The tricky thing is figuring out the cattle last figuring out the catalyst. Job and we see the market only down 0. 9 on the s p. It felt much worse. Varian tends all day. Big selling over in europe. Definitely one of the worst days we have seen in a wild. Scarlet this particular rally started overseas. A pretty steep selloff. European stocks hit particularly hard. Most sincehe february, and volatility actually spiked. And energy was one of the worst performers. Interestingly enough, inflows too the u. S. Bond fund rose 4. 6 billion. That is unbelievable. It sets up the whole dynamic. Joe bank that is a perfect segue into the daily check. Here is a charge we have been looking at all day, japan, germany, u. K. , record low yields across the board. Yields pretty much anywhere you look today. We saw yields lower. The 10 year guilt is at its lowest level since 1729. That is what we are seeing day in and day out. Pound took a leg down in the afternoon. Friday afternoon in a new york. Look at that move, especially the dollar versus the pound. This is a new poll showing the momentum is not 55 versus 40 . A drastic move that has anybody on juneg what happens 23. Alix the story to me was about copper. That is trending around its lowest level since february, the worst week in more than a month. We spoke earlier about the stockpiles raising 37 . This really worries me. Can markets rally, can china hold up when market is rolling over . The other side of the coin, Oil Prices Also rolled over. Have been getting increasingly bullish. It just shows the optimism in the markets when you do have a watch out a washout a washout he can hurt. Scarlet you can find all the following charts at the function charts using the function at the bottom of the screen. A look. Ke they are back, the headline really says it all. See three oil rigs return to operation this week. That was a two week gain. The first since august. Lets zoom inside you can get a feel for it. The looks pretty similar to what we sell with u. S. Oil production last week. That rose 10,000 barrels per day. Are we seeing more money going back into more money into production as oil rallies. Does that end up capping any we see . Jumping here is a chart that janet yellen is going to make a yellen,ision janet who is making a huge decision next week, isnt excited to see. Is the chart going back to 1978. As you can see, fixed expectations for the next five through 10 years hitting a brandnew record low. Falling off a cliff. I think there are all kinds of debates about whether these really matter. People Pay Attention to them, so the extent that they do matter, not necessarily what you want to see dropping off like that. Inflation ist taking hold in peoples minds, not so much. Alix you used to be a lot of blame it on oil but you cant do it right now. Scarlet these are chinese kongs traded in what hong traded in hong kong. You are looking at the groups relative strength index. The speed of the rally pushed the rsi to territory over the red line. We are having some technical difficulties, live tv. Line. Is the overbought the green line signals oversold. There are a couple of things coming up next week that half people worried. Mainly chinese stock markets resuming trading after a two week break. Industrial production retail sales. Next week they will decide whether to include and their indexes. John several days coming up on that front. Alix joining us now is the Global Equity strategist at what do you make on a week like this week, when we have global bond yields sinking . Ben a big couple of weeks of data. Our sentiment is not necessarily supportive either way. This is pretty close to top of the range. You talked about the fact that you have downgraded your assessment of equities overall. You are looking for fundamentals to deteriorate. Nothing changed all that much. Equities finished the court of the first way despite all these concerns. Why have the fundamentals 60 of globalben equities in the u. S. And japan are right on the top of that cycle. We think expectations on Earnings Growth are too rich. Much earlier in the learning cycle, margins are much lower, we are looking for earnings surprises and potential growth surprise. The message is to be selective. Joe bank we get this close to breaking down another record. Could we go back to the bottom of the ranch . How much lower bond we see you go ben yields support multiples. We are going to see earning. Xpectations slashed they could come back a little bit. Margins are under a little bit of predato pressure here. Alix do you think the worst is over for that group . They were responsible for dragging down the earnings s p. Ben i think that is very good for some stec some sectors. The sectors, which are very exposed, doing so well, high dividend yields. Opec strategy is sort of working. Have 55 at the end of the year. Energy still has the highest dividend yields of any sector out there. We think the integrated saw integrate it stocks use that level very well. Valuations are pretty attractive. If you look at the overall market you say the world has become less friendly to equity investors, what about fixed income investors where they are looking for returns and equities . Ben almost always low bond yields in the u. S. , 0 on bonds and negative in jgb. That is going to anchor where we are in the u. S. We wont see a high bond deal for a long time. Longer duration stocks, these noncyclical stocks by 25 percentage points. We think there is something to go here. Then you say im a bond investor, maybe im really paying up for that. You are saying something that a lot of people are uncomfortable saying, that eels are going to get lower and lower. How much lower in germany and japan and u. S. . Ben intestine coming down for 30 years, so not sure this is all that new. We have 150 for the u. S. Treasury at the end of the year. We are almost there. I will point out they are well anchored here. Europes started buying Corporate Bonds. The era of unconventional policy as well. Of the selloff is a true beatable to gregs it concerns versus a positioning before the Federal Reserve . There are a whole bunch of issues in the market of this rally. Very hard valuation preearnings. If anything it has been disappointing. Joe bank you mentioned you like emerging markets. Any particular areas that are most interesting. Ben i think the dollar stabilization is taking a lot of pressure off. They used to be the highest. Of eem demandtion around the relatives developed markets, i think theyll open up for up front. Thank you very much. Global equity strategist. Per barrel is not enough to rescue companies on the verge of collapse. We speak with a partner at serengeti asset management. Mark Hillary Clinton has a razor thin lead over donald trump in a new national poll. Trump led clinton by three points in the same poll last month. The emailalso shows scandal continues to haunt the former secretary of state. 60 say she is lying about how the emails were handled. The Gun Safety Group founded by gary gifford recruited an unlikely ally. Action foral responsible solutions has formed a new group composed of military officials who will advocate for stricter gun rules. A mass shooting into son left six dead and 13 injured five years ago. Companies agree to new measures to tighten gun controls. Stricterres include rules on buying and owning semi automatic weapons. Steps to stop the activated guns from being put back into use and better tracing of traffic weapons. If she survives an impeachment trial. She should be consulted on the future even if the senate doesnt permanently remove her from office. Such a bold move could lead to a new president ial election. Global news 24 hours per day powered by our 2400 journalists in more than 150 news bureaus around the world. Back to you. Alix you can make money and energy right now. Sectorscies in energy are growing and some copies are providing and attract meant an attractive investment opportunity. With Significant Oil Gas Investments and putting money to work. Prior to that she was the global head of accolade head of commodity sales. What is the case for owning energy . Guest there is still a lot of dislocation. Whether it is the high yield equity markets, what is being said what is being priced in is very different. If you look to own ig names you are paying a premium. 65 per barrel. Alix if you look at their debt, they are pricing in 65 per barrel for crude where is the highyield market is pricing in what the actual script prices. If there are two different markets, which one is right . Guest you can really make money in the convergence of this. If you really push me on what my thought is, i dont think 65 per barrel is obtainable at the end of 20162017. Rigs are starting to come back on. The oil market is acting as though everything has been figured out. We know where opec is standing. Do inhe u. S. Producers the next couple of weeks or months is going to be important. We are supposed to take 700,000 barrels out00,000 of the market by year end. Joe bank a doesnt matter what oil does, you just expect the Investment Grade in the highyield market to convert on one oil market area have there ever been a time like this in the past where we sigh similar split between the two . Guest clearly it is wider than it has been today. You are seeing differentials. Definitely historical. Joe bank five what . Guest the ig is five times richer. We have seen this rally in credit and rally and equities. To what extent is that the name is that delaying the evan what extent is that the laying the inevitable . Guest we have had a high we a wide open at these market. Maybe we get to the end of this in a more orderly fashion. If that capital is used to increase production, then this is just a prolonged further leg down in the cycle. Which one is it do you think . Guest i think the drillers will drill. What is the case to go along some kind of stock . A lot of guys said why bother . You own the stock, you own the death own the debt. That could take years. Guest it is a hard case for equities. I think some of the credit going through some of the bank proceedings, there is a lot of back some ofing the contracts, renegotiating, ringing down costs. I do think there is some value that will flow through. Are equity holders for some of the highly levered names. I wouldnt expect them to come out on the end of bankruptcy for that. Any company that really needs we to drill out as a company would not i know your short ig. We like names like hello oil and real oil. There is a component to it which has been kind of lagging. Those are fully covered by pdb the bonds are covered by the cash flows. To rely on what they will bring to cover your debt. It is a european issuer. If there is some lead over if and what is happening with ecb, i think it will benefit from that as well. It is a securitization of royalty payments coming off of the offshore oil rigs in brazil. We think that is very well covered. Good to hear. Asset management. Weing up the financial throw you three charts you might have missed. Alix the Financial Accounting of the u. S. Was released by the Federal Reserve. Household worth rose by 830 billion in the first quarter. Bloombergs matt besler has been digging through the whole release and now joins us with three charts that stuck out. One you were looking at is the return on equities for nonfinancial corporate hitting a new low. They matched the record low we have made in the Fourth Quarter of 6. 1 percent. This is basically the return you are generating on investment capital. It is a little bit concerning because it speaks to low profitability of u. S. Businesses. Reflects Slower Growth in general and less leverage and that sort of thing. It can be viewed on one hand and the other hand. We talk about the cataclysmic changes. You are also talking about shadow banking. As a financial indicator. Bankingrt shows shadow as a percentage of the u. S. Financial system. It is basically looking at the amount of assets that are held, insurance companies, pension funds. Money market they are extending a lot less credit. That is probably encouraging to regulators who have been working on the banking system. Is that lack of demand or because they are constrained . We are definitely seeing on both sides. This is an something that was classified as financial stability. There was a lot of concern about how the Corporate Bond market is increasingly being held by mutual funds open up to run risk. A lot of people think this may be where the next big market crisis is. Toyou have everybody trying with draw from mutual funds account be trouble. The rest is owned directly by households and institutions . A variety of different entities, but also pensioned funds. Good to see you. Shrugging off the report the call for bankruptcy. We will speak with an analyst who says there is a whole different story about the business. Mark Hillary Clinton addressed a planned parenthood event in washington, linking abortion rights and Birth Control to National Economic growth. She said likely republican president ial nominee donald trump wants to turn back the clock on advances in Womens Health care. She also criticized one of his campaign slogans. When he says lets make America Great again, that is code for lets take america back or it. Back to a time when opportunity and dignity were reserved for some, not all. Planned parenthood announced its support for mrs. Clinton. It was the first endorsement in the groups 100 year history. To campaign for britain leave the European Union appears to beginning momentum. Survey in the new independent newspaper, 55 favor a brexit. 45 support remaining. Team searching for that missing malaysian airliner and debris was found off of australias south coast. Wreckagevery suggests may be spread out over 6200 miles. If confirmed, the debris would be the first part of the plane found east of the main search zone in the southern indian ocean. The plane disappeared more than two years ago. Hockey legend gordie howe is dead. Seasons in the nhl and six seasons in the world hockey association. His first 25 seasons were spent with the detroit red wings. Was a 23time time nhl allstar and is considered one of the greatest hockey players of all time. He was 88 years old. Global news 20 hours per day powered by our 2400 journalists and more than 150 news bureaus around the world. Back to you. Day for hockey. Losing 100 dow points, nasdaq off by 1. 3 . The s p suffering its worst day in almost a month. The catalyst is almost a head scratcher. Global concerns rearing its head before the meeting next week. There was no particular catalyst. Erhaps a little breather the poll coming out later in the day. Causing a little bit of volatility, but the real story continued bond deal declined everywhere in the world. Copper sold off and oil sold off. A lot of uncertainty. No trader wants to take a position. . Whatd you miss the company it bankruptcy waiting to happen and a stock heading to zero. Of twook at a playbook Environmental Companies that had huge liabilities preceding this, that has the same track to go to bankruptcy. Can i look at the Balance Sheet of a company that is too highly leveraged for the amount of money being generated . Yes. Do i have evidence of a nefarious plot, saying its time to go bankrupt . Of course not. The company did refute reports by saying it is cutting 200 million this year to reduce earnings and that. Earnings will rise from 2015. Here to give us the bullish take is a bond analyst at credit sites. You are focused on the fixed income side rather than the equity side, which is what he was focused on here. What in particular about his thesis does not rain true to you . We dont see substantial risk of them going bankrupt in the next 18 months. There are calls on liquidity and nothing in the next 18 months. They have 43 cases. If you take each case and lose every single one and they get 1. 6 million per case, which is what the first verdict went for, that is still only 60 million. Revolver, 750 million. Do not see bankruptcy risk on the nearterm horizon. You can see dd i. S. Is a function right now. Principal ind 2023. It is not a significant amount of principal coming in any time soon. Areoure pointing out there no imminent payments or they will not be able to make the payments anytime soon. Is largerys the dead than the companys peers. Is he correct on that point . Is that just not particularly relevant even intermediate cash flow . Their debt is high. When the first yield came we had to sell recommendation on the name. There is definitely some bankruptcy risk their. The idea is as prices fall and Security Prices fall it creates opportunity. Another point you make is that you are not unique when coming to environmental liability. These are long drawn out liabilities that are unlikely to get hunched up in the shortterm or mediumterm. Tell us about that. There are two types of liabilities, they have the litigation story and then Environmental Liabilities to clean up different sites. They have disclosed upwards of 600 million. Every chemical that we followed has different environmental obligations. We have never seen the spikes significantly in this short amount of time. There is a lot of thought coming we feel comembers full that 293, up to one billion is where they are at with this. Coming up, u. S. Imports continue to fall flat despite steady growth in demand. Dan gilbert, owner of the Cleveland Cavaliers and are toh to say are each said have 5 billion in googles core business. Made anis said to have offer between 3. 5 through 4 billion. Companiesication expected to get a chance at yahoo sales process. Acquisition proposal from buyer has been rejected, offering the same price it did back in may. A higher offer, according to people familiar with the matter. The Worlds Largest seed supplier and its debt at 62 million. That offer was rejected on may 24 and financially inadequate. A world wind day for dr. Media. Media. Gawker according to a person familiar with the matter other bidders can offer a higher price for their media brands, which will be sold in a bankruptcy court. The gossip website told a florida judge it could not afford to pay 100 40 million jury award to hulk hogan for posting his sex tape online. Alix the issue with u. S. Imports. Well imports are half a point last on the year versus year. Gdp demand is actually growing. In theory the demand is growing and imports should also be increasing. And formeror fellow Deputy Assistant secretary for a National Analysis of the u. S. Treasury from 2011 through 2015. Explain what is going on here. Know whatdont really is going on. That is subtraction against gdp growth. Imports have basically been flat. Backward looking sense otherwise what it would have been. In a forward looking sense, there may be some catch up. Of a bigger dragged them they have been in the last few quarters. Basically given that domestic growth, it is reasonable and possible that imports will rise, so what we think gdp is now it could be lower. Famine it is a possible headwind that could slow u. S. Growth in the next few quarters. What does this tell about where they are in the economic cycle. It is a little bit puzzling. The most plausible explanation is the investment has been week and imports tend to be more correlated. It is less of an indication on where we are in the cycle and more about the composition of u. S. Growth. You can talk about u. S. Mports or trade steadily depreciating throughout trade. The fx desk has cleared out further weekend. Do you see further pressure . A lot of talk about that last august. Kind of gone quiet but as you see the offshore currency weakening, going to Start Talking about critical tot is differentiate between how china moves between the dollars and how it moves in a broader basket of currencies. The reflection that the dollar strengthens against the euro. Since china is increasingly managing against the basket, you can imagine that leading to some weakness. The big question is whether china can it china can control expectations. The widespread expectation against the dollar in my view bankingconcerns the system and led to an excel ration and capital flows. They clearly drop. As they test against the dollar, you can imagine it may be more difficult. Take a look at the bloomberg here, this white line is the offshore. The blue i is the onshore. Purple line is a shanghai composite. They also had a selloff. Do you expect something similar to play out here . I think the differential is a good measure of the direction of market pressure. An important signal for Chinese Companies because they are the ones that have the capacity to move money in and out of china. Admittedly a future path to chinese growth. You worked on the european debt crisis, what du think investors learned about that experience that may inform them about how chinas debt may play out over the next couple of years . Im not entirely convinced there is a precise analogy between the euro area crisis and the china crisis. The euro area crisis was a crisis of monetary union, where there were deep doubts about whether the et be stand behind italians, spanish, others. That led to a widening of the yield of spanish. The issue with china is very different. The china has had a rapid expansion. There is going to be a question about who bears the loss associated with some of those bamboo those bad loans. Shouldnt be any question about the functioning of chinas internal currency and internal monetary union. Think chinas government has the capacity if necessary to stand behind those local government financing vehicles. When the euro area crisis got hot, and when people doubted whether they would stand behind spain and italy, you can imagine those risks. Thank you so much. Coming up there has been a lot of calls for protectionism. That may affect the u. S. Steel market. Chinese still exports are surging, raising questions about if western countries may impose higher tariffs to stop china from flooding the market. This has huge and locations during a u. S. President ial race. Joining me now as ken hoffman, head of the Mining Research for bloomberg intelligence, who literally greets it every single day. Some china imports are incredibly high, like 250 . Could they get higher . When filing trade cases against china, they dont even respond. They dont even say we have a problem, that makes the u. S. Authorities impose one of the highest numbers they can. Pretty much before those numbers is shiftedat they to around the world, then it gets reprocessed. Are we going to see some sort of Nuclear Option . The Nuclear Option being we are never going to import anything ever again. Have seen is the u. S. Has some a different trade cases. That is why steel prices are much higher. U. S. Steel has filed a section 337, which means the chinese have spoken in have stolen our trade secrets. That will be decided late this year. The new president would have to decide whether or not it goes forward. Also today the president could invoke the section 201, which keeps all in the u. S. To a certain level. It is a matter that china ships it to south korea or taiwan. What this also has done is shown a huge divergence in steel prices in the u. S. And china. It is truly incredible. How did we get to some high prices here . The price is around the worlds bike up and in the meantime the u. S. Proxies trade cases up. The prices come plunging down. You have car sales, good construction. Unlike the last time we had a section 201, it did nothing because it didnt help them anyways. Puttinge around they the trade cases in a good market. In a way it is sort of bad because how can they claim to to that point we have seen the profitability really surge. At some point will they be forced to import steel if we dont have enough of it here to pay up those really high terrace . A pretty good situation. You are probably running about 80 capacity in the u. S. Seen the Auto Industry slowdown. Politicians . The and two i believe they may do something about it versus all of that is piling up. Which is better for consumers, which is better for investors . Obviously you want to keep this deal out. There will be a little bit of pricing is going on with automakers and appliance makers. Automakersoking for offshore and that could come into the united states. Why havent we seen china retaliate . They actually brought some production online. Why do they keep doing that . The trade cases dont mean anything. If they are getting sued from the outside world, one points 2 billion tons of steel. That is 14 times with the u. S. Can make. They need to get their own house in order. And all the stuff that was a big deal for us is not a big deal for them. Thank you very much for breaking it down. Reminder, you can find the full analysis on the terminals. Find full coverage of various industries and companies. Coming up what you need to know at the airport next week. Industrial production retail all reopening after two days of being closed. Monday will be a busy market day area wednesday you have the decision you definitely dont want to miss. They might talk about it. Bank of japan race decision. Definitely going to be talking about that. Thats all. Thank you for watching. We will see you back here on monday. Mike im like. Mike. John with all due respect to donny deutsch, this is one goodlooking cohost. The game is afoot. Welcome to what is the first day of the general election. We have a lot to cover but lets begin with the days dueling speeches between donald j. Trump, billionaire, and hillary r. Clinton,
vimarsana.com © 2020. All Rights Reserved.