tv Bloomberg Markets Americas Bloomberg March 1, 2019 10:00am-11:01am EST
10:00 a.m., 3:00 p.m. and london. from new york, i'm vonnie quinn. guy: and from london, i'm guy johnson. welcome to "bloomberg markets." vonnie: we have breaking economic data. getting isn manufacturing data missing estimates by a little bit. 54.2 is the headline number of the market was looking for. employment came in at 52.3. miss.as a big mess -- a second month under 50. of estimateshy with ism manufacturing. sentiment figures, coming at 108
.5. let's look at markets. we are getting a nice balance -- a nice balance -- a nice bounce. gas is up 21%. ist locker is up 8% and ebay undertaking strategic review. walgreens is the worst performer in the s&p 500. guy: let's talk about what the market is doing. it is fascinating the market is badring the bat data -- the
data. the good data came out of china. bottoming down in the chinese data. in see that reflected economic factors around the world. 2.2%.i 300 up by a very positive reaction to the positive data. european data, the cpi number not very good. there is no inflation at the core level in europe. the euro-dollar is trading higher, despite the fact we have had horrible data. the market is focusing on the positives and not the negatives. vonnie: let's get back to the economic data.
also, some federal reserve comments. carl, let's go through this morning's data. overall, not that terrible. confidence is down a little bit. >> we have gotten spoiled from last year's meetings approaching -- we haveeeting gone split from last year's rea dings. surprised to be see cooling in the survey because we are moving down from somethingh in 2018 to in the mid-2% territory. things like production surveys should cool moderately, but we are seeing more resistance. guy: when we had that really december retail sales
numbers, everyone thought that was a fluke. but maybe that wasn't a fluke. and you break down expenditure for the u.k. -- the u.s. consumer, it doesn't look good. is the u.s. consumer rolling over here? >> i don't think that is the case. those retail sales numbers are talking about our key source data for this consumption data this morning. i suppose there was a mistake in the retail sales number. if there was a mistake, that would be directly transmitted into the consumer spending numbers as well. i don't think it was a mistake, but we have lots of idiosyncrasies to contend with in december, mark your now, government shutdown, and even the collection of the data was by the government shutdown. when you are serving -- when
you're surveying economic data, you are never looking at the entire population. but we can see is green shoots consumer spending is on a solid trajectory heading into the later part of this year. household income growth is very solid. the savings rate spiked in december. and we saw consumer confidence tank at the same time. already, we're seeing metrics like consumer sentiment and consumer confidence earlier this week starting to move in a more favorable direction, so we are not at the highs of 2018, but there is a positive, warming happening, and it is a solid omen that consumers will re-take the growth mantle for the u.s. economy in the first half of 2019. vonnie: january income sales
fell month over month. carl: we need to look beneath the surface. didch company in california a special dividend in december, leading to a dramatic increase in household income. that gets washed out in january. if we want the real story, we have to look at the wage data. .5%.we see that is well north of the rate of inflation, and that tells you consumers are in a positive territory. going back to a theme j. powell hit on, we have strong consumer dynamics, and that will largely insulate the u.s. economy from these external headwinds. thoseet's talk about internal headwinds. i am here is to get your take him of the ecb does next.
we saw cpi coming in at 1%. ecb is struggling to get the core number moving. it has struggled to do that. this is the last piece of major data before next week's ecb meeting. the ecbo early to see pull the trigger on further stimulus? carl: it is too early for additional stimulus. that being said, you know, forecasters are looking at the potential timing of an eventual rate increase, and that is starting to drift a little later. we should not be particularly surprised to see low-inflation, or disappointing inflation result only know that growth was weak and disappointing, and worker's wages or not particularly inflated or robust over that period.
inflation is a lagging indicator telling us what happened in the economy several quarters earlier. when we look several quarters earlier in europe, the news was in particularly compelling for a solid economic picture. vonnie: carl, let's leave it there. by our analyst live from st. louis. let's look at china. we know there will be a meeting between president trump and xi in december. we don't know what the agreement will be. tories takenf the off in order -- some of the tariffs be taken off in order to rally more? had a we need -- we have lot of negotiations over the past year surrounding the trade dispute.
find by bothhing parties that say, here is the path forward. here is what the trade deal will look like in the coming years. but we are agreeing on these key points. the market is hoping that in the next couple of weeks, we will get there. vonnie: this rally we have had in january and february have been quite phenomenal, with all and wasonsidered volatility being extremely low. rebounding orkets are we in a period of digestion here? peter: coming into the year, there were a lot of headwinds the market was contending with. there was uncertainty about central-bank policy in the united states, and uncertainty about the data coming out, and the trade and brexit concerns. in the past few weeks, we have seen some of those concerns ease. we had the fourth quarter gdp
data. -- it came inly better than expected in trade talks are going well. and we are heading towards the brexit deadline march 29. that is likely to be kicked down the road until late spring, early summer. marketetting the briefing room to move higher. there does seem to the two schools of thought and the administration -- pw ministry be two- there seems to schools of thought pw administration. theme issts a detailed taking place. why won't the market -- the
rally this deal will be lightweight and not be enforceable over the long-term it won't change the narrative. does the nature of the deal matter? peter: it certainly does matter. i think there is a number of ways 20 interpret what is coming out of the administration. we have alot of -- lot of fill in the blanks going on. a trade deal -- illegitimate trade deal will take -- a legitimate trade deal will take some time. even with china, it will take time for us to get to a comprehensive trade agreement. what the administration is centering on his having a framework, a path forward, to
filling in those details over the next couple of years. that is what is important to the ministries and as a whole. and second -- that is what is important to the administration as a whole. and second, on the enforcement side, u.s. and china are trying to figure out a middle ground. coming back to vonnie's question, is that enough to repel the s&p significantly above the 2000 level we have now? the hesitation must become a you know what? be, youesitation must know what? we have a pause. peter: the markets have been rallying on the sentiment that a deal would be done, right? we have had a lot of market moving ahead of the potential
for a trade deal. the way the deal is laid out in the details surrounding the trade deal, whether that leaves us to tariffs being removed, that is one of the things that is sitting out there, the potential that maybe something could fall apart. maybe the negotiations don't go as well. away, and thealk tariffs currently out there could rise even higher, and that is a risk to the market. if we have a framework that --gests those tories may those tariffs may be reduced, they -- that could make the market rise further. vonnie: some kind of massive dividend shift in order to get a stock to move. that has been what is moving the s&p 500 over the last several months? peter: the markets are looking for some sort of catalyst to
drive activity higher. we are in a period where we had great earnings growth last year. this year, we are expecting earnings growth to be not as high. and markets are looking around for the next driver. you will see these individual companies's stories and trying to piece through the broader macro stories. our broad view on the markets is growth, even though we are seeing it slow globally. think some of the headwinds moving markets higher are coming off. i would say the fundamental basics for prices moving higher are there. vonnie: peter, thank you. our thanks to peter, global researcher for wells fargo coming to us from st. louis. guy: let's go to kailey leinz.
kailey: u.s. officials are preparing a final trade show between president trump and xi jinping. bloomberg has learned administration is considering a summit between the two leaders mid-march. there is still a debate in washington whether to push china to make more concessions. president is claiming his relationship with north korea's kim jong-un is very good, despite the collapse of the summit in hanoi, vietnam. president trump did not address the pushback from north korea, which disputed his account for why the summit fell apart. prime minister benjamin netanyahu in israel called it an president witchhunt. the general says netanyahu will be charged for -- will be indicted for bribery. and billionaire casino mogul sheldon edison has cancer and
has not been to work since december. he is dealing with side effects from the medication he is taking from his cancer. he is 85. global news 24 hours a day on air and on tictoc on twitter, -- justin trudeau has shuffled his cabinet. resigned last month. she was moved after testifying against the government for helping a quebec company with a legal issue. the government insists it had -- he did nothing wrong. global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg. guy? guy: thank you very much indeed. coming up later in the hour, we will hear the highlights of bloomberg's conversation with bill gross as he retires.
♪ guy: live from london, i'm guy johnson. vonnie: live from new york, i'm bicycling. this is "bloomberg markets." there seeing a bounce for first trading day in march. here is abigail doolittle. dow,il: take a look at the excuse me, the s&p 500 and the nasdaq, up a little more than half a percent. the first update in four. the bulls really trying to take charge. that started in china. .9%.ax is up 9% -- is up
relative of coming off the hi, let's look at the chart in the bloomberg that everyone is talking about. this is the one year range of the s&p 500 and buyers and sellers got overexcited at certain periods of time. it is going to be interesting to see resistance caps off as investors and traders pay attention to valuations. more than 15 times, it was trailing 12 month of earnings. it will be important to watch the level. seems to be holding right now. as for what is helping the s&p 500 on the day, we have big gainers on the day. analysts were happy. sorona up 8%.
beat is a -- the view there and foot locker had a very strong quarter. sales are up. quite the expectations. guy: in europe, we are seeing the chinese story pricing into the european market. the dax is a performing significantly, up .3% more than other markets around europe. the reason is the auto parts. the car sector is having a much better day. two reasons for this, one is expectation going from a trade war to a trade thaw. and then we saw the china numbers coming through strongly. that data helping the automakers out as well, so i positive day for the dax.
♪ vonnie: warren buffett's letter to shareholders says he is parting ways with one of the most well-known accounting metrics. here are how etf's are affected. why is he parting ways? ones is one of the biggest for value investing. att book value is it looks the difference between assets and liabilities and determines if the stock is cheap or not. uses saying, we should not book value anymore. --h value doesn't pick up book value doesn't pick up on the tangible value. he thinks it is disconnected
from the economic realities. guy: weiss is important to the etf universe? that's why is this important to the etf universe? >> even though value has been underperforming, it is not stopped investors from pouring into its value. -- e is an into almost looking to not have book value in a value etf would be hard finding that. vonnie: if they don't want book value, warren buffett at this point, how does that look? >> there are only four in the universe. one looks at enterprise value. if you want to get away from book value, there are other ways to do that. vonnie: thank you.
comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers.
with kailey leinz. kailey: another democrat is into the race for the white house. jay inslee is launching his bid in seattle, mixing his liberal record with emphasis on climate change. calls foragon plan troops to afghanistan in three to five years. the offer is being in the form of peace talks with the taliban. it calls for reducing the number of americans from 14,000 to half of that. in canada, justin trudeau's liberal party is still behind him, for now. his former attorney general in the him of meddling election. justin trudeau says he has done nothing wrong. warns goldman sachs could get find is more
than $9 billion. says -- om citi the scandal involves the firm raising money for development fund. global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg. vonnie? vonnie: kailey, thank you. bill gross retires today. he sat down with erik schatzker for a discussion. includese topics alexandria ocasio-cortez. and ishe is a fresh face like her courage. obviously, i am more inclined to think about health care from the standpoint of of theing the universe
population to receive it. a common sense observer would have to tell -- would have to know that it takes a long time. but yeah, i think health care has to be a critical question --mand it is something where a critical question, and it is something where they will make that known at the ballot box. erik: you admire her courage. do you admire her ideas about health care or beyond? example,ree that, for taxes on the wealthy need to be higher so the government can act
as more of a redistribution area -- redistributionary actor? evil,it is an unnecessary if you want to call it that. capitalism has proven to be the most successful system in the world. it is just a question of the balance, what should the tax rate be? erik: what should it be? bill: it should be higher than what it is. it should not be where it was in the kennedy era, but it should be higher. 70% at margin? bill: no, i'm not in that category. i think trump took it too far. and we need some balance. maybe he should be in the form of a larger deficit. maybe you don't have to increase tax rates. maybe you can keep the engine
going by keeping tax rates where they are. that they have to be -- but they have to be -- but there has to agingincentive for the middle-class, or else, you know, just like global warming, you see the opioid crisis command that is a function, i'm sure of nothing to do, no benefits. what else? what else what that person do, but do drugs? that is a scary thought. balances,nomic system benefits, as well as continues -- four people and
-- for people and organizations who want to succeed. butyou need to have that, you need to have the other side. you need to balance the benefits so things don't happen. but they will happen. it is just a question of time. just like global warming. it will happen. pimlico cofounder in conversation with erik schatzker. you can catch the full conversation tonight. vonnie: all right. it is interesting to hear everything he has to say. pretty phenomenal interview, talking about his own record, his own time in decades in finance, and his diagnosis with asp burgers syndrome -- asperger
autos. tesla is -- elon musk is closing physical stores and warning the company will not make a profit in the first quarter. is for its group jaguar units. and tesla. with elon he talked about closing stores. do we know how many? >> this is the third time that elon musk is doing another round of job cuts. in the past, he has given a percent figure with closings, but is not elaborating on how many people. he sent an email to employees talking about significant reductions of sales and marketing spending related to the strategy of going to online ordering only. the idea that bringing those costs down on the sales and
marketing side will enable them to offer a $35,000 version of the model 3 for the first time. he said he was going to offer one at that price point. that was long awaited and a big development as the ending of the physical sales strategy. ay: craig, if they sell $35,000 car, does tesla blues its premium payload -- just tesla lose its premium payload? craig: that analysts raising that point that there is a concern of the deterioration in the brand. i wonder if that maybe a concern that it is may be overblown. this is a company that has developed a huge following. people are willing to pay a ton of money for these cars. they have been selling these model 3's for $60,000. i think there is a lot of value
in the brand. a big following for the company. that may help them. it is a question of whether or not they have a breakeven point that is above that $35,000 figure? that maybe playing into concerns today. vonnie: no question that tesla is doing amazing things, not just in the world of autos. is there a point that even some say,s diehard supporters this is at the carmaker for me? craig: that will be an issue in the coming years where you have a lot of entries from the german carmakers. you have ford bringing out a performance suv that is electric. you general motors talking about more than a dozen electric vehicles over the next couple of years. and so, there will be a lot more competition. iso think the competition fairly far behind, so they do have quite a head start.
but that will be an issue in the future. there is a sort of question about how much cross-shopping will go on with some of the other models that you alluded to. likely? likely is craig: i think with the first quarter, there is a lot of concern about one-time charges, -- will headcounts well containing one-time charge. there is going to be this disconnect of how many cars they are producing versus how many they are selling. all of that combined will lead to a likely loss for the first quarter. but in the second quarter, they will have a lot more of those deliveries to markets outside of the u.s. thethere is a question with
more you are selling these cheaper versions of the model 3, how much does that pinch your margins and you know, drop on profitability in the second quarter and beyond? vonnie: let's turn to takata. bought jaguar. it was the crown jewel for a long time. they are looking to do something. craig: they are looking at options for jaguar and land rover. it is struggling and brexit is a huge concern for them. they are doing significant job cuts in the u.k., but also china is aerobic issue, and it is a story for the broader industry where a few years ago, you could sell as many suv's as you wanted in that market, and suddenly, you have seen a real deterioration in demand and
concerns about economic growth and disability in the auto market. so you have seen jaguar and land rover has serious issues there. you have seen that with ford and fiat chrysler as well. you think jeep would catch on, of all brands, but they had been struggling, so it is a difficult situation for jaguar, land rover, and the entire industry. long to is he taking so make this decision, and if this were about diesel, land rover did not offer a petrol engine, and that was a huge problem in the european market. craig: that is a great point. the regulatory structure in europe is also a huge problem for the european carmakers. diesel engineing
certified under stricter parameters that have been put in place in the last eight months have caused serious delays, and hasn't helped matters. but they are a company that a few years ago, to the point earlier with the crown jewel, i think tata got a lot of credit of what they did with jaguar and land rover, turning it into a company that was doing quite well for a time, so you're going to have this reluctance where you do see the urgent need to turn things around, but you are going to be choosy about how you go about doing that, whether it is selling a stake, or wanting to maintain control, self that will play a part for tata for them to want to hold on to land rover and jaguar, and the are pushing back the idea to get rid of it entirely. valuations kind of will top out adobe looking for? tata be looking for.
tata be looking for? craig: it is too soon to tell. after that $4 billion write-down, it is a bit of a more attractive asset. it is definitely also kind of an iffy time. you may not see a lot of action on this front until brexit resolves because it will have huge applications for land rover and abhor and how they will be valued -- land rover and jaguar in how they will be valued. guy: it is hard to see the valuation being in this dry frame and the other engineering story. these businesses are going generationalsive
shift. i'm trying to understand, how you value a car company right now? and landth jaguar rover, on the jaguar side, they have issues where they have more dependence on diesel. land rover is a hugely valuable suv franchise. that is on the other side of the ledger. but you also just have them on the jaguar side, you have a bit of sharing up suv platforms, where they are bringing crossover market as well. segment wise, they are playing in the right spots. and that is valuable. you also have a bit of a tech play, where they are one of the partners for waymo. i don't think they have a ton of value from their own technological perspective, but
that will be a name to watch as well where waymo has partnered with fiat chrysler and jaguar/land rover on a contract manufacturing of acquiring suv's , and equipping them with their self-driving technology. and so, there could be some space to watch their for a deeper partnership -- space to watch there 40 taper partnership. it is -- and so, there could be some space to watch there for a deeper partnership. vonnie: craig, thank you. be sure to take out the latest issue of "bloomberg businessweek," featuring a special edition on the auto industry. guy: fascinating. let's get a bloomberg business flash. we will stay with a similar thing. some of the biggest business stories we are watching. if you want to buy a new car in
beijing, you have to be the odds. it is part of china's plan to cut down on pollution. the story is in this latest issue of "bloomberg businessweek." ♪ >> beijing says its air quality is getting better. still, it is one of the world's most polluted cities. since 2011, the government has been using a lottery to restrict the number of new cars registered each year. and that number has been shrinking from 240,000 vehicles a year to 100,000. only 30,000 of those will be gasoline-powered. paul this in a city of roughly 21 million people. but when the lottery to buy a car is just the start. beijing restricts the use of gas-powered cars to certain days of the week determined by the license plate number. many beijing residents tried to systemsystem -- beat the
by registering their cars outside of the city, the government caught on. now cars without local licenses are allowed to be driven in beijing for just 12 weeks a year. guy: in london, we had pretty congestion as well. a story worth reading and no quote bloomberg businessweek." in london, this is bloomberg. ♪
♪ guy: live from london, i'm guy johnson. vonnie: and from new york, i'm vonnie quinn. this is "bloomberg markets." guy: time for futures in focus. we often see an equity market selloff develop. the s&p is still up, but it is below 2800, and we have seen a selloff into the oil market as well. maybe we need to put these two things together. everything felt risk on
earlier on. scott: with the oil market, it is odd to see how opec came out saying they were tightening supply, so with this pullback within the last few minutes, it is surprising. we thought it would be higher with more push to the upside. right now, it is pulling back a little bit. i have not seen recent headlines for the reason for the pullback, but overall, this week has been crazy with oil from the big selloff on monday due to the trump tweets to the unexpected supply in the u.s. being able to recover all of that. now, we are going back and forth and we'll see where this oil market is settling later today going into the weekend. volatility has been higher than normal. roughly two move is hours in the next nine days and the cost skew is more to the
flipside. but it will be flattening. guy: interesting. i was going to argue, what would it take to get wti down to six. thanks, scott. breaking news, vonnie. vonnie: a development between india and pakistan. tv,can see pictures, state the arrested indian pilot. he is now at the pakistan-india border. you can see him about two cross into india. both states are showing this on their tv stations. goodis perhaps a development. time for talk of the hour.
montclair's shares are rising the most in five years. emma chandra has been covering this. when it came to montclair, they did extremely well with the blowout report. they saw double-digit revenue growth across all geographic regions and with the best performer. millennialsiting putting them over the last year. say --esigners [laughter] various other designers are coming in. that is what is driven their sales. vonnie: emma chandra, thank you. aboutonnie, let's talk
what is driving european markets and u.s. markets. the s&p is now below 2800 again. the market is really paying attention to that. european markets are broadly higher. the dax is outperforming. the reason is the auto sector is trading higher today. the reason they are trading buter is we saw better news it to the trade story, and we have seen stabilization in the chinese data. that is driving the dax higher. it is up .8%. we are counting you down to the end of the week in europe. this is bloomberg. ♪ ♪
guy: 30 minutes that in the european trading day. from london, i'm johnson. vonnie: and from new york, i by:. this is a european close on "bloomberg markets." guy: let's look at where europe sits right now. at the moment, european market are big, but the dax is outperforming. the auto segment is outperforming on better data out of china and prospects of a trade deal getting done. we will talk about that story when they go to washington. the dax is up .8%. the csi continuing to rally very strongly. they announced they were going to up the ratings on chinese stocks. we have a risk on move. the euro is trading higher, despite really disappointing data coming out of