tv Bloomberg Markets European Close Bloomberg December 17, 2019 11:00am-12:00pm EST
as u.k. prime minister boris johnson revises the threat of a new deal brexit. and no holiday cheer for fedex as amazon labels the shipping ground network to slow. i'm vonnie quinn in new york, and we are counting you down to the european close on "bloomberg markets." ♪ vonnie: just a few trading days left until the end of the year. the s&p 500 holding steady at 3193, really making an effort not to go anywhere for today's session. the 10 year yield, one. . .88% the dollar index just above 97 -- the 10 year yield, 1.88%. the dollar index just above 97. crude still above $60. let's get across the atlantic
and the asset classes over there. the british pound is weaker by 1.5% after a big run up. $1.35 in change, looking to get everything done by the end of december. we will talk to our next guest about whether that is actually what is going on. gilts at 77 basis points on the 10 year. the ftse 100 unchanged, but lots going on beneath the surface, including the banks. they are lower today after the bank of england yesterday doubled the capital buffer they on the idearom 1%, that there might even be a rate cut in january. this from deutsche bank and potentially others. obviously come of the scene is not so great for the british banks. let's get to the latest on boeing. shares falling today after southwest became the latest airline to say it won't schedule any flights on 737 max jets
until april 13 at the earliest. the move comes a day after to haltet a plan production of the 737 max indefinitely. us with an outperform rating on boeing and a price target of 100 $34 per share, did southwest do what boeing should have done itself? well, basically southwest has said it would take about 60 days after certification for them to resume service, so i think mid april kind of matches up with the potential certification in the middle of february. vonnie: my point is, do we need a whole host of airlines coming out and saying they are pulling max 737 of putting the in the air until april?
should they just say we will update you when we are ready to fly again? think the airlines want to get the max, so to basically put something out even farther, they don't need to do it. they just don't want to have a schedule. they don't want to put it in the schedule and then not be able to deliver and put it in their term schedule, and then have to disappoint people. make of the did you testimony by the faa chief? is the faa incentivized to get the 737 back in the air, and quickly? cai: i think the faa is incentivized to basically get it right. that's what they have said, and that is what their head has said. he also, i think, is trying to get transport canada and the brazilians along so that you get
certification by all of those entities in a relatively short time. vonnie: what about suppliers to boeing? do we see a huge knock on effect? cai: i think there's got to be some. i think boeing will treat each of the suppliers on a separate basis. for example, spirit and adi have been going at a 52 per month rate. 10 higher than boeing, so i think they probably have above average risk of being paired back. i think the others, it will depend. if they are in financial trouble and they are critical, boeing may give them some financial support, but i think it will deal with all of them on an individual basis. vonnie: just in the last hour, we had airbus coming out and saying it is backing its own forecast for the amount of
deliveries it said it would make jetliners, and expects to reach the challenging delivery target. can airbus somehow capitalize on boeing's difficulties here? has a hugeairbus backlog of their own. that,k if they are to do it will be out a couple of years. we will see will people come back to the max are not, but i think near-term, it's been a duopoly for a reason. vonnie: are you happy still with your outperform rating on boeing? do you think boeing is being realistic about when it will get those jets back in the air? haven't saidey when they are going to get those jets back in the air. i think their hope is mid february. i think one of the problems is that we don't really have a
clear-cut set of milestones in terms of being able to assess what exactly does the faa want them to accomplish, and how long should each of those events take so that we can make a good assessment obviously. boeing has missed twice in terms of their estimates, so i think everyone is a little bit reluctant to make another guess. as to the recommendation, i think we are going to have to we better visibility that are close to certification for the stock to start performing. vonnie: thank you. appreciate you jumped on the phone at the last minute. rumohr.cai von now let's bring in michael shaoul of marketfield asset management. we are coming towards the end of the year, and the market has a lot to digest in the short term,
never mind the long-term. is a 12 handle on the vix appropriate? michael: yes. the market is that i all-time high, and 12 is near the high-end of what i would call a normal range. 10, 9, 8, those are sort of complacent readings. we saw those for much of 2017. i think 12 matches up pretty favorably with the s&p where it is right now. vonnie: why is the s&p where it is right now? let's get to the heart of the matter. there's been a few uncertainties taken away in the last week, but there still remains plenty of uncertainties out there. we had robert kaplan earlier on saying that businesses are still on confident about investing. that's got to have a knock on effect at some point, no? michael: in certain cases, yes, but when using about the weaker parts of the economy, there are signs it is finally bottoming right now. when you look at a sector like
housing, which was weak last year, that is clearly accelerating. the general industrial sector is basically ok. i think the market looks ahead and says we still put some of the geopolitical uncertainty. the worst case scenarios have not happened, and central banks have cut this year, so it is a pretty good cocktail. vonnie: what makes you think the industrial sector is going to hold up? you seem pretty confident it will. cai: i don't see any signs of anything undermining it. confidence is not where it should be. think the projects have been put on hold, but i look at that favorably. i look at the potential in 2020 for some of those projects to actually get done. i think if you go back and look at housing this time last year and look at how poor sentiment was toward housing, yo had an air pocket where it took them three to six months to respond to sales. but look at where you are now. it looks as if single-family home construction is finally
breaking out into a cycle hi a year later. i think you will see a path similar to that end industrial activity globally. vonnie: so you think the global manufacturing that i we have been seeing that is weak across the globe will start coming back? michael: yes. the asian data is bad, but not as bad as it was. that is the story with pmi data. it goes from terrible to bad, bad to mediocre, mediocre to ok, and from ok to good. that first move is typically when the equity starts tob ottom. that move is sometimes enough for the equity sector to put in its low. vonnie: so the economic fundamentals but pretty sound in the u.s. what does that tell you in terms of gdp next year? michael: i think u.s. gdp will meet or slightly beat
expectations, but the real potential is in global activity. i think that china is not as bad as people have said it is this year. i think novembers data was a bit of an eye-opener for people because at the very least, it told you that things didn't fall apart in september, october. i think japan is an economy which people have underestimated that looks like it is in a better place than it has been for 20 years. i don't think u.s. gdp is that exciting, but global gdp could be. vonnie: at what point do we get a recession? it's already by far the longest cycle in history. how long can that continue? michael: i think it's going to be an oversupply story. normally you get a recession because you have oversupply in key sector in the fed is withdrawing monetary stimulus. the fed is actually going to be pushing liquidity into financial markets through at least the second quarter. if you want to ask what is the danger of the next year, the
danger is that we see an inflection in global inflation rates. that central banks look at this year and start to worry that they made a mistake. that is what happened after 1998. it is also what happened in the late 1960's, where you had a wobble in 1966-1967, anti-central banks cut. by 1970, you had central banks turning around again. i think there's reasons to be optimistic. i think the danger is at some point next year, you see this inflection in global inflation rates, and the monetary policy story starts to go to how much ,ore easing have we got to go and how much longer central banks can stay the course. vonnie: much more to come. michael shaoul is joining us from marketfield asset management. once again, he is staying with us. let's get a check of markets with kailey leinz. kailey: we are seeing weakness in europe.
the s&p 500 holds up to a marginal gain and the dow is up by about 0.1%. nasdaq is the only one lower, roughly flat. it would snap its four-day winning streak. if we look at the past five days, this would be the fifth in a row that all three of them have risen if we can close in the green. the nasdaq 100 up by about 2.6% over that time, while the s&p is higher by about 2%. if we close higher today, it would be the longest winning streak for the s&p since in november come of the lung is for the dow since september. the nasdaq would be the longest winning streak since back in july. let's take a look at some of the gains put on. taking a look at the bank of america merrill lynch global stress indicator, a level above zero essentially indicates financial stress is higher when we look at demand for hedging. if it is below zero, financial
stress is lower. we are seeing financial stress at the lowest level since back in may of this year. if we take a look at a few movers on the day in the pipeline, take a look at tallgrass energy, absolutely surging up the better part of 21% after blackstone agreed to buy the remaining shares of the company for $2.2 billion, giving a lift to some peers in that space. noble, williams, and energy transfer all up. vonnie: thank you for that. that is kailey leinz with our market check. remember, the function gtv on the terminal allows you to browse all of the charts featured on bloomberg tv. save your favorites for future reference. this is bloomberg. ♪
vonnie: live from new york, i'm vonnie quinn. this is the european close on "bloomberg markets." let's check on first word news with viviana hurtado. viviana: tomorrow, the u.s. house set for a historic vote on impeaching president donald trump. moderate democrats are starting to announce how they will vote, most announcing they will impeach. one first-term congresswoman from michigan says she was told the end vote would be of her short political career. boris johnson will change the law to ensure a brexit transition period will not be extended, setting up the possibility of a new deal exit at the end of next year. the eu warning is unlikely they would be able to complete the kind of deal johnson wants. pope francis has abolished the so-called pontifical secret used
in past sexual abuse cases. the high degree of --fidentiality has protected opposition leaders calling for a nationwide protest on thursday. the law bars undocumented muslims from pakistan, afghanistan, and bangladesh from seeking citizenship. protests threaten to undermine plans by prime minister narendra modi to attract investment. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. vonnie: thank you. back with us now, michael shaoul , ceo of marketfield asset management. i want to go to britain because we have a little more certainty about what is going to happen now, whether it was a surprise or not. the market suggests that suddenly, there's a little bit
of a hint that we may not be certain of a no deal off the table. michael: i think boris johnson has just been elected with a mandate to "get brexit done." it is a simplistic slogan, but he's going to try and do it. i think it is a reasonable first step for him to take. deadlines are helpful. deadlines with downside are also helpful. i think this is just kind of normal diplomatic or political behavior. probably you don't get it negotiated in 12 months, but nine or 10 months into it, everybody's heads are being banged together, and some kind of sensible extension is put into place. when i read the stories about this, i did see that the canadian negotiators took seven years. frankly, that is an indication that there's a problem. the problem is with the
bureaucracy, with the politicians being unable to do something. note negotiation over trade should take as long as seven years. vonnie: but do you think it can be done by next december? michael: i doubt it, but i think it could be progressed far enough that a reasonable extension could be put into place. i don't really think that is a problem, nor do i think the market is really reacting to this. vonnie: well, four big figures in sterling is not a small move. what is the appropriate price right now? michael: i would think of some sort of range between $1.20 and $1.40, with $1.20 as a hard brexit facing you, and $1.40 as getting a deal done. it is a big move, but it has been a big week. sterling went from the mid one to $1.35. that is profit taking as much is
anything else. you haven't seen the u.k. equity market really take it on the chin if you take into account the gains it's had. i think everybody understands this is not going to be straightforward and simple, but it probably will get done in the end. vonnie: are you constrictive on the u.k. economy? will the bank need to step in? michael: i don't think much about the u.k. economy. i think it is ok. i think that getting the conservatives with a mandate reduces a lot of uncertainty outside of brexit, and i think it is basically business friendly. so as i say, i'm generally positive about developed markets outside the u.s. i wouldn't go out of my way to expose myself to the u.k., but i wouldn't avoided either. vonnie: where are you looking to add positions? michael: i think japan is particularly interesting because it is at this intersection between emerging markets, very china sensitive, and hooked into the developed economy.
nikkei hasway the behaved as second part of the year. it has started to do better for people felt better about cyclical equities, and really nobody seems to be very excited about it, so i think that is interesting. i think commodities look interesting. this is theoretically been a bad year economically. again, i would question some of that. monty's have done ok, finishing the year on a pretty -- commodities have done ok, finishing the year on a pretty strong note. put a cyclical bottom in place. there are tentative signs that some of that is happening. you are seeing deals take place in the energy infrastructure .rea i think it may be one of the surprises for next year. vonnie: on that note, talk to us
where we could possibly be. is there anything that might be attractive next year? mainland china is finishing the year on a strong note. absolutely nothing over the summer, nothing terrible and nothing wonderful. that is a market that has always been driven by domestic retail flows, and has a history of violent moves in both direction. i think the upside potential of mainland china is something you want to keep an island. vonnie: deal or no deal on trade. michael: exactly. vonnie: thank you for joining us today. much appreciate your breadth of knowledge. michael shaoul, ceo of marketfield asset management. this is bloomberg. ♪
vonnie quinn. this is the european close on "bloomberg markets." it is time for your latest numbered business flash. the winning streak for the national automobile dealers association may be over. they say fewer than 17 million new cars and light trucks be sold in 2020, the. . least in six years the trade group says -- the least in six years. the trade group says users are considering used cars. uber has fought back in aggressive attempt to force it to treat drivers as employees. the judge refused to throw out the case, an early test of a california law aimed at gig economy companies. in london, shares of nmc health down as much as 20%. it is shorting the stock because of concerns about nmc's
financial statements. bloomberg has reached out for comment. that is your latest bloomberg business flash. let's check u.s. markets now. we saw fragmented gains across the indices. the dow was up 0.2%. the s&p up just two points. the nasdaq basically unchanged. the vix is almost unchanged at 12. in europe, we saw declines for a lot of the session. ftse 100 has turned around, just less than 0.1%. italy's stock market is also positive, up 0.4%. the european close is next. this is bloomberg. ♪
green. it had been a sea of red for most of the session but france and germany, major countries are red as we approach last couple of minutes of trading. britain is gray. still green in italy and spain. let's get to some of the indices underneath it all. the ftse 100 back to flat. a lot weighing on the ftse 100 including that carson waters on mmc which was dragging on the ftse 100. down more than 20%. we have reached out for comment. waters, enemy made some investments -- nme made some investments -- this is according to short seller carson block. the dax and germany down .9%. trepidation from automakers about china retaliation if there is backlash on germany not using huawei for 5g.
that is not set in stone but there would be backlash and that is affecting automakers. banks in europe are not doing so well after the bank of england double the capital buffer for banks from 1% to 2%. the countercyclical buffer. you have rbs lower, lloyds lower, barclays lower. the cap 40 down .4%. 40 down .4%he cac as well. in the u.s. seeing on a balance but fractional gains to the s&p 500 and the dow with the 10-year gilts at 1.80 eight. -- with the 10 year yield at 1.88. -- taking the deal in stride and seeing what comes impeachment or otherwise. oil companies doing pretty well today in the s&p. that is a look at markets right now. chrysler and fiat
tsa meeting separately to discuss the details of their merger deal. the final announcement could come tomorrow. joining us with the latest from paris is bloomberg's caroline connan. what we know? group is still meeting. we do not know if this will last a few hours or could have an announcement by tomorrow morning. what we know is the two companies could sign binding memorandum of understanding. this is about six weeks after the initial announcement of their plan to merge. detailsd hear about the between the owner of fiat chrysler and psa.
chairman to remain -- the fiat chrysler to remain chairman of the combined company. we expect the current ceo of psa group to be the ceo of the new entity and this company should be based in the netherlands but listed in paris, new york, and milan and it would create the fourth biggest automaker in the ,orld behind volkswagen, toyota and the renault nissan alliance. vonnie: what obstacles to the merger remain in place? we have seen a few obstacles along the way. one of the big obstacles is the french state. remember in june, the french state was responsible for making the renault and fiat merger fail. this time, according to bloomberg sources, this deal
should have the backing of the stake state who owns 12% in psa group. another obstacle could be psa groupareholder of , the chinese, who went into the psatal of psa in 2014 when was struggling. according to bloomberg sources, this would be sold, at least partly, and the family could buy parts of these dormant stakes of the french stake. we will hear probably more details as we hear from the board meeting that is still happening. finally, legal obstacles could also, in the way. -- could also come in the way. italian tax authorities asking billion as much as $1.5
regarding the chrysler acquisition a few years ago. on the other site, chrysler being accused of bribery and corruption. a has denied any wrongdoing. if this is binding and signed today, we should complete the deal in one year from now. usnie: more broadly, talk to about the strikes that gripped paris over the last couple of months. are they coming to an end? will we look forward to more in january? caroline: of course it is possible. there is stillak mass demonstrations going on across the country according to the most radical union, 350,000 people were protesting today in the french capital. we are still expecting more official numbers from the police. the goal of the union was to reach one million protesters
across the country. today we will see if the numbers confirm the target. vonnie: thank you for all of your reporting. that is caroline connan in paris. let's get to another big corporate story. amazon announcing third-party merchants can no longer use fedex ground delivery because it is too slow. the move comes just as fedex prepares to announce its latest results. joining us from our princeton office is bloomberg intelligence senior logistics analyst. it seems quite tyrannical for amazon to tell their third-party sellers who and who they cannot use. is this something third-party sellers sign up for when they join that platform? lee: they have to use the providers amazon lays out in the agreement. this can be disruptive for some of it sellers and not a big deal for others. for fedex itself, it is probably not that big of a deal.
fedex has been walking away from amazon over the last year. this is another part of that decoupling of the two entities. amazon has been active in building its own delivery network, which is similar to what other large retailers have done. the difference is when walmart what amazon is- doing is between their warehouses in people's doorsteps, which is different. plentylity is fedex has of other business it can go after like a walmart or a target which will not use amazon's delivery system. vonnie: hold on for one second. we know that now president trump is planning to attend of world economic forum in dabo's in switzerland -- in davos in switzerland. that happens in january every year. president trump is planning to attend. we learned earlier boris johnson is not planning on attending.
again, these could change. for now, president trump is going to attend the world economic forum and boris johnson is not. let's get back to fedex and amazon. will this make the third-party sellers more popular? go withdecide to only those that could fulfill the delivery within the same timeframe as prime, will that bring customers back to the amazon platform? lee: i think fedex might have an issue in terms of the on-time delivery requirements. their performance was quoted as being around 90% where ups was 94%. fedex might have dealt with different weather conditions than ups, but the reality is fedex is getting the overwhelmingly majority of their deliveries on time barring any weather issues. abilityvides amazon's to take stuff in house and force its third-party sellers into its own distribution center, which
will help lower its own cost to deliver its goods. it seems like there is somewhat of a conflict of interest between the third-party sellers and amazon. vonnie: how many third-party sellers does amazon have and are they worth much to amazon's bottom line? lee: i do not cover amazon so i do not know the specifics. from what i understand about 50% of their business is third-party from my understanding. vonnie: talk to us about the wars between the different carriers. we have dhl, we have fedex, it seems to me, and this is anecdotal, but i hear from a lot of people that deliveries are piling up. everybody is delivering and some of them are using those carriers. are they outdoing each other? who is winning? lee: we are in the peak season. between black friday and christmas. that has been compressed four
days because of where thanksgiving falls, it falls later this year. you're having growth because e-commerce is growing significantly year-over-year and you're trying to get all of the packages into a shorter period of time. fedex and ups and even amazon and the united states postal service, they do not build a .etwork for peak season you are seeing what would be some bottleneck, but fedex and ups are countering that through investments in technology and trying to automate as much as they possibly can. they hire seasonal folks to help deliver and sort the packages that may not be can viable. they are dealing with their own challenges. there is competition in north america between ups, fedex, and the u.s. postal service and to a lesser extent dhl. fedex has other issues in europe
, which goes more up against deutsche post with its acquisition of tnt. that has not been executed as well as management initially hoped. a lot of that had to do with cyberattacks that paralyze the company four years ago. they are reeling from that and had to pull forward with a lot of investments to help tnt get back on better footing. we think the tnt acquisition, while it is going slowly, longer term should provide value for fedex and its shippers and deepen fedex penetration into the european parcel market. vonnie: much appreciated and a great story. let's check where european stocks have settled as we had to break. most of the indices are lower. up .5%.ve the ftse mib the ibex down .7%. the dax and germinate giving back .9% of the gains.
has yearned -- has learned adam schiff and jerry nadler are likely to be named -- that is when the houseboats on articles of impeachment. more signs of a rebound in the u.s. housing market. startedber, homes rising 3.2 percent. application for building permits hitting the highest level in more than 12 years. this year the fed cutting interest rates three times has helped housing. u.s. defense secretary mark esper suggesting turkey to be on a collision course with nato. the turkish government has threatened to close two critical nato bases and nato -- and as turkey's purchase of a russian-made missile system. -- he's president says if will retaliate. workers across
the country's labor force walking off the job joining the does care week-old -- joining the two week-old strike. emmanuel macron's pension reform system would raise the retirement age and end special permissions -- special privileges for certain workers. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am viviana hurtado. this is bloomberg. vonnie: thank you. we are looking at the renewable energy group as our stock of the hour. biofuel as congress nears a deal to extend some tax credit. taylor riggs is looking at which companies could benefit. taylor: we are taking a look at shares of renewable energy jumping most on record, up 42% in the last day or two. this is after congressional leaders are looking at overhauling the tax credit. , coming outebating and looking at renewing some of
the tax credits on the biodiesel. this would affect shares of renewable energy, even valero according to some analysts. would you retroactively extend the one dollar per gallon credit for 2018 and 2019 but also looking to extend that into 2020 and then it drops by $.20 a gallon for every year between 2021 and 2023. analysts at piper jaffray and roth are saying that is more ambitious than they thought. very good news for some of those companies. notably, it does not include solar. it does look like right now it could extend some of the wind credit. a lot of debate still going on. vonnie: i want to break a headline. rick gatesign aide sentenced to 45 days in jail. we have a decision in the rick gates case. he was the star u.s. witness against paul manafort and roger stone. prosecutors had asked for him to
only be given probation but he got 45 days in jail. we do have an answer on the rick gates sentencing. 45 days in jail. back to taylor riggs in san francisco. wind energy is included in these tax credits, solar energy not so much. why is that? taylor: i want to take a look at some of the companies we know. toar dropping as much as 1% 2% earlier this morning on the news. it is setting up for pretty big spikes as democrats pushing for the tax credit to be extended for some of the alternative energy. wind looks like it might be included. solar not included. the solar stops are taking a bit of a leg lower. republicans have been pushing back. the white house does not want to extend the tax credits to some of the alternative energy producers. we have to wait and see. we have a few days left to see if we can get this done. vonnie: taylor riggs in san
francisco. thank you for that. i want to reiterate we have a decision in the rick dates sentencing. sentencing.gates of 45 day jail term. the trump trade who was a star witness against paul manafort and roger stone. prosecutors had asked for him to be given no jail time, but the court found differently. the court found rick gates should be sentenced to 45 days in jail. coming up, it is our global battle of the charts. this is bloomberg. ♪
vonnie: it is time for our global battle of the charts. you can see them on the bloomberg by running gtv . kicking things off is michael mckee. that bigi like to see smile on your face because this chart says you are happy. whichs the misery index combines the unemployment rate in the inflation rate. inflation eats away at your income. what we see now, you can see the
numbers in the corner, it is the lowest misery rate since 1953. come back to that time period, we do not have data before that. you can see in the green, that is the lowest number. that is because inflation was so low. the most similar situation to where we are now is 1953. as former vice president dan quayle once said, campers you are and campers you will be . vonnie: i love it. i wonder if that index can go negative? ifhael: i suppose it could we got inflation and unemployment so far down but i'm not sure you can be negatively unhappy. vonnie: do two negatives make a positive? john hyland, you are after michael mckee. msci world index to a
record high. going 685igh after days without a fresh record. it is now up in the last five trading sessions and that has pushed its relative strength index above the 70 level into overbought territory. last month it was its most overbought since january 2018 when it lasted a record, but it still continue to rally, pushing higher yesterday. this comes on the heels of renewed optimism. the u.s. and china reaching a phase one trade deal and investors think there could be more upside in the market. the global chief investment officer for ubs wealth management wrote in a note that as soon as we reach peak tariffs which could unlock more upside for the equity market and comes on the heels of renewed business confidence. this index is up 23% this year, on pace for its best annual gain since 2009. something to keep an eye on. you can find this chart by running gtv on your terminal. vonnie: i love it, i love the presentation, i love the idea, i
love the citations. today you get an honorable mention because i enjoyed the misery index chart michael mckee presented. john, i know you will be back. you will win again. you always do. michael mckee, congratulations. michael: thank you. keep smiling. vonnie: coming up on "balance of power" we have been pardoned, maryland -- we have senator ben cardin to discuss the trade deal and impeachment. checking u.s. markets, a slight moves. they are all to the upside. generally positive. this is bloomberg. ♪
where the world of politics meets the world of business. other brief today, kevin cirilli from capitol hill on impeachment. edward evans from london with a hard brexit back on the table, and edward baker from san francisco on pg&e versus the california governor. kevin cirilli, let's start with you. impeachment, we will figure out the rules today and about tomorrow. kevin: as we talk, the house rules committee is underway navigating the rules for the impeachment proceeding. the vote is anticipated tomorrow. some of the key questions members of the rules committee are grappling with is whether there will be a voice vote or an electronic vote. just within the last half-hour, new developments from the senate , they are going to vote whether or not to convict. all indications signal the republican-controlled senate not vote to convict president trump of that. senate majority leader mitch mcconnell responding to the letter onun