Transcripts For BLOOMBERG Whatd You Miss 20180207 : vimarsan

BLOOMBERG Whatd You Miss February 7, 2018

About fbi impartiality dating back to the obama administration. It says Text Messages between former Bureau Officials in 2015 reference a directive from president obama to know everything we are doing in regards to the Hillary Clinton email investigation. Texts indicated advanced knowledge secretary clinton even award prosecution before being interviewed by the fbi. Salt lake city is the first between announced it would pursue the winter olympics. After spending four months ensuring utah could host the games again without using money. Global news 24 hours a day andred by 2700 journalists analysts in 120 countries. Im Mark Crumpton. This is bloomberg. Julia live in new york, im julia chesley. Joe im joe weisenthal. Julia another day of choppy trading. The dow up 200 points. 85 . Ar yield around the question is, what did you miss . Announce aers bipartisan deal to fund the government for two years. The senate still has to vote on the deal. Investors are trying to make sense of the violent selloff. Going back to the signs and wages to take stock of the economy. He joins us in the next hour. And the spectacular launch for the falcon have the. Investors will be watching the cash burn. The bipartisan agreement facing bipartisan opposition in the house. Mitch mcconnell and shop just Chuck Schumer announce a deal to avert a government shutdown. That bill is hitting an impasse in the house. They are voicing objections from all sides. Now from capitol hill with the latest. It could take all afternoon if you explain what was involved. Talk about the Critical Issues that had most contention from both sides. Aspects in this particular budget deal are less contentious. There is a significant increase of well over a hundred billion dollars to military spending. That is a big victory for those who have been demanding this. There is an increase of 100 , to nih funding and opioid money to combat that problem. That is a victory for democrats. The issues are separate. The issues in the house in particular by the prospect of looking at this are gloomy at the moment, the fact they are demanding a guarantee that there will be votes on protecting dreamers as Mitch Mcconnell has guaranteed in the senate. Brian has not made that promise. The House Minority leader has been on the floor. Remarkable stretch speaking about dreamers and her desire to have some sort of deal. Appear they are going to the democratic votes to get this out of the house . Does that mean pelosi can get some leverage out of ryan opening the house to an immigration discussion . That is a key point you raised. House conservatives who dont like the fact that there are spending, theense Freedom Caucus demand several votes. Needspected rhein would democratic votes to get it through the chamber. Experience mark meadows is good with numbers. I would take that seriously. You are significant numbers of republicans that dont like that it increases nondefense spending. Deficit hawks few left. From capitol hill on this developing story, thank you. We have breaking news from xl group, attracting interest from rivals. This is according to people with knowledge of the matter. You can see they are searching on the report from bloomberg. A market value of the most in billion dollars. This is still preliminary and may not lead tweet takeover. Looking at a potential target for the casualty coverage business in the u. S. We will continue to monitor. U. S. Stocks are having a bumpy ride today. Treasury yields surge. The cio at Family Management corporation joins us now on the latest but these market moves. This is preceded by weakness in treasuries. Lots of different concerns. A weak dollar to boot. What is the narrative . It has changed certainly . Theres a lot of things, as you mentioned. The market is catching up with fed expectations. The labor market is starting to take hold with wages and employment. The plan that the fed put in place is probably justified. I think they were behind the curve going into the year and now we are probably at a point that is right. Jo we have had a lot of false selloffs. Theseears we get tantrums. Is this different . It is a little different. I would say this is normalizing. I think yields are going where they should be. The fed will probably go to times, at most four. We were at near 100 probability of a hike in march. Likely think marches area after that there is probably a few more to go. We start to see the curve selloff. The 10 year youll real yields, expectations are at recent highs. What are the linkages between the selloff and the recent selloff in risk assets . Markets long time the are predicated on low volatility, and the realization increase isket actually justified. Risk assets are waking up. Everything prices off of the riskfree rate. Whether its high yield can whether it is tied together. Other risk assets are going to have to adjust. How long does this take . It can be painful and shock a lot of people. In general what do we know about how long this takes . Is some moreere mullahs asian left. In some areas, a lot of defenses, they have gotten hit on the chin and you concert looking at those Asset Classes to start getting into them. I think they are getting attractive. These have been probably overdone a little bit. Credit hasnt budged much at all. Why . The economic backdrop is pretty good. Earnings have come in. The backdrop is supportive. There is not much supplied coming in. Lot. Nk that that is a there is less cushion now. There are meager spreads over treasuries. The same goes for high yields. Do you have any cushion to be buying these now . There is it really credit risk per se. Here. Has not moved julia you have to be sure there is a problem here. Ultimately we can continue to here. From you said we should realize our understanding of markets is less than we believe it to be. Predict is an exercise in futility. The president tweeted this morning, he did make the point in a sense that we are in a situation where good news for the economy may mean bad news for the markets. We were talking about a fear of missing out problem. Now we are talking about good news being bad news. Can those things hold true . That is interesting. We would recognize theres a big difference between the economy and the stock market. Early 2009, we did not bottom good news per se. Bad news was still going on. We can have a healthy selloff withaybe even some more the economy it just doing fine. Something you have talked selloff,en we get a there are different aspects. Sometimes it is liquidity. Right now it is alteration. If these things persist do they bleed into each other . I think they do. Spreads have absorbed a lot of the rate increase. There gets to a certain point when people say i can get the riskfree rate at this. Do i want to stretch myself and take the credit and Liquidity Risk to go in there . Theres different inflection points. That is an underpinning it. The technicals of the bond market have supported that. I think there is a point at which, there is a spillover in people are not willing to take incremental risk for low marginal return. Scarlet he is sticking with us. This is bloomberg. Scarlet etfs help drive the rally and played a role in the latest stumble. Inant to bloom in the spring eric. We look at the flows in the past week and it tells a different story than january. It is a completely different month. Month, they do the same thing. Spy is used by the trading crowd. Andis used by advisers allocators. Allocators are continuing to allocate. That money is coming in. It never saw outflows. Spy got hit hard in a good way in january and then all that money has come out. Traders seem to be spooked. The big story was about volatility. Etfs, you canhe see the february returns are all over the map. These are fallout far out numbers. This is causing controversy. Is confusion on how these things work for some people. Have introduced a system we actually launched today called the stop light system. This is a way to give advanced information for the level of surprises that could be lurking in your etf. You can trade it. Not to say it wont go down but theres nothing weird in it. And we give a yellow light because the holdings are not as liquid. Red andg that gets a basically it checks every box in terms of infractions. That is something investors should view as cautious. This week and have people use the right products for the right reasons. A lot of people were running red lights for the last few years. Lets bring in david shaw. It worked like a charm for years until it didnt. What we saw was the painful unwind. Do you think there is more to come . I think it is representative of a broader secular trend we have seen in the market since the fed started on their Quantitative Easing Program and took mortgages out of the market which suppressed volatility and now volatility is creeping in. Not every instrument is going to blow up but it is an alarm clock to the Investment Universe that this volatility is not a oneway street. There are other instruments that may not be as extreme that we need to take into account. We had a guest yesterday saying that spike and volatility cleaned out the market. There are many ways to go short volatility. Do you have experience products that suggests other ways are still being look at . The other week i looked at a Corporate Bond fund that was deemed enhanced. The more i looked into it, they were buying investmentgrade Corporate Bonds and layering in shortfalls. Givenou look at the test, what shortfalls have done, you add on rates following and clipping a coupon. I think that shows that not all Market Participants understand what that is and people were using it to enhance returns without understanding the risks. Some of the funds, do you think they will just be relaunched . In theory they can just start over. Or do you think they will be hesitant to let it out in the wild again . If the volume today is any indication people are going to continue to use them. It is like nothing happened. That. Are back in there is a more sensitive version of x iv. That saw 5 million above its average. Im guessing these will take volume away from it. The question is how much of the retail component will be scared away forever . I doubt no. Will nothink the sec do much for now. Julia doesnt this suggest that the message here is people continue to be call him even after the spike that we saw . There is a little bit of avalanche patrol. The avalanche happened. I think it will scare investors out. The retail risk starts to creep back in. In prolonged times of low volatility this can get going. For a while investors will be hesitant to go deep. Scarlet we dont even really know how big this market is, do we . There is money that piled into exide the. Then there are other ways people can express that trade but not necessarily through the etfs. The etfs, whether you are of ang spy, it is the tip bigger iceberg underneath. It trades its own exchange. Underneath was a bigger trade of shorting volatility, one estimate had it 2 trillion. I also think it was front run a lot on that close. Sometimes that happens with these products. You go back of four or five there are these crazy moments that happened with these crazy products. ,hey stopped issuing creations the futures long. It would to 100 premium and then they started issuing. It dropped and they got sued. These things are not completely new. You hate to see them. Even back then that was part of a larger trade. You look underneath. Institutions are using the derivatives themselves. Scarlet right. That is just a convenient way to keep tabs on it. Thank you. Julia not reassured. Scarlet a lot of warnings there. Scarlet you can watch us on etf iq. Coming up next with the countdown for tesla fourthquarter results. What are investors looking out for . Hint, it has to do with cash. This is bloomberg. Julia elon musk is a busy man. Spacexay he watched his launch its first falcon heavy. Are we back to earth . Preview,s now for a diana. Great to have you with us. Lets talk production. I feel it a lot of focus once again is going to be whether or not we see further delays here. In early january tesla said it expects to hit a production investors want to see if they are going to stick to that. This is important for teslas cash position. They are added interesting point in their estimates. One of the details about how a question was posed about whether tesla can achieve response was ais positive or 12 seconds. I dont think we are seeing that. We hitant predict until 5000. Are they going to hit 10,000 this year at all . Just the lack of transparency around the run rate, and the overall issues. These they are excited about getting these at some point in the future. How crucial are they . Is a number that has gone up a quarter over quarter on the balance sheets. Interest free run. Keeps their positive. Had theourth quarter we semi truck and the new roadster. Is that number going to arrive . Scarlet thank you for joining us. The market closes next. This is bloomberg. We use our phones and computers the same way these days. So why do we pay to have a phone connected when were already paying for internet . Shouldnt it all just be one thing . Thats why Xfinity Mobile comes with your internet. You can get 5 lines of talk and text included at no extra cost. So all you pay for is data. Choose by the gig or unlimited. And now, get a 200 prepaid card when you buy an iphone. Its a new kind of network designed to save you money. Call, visit, or go to xfnitymobile. Com. Julia stocks and the session after a shocking trading day. Investors are asking are we friday yet . Joe re friday . Vonnie almost. We begin with the market minute, and if you thought it was friday, you are forgiven because the markets have been all over the place, including the s p 500, erasing all the gain from wednesday, the dow swings the 500 point rise, so we have been all over the place, and right now the early close numbers indicate a loss. These are modest compared to what we saw on monday. Joe another extraordinary session all the round all around. Scarlet the return of volatility continues. Lets get to individual names, snap after they had their first 50 . This is a highly shorted stock as well. Bermudabasede insurer we side people with knowledge of the matter that it is good for a 12 and a half percent boost. Resorts with a rally after tumbling in recent days. The chairman and ceo has to down asinoeside, ca regulators will continue their hislem about whether or not operations in massachusetts, colorado, and overseas might be in jeopardy. Will continue to monitor. Joe now the u. S. Government bond market. Rates continuing to march higher on the shorter and long yield. At two point 84 , and if we look at the intraday, it was a very interesting session and we went out near the highs. We had a treasury selloff after the news of an agreement on the budget, perhaps spurring thinking of people talking deficits, so that caused some selling. A few weeks ago we were talking about flattening and theres going to be an inversion, but those seem like happy times compared to right now. If you look at the 210 spread, significant move in the recent days and weeks since those lows. I bet there is a lot of people who would like to go back to those days, but that is not the concern right now. Julia you mentioned the u. S. Senate reaching a bipartisan deal, the u. S. Dollar gaining on the news of that deal. Led positives we have common currency hedging its lowest is january 23 despite the fact that german chancellor Angela Merkel are concluded that agreement with the Democratic Party on the rolling coalition will talk more detail later on the show, and we show you a relatively unchanged dollaryen. And i am showing you the euro stock which was the biggest mover, the shift in the eurodollar higher, 6 10 of 1 . Finally on commodities, lets look at oil and gold. Againwn 2. 6 , and once the bear case is emerging for oil, over 10 Million Barrels a day, the highest level in 47 years, some incredible supply. Gold selling off with the selling off of treasuries, and copper down 3 . Seeing it a bit today with that decline in copper and oil. And those are todays market minutes. Scarlet and we have breaking , 20th century fox has reported and we have a beat on the bottom line and topline. The quarter, analysts were looking at . 38, the topline revenue, apron 4 billion, analysts were looking at under, Cable Network programming revenue 4. 41 billion, a huge chunk of 20th century foxs is from Cable Networks can higher than anticipated. Some commentary on the deal to sell assets to disney. Fox sees the disney deal closing in 12 to 18 months from last december, so that should put us basically for a timetable of 2018 you can expect the deal to close. Up 2 in afterhours trade. Of the bumpy busy equity markets, and we have to now consider the prospect of what it means when we look at concerns about higher inflation and whether that economy feels that out. Lets take a look at that with peter borish and you have seen for a long time a deflationary environment and out the narrative has changed to inflation, you are not convinced, are you . Oh no. It is an honor to be here today where everybody is nervous about treasuries going up, what happened to copper, what happened to oil, gold, silver . While my god, wages have gone from 2. 9 to 2. 9. Is being distributed differently and everybody is nervous, but there is no measured inflation yet, we can talk about so many Different Things, that it is a lot of fun, particularly to be a bit of a contrary and. Ian. Changed inything equities and volatility as far as you are concerned or is this the type of thing that we are going to settle down in a week and forget about today . Rush e in and in no market in terms of percentages and daily swings, but we are at the end of a cycle in terms of a long. Of time in the bull market without a 10 correction a long time in terms of slow economic growth. Everythinghink that is going to continue for a long time, i want to say it is all about Risk Management and i want to harp that escrow does not go hunting for acorns in april. Shares inesla afterhours, fourthquarter revenue slightly higher than what analysts were looking for. Rth quarter lost for share the nongap automotive growth , onen for cars is 13. 8 percentage point lower than what analysts were looking for. What is most important are deliveries, and where look

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