itself and you saw what happened to the equity markets in the last six weeks of last year. the damage has been done. you look at the chart and i say we will probably stay in this lower, slower, longer period. even if the china situation gets better, it will not change the imf and their position on global gdp. long as global gdp slows and
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the u.s. has supplied, the next catalyst for the outlook will be something like a geopolitical issue in the middle east. right now with supply issues and global growth issues, it will be hard for oil to get itself off the mat. guy: in terms of the domestic issues in the united states, what are you seeing in terms of problems there? clearly there is an issue with pipeline. any signs that will change anytime soon? scott: i don't think that will change. what we have to worry about is growth. that will be front and center. the china talk is getting old now. with everybody else falling down, the billion dollar question will be -- can the u.s. go it alone or how much will be slowing down affect the u.s.? we have the fed going dovish on us. the last marks after the fed went dovish was really good.
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there may be tumultuous times in the fixed income market that will take out -- that will eek out. u.s. and what the it does to the dollar and that may be the catalyst for the next big move and oil. guy: the dollar has been on a tear over the last few days. thank you very much. to a speechs go with us earlier into by. have a listen. >> i wasn't really surprised, maybe the way it played out was more abrupt than i would have expected to see. the fact of the matter was that the feds normalization -- fed's
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normalization of t was not in te data. where was the inflation? clear thatbecame there was not enough inflation or signal to justify and meanwhile, you have headwind facing the economy. continuing to raise rates was looking like a bad idea. >> was a possible to switch to cutting rates? >> of course. europe is looking problematic. china seems to be having a slowdown for reasons that have nothing to do with u.s. policy but it blows back to the u.s.. deteriorating
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environment, it is quite possible the fed will end up cutting rates. >> we surveyed cfos in the united states, and a majority believe a recession will happen in the next for years. is that something you see? >> i wouldn't be as definitive, but it seems likely. there seems to be an accumulation of smaller problems and the underlying backdrop is we have no good policy response. the fed can't cut rate very much. there is this close space if we are prepared to use -- fiscal space if we decide to use it. there are even odds we will have a recession. >> when you look back to the last crisis and compared to now, is the u.s. and the world and better soon -- shape to withstand the crisis? >> we are in were shape. we came in the last one with
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interest rates above zero and lots of room for interest rate cuts. we came into the last crisis with public debt substantially lower than it was now, which is not a big factor objectively but it is psychologically. we commit to the last crisis with remarkable leadership -- we came into the last crisis with remarkable leadership. our current treasury secretary is no hank paulson. we are in much worse shape and we don't have a crisis of that magnitude about to hit us. we are in much worse shape to deal with it then years ago. >> the recent imf report downgraded estimations for domestic growth. -- global growth. what is the biggest problem we see? >> one of them is china.
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i have been in the camp that has predicted a chinese crisis over inadequate consumption for a long time. it does seem to be gathering and getting -- getting closer to that point. the other is the euro area. there close to recessionary levels already. n speaking inkrugma to buy. time for the "stock of the hour." electronic arts showing legends is overshadowing what was a dismal earnings report. joining us is taylor riggs. finally starting to see competition. if you come into the terminal at today, up 16%.7% friday. a third straight day of gains and it has been a volatile year for them.
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analysts are saying this could be the first thing they have that could take on fortnight. fortnight' ng that was cut in half. so far, so good. it is speculative. that is leading to target raises. bankamerica with a price target of 110. jeffries raising their price target to $90 a share. electronic arts got 10 million users inc. engaged within 72 hours of the game being released . finally good performance after a tough year. fortnight is claim massive competitor but has a different business model. you get it for free and then pay for skins, etc. that is something the industry has not had to deal with. walk us through the impact of changing the model in the sector
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and how that will affect companies like ea. taylor: i will never remember -- forget when it set up for a night was a bigger competitor than hbo. they have 200 million registered users. electronic arts had 10 million within 72 hours of that recent gain. vonnie: electronic arts, the best performer in the s&p 500. there are other assets including the dollar, just above 97 in .erms of dollar index this is bloomberg. ♪
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. .
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>> 30 minutes the european day.
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i am guy johnson. vonnie: i am vonnie quinn and this is "bloomberg markets: european close." guy: where are we now? we have seen weakness today. the pound no exception. very weak data on the gp front. where trading toward the bottom and the range right now -- we are trading toward the bottom end of the range right now. we are down around 1.3% right now. this is part and parcel of the same story. we are seeing dollar strength continuing having a negative impact on crude. look at the charts. you will see the move happened at exactly the same time. , chinan equities returning to the


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