tv Bloomberg Markets European Close Bloomberg October 15, 2018 11:00am-12:01pm EDT
guy: here are the top stories we are covering. stocks are fighting back. the s&p still down. we had that weak asian session. europe did not have a great morning, brookline our way back off lows now -- clawing our way back off lows now. 1973 was the last time the saudi -- that saudi arabia used oil as a weapon and is threatening to do so again over the weekend. president trump advise mike pompeo to get on the plane and fly to the kingdom. and brexit battle. lawmakers thisls will continue. moved and we have a key cabinet meeting and an
e.u. leader summit. let's check the european markets and show you where we are. the dax is trading higher .7%. eurosterling fairly flat. we did see the pound making gains. the euro going down as theresa may started speaking. but it has come up rather quickly. big. is we are paying attention to the saudi story. oil as a weapon. we have not seen that as the 1970's. huge cues on petrol stations. and vw trading very strongly as we see the cfo talk about potentially monetizing the value that could be there in porsche. let's talk stateside. abigail: i am looking at next markets and the dallas up .1% --
and the dow is up .1%. nasdaq underperforming once again. seven out ofown the last eight sessions, so the bears remain in control after last week's big selloff. the s&p -- the s&p down three weeks in a row on continued fears around uncertainty having to do with trade, rising rates, plus the idea that markets have gone to could do far, too fast. o far,t could go to good too fast. the nasdaq 100 on pace for its as theonth since 2012 bears are trying to take over. second down month in a row, similar to february and march. the question is will this be bullish or bearish.
as for what is dragging down the nasdaq, we do have amazon, apple, microsoft all trading lower. where we do have moment to the upside, let's look at the packaged foods companies. we had bad weak retail sales data for september that came out. we do have some of those packaged food companies doing quite well, including campbell's , general mills, kellogg's, and hershey. a little bit of a rally here, guys, and then finally suggesting that the bears may continue to take over on stocks, we have the yen higher, gold higher, and the index up ever so slightly. it is some exciting times. guy: oh yeah, i'm interested to see if the s&p closes above or below 27. 66. we did by one point on friday. market live team
. cameron, let me start with you. which provides a greater trading opportunities this week? brexit, the italian budget? i want to add to that you have the saudi oil story. that seems to be the fact we need to bear in mind. you have a technical story around equity markets as well. there is an awful lot going on. is a market pricing this actively or taking a step back and waiting to see what the dust settles? cameron: the market is in reactive mode at the moment, especially the magnitude of last week's selloff caught most people by surprise. the metrics on how it has have -- -- how they it has been a bellwether leader of the rally. seasonf an earning's
where we will get some guidance as to the impact of tariffs on demand for tech products. apple's products for example, moving forward, but if you look at year ahead earnings' estimates, they are pretty robust and picked up as of the end of september. you could argue there is a bit of complacency in terms of what analysts are expecting, an effect that stocks are not reflecting that. the reality is that people look at the price and the craft the story around the price, particularly you know, we are coming from all-time highs and volatility picking up as much as it has, the natural assumption is, i am missing something here. >> markets are at the whim of geopolitics. a bifurcated trading environment? >> there are a lot of political
catalyst, but when he see markets are trading off of them, it would be more accurate to describe them that markets are standing by as the political developments play out. i was watching the pound a few moments earlier. you could barely discern the move in the currency. that is what we had been observing the last few months now when it comes to brexit developments, and how it has impacted the currency. more and more it seems i currency traders are more willing to stand by and let it play out, make a decision based on what is changing here and the long-term and what is short-term noise? arguably, today at least, when it comes to the pound, it seems like the judgment is this is kicking the can down the road and the politicians still trying to work it out, but not really producing any lasting results when it comes to brexit, and therefore, traders are happy to
sit on the sidelines until they work it out. cameron,ight, so earnings will be something for micro-traders? macro-traders -- but what will macro-traders be looking out of the earning off-season? cameron: some sense -- some sense that tariffs will impact demand. we have retail sales that were weak on the surface. maybe not as weak as expected, was a 4% number and q3 could easily be in the high three's or low four's. but that is above trend. if question is, when rather and to what magnitude will it decelerate? headwinds, one from higher interest rates, hitting demand for mortgages, and the housing sector, two obviously from the tariffs.
and the wildcard is the saudi business. i am surprised personally that we have nothing more followthrough in the oil market -- i'm surprised person that we have not seen more follow-through in the oil market with prices. that will be a lot for the economy to surmount. that could radically impact fed expectations moving forward is the sense is that the economy is turning toward a more rapid halt then imposed. guy: u.s. stock market outperformance has growth tops out. the assumption is almost the u.s. markets are going to meet the rest of the world. we are going to see a re-coupling taking place. i am looking at the dax on a daily basis at the moment, and i'm really struggling to find every connection with the dax. you have the politics in the trade story which needs to be priced in. the dax has been buzzing through
it. as a u.s. comes down, will europe fall further at the moment? >> there is not a lot of positive for the dax guidance. in europe, they are still beholden to their all politics internally with brexit, and italy still hanging over traders, but there beholden to global development, so it is easy to make a case for a european -- four european equities and we had -- for european equities. now that the u.s. conversion story is gaining more traction, the idea of re-coupling, getting more traction, comparatively speaking versus europe, it is much better off based on the fundamentals, based on evaluations and all of that. there might be enough valuation
story to be made for u.s. equity, but how far can i get you? it doesn't seem there are much fundamentals there. if the u.s. makes that convergence play, we might see it. own, itor europe on its is hard to make a bullish case at this point. vonnie: our thanks to both of our guests. let's check on first word news. >> the naked too caught up. president trump -- let's me get you caught up. --sident trump says that says he's sending secretary of state mike pompeo. -- secretary mike pompeo to saudi arabia. president trump is on his way to florida and georgia to look at the damage caused by hurricane michael. the storm devastated areas of the panhandle and it could be weeks before people get their power back.
they are trying to account for 250 people try to ride out the storm and are homes. the pentagon is looked at the grounding of more than 80% of its fighter jets. the planes for ground last week after investigators found a faculty tube -- a faulty tube could've caused the crash in south carolina. dayal news 24 hours a powered by more than 2700 journalists in more than 120 countries. guy: thank you. theresa may still addressing the province. saying the whole of the u.k. must leave at the same time. theresa may's government still has an issue with getting the budget through over the next few weeks. if they were to back off, it may not happen.
♪ vonnie: from new york, i'm vonnie quinn. guy: and in london, i am guy johnson. ons is "the european close" "bloomberg markets." vonnie: bloomberg's he tom keene has -- bloomberg's tom keene joins us. tom? >> the question is the impact. we have heard about the farmers and the midwest. you wonder what the impact of a trade war in gary, indiana.
be president will not campaigning there. gary, indiana is a home of the nobel laureate of columbia who joins us. you folded right into a blistering this course on the elections. what is so important about your discourse is it is about trump and the republicans, but it is really about the democrat parties that you identify with. it is a breath of fresh air as we have not seen that. what is the democrat party getting right as they move through these elections? >> i think they are realizing that they have to have more than an anti-trump position, they have done a positive position to understand why the country has not been forming very well. why there is such any quality? it has part to do with monopoly power, and parlayed that we have not done enough to protect those
who have been so badly effected by -- have donewhat others to us. it is not immigration, trade, but it is really our failure to address the problems and the transformation. -- you nail it dashed on off yourl it elections. how did the democrats get the troops out? do they go back to our childhoods when you went door-to-door. -- door-to-door? ways ofthere are reaching people through social media, but it is getting people out to vote. -- a lot of the young or old people don't vote, so you have to reach different parts of the -- in different ways. tom: you touched on a
generational shift in the democratic party. we have seen a shift in the republican party with the success of president trump. how do the democrats effect a generational change in the coming months, 20 two days, and on to 2020? how do they affect that shift? the young table, the enthusiasm -- the young people, the enthusiasm, we have seen that in some of the primaries seeady that young people, i at columbia where i teach, the enthusiasm may have for candidates that have a positive agenda. says's memo toe joseph's columbia -- [laughter] tom: you saw this with historic
elections, how to the democrat -- how does the democratic party regain wisconsin? how do they regain a suburb, 72 miles outside of gary, indiana? do they do with speaker pelosi or do they have to go to something new? tom: i think they have to go to something new -- joseph: i think they have to go to something new. they talk about being authentic. tom: what is the real alternative? agenda a progressive that and away is going back to the middle class lifestyle we had in the middle of the last century, but it will be a different way of achieving that. we are not going to have the old-style of manufacturing jobs of the 1956 -- of the 1960's and 1970's. the new way will require a different room for government, providing for old age, health
care, education. tom: but the republicans do solo, and yes, the republicans get a turnout. they will play to the base in the next 22 days, but how to the democrats get beyond a progressive base that went down in flames in 2016? joseph: i think part of the stories to explain how immigration, trade, is not going to be the solution. the trade war will cost us in our agricultural areas and cost us in our industrial areas. it is not going to be helping an hour more dynamic areas, whether it is silicon valley or new york. to thew do you respond
president when he talks about your party, your politics is the mob? uglyh: we know he is very in the way he articulates and expresses his disdain. i think the democrats have to respond positively, you know? i think the country is that up with that kind of ugliness that has characterized trump and those who are with him. and they want a positive story, not the kind of fight with everybody around you, but you would hope of what we can do, and i really think these are the things we can do. we are much more -- now than we were 75 years ago, and yet, we seem to be telling the americans
we cannot have a lifestyle that we had 75 years ago. that is nonsense. the reason we cannot is all of we gangs -- all of the gains have had are going to the people at the top. if we shared more, all of us could give back to that middle-class lifestyle that everyone aspires to tom: i want ofaddress the phrase discontent. do you have a royalty on that. when everyone says discontent, you get a royalty. how does the discontented act in begins to be given -- two to re-gain ground -- to begin to re-gain ground? joseph: the whole issue is turnout. what i have seen, and again
universitiesly -- i have visited around the country, they are beginning to grasp their future is at stake. the future of our country is at stake, and we are at a pivotal do not takeif they these actions, the country will have gone off in a particular direction, and it will be harder and harder to bring it back. tom: we got through this interview, folks, without me bringing up paul. you can trash paul. before you go, i have to ask you to get the professor' at on -- the professor's on -- do dna to sayto she is partially indian. are you parse a native american? joseph: no.
tom: is she too far to the left to win? no,.h: -- no. tom: so she can win? joseph: i think she can when that had think she can win. she has a clear message of where we need regulation -- i think she can win. she has a clear message of where we need regulation. we want to be able to drink our air, and breathe our as we go the direction, we won't be able to do that. keene. our thanks to tom this is bloomberg. ♪
until europe closes for the day and let me talk about the levels. the dax in positive territory. we got some stocks doing well today. vw dax briefly well bid with trading up. cac is flat, starting of negatively this morning. this is where we are. tripping downound around .1%. , the full european close. this is bloomberg. ♪ his is bloomberg. ♪
it came off a very negative session. we have climbed down. most of europe is now finishing a positive territory. the me show you the numbers. well. the dax having a much better session held by vw. the dax is played by a number of bills at the moment -- ills at the moment. up by .8%. the italian market is up by .3%. the italian budget has to be in brussels by midnight. let me show you individual names and what is been going on. with vw by 8%p and the cfo was speaking earlier on saying if you put porsche and , therery -- and ferrari
will be -- it is the same as the whole of vw. you get the rest of vw for free. on,with the morning earlier the stock is trading down by 34%. i want to highlight how will gold stocks are doing in london. remember, take a look at the short data on gold at the moment. we have record shorts on gold. it will be interesting to see if we get a squeeze on the price forward from here. let me quickly show you what has been happening with the -- despite the fact we have had a slight recovery, it is not been a great volume. the volumes today have been a little lower since last week. that is a look at the european markets. i'm guy johnson. vonnie: here in the u.s., you are not anticipating a week of wondering what is going on.
earnings continue a pace. bank of america this morning and more banks in the next few days. the vix is down, but still elevated above 20. the dollar index is also lower in trading at 95.03. gone at 71.46. one of the geopolitical stores of the day is mike pompeo king salmon and what is potentially going on in turkey at the saudi consulates. -- saudi and turkey stocks are higher today. making news, south africa down 2.1% in terms of equities. iran is higher. --moody's may not have
downplayed south africa. we are seeing a big reaction in argentina. the second round of the brazilian elections come ever closer and it looks like a -- looking for the see with the results delivered terms of economic reform. let's look at the markets in europe. we are joined by our analyst. a bunch of things going on. you got brexit, the bavarian election, and by midnight tonight, italian budgets -- and italian budget has to be in brussels. do you think that will get rejected, and if so, what happens? >> i don't think it will be rejected. it will take some time to look at the budget. on. could go
-- we have seen is [indiscernible] guy: yeah. i struggled to see where that voices coming from. you have angela merkel increasingly looking like she could become a lame-duck. macrone the emmanuel administration, waiting for a re-launch, but it is struggling to make headwinds domestically. it had a bit focus -- big focus on headwinds. where does the reform agenda come from. -- what is the reform agenda come from? >> there is a crisis big enough
to really trigger integration. -- is weaker. there is a boom of opportunity that opened last year after macron -- the german indexes closed again. [indiscernible] the big european leaders are leading towards -- integration. guy: we are going to leave it there. we are having a few issues with sound quality on the line, so we will wrap up the conversation. to somelet's get back of the political stories today, tensions rising between the u.s. and saudi arabia, president trump saying mike pompeo is
meeting with the saudi king. quite theas statements. ofsident trump almost sort let the cat out of the bag on behalf of the other governments, sounding to me like these could have been rogue killers. this is the first time that there was acknowledgment that the saudi journalist may be dead. >> did was very unusual comments from the president -- it was very unusual comments from the president. key dispatch mike pompeo -- he dispatched mike pompeo. the king gave him a flat denial that there was -- the king gave wasa flat denial that there an moment with the journalist. vonnie: what happens next? the human tragedy is front and
center, but in terms of u.s.-saudi ties, what happens next? it will be very interesting to see how mike pompeo will negotiate this trip to saudi arabia. what kind of statement comes out of that. it is an issue that the saudi is in the u.s. government at some levels would like to see wrapped up pretty quickly. there hasn't been a real credible explanation from the saudi's about what happened at this point. they need to, you know, have an investigation that is credible. what is at stake, the president has built his middle east foreign policy around the saudi's. he has touted them as a central part of that. you have a peace plan mentored kushner has been working on that is believed to -- you appease plan that jared kushner has been working on.
the u.s.-saudi alliance has been very strong sense trump took office. it was the first country he visited after becoming president. with thee controversy missing journalist, people believe who have been killed in turkey, has threatened to undermine all of that. vonnie: and the saudi's future investment conference from which almost every body every big investor has pulled out, or is thinking about it. steve mnuchin -- mike pompeo? we know he doesn't always agree with the president and we know that john bolton been involved already, this affair between saudi arabia and the u.s. is there a danger that there might be a breach between mike pompeo and president trump on this one? >> i think president trump said pompeo,peo -- sent mike
i think him going directly to saudi arabia shows the saudi's the seriousness at which the u.s. is taking this. president trump has been under a lot of pressure from congress to address this in a meaningful way. and i think pompeo going and whatever statement or agreement comes out of that is going to be the administration's best effort to get to the bottom of what happened, and to also get past what happened. vonnie: right, we are looking at live pictures and awaiting secretary of state's mike pompeo trip. president erdogan is involved. whatever it was that happened in turkey on saudi arabia soil at the conflict, but in turkey, how does president erdogan uses to his advantage? >> it is an interesting place for him to be. he is set to fallacious with the u.s. and tough relations with the saudi's. he has -- he has had tough
relations with the u.s. and tough relations with the saudi's. u.s., youith the might remember turkey finally released on friday and american pastor who had been detained for two years under what the u.s. had said is basically an on credible charge of being involved in a 2016 coup. erdogan is in the middle of this very much so as a u.s. of saudi arabia hope to resolve this issue. vonnie: just briefly, if this journalist based in washington, d.c. is dead, is there anything that would allow for ties to saudi arabia? no matter who did it? it would have happened on saudi arabia and soil. some a matter who -- matter who is responsible, can the u.s. and saudi arabia make this good at all? >> a lot of it will depend on
the credibility of this investigation and the if early -- this investigation and the inquiry. senior officials in congress have stepped up the pressure on administration, saying future arms sales to saudi arabia could be blocked. congress could do as it did with russia in its administration and put real pressure on administration in terms of sanctions and other actions that would punish the saudi's, whether or not the president supports that. vonnie: our thinks to our reporter. -- our thanks to our reporter. guy: let's get an update with courtney donahue. courtney: harvard goes to court in a case that could determine the fate of affirmative action in college admissions. a group headed by an affirmative action opponent sued harvard claiming it illegally limits the number of hispanics.
the school says that race is just a factor in its approach favored by the supreme court. unexpectedlyrose 2.1% in the second month in a row. the trump administration -- to ship code out a natural gas to asia. interior secretary ryan zinke he said it is a matter of national security to have affordable access to fuel. i'm courtney donahue. guy: thank you. able topoint, i will be pronounce your name correctly,
but i don't know why i cannot do it. it will happen at some point. let's check in on the u.s. market and show you how europe closed. as you can see, u.s. markets are in the green light now. we staged a little bit of a recovery. the exception is the tech stock of the nasdaq remains under pressure. the major names continue to be lower. we are focusing on the banks. we have bank of america today and will get goldman's tomorrow. the banks had a fairly good day. this is bloomberg. ♪
♪ vonnie: fashion line guy: time for battle -- guy: -- of -- guy: time for battle of the charts. i will start things off. over to you. >> i will talk about two assets making headlines. let's start with treasuries. let's start with j.p. morgan. they see the 10 year going as high as 5%, which seems pretty bold. we have not seen that since 2007. oil,u compare it with which is what i got here. i got the 10 year breakeven rate. over time, they attract each other pretty nicely. one reason is inflation. up and pusheses rates up. we have seen this correlation going. you have big calls on oil with
many saying it is going back to $100 a barrel. as you see, oil going higher, that big call on treasury yields seems more believable. ok. interesting chart. vonnie quinn? vonnie: here is another interesting one, guy. south africa, i mentioned it -- moody's --ease it could be upgraded. you can see there have been outflows all through the past several months. look how much they shot up. you can see that on the bloomberg chart. it may not be too late for you. guy: it may not be too late. -- sebastian has
done a number of things today, which is talking about crude. he has to go around all afternoon to make a chart available to us. and he tells me it is dan's chart, his favorite chart. of one of by virtue those points, is the winner today. this is bloomberg. the s&p is on a -- moving average. good afternoon, good morning. i'm off to join jon ferro on bloomberg radio. this is bloomberg. ♪
had a 20 minute conversation, expressing absolute denial at events regarding the disappearance of jamal khashoggi. for the moment, we are going to continue that story, but we're going to the kingdom's energy minister who dissented his country's oil impact in new delhi. >> in our view, the current isket took the fundamentals quite a balanced and in large measure, due to the collective efforts of saudi arabia, uae, russia, and other allies, who have opened tariffs and increased production. weother words, once again, and saudi arabia in particular, delivered on our role as the world's cushion against -- i normally don't like to talk
about prices, but i will tell you, oil will be back to where it was five years ago giving the type spread capacity and the rising demand over the last three years. oil will be easily and the three digit range had it not been for the extra efforts that the kingdom has done. my expectations is that the kingdom will continue to be responsible, and we will do the right thing, and we will work with consumers and producers, essentially the central bank of the oil market and help balancing keep the markets stable. guy: interesting stuff in terms of what else is going on but the relationship between saudi and the rest of the world visit the energy -- vis-a-vis energy. they energy form took place earlier on in new delhi.
let's talk about the stock of newmont mining. sincetock up sharply stocks run aground over in the states last week. here is a story. 10% over the past month basically, we came into kind of this last a couple of weeks were was stuck in this tight trading range. but it turned a corner over the last couple of weeks with the stock market route and trade tensions ratcheting up. thing you have this other geopolitical issues and gold is essentially becoming much more of a haven than it used to become a drawing a lot more attention to these mining companies like newmont. if you take a look at what gold is doing, we are above the 100 day moving average on spot bull prices and that is a key technical level that a lot of traders have been watching to see if gold could break through and potentially hold. rallyay that last week's
was a turning point in if they could hold above this level, we could see gold rise at $1300 an hour -- at 13 -- at $1300 and that is why you're seeing newmont rising. vonnie: i could see why the etf's increased and hedge funds are boosting bearish gold wages, but whyuld be assigned, is this one gold minor among many? >> the market gets 97% of its revenue from gold-mining, so it is one of the few are played gold stocks out that. newmont is where you want it to be. you have a couple of companies in europe for u.s. investors that is harder to train those. toyou see flows going newmont and the gold minor's etf, which is the pure play. you mentioned the hedge funds. they are contrarian and they are
neck he short and have been -- and they are net short and they had been net short since last week's rally. are these hedge funds going to continue to double down? -- orl we see more like will we see that gold is poised for a breakup -- for a breakout? vonnie: romaine bostick, thank you. newmont mining and you can look at that chart that we showed you. trading above 21 s&p 500 down .2%.
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, i'muarters in london david westin. emma ross thomas on the brexit deal that isn't. from berlin, patrick donahue on angela merkel's historic loss of support in bavaria. tell us with the president had to say. >> president trump says he spoke with the saudi king and that he has denied any wrongdoing or involvement in the alleged involvement or killing of the journalist. the president recalling his conversation saying that ultimately, it could be rogue actors that acted against the journalist. this has had a massive