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tv   Bloomberg Markets European Close  Bloomberg  August 6, 2019 11:00am-12:01pm EDT

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guy: 30 minutes left in the 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: european equity markets have started to turn negative. earlier in the day, a positive story. asian session reasonablyasian s. it all came off the fixing that china generated earlier on for the currency. as the day has progressed, the music has become a little more negative. that sort of turnaround tuesday narrative has started to fade. we are seeing an accelerating picture when it comes to the bid on bonds, so we've now got a -53 basis point petition on the german ten-year -- point position on the german ten-year. by 1/10 of 1%,n trading at 1.1186. vonnie: the s&p 500 is up half of 1%.
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the nasdaq is the best performer today. same company topping both of those, take-two interactive. it fell more than 5% yesterday after president trump talked about video gamers in relation to the weekend's mass shooting. take-two interactive has bounce back from that death has bounced back from that, have reported a great quarter. 7.0541, underscoring everything today. yield.n the 10 year bouncing around a bit, but within one to two basis points. guy: the u.s. treasury department labeling china a currency manipulator overnight. that's the first time we seen that since 1994. china's central bank later in the session stepping into support the you whe -- the yuan.
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hasn't lasted throughout the session, so as you come through the afternoon here in europe, the morning in the united states come of that story has begun to fade a little bit. ofmy conway, citigroup head em ea -- of emea trading strategy, is with us. what do i take away for strategies? jimmy: be careful you don't get caught in the crossfire between the u.s. and china. i think the euro specific story is a little on the sideline at the moment. we were focusing more abound what sterling implied about brexit risk. now i think it is a straight up fight between increased risk versus theequities fed pricing and probably the ,ost dramatic move we have seen the cuts being repriced into the
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end of the year and how aggressive that looks now. so it is liquid at the verses china trade war. guy: it is interesting you say europe can stay out of this one. the european economy looks super exposed to this trade war. it seems to be the one area that you kind of look at and start ticking boxes, saying, yes, exposed to that. jimmy: i wouldn't say you stay out of it. ofre's not a huge amount direct control europe is going to have over it. if anything, the thing europe has to be cognizant of is if currency manipulation is now out there as part of the toolkit, 1.0 5, 1 .07, what level of the euro did we start seeing auto tariffs? i think one of the big things is the u.s. still has levers, china still has levers. they looked as though they were all going to come into play with
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the ecb. we are still quite cautious. we've been saying since the ecb and the fomc that if you're going to buy the dip, probably want to do it in the options space. options were very cheap going into last thursday. habit just has that nasty of delivering a nasty surprise. vonnie: volatility has completely come out of its summer doldrums. i wonder what you are doing to take advantage of fx volatility, rates volatility, for example. more one tend to focus the equities space, so from an fx perspective, one of the things we look at is what is it saying about our own market. if you look at, for example, the went from 1.5.
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we are actually using these to indicate whether or not we think there's been a reasonably large stock as to whether or not we p.ould buy the di you seen these technology moves across other markets. credit has been the one where it is sort of suspiciously absent, particularly in europe. credit has tended to follow duration as opposed to the risk, but everything else at the moment, particularly in the fx space, is urging us to be cautious. vonnie: but at the same time, this designation of china as a currency manipulator and all of the uncertainty that comes along with that, does that make some markets in asia very attractive to you now? at current levels, no. much as europe can be part of the collateral damage from what is out there in a
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global gdp perspective, you don't know what happens when these supply chains start getting materia sleep -- start getting materially disruptive. what is not necessarily getting a lot of coverage at the moment is the trade war seems to be contagious. we now have japan and korea taking steps to up the ante against one another. were a firmou believer that the doj is going to do something to aggressively , obviously the easy way to trade that, but that doesn't seem to be the case for now. we are presently in a world where, other than perhaps the dollar, you are seeing a lot of positive correlation between fx, particularly em fx, and commodity markets. i think from our perspective, if trade really does come under pressure, using a weaker kospi, weaker yuan.
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there are more exotic spaces to express some of those correlations, but again, vol has spiked to a level where now we are telling people to roll their hedges. the vol curve is quite inverted in some markets committing the some end more expensive -- markets, making the front end more expensive. roll down the curve put the hedge on a little more cheaply longer dated. quickly.uy protection but now i think it is at a stage where we are set for a slightly longer war of attrition and people should be rolling those hedges further down. guy: if the ecb goes big in september come up with that be a reason to buy european equities -- in september, would that be a reason to buy european equities? jimmy: another driver of that
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from our perspective is brexit. if parliament is in disarray, we had that vote of no-confidence which feels like it is building towards september, the ecb goes on the 12th. they're going to need to get in front of that as well. to answer your question, medium term, yes. but the problem i have is it is not necessarily an earnings game or i believe the economy is going to vastly improve. it is that risk premium has been exhausted in every other asset class. if you look at the premium in euro stocks versus things like ig credit or 10 year government bonds, it is at the extremes. so at some point, that yield premium has to come. we don't think we are going to see such a large earnings recession that dividends are going to fall off a cliff. debtmight be cut, but with as cheap as it is, it is very easy to sustain your balance sheet to keep paying the dividend, so at pump point -- so
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at some point, people are going to have to commit to european equities. guy: we've been hearing that story for a while. tobias left of its -- you bring up european earnings. what is the outlook for european earnings right now? what is your expectation in terms of the wake earnings are going to develop in europe? they have been battered, but there are a lot of global companies that have exposure to the u.s., which in many ways looks like it is any distant -- it is in a decent place. what are your expectations coming out of this earnings season? europe is still reasonably constructive in terms of the outlook. the the expectation of the downgrade such as they are are
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probably already in the price. i think the key thing is that he looks at it from the perspective highs the excess yield to in european equities. when you look at how much room some of these companies have in terms of things like payout ratios, we had a huge amount of dividend downgrade already. if you think of some of the single names that have had to cut dividend, etc. he's relatively constructive. mightms of whether people have to recalibrate that is a function of further slowdowns due to trade tensions, yes, but then again, the equity market has already discounted that. , i find itrspective abouto get too excited equity earnings in europe, but at the same time, the sheer exhaustion of risk premium leaves you with nothing else to
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buy. so earnings might come down, but you can rerate the market because there's nothing else to buy. you can trade on a higher multiple from lower earnings because, what are you going to get now from 10 year treasuries? guy: it keeps getting bid day after day. jimmy: it is horrible. [laughter] david: jimmy is going to stick around. -- jimmyway, ct emeay, citi head of trading. vonnie: a headline crossing the bloomberg, opioid many factors down by a couple of percentage , offering a potential $10 billion deal to end state lawsuits. ande are the distributors, they are trying to have this request granted by a court
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before another court certifies a negotiating class, which could actually be more risky for the distributors. on this proposal, $10 billion to end the state lawsuits, stocks are down. 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 the european close on "bloomberg markets." let's get a first word news update with courtney donohoe. courtney: president trump warns he is watching google "very closely," citing claims that google suppressed negative stories about hillary clinton, which he called "all very illegal," and says the ceo has been in the oval office
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telling him that they did not plan to subvert next year's election. google has denied the claims. talks with kim jong-un up here to be on the verge of collapse -- kim jong-un appeared to be on the verge of collapse. north korea threatening to dictate new road in negotiations if u.s. doesn't cover my's, -- doesn't compromise, after they made their fourth missile launch in two weeks. beijing urged hong kong citizens to stand up to protesters challenging the government. officials described demonstrators as "a very small group of unscrupulous and violent criminals," and protected efforts to get hong kong leader carrie lam to resign would fail. nobel laureate toni morrison has died. morrison gave a voice to the african-american experience, and became the first black woman to win the nobel prize in literature. among her best books was "beloved," later turned into a
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movie starring oprah winfrey. morrison died in new york. she was 88 years old. 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. vonnie: thank you for that. let's check global markets now. here's abigail doolittle. abigail: we have been looking at a rebound, at least for u.s. stocks on the open. that has faded quickly. s&p off the longest selling streak of the year since the volatility of the fourth quarter, increasing trade tensions between the u.s. and china. still waiting on the ftse 100 come in your session lows, down 7/10 of 1%, down the sixth day in a row. the shanghai composite down 1.5%, down a fifth day in a row. one turnaround, the 10 year
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yield, which had been down seven days in a row, this is the first update for the 10 year yield in eight sessions, telling you that bonds are pulling back just a little bit. overall, this is a risk off picture. let's take a look at the german bund yield. this is really incredible. this is a 17 day chart, down 15 of these days, losing more than 30 basis points. the negative yield now greater than -50 basis points. investors paying the german government to hold their money, seeking safety whether it is on a risk off tone or liquidity structure. either way, this is pretty incredible. as for what has been helping the s&p 500, although we are seeing a bit of a fade here, apple and micro soft -- and microsoft up. take-two being rewarded for a good quarter, and kla, same deal. let's take a chart we looked at several times over the last
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couple of weeks. we've only changed the color of those arrows and purple. this is a massive range over the last year and a half for the s&p 500, a battle between the polls and the bears -- between the bulls and the bears. the s&p had been confirmed for the 3060, but reach resistance first. if the s&p 500 were to go below this year's lows, it would suggest we go towards last year's lows. the range of uncertainty continues. right now this chart looks fairly bearish and uncertain. guy: fairly bearish and uncertain. on that note, we will leave it. let's carry on the conversation with citi's jimmy conway, joining us on set in london. this chart is an extreme example of pretty much what you see everywhere, and that is momentum versus value. this is a five-year chart. the spread is colossal.
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but it is basically the same narrative you have everywhere. this is a bond trade. these are bond proxies. this is the same trade abigail was just talking about. goes tonks the bund -80. to -80, wherees does that trade go? jimmy: well, it is certainly not going to reverse. the issue is that spike the near limitless liquidity, and that means cheap credit, which means you can buy structural growth come about at the same time we are not getting any inflation -- growth, but at the same time we are not getting any inflation, forward expectations are lower both in the u.s. and in europe. without that sense that people need to go out and spend on projects today because if you don't, it is going to be more expensive tomorrow, it is very
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hard for value to rally. the project of reigniting inflation, of all the things globally in the world that look most at risk, that is probably the one. if we slip into a deflationary ofle, if hsbc's concept there being no inflation is correct, that spiral becomes really dangerous. guy: how does europe get a steeper curve? if i may corporate and i'm looking at a negative curve, my cost of capital, the numbers i would normally work with are just thrown out the window and i'm trying to figure out why invest, none of the normal things i would do as a cfo or ceo work. what do we need to do in europe? what do european companies and european equities need to start to get valuations moving in the right direction? jimmy: it is not just that.
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the paradox of negative rates seems to make people more defensive and safe more. guy: it is logical, and a way. jimmy: the problem with negative rates is that the messaging, there was a disconnect between the intention, which was to go out and create credit, and the messaging, which is things are so bad that you should be defensive and sit on cash. to get the curve steeper in europe, i think it is about curves globally. it is difficult to react, i think, to re-anchor expectations one by one. taking discrete central banks and saying, ok, i'm going to have a go now. the problem is deflation gets recycled through the fx channel. what you need is for them all to say -- and i guess we had instances of this before. people talk about the shanghai c -- the shanghai accord. if they all went after
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abandoning their inflation targets and a steeper curve together, that might work. vonnie: what are your clients asking you regarding brexit? what do they want you to do trading wise regarding britain and whether they exit the eu with or without a deal on october 31? jimmy: despite all the airtime it commands in the press, it is a relatively muted topic from an equity perspective, primarily because i think most people, we see nothing but outflows since the referendum. the positioning isn't extreme. if anything, people are under positioned. the ftse commands some interest. sterling, should you sell it? should you buy it? div yield is a real cushion. i do think that ftse can
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withstand a bit of an upswing. the main interest is should we be hedging the october 31 date. we think clients should. there is markedly little attention paid in the european volatility market. the event risk that was there even for the french election and the first referendum isn't there. so we think letting stuff expire in september is the way forward. guy: we will leave it there. jimmy, nice to see you. mea headnway, citi's e of equity trading strategy. this is bloomberg. ♪
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♪ vonnie: checking u.s. markets now, we have seen a nice bounce back for the majority of the session so far. a couple of little headlines taking stocks lower. still, the s&p 500 up about 1/3
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of1%, the dow up about 1/4 1%, the nasdaq up half of 1%. the vix down just slightly from yesterday. guy: in europe, we are trading at session lows. european equities are now at session lows or just off them. it was meant to be turnaround tuesday. it is turning out not to be the case. ftse down by 7/10 of 1%, dax down by half of 1%, cac 40 back to flat as well. the turnaround this afternoon will have cut a lot of people -- will have caught a lot of people. the momentum doesn't seem to be carrying through into the afternoon. the european close. is next this is bloomberg -- close is next. this is bloomberg. ♪
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guy: 30 seconds until the end of regular trading in europe. it started well. european equities on the front foot. a move out of asia that was positive. it kicked off with the kind --
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with the chinese currency fixing. this afternoon, things have turned around. that i wasrnaround expecting first thing this morning. i was thinking of a turnaround versus yesterday. we have seen an intraday turnaround. the ftse is negative, dax is negative, the cac 40 is back to let. --t is beginning to played that is beginning to fade. iron ore went through 100 earlier. that is dragging that sector down. the auto stocks earlier on in the day looked pretty positive. take a look at the breakdown of the dax and you will see some of the big auto names are on the negative side of the ledger. that is how it breaks down. an hour ago i looked at this, the grr function in europe. every single sector was positive. take a look at it now. different story. only three sectors in positive territory and one flat.
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utility still a good. household goods still look good. it is not the more defensive names holding things up, it is the more china focused names. media has come back flat. earlier on vivendi was powering that sector through. that is not happening anymore. the bottom end of the market, that is acting as a drag on the ftse 100, which is loaded with those miners. some of the cyclical sectors have come down. oil and gas is negative. banks have come down. that is what you're looking at in europe. the turnaround we were expecting was negative to positive. we have now gone back to negative. recently decent volume as well. a quick look at the single stocks. rolls-royce under pressure again. also facing issues with bottleneck with airbus and at
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boeing. vivendi positive, but was up 9% on the idea it would sell its stake in its music business to tencent and metro bank under pressure. that is looking european markets. bonnie -- vonnie? vonnie: in the u.s. we are seeing positive markets but shaving off some of those gains. 2055,p 500 trading at well off our highs of the year but we are climbing back up there. the 10 year yield at 1.74, more buying in treasuries and cnh is at 7559. one of theteractive winning stocks today having a terrible day following trump's remarks about gamers and gaming. it has a great pipeline according to analyst and that was enough to get the stocks moving, particularly given that
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it looks like there will be a hillf stalling on capitol with regards to anything the president is proposing. these are some of the stocks driving gains from the s&p 500, the nasdaq, and the dow, the drug distributors. they are proposed a $10 billion proposal to get states to settle on the opioid lawsuits. the makers of the opioids have it a lot worse, but the distributors could be in for a big liability. we will say if the settlement is allowed to take place or if it negotiates a class for all of those that were impacted by the opioids. either way, the opioid distributors are down more than 5%. i thought i would point to the yen as another safe haven. 106.33 right now. a little bit limited, let's put it that way. guy: yes.
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fascinating markets. we came in this morning and you are seeing the same thing. came in with good legacy coming out of beijing. decent legacy out of europe. i've been looking at u.s. futures trying to figure out what the market was going to look like. the fair values look positive. do not know what has happened this afternoon. i do not know what catalyst is for the markets to turn around. .e're expecting cast about it does not look like it has lasted that long. let's get a take on what has happened with bloombergs date will stay -- bloombergs dave wilson. i was expecting markets to have a reasonably positive day on the equity front. europe just closed down. what do you make of the price action? anticipation some the things we get dragged out on you pute, but when
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things together it is not like the situation has changed in a meeting away to get the kind of rebound you might expect. given not just yesterday's losses but last week's losses. put it all together, it is an anemic kind of rebound so far. vonnie: if the market is going to come in and decide everything the president suggest is not going to happen, we are not going to get legislation on video games, for example, why does the market not decide that the day before? why this the drop yesterday and the recovery today? dave: only because it is a reminder of a day like yesterday where the situation is unsettled. on have the 10% tariffs chinese products on september 1 already being hit with tariffs, which means the trade situation gets worse. that is something that can happen regardless of all the other issues surrounding the
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latest mass shootings and what comes out of that. that may be more front and center if only because at some point, it is going to show up with companies. you run through the numbers on the s&p 500 and see analysts once again anticipating profit will be down this quarter. they did that last quarter in the quarter before and it looks like both cases will see companies deliver some earnings growth, not a lot, but some. here we are back in the same situation. next year there anticipating 10% earnings growth. it becomes a question when you have the trade issues and currencies and all of the backdrops we are facing at this point. citigroup cut, its earnings forecast for the u.s. market but kept the price target. what you make of that? is the correct interpretation --
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you find yourself in a situation where equities are the only game in town. i appreciate that treasuries bid, butolid basically there is nothing to buy other than equities. make it is possible to that case, especially if we see interest rates coming down. the argument for a lot of investors is it has made an increasing amount of sense to deal in cash, to anticipate you will get a buying opportunity down the line. now you have central banks cutting rates again, the federal reserve, notably, last week, and you have bond yields increasingly negative around the world and falling in the u.s. what does that leave you with? it is almost like we are back to a theme that arguably has carried through much of the bull market. there is no alternative. for a lot of investors the stocks were it. it is almost like we are getting
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back to that. vonnie: we do still have big earnings, and whatever you see about the macro environment, all of the earnings seems to have been trading relatively narrowly on the earnings themselves. dave: the big one this week will be disney after the close of u.s. markets. the story will be what does the company look like going forward now that they have bought boxes and movieelevision studios. you will have what is left of fox and news corp., cbs and viacom. may be one with what we are seeing with drug , they are certainly involved in the business. there will be a few reports worth focusing on. of the point, the bulk numbers are out, we know
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earnings are up not a lot. the latest figures .1 .5%. the question is where do we go from here. dicey given a bit the potential on trade and other issues. vonnie: thank you as always. dave wilson with an update on what the market is doing. growing to $75 billion, coming to the market today. book is now basically the largest since aramco. i'm interested to which durations are selling the most. this is to find the anadarko deal. what the market turbulence over last couple of days, it is unlikely they were like to do it. softening does not look that great. islooks as if the order book
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substantial. i guess given the size of the acquisition, it has to be. let's look at where european markets have settled. we are through the auction process. a very negative session. we have come down. we started off positively this morning. the market faded the earlier rally. europe underwater in through the close. even the cac 40 finishing down. yet the carry on the market coverage. lots to talk about as we see the market continued to develop. price action is fascinating. the cable show will take to the air at the top of the hour. jonathan ferro is in new york. i'll be joining him in london. we are on dab digital radio in london and around the world on your bloomberg devices. this is bloomberg. ♪
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guy: from london, i'm guy johnson. vonnie: from new york, i am vonnie quinn. close" onhe european bloomberg markets. discovery reported second-quarter earnings better than expected with ad revenue increasing 6% despite a drop in subscribers. joining us is discovery communications chief financial officer gunnar wiederfelds. to what do you attribute the advertising revenue growth? gunnar: thanks for having me again. the bottom line is it is a phenomenal scent of numbers. the report to the 6% asset growth. we also guided to acceleration and advertising. digitsed top high single and there are two things we see with these numbers. number one is there is a lot of longevity in our core business
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that some are surprised about and we are seeing first returns come in on our investors on the direct to consumer side. that shows a clear path to strong growth in the future and the bottom line is performance is industry leading, revenue growth accelerating and top of industry margins. top to bottom, a good set of numbers. vonnie: how much control do you have ever these numbers? advertising is something you can learn in the best of times, during campaign times. what are you telling investors about how you will keep those numbers up? gunnar: if you look at our portfolio, many do not understand where the largest -- we are the largest tv company for the female demographic in the u.s. it is hard not to buyer
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advertising inventory for a lot of consumer goods. numberudiences, we're one. the second point is we are seeing declines in universe estimates, people using television. in that environment, we are state -- we are still able to put up a 6% growth number. this is all baked in. as reach in tv becomes a more scarce resource, people are willing to pay up and generate those kinds of numbers. i feel good and we are pointing to acceleration on the international side. guy: good morning. is cost-cutting accelerating? gunnar: i do not have a crystal ball. we are not delusional. we are seeing what is happening in the industry. i want to point out the discovery portfolio is the most widely distributed portfolio not only in the u.s., where we have been very successful getting distribution, in addition to our traditional distribution.
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also from a global perspective, i think we are different in that we are everywhere in the world. we are reaching close to 400 million homes every day with our portfolio, which is giving us a lot of portfolio benefits in today's world, but also a great starting point as we rolloff director consumer offerings. we can be so much more efficient because we are already reaching all of those households on a day-to-day basis. as we ramp up a day-to-day platform, we'll be able to efficiently role that out. guy: the focus is on streaming. disney is coming later on. i can guarantee the first question on the conference call is going to be about streaming and that story as they develop it. the nature of the product is changing. my question is is your sense of the rate of change -- are we seeing the second derivative changing? are we seeing that change accelerating? gunnar: i do not want to
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speculate on some of the broader industry trends. we are factoring in the decline in viewership in the ecosystem in our projections and i just pointed out on the call earlier that we are seeing an acceleration in advertising revenue. we are seeing mid single-digit growth in our affiliate revenues. from that perspective, in this environment, our numbers are very much intact. the second point is we have also making thet investments to build out that global direct to consumer platform. hired someone last year from amazon who has a lot of experience making the direct to consumer products scale and he has been active. i have already guided that discovery is making 300 400 million dollars of investments to build on that platform. we are offering a platform in the nordics, a streaming platform that is already
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contributing nicely to our revenues in the second quarter on the back of us rolling out that new technology platform. to my point earlier, i think we are in a good position. we own all of our content across the globe and are producing 8000 hours of content every year. we have an industry leading distribution, close to 400 households on a global basis, and since peter joined we have been able to attract the talent we need to build up his product features. vonnie: netflix one of those investing heavily in nonfiction, which directly competes with you guys. how are you going to counteract that investment from netflix but also others that try the same thing? >> we operate in a competitive environment. there is no doubt. we have been operating in that environment 30 years. we've always had competitors and gone head-to-head with others who try to compete for our shows. the bottom line is this is what
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we do. we have 30 years of experience we have 30 years of experience in that field, and to this point we have not lost any talent to netflix. one thing you have to keep in mind is netflix is a great product, but from a talent perspective, if you're a chef, we can put you into close to 400 homes on day one, where is netflix has a track record of cutting series short after two or three seasons. the way our talent looks at what they are doing with us is building a brand for them that covers the entire global footprint and allows them to build out a lot of business and brand value outside of the transaction of one individual series. vonnie: i wanted to ask you about fx but unfortunately we have to leave it there. that is gunnar wiedenfels, discovery cfo. and our stock of the hour we are looking at k allowing ten-hour -- at kla to an hour.
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ailey: this company put up strong quarter and be june quarter earnings. a bit of a bright spot. it does look like that revenue could start to grow sequentially. a piece of this, the stronger foundry and logic business for -- there is demand from taiwan semi conductor for that business. on the other hand, there is so much weakness for this energy -- for this industry, there is reason to think this could be a bottom. very powerful chart for the chip index. we're looking at white here, dram pricing, and blue is the stock. they tend to train together. in 2016, dram did put in a bottom. butstock is precarious analysts think this company might be insulated from over a week as and in 2020 a bit of a
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pop. a bright spot in the chip space. especially since one of their competitors misguidance. guy: abigail, thank you for a much indeed. coming up, the global battle of the charts. that is next. this is bloomberg. ♪
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guy: time for our global battle the charts. as regular viewers will know, you can find these charts on your bloomberg terminal, gtv . you things off, romaine bostick. romaine: let's start here. talking about the banks in the financials where things are rebounding, we are not seeing the rebound in financials. i want to show you a chart that would give some idea why. we are talking about what is going on with trade and the yield curve and how that all in her place with expectations. when you look at this chart, you
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can see the white line the yield curve inversion. you can talk about the 10 year yield being below that three-month yield for about three months. we are talking about an inversion of 30 basis points. the inversion remains persistent, it raises the question of what the fed can do. the general idea is that the fed will try to on invert that curve. as they do that, that means monetary policy easing and that puts pressure on bank margins. that brings us to the aligned. net interest margin, the differential between what banks lend and the money they make to offer lending versus what they have to pay out on deposits. we have had a rebound since 2015. that yellow line going up. that is because banks have done a lot of hedging and they have cut deposit costs when they can in order to keep those margins going at the same time you have the yield going into opposite direction.
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of course, with all the developments we have had, the question now is will it be enough for banks to stay ahead of that curve? guy: that will be a tough ask. europe,ou exhibit a, and the effect of ecb policy. vonnie: a simple chart. this is the secondary effect of all of the trade was between the u.s. and china. it is a chart showing how european auto stocks have been on the decline and i have reached the lowest level since january in the last couple of days alone. a very simple chart, but it does show you this currency war, designated china a manipulator and so on, it does not just impact the immediate actors involved, it also implicates those invested in auto stocks and to clearly think it is looking worse around the world. maybe something else is coming down the pike. you can see that chart on the bloomberg at gtv . guy: absolutely.
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the europeans are terrified and the european auto sector is going to be next. i have to give the win to romaine bostick. the net interest margin story has one. -- has won. you're supposed to be humbly grateful. romaine: i am grateful. guy: he does not look very humble. thanks, guys. great charts. great story at the moment. coming up next, "balance of power." david westin will be talking to anthony scaramucci on his take of what is happening with the u.s. political situation. that 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 meets the world of business.
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on the brink today, tom orlik on ratcheting up the u.s.-china trade war. anna anderson from washington on the fallout from the shootings and in london and the chandra --emma chandra on president trump seeking a friend in prime minister johnson. the pboc says they did not try to manipulate the currency because of trade. who is telling the truth? >> the pboc is closer to the reality for -- closer to the reality. for a long time, the pboc was active in the market, buying yuanars, preventing the from appreciating and getting an unfair advantage in their trade relationship. that was the time when the currency manipulator label was true.

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