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tv   Bloomberg Markets European Close  Bloomberg  February 12, 2019 11:00am-12:00pm EST

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european trading day. from london, i am guy johnson. vonnie: from new york, i am a vonnie quinn. guy: let's talk about the markets and show you what is going on. a big divide across the english channel, and not about brexit, it is about the market story. the dow responding strongly to narrative intive the trade story. stocks having a solid day in europe today. part of that is the trade narrative and part of that is company --he german french company generating good deadlines. the dax is pushing a bit higher today. the ftse 100, though, lagging, on the up about .1%. industrials are leading the market lower today, adding as a drug. we saw a downgrade for the sector yesterday. nevertheless, this is a sector that is increasingly correlated to what is happening with the brexit.
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we are seeing a solid day for brent and wti on either side of the atlantic. brent trading up 2%, which means some of the big oil stocks, for instance, shell, our trading strongly. the other story and wanted to mention is that we continue to watch what is happening in spain. , the start of a vote, and a debate process. we will get the vote tomorrow on the spanish budget and it may be , depending on what pedro sanchez is going with, it might not pass. votes fromng on 13 the catalan independent government to pass that budget. the colleagues are less minded to start with the government, considering the trial of the 12 separatist leaders from catalan. vonnie: you mentioned brent, i will mention of the ti, up 2% as , up about 2%.
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s&p 500 up one point 2%, the other indices up around those levels. plenty of good stories today, including coty, because jeb is looking to a tender offer -- jab is looking to expand its stake in the company. the last earnings report is helping, and also the stock price is also down about 50%. has made an offer, and they might up the offer to get investors interested in increasing their shares. under armour started the session lower after a disappointing revenue, but however, it hasn't mariee -- it has done a inventory, and investors seem to be please about that. it is now up higher.
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guy: u.k. prime minister theresa may has updated parliament on the brexit talks. she talked earlier in the house of commons. >> we now need to hold our nerve to get the changes this house requires and deliver brexit on time. by getting the changes we need to the backstop, by providing workers rise, environmental role ofons, and by the parliament in the next phase of believe we can reach a deal the house will support. guy: emma chandra joins us now. theresa may is simply pushing the clock, and waiting for kind of a final big moment in this brexit process towards the end of march. >> that is certainly what a lot of lawmakers were saying today from several parties, including her own. certainly, there hasn't been much sign of progress, she may
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have gone back to brussels, she said she renegotiated the treaty, but there doesn't seem to be a huge. amount of urgency she may have slipped today, but it seems she said that she would is there should be a vote on the deal. head of business did not deny that the vote could come back after march 21, the au summit, eight days before brexit is due to happen. people have been credulous that this would go down on a midnight summit, greek-style summit, and for a while it looked like that would be the case. for example, we see germany increasingly getting involved, we see small countries, we have malta and cyprus all saying that a no-deal brexit would be catastrophic. if there will be any concession from the e.u., it would be a,
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small, and b, very late in the day. vonnie: we heard her saying that the us we heard the minister in the e.u. saying that we need to find a way to reassure the u.k., and we cannot accept the uk's demands. this island is in the trickiest position, because if not only doesal, the irish economy take a huge heads, the whole issue we have been talking about for two years, the irish border and how to avoid an irish border, ireland would have to have that fight with brussels. there has been a bit of to and from in recent weeks about whether there will be a border in the event of a no-deal brexit. the u.k. and ireland would have to avoid that, but it is clear that that could become the ease border in the event of a no-deal brexit and would have to be policed accordingly.
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guy: where are we and preparations? project after, who came up with that i have no idea, but you would have thought we could have come up with a better name. but in terms of no-deal brexit reparations, the u.k. is way behind in terms of preparations. is that an impediment to a no-deal brexit? emma: you could certainly argue that, that is the reason exit years for a long time have been calling on theresa may to strengthen her negotiating hand. things like will planes take off, it looks like that is sorted. airplanes will be able to fly. on finance, they have been bilateral agreements to keep the plumbing if you like, going, in the event of a no-deal brexit. likewise, the has just been announced that there will be a tunnel. the things that potentially would be catastrophic have been sorted out. but the big question is food supplies. the u.k. has said they would
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just wave in most of the trucks from the ports, but that is only one way. he will still have these blockages and traffic going back the other way, because it is unlikely that the e.u., and the au has made clear that it will ng in u.k. boats and trucks. theresa may was talking about medicines, that they are stockpiling medicines. she told patients today not to stockpile medicines, so that is where we are. guy: what your medicine cabinet looks like. ehank you very much indeed, mma ross-thomas. vonnie: it is pretty terrifying, he are being told by your prime minister that you shouldn't stockpile medicines. is it a guarantee that you will get medicines? has not affirmed with her he will support the deal on border security. we bring in our next guest.
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marty, we have apparently reached an agreement for billion --ike $4.6 one point $6 billion to be allocated to 55 miles of wall. >> well, the careful calling it wall. vonnie: this is true. what has this come down to her? >> it is obvious that the negotiators tried to craft a compromise allowing we will room on both sides for the democrats to say, we did not give donald trump a wall, but it is a structure. and i think it gives the trump administration the bandwidth to claim that they got the democrats to agree to some semblance of a barrier. is, whatal question does donald trump do? will he threaten a veto? it is interesting that he did not operate reject this compromise, which i think is a hopeful sign. but i do think the calculus in the white house now is, how do we respond?
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absolutely. and presumably, they will be looking at polling. trump got the blame for the first shutdown. the deal effectively seems to push donald trump into a corner, i.e., if you doesn't accept it, he will accept the blame. presumably they are aware of the polling from the first shutdown and they don't want to extrapolate that into the second one? marty: i wouldn't even say a little bit, he is absolutely in corner. if he rejects the deal, he is rejecting what his own republican party has crafted as a just compromise. and if there is a shutdown, it will be laid directly at his feet. ratings are aty the lowest of his presidency, based on the first shutdown, and he will own of the second one if he chooses to go there. i do think this is a real, and we overuse the term -- this is an inflection point for his presidency, for the next two years. onwill have to make a choice
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whether he wants to govern, or whether he wants to fight, and his nature is to fight. i think anything is possible here. vonnie: a headline just came out a few moments ago that raises an interesting possibility that -- democrat joe manchin said he would support the president creating an emergency for well-funded. you said he has to fight or govern. can he do both, make a deal and fight? marty: yes, in fact, a number of more levelheaded administration officials are advising trump to take the deal and declare his emergency. last night in el paso, he claimed the wall is going up. there are some people who would like to know where that is, but in his own narrative, he is able to say, we got a little bit from the democrats and i am going to pick up the rest through other funding. and with joe manchin, who is a maverick democrat, giving support to an emergency declaration, it gives him even more cover.
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guy: marty, i am curious as to the overlap between the border story and the trade story. if the president accepts this does thate border, give him more wiggle room when it comes to the trade story, i.e., to fight a bit harder, and vice versa? marty: actually, my thought is that throughout his presidency, president trump has been given off ramps to avoid taking extreme positions. shutdown,his full there were many chances along the way that he could have claimed a victory and moved past the shutdown. he didn't take them. just like in trade, if he does take this compromise, it may also -- he may see the benefits of getting a little less than what he wanted in order to declare victory on trade. so i think, in a perverse way, whatever happens on the shutdown
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can inform what happens on the trade talks. vonnie: marty schenker, our chief content officer. a reminder, we are expecting a cabinet meeting at 11:30 in there-- eastern, and if are any words from the president, we will bring you those. let's check in on the first word news. >> in madrid, the trial of separatist leaders gets underway . 12 defendants are being tried unilaterallyes in declaring catalonia's independence. the move was based on results of a secession referendum of that ignored a constitutional ban. unilaterally declaring catalonia's some of them face of decades in prison if found guilty of rebellion. trade talks between the u.s. and china are back underway in beijing and the white house says president trump wants to meet "veryresident xi jinping soon." every union could bring unofficial and to the trade war. president trump has put an double tariffs on $200 billion of imports from china if there deal.
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a retired astronaut, mark kelly, announced he is running to finish john mccain's last term in the senate. the 54-year-old is considered a top democrat recruit to challenge republican martha mexicali. it is expected to be -- martha csally. it is expected to be one of the most hotly contested races. davos powered by more than 2700 journalists and analysts in over 120 countries. -- global news, 24 hours a day, on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. vonnie: a student at mississippi valley state university, he is the fed chair is speaking at mississippi valley state university. he says the economy is good, but many are not experiencing prosperity yet. will keep an eye on his remarks to the students. you can also watch more at live go. this is bloomberg. ♪
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♪ vonnie: from new york, i am vonnie quinn. guy: and in london, i am guy johnson. this is "the european close." let us figure out what is going on with the dollar. here with the details is abigail doolittle. abigail: we are looking at a risk-on rally globally. take a look at the nasdaq 100, up 1.4%. european stocks are also revving. 2.6%,a, the nikkei is up best day of the year. so there is relief perhaps from investors around the world of that trade progress could be made this week, and that a government shutdown could perhaps be averted.
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crude oil trading higher, another risk asset and another segment of the risk asset silo. sector what is happening wise for the s&p 500, you will see lots of green. look at the map in the bloomberg , here is all the green. s&p 500 sector trading higher, financials, consumer discretionary, on the bottom is real estate. the fact that it is lower is actually in the idea that we sentiment.sk-on in terms of what is helping the nasdaq 100, the top performer, lululemon it is. trading higher in sympathy with under armour. take a look at these two stocks. under armour was all over the after disappointing first-quarter guidance, but they did beat estimates over all and reduced inventory. and then this stock did not go down. he utility.
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21%, you aren up saying that there a packed legends could beat out fortnight .he i don't understand the gaming trend, but investors seem to be lacking it quite a lot. vonnie: it is the battle royale format. hadfortnite, but now it is potential for apex too the market. it is time for your bloomberg business flash. coors is restating years of results after accounting errors. the company says there have been material weakness in its control over financial reporting. credit suisse has told some employees that they may lose their bonuses. afterws reportedly comes them bank lost money on a comedies financing deal last
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quarter, and one person has left over the issue. they declined to comment on the issues of the commodity trade. the investment bank will report results thursday. this mineral company posted results weaker than expected. mill in ontario caused a slowdown during a busy winter season. and anti-icinglt products used for treating roads and other services. that is your latest bloomberg business flash. guy, we certainly could do with a little bit about, and it is also starting to snow today. guy: yes, it is also chilly here. up next, we will be talking to our next guest, the international cio of fixed income at j.p. morgan asset management. in the last few minutes, we have seen a pop in the euro, jumping a bit higher. we have gone through 1.13 in the last couple of minutes.
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it could be on jay powell's comments, he is saying the u.s. economy is good. it may be chilly and in new york, but the u.s. economy is good. we talk about that next. this is bloomberg. ♪ is bloomberg. ♪
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♪ guy: live from london, i am guy johnson. vonnie: and from new york, i am vonnie quinn. this is "the european close: on bloomberg markets." guy: we just heard jay powell speaking to students at mississippi state university. among the many headlines, he said the u.s. economy is good. there is also talk of the fact that policy takes a while to work, and that he doesn't feel the probability of a recession is elevated. the international cio of j.p. morgan asset management joins us. the big question the market is
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grappling with, is the fed done? he talks about being data dependent. you listen to powell any think, is the fed done? he is talking about the probability of the recession being some way off, will we see more flip-flops from the fed as the data comes in and we get more volatility? is that what we are seeing here? how would you read this. iain: i wouldn't necessarily call it a flip-flop, they have been on a hiking cycle and the have come back onto a neutral stance. they want to look at the data. as he said, it will occur with lags, and then they will see they will continue the cycle. my guess is we could get a couple more hikes later this year or next year. guy: aren't yields to be pushing lower? are they overpriced. iain: depends where you look in the world. guy: ok, bond and treasury -- bu and treasury marketsnd.
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iain: i would say yes. the pessimism around europe is pretty elevated at the moment. the u.s. market is saying, if the fed will be patient, maybe they get another hike or so. ,0 year treasuries around 2.70 three years around the 3% mark, that is a big rally. vonnie: wasn't an anticipated move for the boj to cut? in -- itnk it mitch makes a huge amount of difference. last year we widened the band and people were talking about removing ups with of that. i think they would be better stepping back. rally, and ifonds so, by how much question mark what will be the catalyst? we are seeing equity markets rally today, and it is a quencher if it is because of the
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border deal, trade, or simply sentiment. iain: i think if you get good news on trade, he would see treasury yields move higher, but i don't think we will get to the levels of last year. the fixed income market part that will actually do well at would be the credit markets and emerging markets, where you still have considerable spreads and elevated yields could come lower. guy: where do you stand on the debate about the u.s. recession? plenty of people are saying that this is a near-term risk. if you look at the new york fed's economic recession predictor, we are up to 24 at the moment. it doesn't take much to push us higher than here, for people to say, this predictor is saying that it is an near-term risks. what do you say. iain: i think what the fed has done is take that near-term risk off the table. if they have continued on the tightening come at we would have been discussing recession, maybe. but the fact that we have stepped back -- the fact that
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they have stepped back, we are still only just above inflation, it is positive in real rates terms. this is an environment which extends the cycle out now stick around, iain: we will carry out the conversation after that. vonnie: we will also ask him about the fx, the dollar hitting a session at low and the euro and sterling rising today. check in u.s. markets now, indices higher by more than 1%. up is up 1.25%, the s&p 500 1.2% and the nasdaq up 1.3%. there isthis is bloomberg. ♪ calm in the volatility space.
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"all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. guy: less than 30 seconds until the end of regular trading this afternoon in europe. france with a solid day. the current supplier coming through in providing -- car
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supplier committed and providing solid numbers on that. housing stocks are the reason behind this. the up by 1/10 of 1%. dax trading strongly. the more positive narrative coming out when it comes to the trade story helping out. and i want to highlight this as well, political drama unfolding in madrid appeared we make it able -- in mardrid. we make it a vote on the budget tomorrow. and we have some breaking news here, another reason why we are focusing on the spanish market. this relates to the cocoas we have been talking about. so what we are seeing is that they will skip the call option. which has not happened before. these have a call option after five years, normally that five-year call is taken. this temer on it is not going to
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be. we will come back and we will talk about that in more detail. paul dobson will join us to give us insight. and what we're seeing in terms of individual names. the free organization is the wider narrative on this giant industrial. michelin up by 13%. and we talked about gucci, gapping lower, than bouncing back. and a quick look at the volume. quick update on how that looks. light onhe picture, volume toward the back end of the session. and what we saw yesterday confirms the positive moves we have seen today. that is a look at the european close. says it will- exercise those options. when it is right to do so.
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probably giving the market more confidence in the bank. is at a dollar index session low, down a quarter of a percent. stronger,rrencies are including the euro and the pound sterling. the 10 year yield is at 2.68%. a little bit of selling in the treasury market. obviously, the rally has continued for stocks. and crude oil has been paring gains for most of the session come up 1.6%. opec considering another cut. and we have the macro movers. 2.6%.e the nikkei, up probably on a stronger yen today. and in brazil, debating tightening measures this week. for the measure, vespa is rallying. and the oil currencies, as it can take my they are also getting some steam from the hydrocarbons today.
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guy: back to the breaking news. santander deciding to skip calling on the call. of thee riskier end big e have been talking about. paul dobson -- end is what we have been talking about. paul dobson is joining us. tell us why they have not decided to do this and what the implications are. they have the right >> -- >> they have the right, but not the obligation. what it has chosen to do is carry on with the existing securities. that is because the interest rate it is paying on them are lower than what they would be if the refinance them in the market and this moment. that kind of goes against the standard. usually, the investors have the understanding, a gentleman's agreement, that they would be
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about back. -- be bought back. but they are saving money for their shareholders. the ceo talked about the equity holders, the number of people who hold the bonds is fewer, they should be happier. the bank will be happier. they will be saving millions a year. good news for the shareholders. different preside -- different standard in the market. investors will think twice about their assumptions that have been priced in. vonnie: are they doing this in order to send a signal? does it need to do this in order for investors and for shareholders and ordinary depositors to hold confidence in the bank? paul: it was not under particular pressure. it is a reasonably strong credit. the last time there was a similar event going on in 2008,
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when deutsche bank decided not to call on bonds in a similar way, but that was a totally different environment. this is more about saving money. the with a investors have flared their nostrils about is the communication was not transparent. talkometimes they would about selling the market, but investors are kind of expecting that they would have had more comfortable communication earlier on. guy: let me join in iain. on this, but more broadly what does this send into the market, the signals? how will he change the way this part of the market functions? iain: it is highlighting you need to be aware of what you are buying. when you look at these, you need to find out what the actual structures are, what happens at call date, what level are you getting close call, are you going to see a step up?
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and then if you are not going to see that, there are implications. this may not be the first one out there, or mailing one out there i should say. vonnie: the adr dropped off of that to flat. santander trading in the u.s. thanks to paul dobson. we will continue with iain. the 10 year yield in the u.s., is is so attached to the german bund yield that it will not actually trade on its own or take a different direction unless it can break that, you know, it can break that connection? iain: i do not think so. as we saw last year, we had an environment where treasury yields moved to hire and that was not the case for the german bunds. you will be looking at the economy in europe, what is happening in the u.s., and that
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will be the main driver of yields in both areas. vonnie: what are you doing i jpmorgan international -- at jpmorgan international, are you looking at various bonds in all countries? iain: you want to look at the local market. i have been a little bit surprised by how well the dollar has done post the fed announcement. i think that maybe the u.s., relative to other markets, looks reasonable. but there is an opportunity, that if we get good news around trade, we get a patient re the next six months -- fed the next six months, then other currencies can do well. guy: what is happening on the periphery of europe? we have disturbances in italy and spain, yet we continue to see strong demand when it comes to the long data bonds. we fell the big order being built up around the bcp 30's. is that rational, given what is
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happening at the moment? we have political instability, so is this the right call? iain: there is a grab for yield going on. we have gone through some of the real political noise, if you look at the deficit in italy, where over that at the moment. and some stuff going on with spain at the moment, the elections denied. but people immediately. -- need yield. we have missed going into well of next year. we have seen it, people need yield and they will go long. guy: have we moved beyond and come up? did that era and in the united states? it never ended here. iain: it ended because you could get yield on cash. depending on which cash instrument you are looking at. but you have germany at negative.
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guy: and -- iain: you need to be looking at other places to get a positive return. guy: how does that change? vonnie: go ahead. change? does that iain: i think that either way that changes. you need to see the economic data got. pick up. that is not the case. across the eurozone, it is going down. maybe that is a reason they are getting support. but for the time being it looks like we have low yields to stay in europe, which means the -- income continues. guy: iain, thank you. vonnie: now bloomberg first word news. courtney: senate majority leader mitch mcconnell is praising appropriators for reaching a tentative border security deal that funds new barriers and
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finishes the remaining spending bills needed to get the government-funded. >> as waste become our colleagues -- as we speak, our colleagues are working on this deal and we hope the senate can act on this legislation in short order. courtney: bloomberg has learned that president trump has not decided yet if you will -- if he was up with a bipartisan deal. too says it will respond russia on a cold war treaty. speaking in brussels, said attorney general jen storm berg urged russia to return to confines in the intermediate range and forces treaty that it agreed to bilaterally with the u.s. in 1987. the pentagon believes the ground fire cruise missiles a russia could give moscow the ability to launch a nuclear strike in europe with little or no notice. and the united nations's refugee agency says it has noticed a
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surge and people fleeing south sudan. the country has been gripped by violent demonstrations since december. the yuan -- un high commissioner says many people have fled in recent days and just last week the yuan envoy said that violence has diminished there greatly, since a peace agreement was signed in september. 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'm courtney donohoe. this is bloomberg. guy: thank you. we are coming through to the end of the european session. we have been through the auction. we saw a little bit of a for the ftse -- dip the ftse 100. and some house builders getting knocked the lower. -- knocked lower. if you are leaving the trading desk and heading home, you can
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continue with bloomberg's coverage on digital radio in the london area. "the cable" show is coming up with the jon ferro in new york, i will be in london. you can also find that on all your bloomberg devices. this is bloomberg. ♪
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guy: live from london, i'm guy johnson. vonnie: and in new york, i'm vonnie quinn. this is the "european close" on "bloomberg markets." guy: we will turn our attention to the car sector. nissan has cut their forecast for the year. our bloomberg is detroit borough chief. -- bureau chief.
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how did the arrest of the ceo did the subsequent discovery in the books affect these numbers? david: it will not hurt their profit per se. the charge is not what is really hammering their profits. they are having operational issues. that is more interesting it is sort of contributes to the hot mess we saw that is dragging the shares down, because it looks like there is a bit of a smoking gun in terms of what the japanese authorities were looking at. they have focused on the subject of deferred pay and is the company was hiding money that carlos ghosn was not supposed to get and differing it into the future, which both sides argue that there was a deal on the carlos ghosn side, and they were hiding things on the prosecutor's side, so that will need to be ironed out. and you saw the profit forecast that you just referred to, they guided the number of vehicles they are going to sell in the
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next fiscal year will be down by 3000 units globally, that is a big hit. and you look at where it is, it will probably be in the u.s., where they have been struggling. the chinese market has been tough on everybody. the two major markets, nissan will have trouble keeping their volume up, and that will take a hit to the operating profit into that is where most of this is. the existingive japanese management team a really tough time. likee: do controversies this cause people not to purchase certain brands of cars? we had the mechanical and other types of errors from various carmakers over the years, and that is have an impact, but will something like this? david: i do not think it will affect the many consumers. car buyers may or may not pay attention to the legal things going on with carlos ghosn. look, if the company is in serious crisis, if it is related
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to safety it has an impact, and is causing some people not to buy the stock. because there really is, now with pressure on japanese management to turn the company around, with carlos ghosn out of the is causing some people not to picture, there isn as to who will run the company? will the alliance stick together? and will you still have close cooperation-- close that will work for the company's? ies? clearly, the idea of a full merger precipitated a lot of the crisis that has gone on. so, will the marriage survive? and assuming it does, how close will it be? those are the questions investors have. and when basic operations are not doing well, everybody will just flee the stock. guy: can i give it to michelin out of france.
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up on the cac 40. one reason why it had good numbers was it has really good pricing in the u.s. right now. can i take anything away from that about what is happening in the u.s. car market? doesres are selling well, that mean people are keeping their cars for longer? does it mean the market is buoyant? i am curious how to take away a tire manufacturer having a good day? david: generally speaking, people have been keeping their cars longer because the quality is a lot better. the market has, the u.s. market is very strong and healthy, but it has been coming down. i think what you may be seeing is new vehicle prices have been going up for some time. one thing that drove general motors' good day was record prices of an average of $36,000 a vehicle. that is good if you are a shareholder, not good if you are
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trying to buy something in the market. you have more used vehicles being bought, people are holding on to their cars longer. so the macro dynamics for the tire companies, yes, if people keep their cars longer, they are not burning through those leases and they need to buy tires. that could be part of the dynamic. i think that you are onto something, but this is more of a big picture thing. guy: it is interesting to see the big picture. detroit on what is happening in the auto sector. the big macro story, what has been happening with the trade talks. vonnie: time for our stock of the hour. under armour one of the best performers in the s&p 500 today. but it did not start that way. kailey leinz is here with more. today. price action the reported results this morning. pretty good.
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nine cents a share, higher than the estimates. gross margins beating expectations at 45%. then the earnings call started. and you can see in the bloomberg terminal, this is sharing with -- showing what the shares did today. they were disappointing on afford guidance. first-quarter revenue was supposed to be flat or slightly downward, they thought it would go up 2% in the quarter. shares back up again and investors seem to be focusing on the positives, one of which is the inventory drawdown. inventories down 12% this quarter, now at $1 billion. the lowest it has been in two years. inventory is key to the turnaround strategy, they are focusing on products that sell better, so less discounting and that results in their profit beat this quarter, so they are being rewarded for that and less so punished for their guidance. guy: north american sales have been sluggish.
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did the narrative change this quarter? kailey: no, north american sales were down 6% and contrast that with international sales, which were up 24%. in asia, up 35%. north america has been weak for them and the first quarter of revenue guidance i mentioned, the reason they say it flat to down is because of north america. sales could drop further next quarter. still a problem area for them domestically. vonnie: coming up, it is our global battle of the charts. this is bloomberg. ♪
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vonnie: it is time for our global battle of the charts. you can see them on the bloomberg by running gtv . here's jessica summers. >> ahead of the inventory report tomorrow, i wanted to give you a
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preview focusing on one data point. we are looking at crude import into the u.s. from saudi arabia. we can see they have been dropping consistently since november, sloping downward. saudi arabia came out and said that they will be actually cutting their oil output further this month, meaning we should see less oil flowing into the u.s.. and another reason we should see imports lower than this, is there will be a widespread between brent and wti. pay attention to the import levels tomorrow. if we see a decline, it will be bullish. find this chart at dtv -- g tv . vonnie: excellent. this is the first time we have shown a chart on this. guy? guy: i have a great chart. i was trying to figure out a way to talk about the shutdown and the impact that is having and how to relate it back into what is happening with the markets. so, earlier on we saw the small
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business index coming out and what i have in the white line is the optimism index. this has been hit hard by the shutdown we have seen coming out of washington, which has really ripped into the small businesses and sme's. the optimism index has been dropping sharply as of late. but what we have seen in the russell is that the russell 2000 has bounced back. so, which one is the lead indicator and which one will be following? theoretically, if we do not get a government shutdown, maybe the optimism index will bounce back and the russell moves higher. these are pretty correlated on a regular basis. fall,t continues to because we are talking about a recession, the russell could be in the wrong place. we have this juncture, we have the russell moving higher, the optimism index moving lower, so one of them will end up proving
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wrong it will be bouncing back in the opposite direction. it will be fascinating to see which one that is. vonnie: so, i am thrilled that to talk about the optimism index. this is phenomenal. that is all the more reason why it makes it so much more difficult to say i am sorry, but jessica summers is the winner today. one of these days, i promise, guy. "balance of power" is next. this is bloomberg. ♪
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david: from bloomberg world headquarters in new york, i'm david westin. welcome to "balance of power," where the world of politics
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meets the world of business. kevin brief today, cirilli from the white house on the tentative deal to fund the government. and shawn on trade negotiations with china. and from london, theresa may's continuing quest for brexit. we are waiting with a beating breath -- bated breath to see if the president will go along with this deal. kevin: still no word, but he has convened an all caps at a meeting at the white house. vice president making his way here, along with virtually every cabinet official. it comes following the tentative agreement that was reached last $1.7 on capitol hill, of billion to increase 55 miles worth of fencing on the u.s. border with mexico, as well as an additional $1 billion for humanitarian aid and other factions. we were talking about the number of

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