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tv   Bloomberg Markets Americas  Bloomberg  July 22, 2019 10:00am-11:00am EDT

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york, 3:00 p.m. in london, and 30 minutes into the trading day in the united states. from new york, i'm vonnie quinn. guy: from london, i'm guy johnson. this is "bloomberg markets." vonnie: we are seeing some green on the screen. 1%.s&p 500 up 1/3 of the nasdaq running away with things on ships. goldman sachs upgrading the outlook for chipmakers. we also have halliburton up about 6% after a great quarter, and that is helping the s&p 500. the 10 year yield down. we will be speaking about that for most of the two hours. intercontinentalexchange down 6/10 of 1%. one analyst on wall street saying it has been pretty fully valued by now. guy: here in europe, stoxx 600 going nowhere in a hurry. equities absolutely flat. they've traded in a 1.2% range over the last 10 days.
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incredibly tight range for european equities. the pound is down. we are expecting boris johnson to become prime minister tomorrow. the pound was down a little bit more earlier, bouncing off its earlier lows. we continue to watch the situation in the gulf escalate, and we continue to watch the situation between the u.k. and iran escalate as well. oil trading higher. vonnie: time for a bloomberg spook now -- bloomberg scoop now. carl icahn is ebbing up his occidental petroleum in letters to shareholders. occidental petroleum has just responded. we are joined by our deals reporter scott deveau, who broke the story. occidental says we don't think we need one. what carlentially icahn is trying to do is get
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four directors on the board of occidental, and in order to do so he has to go through this very convoluted process. he has to get a record date, and get shareholders to support his move to replace four directors. occi shares are barely moving. do they think you will have much success here? scott: the effect of the matter is that carl icahn is no wimp on these kind of things. i think he's probably going to be pretty aggressive on his criticisms of the company. i think he sees this as a poster child for poor corporate governance, and i think he's going to continue his attacks. vonnie: he had been agitating for this in the past, but he's stepping it up in particular now and making very detailed claims about the chairman, particularly as it relates to warren buffett's deal with occi.
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the $10 think he thinks billion in financing that secured from berkshire hathaway was expensive. the chairman for rubberstamping the transaction as it was. he claims that there is at least one investor willing to do similar financing without the warrants that warren buffett will get in the financing arrangement. pretty decent -- he's picking up on. he alleges that the company itself could have been potentially taken over. do we have any idea who that takeover candidate could have been, the acquirer? scott: we don't know for certain, but obviously it would have to be someone of sca le.
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someone that comes to mind is exxon. the size itself, someone interested with permian. vonnie: what are shareholders saying? do they think, some of the major ones, that icahn has some points here? the stock is down about 1/3 of 1%. scott: some think this transaction should have gone to a shareholder vote. obviously it is not going to. it is quite a large, substantial transaction for the company. vonnie: we are going to have to wait and see what happens next. are we at an impasse here? scott: this could drag out for a while, i think. vonnie: our thanks to you, bloomberg deals reporter scott deveau. guy: the fed is going quiet between now and months end. president trump keeping the pressure on, of course.
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investors are gearing up for a packed week. earnings season really ramping up. thursday we've got a monetary policy decision coming out of the ecb. jurrien timmer, fidelity investments' director of global metro, -- of global macro, joining us now. if it is 25, what kind of effect will that have on risk assets, do you think? jurrien: 25 is obviously in the number. 50 would be a surprise because fed officials have pretty much walked back from the speculation it would be a 50. i don't think it really matters as long as they signal what's coming. as you know, the market is pricing and 75 to 100 basis points worth of base point -- of basis point cuts. i seriously doubt they would say that, so they will probably do another 25 ine up
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september, and then be data-dependent. the economic numbers are really not bad, but inflation, of course, is chronically undershooting their target. the natural rate is starting to ease off a little bit. it's gone from like 0.6 to 0.4. it is not a huge move, but they certainly have the room. people think about the fed and the rate as an abstract thing, but if it is at 2% going to one point 5%, but the natural rate is also going down a half-point, they are not even easing. they are still staying in place. so it is very much a moving target, which makes their life very challenging because that moving target of the natural rate is unobservable in real time. guy: absolutely. you can do with hindsight, maybe. i guess the question that follows on from this, the market has, as you've indicated, priced in a bunch of cuts.
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i am wondering what effect those cuts will have on the market. we are trading 2985 right now on the s&p. how much higher will the s&p be if the fed delivers those cuts, if at all? jurrien: at the intersection of growth, which for the market is mostly earnings growth, and interest rates, which is influenced by the fed, is the valuation. so the market is trading at 17.2 times expected earnings. we are obviously in earnings season. about a quarter of companies have reported so far. the season is pretty good, but does it come at the expense of future quarters? we are seeing kind of a repeat of what we saw in the first quarter. the short answer is if earnings growth stages a v-shaped recovery, as is currently priced into the markets, the fed doesn't need to do much, maybe
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25 or 50. that will be fed will have to do more because the risk is that we are going into a new down cycle. if we do get the v shape, the fed can only do maybe 25 or 50, and then a year from now even be raising rates. because it is all about the intersection of growth and rates , if growth is strong enough, the market doesn't really care if the fed is at 2% or 2.25% or 2.5% because the discount cash model is sort of carrying the load, if you will. it all comes down to that. weaker the earnings recovery in the second half into 2020, the more the fed needs to cut rates here. fed to how much will the be looking at the earnings cycle, though?
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it is not really up to the fed to protect a bull market, as it were. that is sort of a side effect of a good economy. jurrien: this is always the fed's dilemma. you have the real economy and the financial conditions. you could argue that back in december when the fed pivoted from more rate hikes to none, and now to rate cuts, that it was worried not so much about the real economy, which continues to operate above potential even though global growth has clearly slowed over the past year, but i think it is worried about the transition mechanism from financial conditions into the real economy. i doubt that the fed is watching as a policywth signal, but it is certainly part of the mosaic that they look at, especially with regards to financial conditions. ism has gone from 61 to 51. the global pmi has gone from 54 to 49. clearly there is a slowdown
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underway, and with inflation so much below the fed target, i think the fed feels like it has the room here. basically,ee option, to take a few rate hikes back and see what happens. vonnie: after this one, how much do we need to know about trade before the fed can tell what is going to happen to the economy after that? jurrien: clearly you are starting to see trade seep into the earnings numbers, or at least the earnings guidance. that seems to be every company's favorite thing to blame if they are missing earnings. it could be a different story every quarter. but you are seeing the guidance, and it makes sense. if you look at the whole brexit debacle over the past three years, we saw something similar. the u.k. stock market in those years did ok. earnings were actually up a reasonable amount, but the market valuation went from 60 pe to 12 pe as investors got tired
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of waiting and started sitting on their hands. companies will take a wait and see attitude. they don't want to take any risk in front of this uncertainty, and eventually the market gets because gets de-rated of it. guy: what do using the ecb is going to do?how low do bund yields go? what effect will this have on european banks? jurrien: the banks are an issue. we've been talking about that for a long time. there's a lot of loans on the books. you have flat curves, negative rates. there's really no way for the banks to make any money, so why buy their stocks? the ecb could cut rates again, but certainly negative rates have not worked at all in europe. the asset purchase program has served some purpose to quell volatility in the corporate bond market, but the ecb, the boj, they are kind of out of ammo.
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at least the fed, in an enviable situation, has some room to cut. i'm sure if i was at the fed, i would be worried about not spending too much of my ammo because i don't want to end up where the ecb is now. a word youjapan is hear a lot in europe these days. jurrien, thank you very much. jurrien timmer, fidelity investments director of global macro. vonnie: let's check in on the louvered first word news. here's ritter cook -- bloomberg first word news. here's reddit cook up to -- here's ritika gupta. ritika: iranian forces seized a british tanker in the strait of hormuz. atsident trump is taking aim the federal reserve again. on twitter today, the president
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called the fed misguided and said it should move now to cut interest rates. the fed is expected to cut rates at the policy makers meeting next week. in puerto rico, hundreds of thousands of people will take to the streets again to protest the governor, refusing to quit, but says he won't seek reelection. he's been under fire after obscenity in leaked chats he had with allies. and india has launched its second unmanned mission to the moon, trying to become the first country to land on the south pole. the indian spacecraft is do to reach the moon in 48 days. it will operate for at least two weeks on the surface, looking for signs of water and helium. 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. death -- i'mok up
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ritika gupta. this is bloomberg. vonnie: coming up, more on iran's arrest of those accused of being spies for the cia. this is bloomberg. ♪
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♪ vonnie: live from new york, i'm vonnie quinn. guy: from london, i'm guy johnson. this is "bloomberg markets." let's catch up with those markets. here's abigail doolittle. abigail: a mildly risk off tone. take a look at the s&p 500, up 2/10 of 1%, but really outperforming the philadelphia semiconductor index.
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we will take a look at a few of those in the moment area that is up 1.6%. the dax in germany up modestly, similar to the s&p 500. where we saw some underperformance, the shanghai composite down 1.3%. perhaps wavering around trade tensions. we will be tying that into a broader theme, but first let's take a look at some of those chip stocks, micron in particular. you see a big pop on the day. over the last four, up almost 8%. goldman sachs upgrading the shares to a buy from a neutral, saying the overall memory trends are improving. they also upgraded applied materials and lam research. we see nice gains there. true too for halliburton. they put up a strong second quarter, beating estimates. davita health care announced to the upside, so let's of green on the screen as this earnings week
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gets underway. overall, from a macro standpoint, something very interesting happening right now. if we take a look at a year today chart, we have not looked at this in a while. the white is shanghai composite, in blue emerging markets, and yellow the dax, and in pink the s&p 500. earlier this year, the shanghai composite leading the way. now the s&p 500 is leading the shanghai composite as the shanghai composite starts to turn down. that is worth keeping an eye on because if it is an early tell, it may suggest there could be some weakness ahead for the s&p 500, or at least continued flatlining. vonnie: thank you. prime minister theresa may is leading a meeting to discuss shipping security in the persian gulf after iran seized british oil tanker in the strait of hormuz last week. we also have reports of 17 people young held and potentially executed by the regime. bloomberg'sd by
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correspondent on international security coverage. what do we know about how many people are being held by iran, and what is proposed to be done with them? reporter: largely what we know is what we heard from the iranian side. there are 17 people they are accusing of being linked to some sort of cia spy ring, and that they have all been scheduled for capital punishment. the u.s. is of course denying it and will never really admit to any sort of espionage activity, so we are not going to have a lot from this side on that. it is the latest sign after a very tense end of the week last week that tensions continue to rise. theresa may and her national security team meeting this morning in what is effectively her last 48 hours as prime minister. guy: you bring up theresa may. how does the u.k. de-escalate the situation?
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bill: i guess there's a few different scenarios you could look at. one of the things we did notice is when the iranians took the ship on friday, it was the same day that the british authorities said that this cargo ship that had iranian oil that it seized near gibraltar earlier in the month, that they were going to hold onto it for another 30 days. there's always a chance that perhaps british authorities decide to either release the on, ord let it continue take the oil off and let the ship go. there are a few things like that it could do. on the other hand, we are looking at the possibility that britain escalates in some sort of way by either tacking on some kind of economic sanctions onto iran, looking for properties it could at least temporarily seize. it is hard to know which way this will go. the situation with the spies and the tanker on friday does show
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that there's really no easing insight at this point. vonnie: and it does feel like there's been plenty of tit for tat, plenty of rumormongering and things, but the next step will be something bigger. it can't continue like this, can it? bill: right. less than a week ago we were talking about the potential for some sort of diplomatic breakthrough. there were many interviews that the foreign minister of iran had where he seems to be offering some sort of fig leaf of negotiating. the u.s. was reiterating its position that it was willing to meet without preconditions. you had the sense that behind-the-scenes, something was happening. that all fell apart when you got to thursday and friday last week. now you have the u.s. president on twitter again denying the report that there were any spies in iran, but also reiterating his view that he thinks iran is a really bad actor in the region.
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i think when you look at where we've gone just over the last week, it's been quite a whipsaw. vonnie: bill, thank you. our thanks to bloomberg's bill faries, our correspondent in washington, d.c. just crossing the bloomberg, the u.s. congress and the white house are on the brink of a two-year debt limit deal. for details, we have our chief washington correspondent kevin cirilli joining us from the white house. what do we know of the details in this deal, kevin? kevin: a reported two-year agreement is imminent with regards to secretary treasury steven mnuchin and nancy pelosi negotiating this deal. it would raise the debt limit until july 31, 2021. remember, secretary mnuchin said they have to raise the debt limit ahead of september or else the u.s. could default on its credit. the deal that is in the final stages of negotiations offsets
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about $75 billion in government savings. that is about half of what republicans originally sought gets, but this is where it particularly interesting, especially for pharmaceutical companies. one of the ideas floated in this plan is regarding that there would be -- that the white house said it would save 115 billion dollars if the administration offers some type of mechanism for drug pricing. speaker pelosi and president trump said one of the rare areas of bipartisanship that might be agreed upon is when it comes to drug pricing. in a few short minutes, we are likely going to get word from special counselor to the president kellyanne conway. we will report back with the latest on that. the biggest unknown, whether president trump will get on board with this deal, and that we still don't have the answer to. guy: talk me through congress' vacation plans. how much time is there to get
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the necessary legislation in place? last week, treasury secretary steven mnuchin holding a brief and. i asked him about the negotiations for the deal. he said if they want to get ahead of that august recess in just a few short days to return to their districts and their states to talk to constituents, they will have essentially the whole month off for august, so this is very much pressing up against a hard deadline. while makers have to get this done. it will be interesting to see whether the pharmaceutical drug pricing plan will be incorporated into this. that could pose some risk for pharmaceutical companies, and that is something we will be carefully keeping our eyes on. vonnie: according to the details we are getting already, it would give republicans about half of the amount of savings they were seeking. will that be enough, kevin? kevin: no, not for all republicans. whether it is enough to get most
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democrats and most republicans on board, we will know once those votes are tallied. but just in the last several days, senior staffers on the house freedom caucus, the ultra conservative party, had concerns. mark meadows has raised those concerns, but if secretary mnuchin and speaker pelosi are able to get a deal, they likely would have factored in the amount of defections they can get with regard to that. they likely would have countered in hardliners on the right and the left. but again, this is something to have to get done before september, when sector terry mnuchin says he will have used all of his extraordinary -- when secretary mnuchin says he will have used all of his extraordinary powers. vonnie: kevin cirilli, thank you for that. it is time for your latest bloomberg business flash. the credit rating company equifax has agreed to pay 700 million dollars to resolve investigations into a massive data breach. the 2017 hack compromised some of the most sensitive information of more than 140 million people.
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equifax will pay the bulk of the money to compensate consumers and provide credit monitoring. in china, a trading frenzy risks to the opening of the country's new nasdaq style exchange. the companies that made their debuts rose an average 140%. the so-called star market is china's attempt to avoid losing alibaba's next listing. that is your latest bloomberg business flash. guy: still ahead, the macro hedge fund manager riding the wild bull market in bonds denies that it is running out of steam. that conversation, next. this is bloomberg. ♪ we're the slowskys.
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we like drip coffee, layovers- -and waiting on hold. what we don't like is relying on fancy technology for help. snail mail! we were invited to a y2k party... uh, didn't that happen, like, 20 years ago? oh, look, karolyn, we've got a mathematician on our hands!
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check it out! now you can schedule a callback or reschedule an appointment, even on nights and weekends. today's xfinity service. simple. easy. awesome. i'd rather not. ♪ vonnie: live from new york, i'm vonnie quinn. guy: from london, i'm guy johnson. this is "bloomberg markets." let's catch up with the bloomberg first word news.
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here's ritika gupta. congress and the white a debt limit in on deal. the trump administration still wants 150 billion deal -- still wants $150 billion in spending cuts as part of the deal. there are a number of goodwill gestures by beijing over the weekend. they applied for exemptions from china's retaliatory tariffs on goods. china has come out with the strongest warnings yet about protests in hong kong. thousands of protesters surrounded china's liaison office in the city and debased the national emblem. said that "seriously challenged the central government authority."
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in japan, prime minister shinzo abe claims victory in upper house elections, but he fell short of a super majority that would allow him to push through his revisions to the country constitution. they do plan to move ahead with an increase to the sales tax this fall. 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 ritika gupta. this is bloomberg. vonnie: how long will the bond rally last? wall street is trading bearish on the twin rally in bonds and risk assets. the u.s. yield curve signals a looming downturn, according to many. haidared hader -- said of hide are capital -- of haid feels otherwise.
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he joins us now. said: i think that in general, the u.s. market is rallying partly because of weakness globally, and i think that probably we could see further gains, but obviously when you get to levels like 2% on the 10 year, you get some profit-taking at times, and you had some stronger data in the u.s. on hard data items. in general, those forward-looking indicators globally and in the u.s. has been weakening. we think that ultimately, the market is underpricing the total number of fed cuts we are going to get this year or next. vonnie: what is the position you are taking on how many fed cuts and when? going tothink we are get at least 75 basis points this year, maybe 100, and next year you will see a couple more. the market is pricing about 100 in the next couple of months and 70-ish this year.
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we also saw two of the three most important fed players, clarida and williams, come out just before the blackout period, making remarks that suggested 50 basis points. williams talk to that back a little afterwards, but it seems striking that they came out just before the blackout. vonnie: do you mean the 50 basis points will happen in july? will there be a double rate cut at some point? said: i think there is a decent chance they go 50 in july. if they don't, i think things like equity markets will probably react negatively. how low does the ecb go? how low does the german ten-year go? what effect does that have on the treasury market? said: the problem with the ecb is people are talking about maybe they can go cut 10 basis in september and
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december. that is really not going to move the needle, so the ecb needs to do something else. i think the something else is they are going to signal some sort of restart of qe. at this july meeting on thursday, they will signal that they are potentially going to restart qe in september, or will they delay it for longer than that? i think there's a good chance you see some kind of signal that they are planning on restarting qe this week. they will signal that they are getting ready to announce that at some point. that means spreads will tighten, and german 10 years will still go lower. guy: how much lower? we are trading -34 at the moment. we've been -40. do we go below -40?where's the bottom . said: the big trade won't be too buy germany. thatll be to buy bonds will benefit from qe, so that would be like ireland, spain,
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portugal, even italy. basically sovereign spread products. vonnie: so you are saying that no matter the macro problems and the banking problems in europe, the ecb will make it such that you can make a profit from these peripheral countries. said: right. but what about the banking system? there is a ecb staff paper where they analyze negative interest rates, and claim the more sound banks within the ecb that negative rates haven't hurt the ecb -- sorry, that the banks actually have paid more and more negative rates to corporate deposits and stuff, and it hasn't been as bad for the banks as people think. vonnie: where do you stand on where the euro goes? would you buy in in euros? said: i think the dollar broadly is going to go down as the fed really starts to significant --
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really starts the significant cutting cycle. however, i think the euro has more downside as well. generallyke to be short euros against other currencies. vonnie: around what level, though? said: even against the dollar, euro can go down sub $1.10. if we start another round of qe, we will go below $1.10. guy: how does that change the dynamic? if i may euro investor, that means one thing to me. if i may dollar investor, that means something different to me. walk me through the dynamic of how the hedging story from the currency move that you are talking about will feed into people desire to be on either side of the atlantic. let's say you consider a japanese institutional investor, and say, how do they do buying bunds at -34 versus treasuries
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at just over 2%? they actually come out ahead -34, ande bunds at well ahead if they buy spain or france, or the netherlands, or countries like that. the reason is the way that cross currency basis swaps work. the you find is you lose yield you pick up in treasuries in the hedging. that means that you actually get a higher yield in european asset. in the first round of qe in 2015, most of the selling for the ecb was from foreign investors. however, this time around, they are already underweight. we might not see them go down as hard as in the first round of qe, so maybe it will be more
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domestic selling of european bonds. but u.s. bonds are lower yielding once you account for currency hedging. guy: let's talk a bit about fiscal. we may have run out of road when it comes to european monetary policy. we may have seen the same sort of thing happening in japan. just seeing news of a potential deal when it comes to the debt ceiling in the united states. do you think we are in the process of handing over from monetary policy doing the heavy lifting to maybe the possibility that fiscal could do more heavy lifting, particularly outside the united states? you've got to look at germany to appreciate the potential there. now, in the u.s. right obviously the fiscal impulse is slowing. we had a lot of big fiscal impulse from increases in defense spending and the tax bill, but that is all starting to fade now. in europe, the problem is we've never had a consensus. the germans have always been
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opposed to fiscal increases, and i'm not sure i see a big change their. now, lagarde as the new ecb head is interesting because she is sort of coming from the political finance ministers side , and maybe she will have more that she willre ,et more coordinated in policy but i wouldn't bank on it. unfortunately for europe, i think it's going to be mostly up to the ecb. i think the steps the ecb can take will be relatively limited. even qe will be limited, which means their ability to ease policy is far more constrained than the u.s. guy: do you have any btp's? general, we've been beneficiaries recently of a strong btp rally. italy has the potential for
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elections, snap elections, coming up. we think it is probably a net positive. obviously we are coming up to btp supply at month end, so there's a little bit of supply in italy, and you don't have that in places like portugal or spain coming up. vonnie: the trade war, i presume you've got some wagers or positions on what happens there. there. what are you forecasting will happen? how are you playing it currencies wise? said: in the currency world, the dollar is being weakened by eminent fed cuts, and the euro is also under pressure because , and sterlingess has also been a bit under pressure due to uncertainty of brexit and the slowing down of u.k. growth. but outside of that, obviously you see big differentiations between currencies. you see australia, new zealand, currencies like korea and the
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chinese women be -- and the generallynminbis performing, and then you see commodities doing better. but then you see currencies that aren't directly in the line of thai.ike idr, they are sorted outside the direct line of fire in the trade war. they have been doing better and actually going up against the dollar. vonnie: so is that trade played out now, or do you continue that trade? said: i think those trades all have further to go. there's a lot of optimism every time mnuchin and lighthizer go to china or something for trade talks. but i think what we saw from the previous round of trade talks is when it really came down to it, when the politburo looked at what had been negotiated, they decided they just didn't want to give up that much power that they had in their hands to make a deal.
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that means that really, these big structural reforms are really off. i think they are willing to take pain as opposed to giving up power. vonnie: thank you for giving us your time today. great snapshot into your thoughts. dar, haidar capital management cio. guy: vonnie: the votes are in -- guy: the votes are in for who will be the next conservative party leader and prime minister. we will talk british politics next. this is bloomberg. ♪
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♪ guy: from london, i'm guy johnson. vonnie: from new york, i'm vonnie quinn.
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this is "bloomberg markets." guy: it's time now for a look at some of the biggest business stories in the news right now. big job cuts may be underway at unicredit, the italian bank. bloomberg has learned it may cut up to 10,000 jobs as part of its new strategic plan. the bank is also considering reducing other operating spence's by up to 10% -- operating expenses by up to 10%. td ameritrade is one step closer to allow customers to trade stocks while driving. investors will be able to check via voicefolios command. they say they hope it will enable trading on the go. that is your bloomberg business flash. u.k. chancellor for the exchequer look hammond -- for the exchequer philip hammond posthe will resign his
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is boris is elected prime minister. -- if boris johnson is elected prime minister. our correspondent joins us for a sense of what we will get. it is likely on wednesday that we will see boris johnson entering number 10 downing street. what kind of political environment is boris johnson walking into when he enters 10 downing street and becomes prime minister? reporter: i think you will be walking into a very fractured, fraught, divided, any adjective you like, that is the kind of environment he will enter into, and he will have to move very quickly. first of all, he's going to have to put together a team that he says will be fully supportive of his pledge to leave without a deal on october 31, do or die. but it is not clear entirely that within the johnson camp, there's completing agreement on how far they should push that.
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it is also not clear how many conservatives will stay with him versus defecting to, say, the liberal democrats, or simply opposing him from the back benches. finally, we don't know whether there would be a legal challenge. we know there would be a little challenge, but we don't know if there will be a successful legal challenge -- would be a legal challenge, but we don't know if there will be a success for legal challenge. and of course, the iran foreign policy challenge. vonnie: the chancellor of the exchequer philip hammond saying he will resign wednesday if boris johnson becomes p.m. does that mean others resign, too? therese: i think we will see a few resignations, and the question is whether momentum continues with that, or if we get a few and it stops. there were resignations earlier this year from both the labour and conservative parties.
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there was speculation whether there would be many other mps following them, and it stopped at think 11 in total, and the movement fizzled out. there will be a backlash against his appointment, and i think one of the things he's going to want to do right off the bat is try to show some level of public support beyond this one faction of the conservative party, which is overrepresented among conservative party voters. if he can do that, he might be able to hang on and have a chance with his negotiations with the eu. if there's enough opposition in parliament and public opinion, his job is going to be very difficult. guy: what kind of a majority is he going to have? it is getting smaller by the day, it seems. therese: by the hour, probably. theresa may had a very small majority as well. she relies on the democratic unionist party of northern
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ireland for her majority. already, we know that there are tories who are talking to the liberal democrats. he could end up without a perlman tree majority. he could end up -- a parliamentary majority. he could wind up with a slim one. but remember, it is not just brexit. this government has to get through a whole slew of legislation related to brexit and other things. if he doesn't have the majority of parliament for it, i think we would see a vote of no-confidence pretty quickly. not before the recess, but pretty soon after mps come back from their holiday. guy: it is going to be busy. thank you very much, therese rafael joining us on the latest on brexit. this is bloomberg. ♪
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♪ vonnie: live from new york, i'm vonnie quinn. guy: from london, i'm guy johnson. this is "bloomberg markets."
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time now for futures in focus. dan deming joins us from chicago at the cme. first up, why is the oil market not reacting more to the situation in the gulf and the straits of hormuz with iran? dan: exactly. the tensions are there in libya as well, but i think the momentum we are seeing in the market, you are seeing a shifting impositions. even though you have these tensions, no real supply has come off the market, so partially that's another reason why we are not seeing significant reaction. when you look at the price action, wti now selling back down. you are seeing some selling pressure when we see any type of price hike in the futures structure. guy: just walk me through the backend of last week in terms of perception in chicago regarding 50 or 25. how big a swing was there 25
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from 50? how many people are talking still about 50? dan: well, impersonating the composer john williams, offering "a new hope" and then "the empire strikes back." the expectations are back to 25 basis points, a high probability of that, but the market is definitely pricing in another cut right now. cut innce of a second september, so you might get that second basis point cut at the end of september. guy: thank you for your time. always appreciate it. financial of kkm joining us from chicago. vonnie: micron trading at the since being upgraded by goldman sachs to a buy. abigail doolittle has more. abigail: at the end of june, there were signs of stabilization, and goldman is
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hopping on that bandwagon. it puts them in the majority of analysts there are. -- of analysts. buys.are 18 the upgrade is really on the stabilization around improving memory trends. they are talking about the type of memory that goes in cell phones. if we happen to the bloomberg, there is a reason to think that maybe we are seeing some stabilization for a stock that has been on a real roller coaster. this chart goes back to 2014. in white, we are looking at the memory,ry -- at dram the kind that goes into computers. you can see coming back to 2014, the cycle of dram going down, the stock going down, and then in 2016, the bottom end. dram started to trend back down well ahead of the stock in 2018, but that appears to be putting in a bottom, so lots of hope
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there. on earnings, but what do they say about the outlook? abigail: interestingly, they guided a little softer for their fiscal fourth-quarter that they will be reporting at the end of september. i say that because it is down 86% from the fiscal fourth $.46 perf 2018, at share. look at that fiscal fourth quarter of 2019 and the first quarter and second quarter of 2020. it looks like a lobar. in addition, the company indicated that the dram memory we were talking about, there's the idea that maybe excess inventories are going to be removed. so again, returning to the idea of that roller coaster chart we were looking at, investors want in on the possibility that we are at the bottom of a cycle that is going to start to move higher. perhaps the stock will go significantly higher with it. thisy a low bar story at
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point, investors possibly getting in early. vonnie: abigail doolittle with our stock of the hour. coming up in the next hour, ormer boe governor lord mervyn king joins us. you won't want to miss that conversation at 11:30 eastern. let's take you now to the u.s. supreme court in washington, d.c. president trump has just arrived to pay respects to the late stevens, whopaul died july 18 at the age of 99. stevens lying in repose in the great hall of the u.s. supreme court. hey! i'm bill slowsky jr.,
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i live on my own now! i've got xfinity, because i like to live life in the fast lane. unlike my parents. you rambling about xfinity again? you're so cute when you get excited... anyways... i've got their app right here, i can troubleshoot. i can schedule a time for them to call me back, it's great! you have our number programmed in? ya i don't even know your phone anymore... excuse me?! what?
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i don't know your phone number. aw well. he doesn't know our phone number! you have our fax number, obviously... today's xfinity service. simple. easy. awesome. i'll pass. ♪ guy: 30 minutes left in the
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european trading day. from london, i'm guy johnson. vonnie: from new york, i'm vonnie quinn. this is the european close on "bloomberg markets." guy: as we head towards the end of trading in europe, the equity market is going nowhere. it has been going nowhere from the last 10 days, trading in a range of 1.2%. most of it has been in a much tighter range than that. the next 24 to 48 hours really key when it comes to the british political story as we await the conservative party election and what boris johnson is going to do if he becomes the next prime minister. brent trading up at the moment by 1.06%. you would think that with what we seen in the streets of hormuz, we would get a bigger reaction -- the strait of hormuz, we would get a bigger reaction. vonnie: here in the u.s., a little more movement perhaps, at

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