Transcripts For BLOOMBERG Whatd You Miss 20240713 : vimarsan

Over the last few days. Joe there you go. Russell outperforming. Caroline does happen occasionally. Carolyn was as talking about we had quite a bit of volatility at the start of this Fourth Quarter so i wanted to look at gold because it is a safe haven. It is gaining more than 1 today, feeding off of more signs of economic weakness. The latest data shows u. S. Private companies payrolls rose less than forecast. Hiring in august was downwardly revised. And a stronger dollar and occasional indications of a possible thaw in the trade war have actually pressured gold lately, but gold is still up to close to 17 so far this year. With this recently unexpectedly low data, economic weakness could push the fed to cut Interest Rates, likely setting investors to gold. This is a second consecutive day of gold rising after u. S. Manufacturing gauge post the weakest reading in a decade. Am taking a look at the stocks index. It is actually outperforming the Broader Markets, only off about 1. 6 even though the s p closed lower by about 1. 8 . This is a little unusual. Typically when we get concerns about trade and Global Growth would see some of these chip heavy sectors really underperform the markets and create a selloff given big exposure to international and china. Today that is not the case. Talks have been up around the 1600 level. The 50 Day Moving Average has created a bit of a support line. There is a lot of push pull today within the soft market. Going forward as we relate this back into the s p 500 i wanted to take a look at a longterm chart of the two. The big concern is the stocks have peaked twice for the s p 500, then the s p 500 rolled over. There are still big concerns he had that if you do not see strength in these chipmakers, it is really hard to make the case for the Broader Market to move higher. Abigail not surprising that was stocks selling off today and yesterday, we have a bit of a rally for bonds. Yeara look at this, two down giving up 20 basis points to 10 year 14 basis points. Investors bidding up the short end. That of course has the effect of steepening the yield curve. A top i i ranked Technical Analyst would be encouraged by this. He joined us a couple weeks ago and presented this chart. Two year spread going back several decades. Every time it has gone below zero, we are inverted on a monthly basis, it has gone sharply below. With the one exception he theled here in 1998 along longterm capital crisis where there were a couple blips to the upside risk. Spread on asee this monthly basis at the end of september close above zero we could see a similar situation right now with the two tends back to 1011 basis points. Even though we have volatility to the downside today there will be more risk on volatility up and down in the weeks and months ahead. Joe thank you. Anthony ands is cameron. Anthony, i want to go back to you, because before we got this recent bout of volatility, one of the stories had been early signs of rotation. Maybe we are still seeing that. Seeing some pain and some of the previously love sectors, like tech in particular, some love for financials and energy. Setting aside the recent ructions in the market, is this rotation still something you would . Expect to see continue . . Anthony i think that is a great question. When we met at the end of september to redo our tactical allocations, we brought things closer to home. Overall from a sector perspective we think you can still ride some of the winners, information technology, real estate, Consumer Discretionary names. I think they still have Growth Potential if we continue to stay on track in the economy. However, we have balanced some of that cyclical exposure with more defensive allocations to health care for Consumer Staples which we saw can today continue to be those leadership sectors when investors get nervous about what lies ahead. I think from a broader allocation perspective you need to be neutral on your government fixed income exposures. You probably need to reduce some of the risk and highyield and emergingmarket debt and lean into alternatives. That way you can balance your portfolio and mitigate some of the risks. The u. S. Y the u. S. , has been the cleanest dirty your shirt out there. So we have allocated much more to the u. S. At the expense of areas like europe and japan are just the outlook is a little bit darker than here in the u. S. Scarlet e trade is a u. S. Stock, etf and options commissions, joining Charles Schwab and Td Ameritrade in doing so. This is all in a bid to gain market share. E trade not moving that much in after hours mainly because the shares along with its rivals have plummeted yesterday following the Charles Schwab announcement. How do you think about this . Is a deal between e trade and Td Ameritrade inevitable, that they will have to join forces to survive this race to the bottom . Anthony there is definitely fee compression going on in the Financial Services industry in the Asset Management business definitely. Think you have to be smart and nimble. Think you have to be smart and nimble. The investments and what you can charge for those investments is getting lower and lower. At least from our view at america, how you put packages together, how you allocate a glias c lients portfolio. It is a tough game and they will continue to struggle in a fee compression environment. Joe go back to want to what abigail was showing us. Perhaps factoring in more expectations for a fed rate cut or monetary stimulus. You wrote a great piece earlier as to why bad news is bad news sundays and why bad news is good news other days. Why today is bad news good news bad news is bad news . Cameron the primary argument is the reason the ifn is going down so hard is not because the cost of capital is too high. It is the trade war. The ism itself is very blunt on the subject. Is the uncertainty engendered by trade policy. The level of Interest Rates, no matter what the president or anyone else says, is the primary reason why manufacturing is struggling. Reallynterest rates going to solve the problem as long as there is uncertainty . The answer is probably no. Joe we are making a big point of the fact that we are still only 4 up off alltime highs. On the other hand we are basically where we were in january, 2018. The other view is we literally have not gone anywhere. So could that be able argument that as bad as it looks or as high as it looks, we have actually just stalled for a long time. Cameron if one is willing to accept the premise that we are fairly valued in january of 2018. That is a difficult premise to accept, given how much optimism in terms of the tax cuts and what have you where in the price back then. Scarlet how do you think about fixed income . Where is the value in bonds right now . Anthony it is tough to find value anywhere in the market. I will shift joes comment a little, as i would look at how resiliently market has been with all this uncertainty thrown at it over the last year. Bonds act as a ballast in a portfolio. When you look at investment in government bonds, maybe there is not a ton of upside in the bond prices going forward, but on days like this you want to have fixed income and your portfolio. And what we have really been in vies and clients to do is stay up in credit quality. This is not the time to stretch for yield, this is not the time to stretch for risk in your portfolio. Make sure that that stable part of your portfolio actually acts stable when markets are moving down, particularly on the equity side. So, we favor equal weight on government, we would like investmentgrade corporate, and we would stay high on that credit quality. Caroline will the other havens remain . Yen and gold . Anthony yeah. I think obviously if there is a risk off sentiment out there, then things like gold and the yen and government bonds play a good upside role in your portfolio. I would think too that the markets have been very resilient, and if we get just a pause in the trade tensions next week, that may be enough to change some of the sentiment in the market. And we are in the most favorable time for the markets, october to december is generally the best time after. A 20 rise in the first quarters of this year. The set up from a seasonality set up is pretty good. If we can just ensure that the consumer is in good shape and these trade tensions are not going to escalate in october through the rest of the quarter, we may see positive gains in the market for the final quarter of the year. Scarlet people cannot forget what happened last year at this time. Cameron,s well as thank you both for joining us today. That does it for the closing bell and for me. Next we will have more analysis on the stocks selloff. Declines of at least 2. 5 to 3 for all three indexes so far this quarter. This is bloomberg. Is is bloomberg. We are live from new york. How u. S. Snapshot of stock markets closed down once again today they were start to a quarter since 2009. The slow down and the slide. U. S. Stocks join the global selloff as growth concerns amount. Trump heading back calling the impeachment inquiry a hoax. The state department may be looking to punish those who cooperate with the inquiry. E u. K. Prime minister outcome say and no deal october 31 . Signs of a slowdown. The u. S. Economy you losing steam, prompting questions over how slow it can go and still avoid crashing into a recession. The s p had its worst start to a quarter since 2009. Harvey,h us is cam professor of finance at duke. Along with sara. Cam, thank you for joining us. It is important to note that it was your research that is the whole reason we talk about inverted yield curves. Cam i cannot believe we are still talking about my dissertation. Joe you really are to blame. [laughter] so, obviously 30 years ago you observed this phenomenon of inverting yield curves preceding recessions. We have had some curves still inversion. 210 is positive. When you look at the structure of the curve right now, how serious of a warning do you see for the economy, even ignoring the data we are given . Cam importantly, my 18 third 986 dissertation looked at 10 year threemonth. Two quarters of inversion. At the time of my dissertation i had a 44 record and people were skeptical because they were only four observations. I hadards to my surprise, inversions before the next three recessions, and no false signals. So that is important. Seven for seven, no false signals. Now we are code red, we have an two quarters. It is hard to ignore. Romaine some would argue it is not code red. Does that have to be a signal of a recession itself . Can it not just be a signal of Slower Growth or at least of some growth level that people can wrap their heads around . Cam excellent point. Romaine can i be on your next dissertation . Cam you are like one of my committee members. It is not just an empirical observation. There is Economic Foundation in the theory behind it that this look of the yield curves is linked to future Economic Growth. So obviously low growth is often associated with recession. Empirically this model is seven for seven in terms of predicting recessions, but if we dodge a recession, if we have a stopped landing and lets say growth slows to 1 , than the model has given an accurate signal. So whether we are inverted or flat, it does not matter. It suggests Slower Growth. Importantly it is not the only indicator that is suggesting Slower Growth. Scarlet there is data backing it up as well. Caroline analysts writing up. To that end whether or not it is a recession it is certainly some suggestion if we get to just 2 growth we can suddenly nose in some way and there are worries the u. S. Is not the haven we all thought it would be in a global slowdown. They were pointing to the dollar turning low instead of higher. Through all of this the concerns have been about Global Growth feeding over into the u. S. And you have not seen too many cranks and the foundation here in the u. S. But now after this ism number, you look at the adp employment numbers, they missed. If you look at the five month average it is not the lowest since 2010. You are starting to seek racks in the foundation stateside in the u. S. But some people are starting to ask, is the u. S. Actually the safe haven that we thought it was all along as we have been talking about global recession fears or Global Growth slowdown. Can that feed over into the u. S. , or are we already seeing it emanate here . Say thingsysayers like it is different this time because rates are so low globally that everyone around the world is buying u. S. Treasuries to find a little bit of yield. Is this all familiar to you . Like, lee last three times we had inversions, where their people all those times saying there are other factors . Cam i hear this all the time. Every time is different. It is a trivial statement to make. So the question is, is it different enough that it renders this a false signal . And i do not think that it is that different. The qe, that had way more influence over the curve in the 1960s and 1970s. The size of the bond market today is so dramatically larger, it is harder for them to mess it up. On top of that, it is conveniently omitted in the discussion that the feds Balance Sheet has been decreasing in size since 2017. And that should actually lead to a steepening of the yield curve. So given that we have the fed Balance Sheet decreasing in size, given that we have the yield curve inversion, it is even more powerful to me that this is probably a true signal rather than a false one. Romaine an argument a lot of folks will make his once the signals appear there is still a long lag time between when you get to a recession. Cam that is a good thing. Romaine a lot of folks say this is the time you want to get invested. Ride it out, and if you are crazy enough you jump off at the last minute. Cam this is interesting. This time is different. In 2006 when the yield curve inverted, nobody took it seriously. But after the Global Financial crisis, people thought, this indicator is seven for seven. So it is getting much more attention today. And i think that if we go into a recession next year, it is not going to be a surprise. It was a surprise in the great recession. You know what happens any surprise . Slashing of employment and it makes things worse. Given we have these indicators well in advance, people can plan. They can do risk management. We will not bet the company on extra debt for a new project. Consumers to be more cautious, because all of these signals are suggesting heightened risk. So i think all of this could mitigate the severity. If we had a recession it could be very shallow, and ideally we avoid a recession of Slower Growth and socalled soft landing. Caroline do you worry that your dissertation has deemed us into a situation of a self fulfilling prophecy . That the yield curve inversion means we get a recession. Cam it is very simple. There is no Federal Reserve in the model. It is not a causal model. This idea of all the publicity the yield curve gets turns it a self filling prophecy. What i am arguing is that is a good thing. It actually helps corporations plan. Why wouldnt you use information that is relevant about future Economic Growth in your planning . So, given that we have got the ability to hire quality forecasting of what is going to happen in the economy, this helps firms plan. And you do not get the surprise and you can mitigate the severity of a recession if it occurs, or maybe dodge it. On the idea pick up of folks being less surprise, you are seeing more defensive positioning in the markets. A lot of people say that is a good thing because it means folks will not be caught with their pants down like they were last time. Sarah you could argue investors are more prepared. If you go back to january of 2018, the s p 500 is gone nowhere. If you look at the Real Estate Companies and utilities, they are both up more than 20 . That shows you just how much demand we have seen for these bond proxy areas of the market, for these more defensive areas of the market. However, we do hear a good amount of people now warning of crowding. Having a look at utilities at record high valuations. So that could be a concern. Joe this is bloomberg. Romaine the impeachment inquiry into donald trump moving forward. Several House Committees getting briefings today on documents related to ukraine. Earlier President Trump pushed back on the democratic chairman of the House Intelligence Committee patriotism. Joining us is eric watson. I dont even know where to start. This was a wild day. The ig report or briefing with lawmakers that was supposed to take place today. Eric that is taking place right now and we are rating for one of the members of the Judiciary Committee to brief us. We believe it was about the ukraine matter but we dont have confirmation on that. As you said it was a wild day. President trump issued a lot of barbs. Key takeaways was despite all the rhetoric he said he would cooperate with the house investigation. The House Committee said they would issue subpoenas on friday at the white house does not cooperate. Reading between the lines trump may be surrendering some documents. Joe do we have more clarity on the specific path ahead for pelosi and the house . There are all different kinds of committees and so far it doesnt look like anything of the clinton impeachment. Will it get more focus in the days ahead with specific impeachment hearings, and a clear path to an eventual vote . Aik congress is away on twoweek recess so we wont see the kind of public hearings the. Envoy toencore ukraine is coming in tomorrow morning to brief staffers. We will see a former staff are also coming. That was will give key details to the committees as they prepare the case. When Fourth Quarter<\/a> so i wanted to look at gold because it is a safe haven. It is gaining more than 1 today, feeding off of more signs of economic weakness. The latest data shows u. S. Private companies payrolls rose less than forecast. Hiring in august was downwardly revised. And a stronger dollar and occasional indications of a possible thaw in the trade war have actually pressured gold lately, but gold is still up to close to 17 so far this year. With this recently unexpectedly low data, economic weakness could push the fed to cut Interest Rate<\/a>s, likely setting investors to gold. This is a second consecutive day of gold rising after u. S. Manufacturing gauge post the weakest reading in a decade. Am taking a look at the stocks index. It is actually outperforming the Broader Market<\/a>s, only off about 1. 6 even though the s p closed lower by about 1. 8 . This is a little unusual. Typically when we get concerns about trade and Global Growth<\/a> would see some of these chip heavy sectors really underperform the markets and create a selloff given big exposure to international and china. Today that is not the case. Talks have been up around the 1600 level. The 50 Day Moving Average<\/a> has created a bit of a support line. There is a lot of push pull today within the soft market. Going forward as we relate this back into the s p 500 i wanted to take a look at a longterm chart of the two. The big concern is the stocks have peaked twice for the s p 500, then the s p 500 rolled over. There are still big concerns he had that if you do not see strength in these chipmakers, it is really hard to make the case for the Broader Market<\/a> to move higher. Abigail not surprising that was stocks selling off today and yesterday, we have a bit of a rally for bonds. Yeara look at this, two down giving up 20 basis points to 10 year 14 basis points. Investors bidding up the short end. That of course has the effect of steepening the yield curve. A top i i ranked Technical Analyst<\/a> would be encouraged by this. He joined us a couple weeks ago and presented this chart. Two year spread going back several decades. Every time it has gone below zero, we are inverted on a monthly basis, it has gone sharply below. With the one exception he theled here in 1998 along longterm capital crisis where there were a couple blips to the upside risk. Spread on asee this monthly basis at the end of september close above zero we could see a similar situation right now with the two tends back to 1011 basis points. Even though we have volatility to the downside today there will be more risk on volatility up and down in the weeks and months ahead. Joe thank you. Anthony ands is cameron. Anthony, i want to go back to you, because before we got this recent bout of volatility, one of the stories had been early signs of rotation. Maybe we are still seeing that. Seeing some pain and some of the previously love sectors, like tech in particular, some love for financials and energy. Setting aside the recent ructions in the market, is this rotation still something you would . Expect to see continue . . Anthony i think that is a great question. When we met at the end of september to redo our tactical allocations, we brought things closer to home. Overall from a sector perspective we think you can still ride some of the winners, information technology, real estate, Consumer Discretionary<\/a> names. I think they still have Growth Potential<\/a> if we continue to stay on track in the economy. However, we have balanced some of that cyclical exposure with more defensive allocations to health care for Consumer Staples<\/a> which we saw can today continue to be those leadership sectors when investors get nervous about what lies ahead. I think from a broader allocation perspective you need to be neutral on your government fixed income exposures. You probably need to reduce some of the risk and highyield and emergingmarket debt and lean into alternatives. That way you can balance your portfolio and mitigate some of the risks. The u. S. Y the u. S. , has been the cleanest dirty your shirt out there. So we have allocated much more to the u. S. At the expense of areas like europe and japan are just the outlook is a little bit darker than here in the u. S. Scarlet e trade is a u. S. Stock, etf and options commissions, joining Charles Schwab<\/a> and Td Ameritrade<\/a> in doing so. This is all in a bid to gain market share. E trade not moving that much in after hours mainly because the shares along with its rivals have plummeted yesterday following the Charles Schwab<\/a> announcement. How do you think about this . Is a deal between e trade and Td Ameritrade<\/a> inevitable, that they will have to join forces to survive this race to the bottom . Anthony there is definitely fee compression going on in the Financial Services<\/a> industry in the Asset Management<\/a> business definitely. Think you have to be smart and nimble. Think you have to be smart and nimble. The investments and what you can charge for those investments is getting lower and lower. At least from our view at america, how you put packages together, how you allocate a glias c lients portfolio. It is a tough game and they will continue to struggle in a fee compression environment. Joe go back to want to what abigail was showing us. Perhaps factoring in more expectations for a fed rate cut or monetary stimulus. You wrote a great piece earlier as to why bad news is bad news sundays and why bad news is good news other days. Why today is bad news good news bad news is bad news . Cameron the primary argument is the reason the ifn is going down so hard is not because the cost of capital is too high. It is the trade war. The ism itself is very blunt on the subject. Is the uncertainty engendered by trade policy. The level of Interest Rate<\/a>s, no matter what the president or anyone else says, is the primary reason why manufacturing is struggling. Reallynterest rates going to solve the problem as long as there is uncertainty . The answer is probably no. Joe we are making a big point of the fact that we are still only 4 up off alltime highs. On the other hand we are basically where we were in january, 2018. The other view is we literally have not gone anywhere. So could that be able argument that as bad as it looks or as high as it looks, we have actually just stalled for a long time. Cameron if one is willing to accept the premise that we are fairly valued in january of 2018. That is a difficult premise to accept, given how much optimism in terms of the tax cuts and what have you where in the price back then. Scarlet how do you think about fixed income . Where is the value in bonds right now . Anthony it is tough to find value anywhere in the market. I will shift joes comment a little, as i would look at how resiliently market has been with all this uncertainty thrown at it over the last year. Bonds act as a ballast in a portfolio. When you look at investment in government bonds, maybe there is not a ton of upside in the bond prices going forward, but on days like this you want to have fixed income and your portfolio. And what we have really been in vies and clients to do is stay up in credit quality. This is not the time to stretch for yield, this is not the time to stretch for risk in your portfolio. Make sure that that stable part of your portfolio actually acts stable when markets are moving down, particularly on the equity side. So, we favor equal weight on government, we would like investmentgrade corporate, and we would stay high on that credit quality. Caroline will the other havens remain . Yen and gold . Anthony yeah. I think obviously if there is a risk off sentiment out there, then things like gold and the yen and government bonds play a good upside role in your portfolio. I would think too that the markets have been very resilient, and if we get just a pause in the trade tensions next week, that may be enough to change some of the sentiment in the market. And we are in the most favorable time for the markets, october to december is generally the best time after. A 20 rise in the first quarters of this year. The set up from a seasonality set up is pretty good. If we can just ensure that the consumer is in good shape and these trade tensions are not going to escalate in october through the rest of the quarter, we may see positive gains in the market for the final quarter of the year. Scarlet people cannot forget what happened last year at this time. Cameron,s well as thank you both for joining us today. That does it for the closing bell and for me. Next we will have more analysis on the stocks selloff. Declines of at least 2. 5 to 3 for all three indexes so far this quarter. This is bloomberg. Is is bloomberg. We are live from new york. How u. S. Snapshot of stock markets closed down once again today they were start to a quarter since 2009. The slow down and the slide. U. S. Stocks join the global selloff as growth concerns amount. Trump heading back calling the impeachment inquiry a hoax. The state department may be looking to punish those who cooperate with the inquiry. E u. K. Prime minister outcome say and no deal october 31 . Signs of a slowdown. The u. S. Economy you losing steam, prompting questions over how slow it can go and still avoid crashing into a recession. The s p had its worst start to a quarter since 2009. Harvey,h us is cam professor of finance at duke. Along with sara. Cam, thank you for joining us. It is important to note that it was your research that is the whole reason we talk about inverted yield curves. Cam i cannot believe we are still talking about my dissertation. Joe you really are to blame. [laughter] so, obviously 30 years ago you observed this phenomenon of inverting yield curves preceding recessions. We have had some curves still inversion. 210 is positive. When you look at the structure of the curve right now, how serious of a warning do you see for the economy, even ignoring the data we are given . Cam importantly, my 18 third 986 dissertation looked at 10 year threemonth. Two quarters of inversion. At the time of my dissertation i had a 44 record and people were skeptical because they were only four observations. I hadards to my surprise, inversions before the next three recessions, and no false signals. So that is important. Seven for seven, no false signals. Now we are code red, we have an two quarters. It is hard to ignore. Romaine some would argue it is not code red. Does that have to be a signal of a recession itself . Can it not just be a signal of Slower Growth<\/a> or at least of some growth level that people can wrap their heads around . Cam excellent point. Romaine can i be on your next dissertation . Cam you are like one of my committee members. It is not just an empirical observation. There is Economic Foundation<\/a> in the theory behind it that this look of the yield curves is linked to future Economic Growth<\/a>. So obviously low growth is often associated with recession. Empirically this model is seven for seven in terms of predicting recessions, but if we dodge a recession, if we have a stopped landing and lets say growth slows to 1 , than the model has given an accurate signal. So whether we are inverted or flat, it does not matter. It suggests Slower Growth<\/a>. Importantly it is not the only indicator that is suggesting Slower Growth<\/a>. Scarlet there is data backing it up as well. Caroline analysts writing up. To that end whether or not it is a recession it is certainly some suggestion if we get to just 2 growth we can suddenly nose in some way and there are worries the u. S. Is not the haven we all thought it would be in a global slowdown. They were pointing to the dollar turning low instead of higher. Through all of this the concerns have been about Global Growth<\/a> feeding over into the u. S. And you have not seen too many cranks and the foundation here in the u. S. But now after this ism number, you look at the adp employment numbers, they missed. If you look at the five month average it is not the lowest since 2010. You are starting to seek racks in the foundation stateside in the u. S. But some people are starting to ask, is the u. S. Actually the safe haven that we thought it was all along as we have been talking about global recession fears or Global Growth<\/a> slowdown. Can that feed over into the u. S. , or are we already seeing it emanate here . Say thingsysayers like it is different this time because rates are so low globally that everyone around the world is buying u. S. Treasuries to find a little bit of yield. Is this all familiar to you . Like, lee last three times we had inversions, where their people all those times saying there are other factors . Cam i hear this all the time. Every time is different. It is a trivial statement to make. So the question is, is it different enough that it renders this a false signal . And i do not think that it is that different. The qe, that had way more influence over the curve in the 1960s and 1970s. The size of the bond market today is so dramatically larger, it is harder for them to mess it up. On top of that, it is conveniently omitted in the discussion that the feds Balance Sheet<\/a> has been decreasing in size since 2017. And that should actually lead to a steepening of the yield curve. So given that we have the fed Balance Sheet<\/a> decreasing in size, given that we have the yield curve inversion, it is even more powerful to me that this is probably a true signal rather than a false one. Romaine an argument a lot of folks will make his once the signals appear there is still a long lag time between when you get to a recession. Cam that is a good thing. Romaine a lot of folks say this is the time you want to get invested. Ride it out, and if you are crazy enough you jump off at the last minute. Cam this is interesting. This time is different. In 2006 when the yield curve inverted, nobody took it seriously. But after the Global Financial<\/a> crisis, people thought, this indicator is seven for seven. So it is getting much more attention today. And i think that if we go into a recession next year, it is not going to be a surprise. It was a surprise in the great recession. You know what happens any surprise . Slashing of employment and it makes things worse. Given we have these indicators well in advance, people can plan. They can do risk management. We will not bet the company on extra debt for a new project. Consumers to be more cautious, because all of these signals are suggesting heightened risk. So i think all of this could mitigate the severity. If we had a recession it could be very shallow, and ideally we avoid a recession of Slower Growth<\/a> and socalled soft landing. Caroline do you worry that your dissertation has deemed us into a situation of a self fulfilling prophecy . That the yield curve inversion means we get a recession. Cam it is very simple. There is no Federal Reserve<\/a> in the model. It is not a causal model. This idea of all the publicity the yield curve gets turns it a self filling prophecy. What i am arguing is that is a good thing. It actually helps corporations plan. Why wouldnt you use information that is relevant about future Economic Growth<\/a> in your planning . So, given that we have got the ability to hire quality forecasting of what is going to happen in the economy, this helps firms plan. And you do not get the surprise and you can mitigate the severity of a recession if it occurs, or maybe dodge it. On the idea pick up of folks being less surprise, you are seeing more defensive positioning in the markets. A lot of people say that is a good thing because it means folks will not be caught with their pants down like they were last time. Sarah you could argue investors are more prepared. If you go back to january of 2018, the s p 500 is gone nowhere. If you look at the Real Estate Companies<\/a> and utilities, they are both up more than 20 . That shows you just how much demand we have seen for these bond proxy areas of the market, for these more defensive areas of the market. However, we do hear a good amount of people now warning of crowding. Having a look at utilities at record high valuations. So that could be a concern. Joe this is bloomberg. Romaine the impeachment inquiry into donald trump moving forward. Several House Committee<\/a>s getting briefings today on documents related to ukraine. Earlier President Trump<\/a> pushed back on the democratic chairman of the House Intelligence Committee<\/a> patriotism. Joining us is eric watson. I dont even know where to start. This was a wild day. The ig report or briefing with lawmakers that was supposed to take place today. Eric that is taking place right now and we are rating for one of the members of the Judiciary Committee<\/a> to brief us. We believe it was about the ukraine matter but we dont have confirmation on that. As you said it was a wild day. President trump issued a lot of barbs. Key takeaways was despite all the rhetoric he said he would cooperate with the house investigation. The House Committee<\/a> said they would issue subpoenas on friday at the white house does not cooperate. Reading between the lines trump may be surrendering some documents. Joe do we have more clarity on the specific path ahead for pelosi and the house . There are all different kinds of committees and so far it doesnt look like anything of the clinton impeachment. Will it get more focus in the days ahead with specific impeachment hearings, and a clear path to an eventual vote . Aik congress is away on twoweek recess so we wont see the kind of public hearings the. Envoy toencore ukraine is coming in tomorrow morning to brief staffers. We will see a former staff are also coming. That was will give key details to the committees as they prepare the case. When Congress Comes<\/a> back from recess, then i think we will see big public hearings and charges and counter charges. Erik, thank you for breaking all that down. Politics will be front and center. Coming up we will talk about Boris Johnson<\/a> unveiling a new brexit proposal that has already received criticism. Where do we go from here . This is bloomberg. Mark this is first word news. The president accused adam schiff today of helping to write a whistleblower complaint that led to an impeachment inquiry. His comments came after the New York Times<\/a> reported that adam schiff got an early account of the whistleblower complaint that alleges that President Trump<\/a> pressured his ukrainian counterpart. The remarks came during a News Conference<\/a> with the finished president. Angryump aimed his monarchs remarks at nancy pelosi. We had a great call. You have the transcript. And adam schiff got up related a call that did not take place. He made up the language. I think he had a mental breakdown. Mark in the meantime, people familiar with the matter say the state Inspector General<\/a> is planning to brief lawmakers privately on efforts inside the department to punish officials who cooperate with the house impeachment inquiry. The Inspector General<\/a>s office declined to comment. Earlier, the chairman and nancy pelosi spoke with reporters as House Democrats<\/a> warned the administration against intimidating witnesses and attempting to prevent their testimony in the impeachment inquiry against the president. The Intelligence Community<\/a> recognizes the importance of whistleblowers. Protecting whistleblowers who see wrongdoing of any kind in our government is essential. The president probably does not realize how dangerous his statements are. Mark chairman adam schiff said that president the president s tweets amount to an effort to intimidate witnesses and incite violence. In the meantime, the New York Times<\/a> reported adam schiff got an early account of what became the whistleblower complaint that alleges President Trump<\/a> pressured the ukrainian president. British Prime Minister<\/a> Boris Johnson<\/a> is outlining a plan for a new brexit agreement. In his first keynote speech as Prime Minister<\/a> at a conference, he warned the European Union<\/a> to compromise or watch of the u. K. Walk away from talks. Doubt of whatn no the alternative is, it is no deal. That is not what we want, it is not what we seek, but let me tell you my friends, it is an outcome for which we are ready. To exite u. K. Is due the eu on october 31. The Prime Minister<\/a> says he will never agree to delaying brexit beyond the date, even if it means leaving without an agreement. More on this story coming up. Global news 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im mark crumpton. This is bloomberg. Romaine breaking news. 97,000 is the topline line number for tesla, model 3 deliveries over 79,000. X deliveries s and are down quarter over quarter. Model 3 deliveries are up. In the Fourth Quarter<\/a>, they are looking to boost their order backlog. You can see the numbers and shares reacting, down about 4 at the moment. Caroline we will bring in plenty more analysis on those numbers coming up, but at the moment lets return to politics. Brexit or bust, the Prime Minister<\/a> unveiled a new proposal today that has already received criticism from european officials, including the president of the European Commission<\/a>. He spoke at a conference earlier. Whatt us be in no doubt of the alternative is, the alternative is no deal. That is not the outcome we want, it is not what we seek, but let me tell you my friends, it is an outcome for which we are prepared. Caroline joining us in ,ashington is Heather Conley<\/a> Senior Vice President<\/a> for europe, eurasia and the arctic at the center for strategic and international studies. Do you think a deal will be achieved, or will we go toward october 31 with an embryo meant in the courts . Heather i think we are heading to a no deal scenario, or an attempt by the opposition to hold a vote of noconfidence against Prime Minister<\/a> Boris Johnson<\/a>, if he returns from the European Council<\/a> meeting on october 19 and that there is no deal in place. In some ways, today is a good day. The British Government<\/a> actually articulated what it wanted. This has been demanded by the eu for many weeks. Now the challenge is so many of the issues the u. K. Has placed againsteal it wants go everything the eu says it will not allow. So i think that both sides will tiptoe around this. Either side does not want to be blamed for failure, but i think that they are too far apart and honestly there are about 14 days they can actually negotiate and it will not be done by october 31. Joe do you see a softening in the european position . Heather rhetorically, i think you already saw the softening with European Commission<\/a> president , there was positive aspects to what the u. K. Provided. They do not like it, but the European Union<\/a> does not want to be blamed for the crash out of the u. K. , said they will be managing this carefully. The language will be soft, they will study it, but they will return back with Technical Details<\/a> that the u. K. Will not be able to accept. So around the merrygoround we go. Romaine when you look at the economic impact, the consequences here, i did not hear Boris Johnson<\/a> talk about those. What contingency plans are in place and what is holding the economy together right now . Heather that is really the true risk, although the Prime Minister<\/a> has said the u. K. Is ready to leave on october 31, the fact is they really are not ready. What the government has been doing is spraying everything down with money, particularly related to border issues and customs. And until this actually happens, we will not see the full economic ramifications. But remember, brexit is happening against the backdrop of a global slowdown in trade, a softening in the euro zone. This could not happen at a worse time. And we do not know the real ripple effects globally, as well as for the European Union<\/a> and u. K. Economy. Caroline many have said it is frustrating, because you cannot really count the variables of the outcomes at the moment. But if you were a betting woman, do you expect come october 31, will Boris Johnson<\/a> still be in power and will he be able to take the United Kingdom<\/a> out of the eu on october 31 . Heather that i think is really the big question. We have already been informed that once again, the parliament will be suspended beginning on october 8. And with the clean queens speech on october 14, it is unlikely that the governments proposal or the plan the queen will offer will be accepted by that parliament. That will happen just about after the European Council<\/a> meeting. I think there is a clear direction. If there is no deal, that the opposition will seek a noconfidence vote, but the problem is the opposition cannot figure out who to rally behind. Jeremy corbyn thanks he is the caretaker, other parties do not agree, so this will be a nailbiter. Hold on tight come october 31 will be here before we know it. Romaine ok, heather, we appreciate having you. We want to get more back to the breaking news on tesla. Delivery numbers are out. The deliveries are up quarter over quarter. 97,000 is the total number. Model three deliveries have increased 2. 6 . S haveiveries of x and dropped. Tesla saying there is a Fourth Quarter<\/a> backlog. We will talk about this coming up with alan baum from baum and associates. This is bloomberg. Romaine tesla is out with her delivery numbers. Their expectations they would hit 100,000 vehicles for the quarter, coming in at 97,000. And here to talk more about it is alan baum. He is with us and destroy in detroit. Looking at a quick read of the numbers, you could quibble over 97,000 versus 100,000, but when you look at the trajectory of their delivery and production, is it still on a pace that is considered positive . Alan in terms of deliveries, they are ok. Hit are obviously trying to 360400,get of obviously they will be in the lower end of that, so they will need to break 100 in the last quarter. Just as they tend to move sales to the end of each quarter, they also tend to go out in the Fourth Quarter<\/a> with a bit of a bang. So i think they will get there. The issue is, as the model 3 volumes increase at the expense, in part, of the s and x, then there is a revenue issue. Joe you anticipated my next question. So based on what we know from this release, does that give us any further insight into what is an ongoing concern at tesla about how much money they are making or losing, and how much money they have . Alan the issue with tesla is when do we begin to be concerned about the present as opposed to the future . We expect a loss both in this quarter and for the year. Of course, the idea is as they hit new markets, and as they begin to open the china operation, which would produce lower cost of vehicles, then at some point the negative results would turn to positive. We are not there yet and we will not be for some time. Caroline you talked about china, and really the headwinds of the auto sector are looming large. We have had numbers out of gm today, and yesterday we had a poly numbers that came out for the japanese automakers here in the u. S. Overall, do you think the environment is as dire as many are worrying about for the auto sector right now . Alan i combined august and september sales and i compared them to last year and we were basically flat. Us calendar played tricks on this year, putting labor day and Labor Day Weekend<\/a> into august. Weif we are basically flat, are down a point and a half 1. 5 points through september. The item we need to Pay Attention<\/a> to is that for the last four years, the Fourth Quarter<\/a> has been exceptionally strong in terms of seasonally andsted sales, over 17. 5 occasionally over 18 million in those months. We will not do that this year. So we will be ending the year around 17 million or 16. 9 million, but that is a good result. The concern i have is that as we look at profit reporting from not just the detroit three, but the germans in particular with the export focus they have, you know, they are all reporting profits that are starting to slip. Again, they are not terrible numbers, but they are starting to turn the other way. Romaine 17 million is a nice number, it will mean a lot to keep the streak alive, but how are we arriving at those numbers . There has been data out the last couple weeks and a report about how the length of auto loans has gotten longer, now averaging about six years. The amount of debt consumers are taking on to finance the vehicles has gotten to the point where people are really stretched. That raises the question of, how long can sales growth continue if you already have a consumer that is already tapped out with regards to credit . Alan that growth will not continue. We will see drops over the next year or two or three. The issue though is our retail sales have already for some time been on the downside. Fleet sales have picked up. They are a little more profitable than they used to be, but less profitable than retail sales. On the other hand, the automakers have done a reasonably good job holding the line on incentives, otherwise the profit reporting will look a lot redder. Yeah, we are stretching our market out to a somewhat uncomfortable place. Joe really quickly on tesla specifically, one of the bear arguments has been the emergence of competition and people look around and say, there are some good looking electronic cars from competitors. Do you see that happening, is there meaningful encouraging in the space from other Companies Making<\/a> competitive products . Alan it depends on where tesla goes with the model 3. Havei mean by that is they hit a plateau on the model s and model x. The model 3 is still a luxury vehicle selling for an average price of around 45,000 before the disappearing tax credit. To the extent that they pull that price down, then there will be some competition going forward. Right now, when we look at competition, we are looking at audi, jag, and of those prices are much higher than what we are seeing in the mainstream for tesla. But of course, they have the brand value and the experience in manufacturing that tesla does not. And so as the rest of the industry starts to come into a more mainstream position, and we are certainly not there yet, and neither is tesla, then we will start to see where that stands. Joe great perspective. We appreciate you joining us. Our thanks to alan baum. Now over to a smart chart. Abigail, you are looking at interesting charts today. Abigail always. Today we are focusing on the s p 500 given a volatile start to the Fourth Quarter<\/a> and we have here with me Walter Zimmermann<\/a> jr. I am not sure if you know this, but the Fourth Quarter<\/a> is off to the worst start of any quarter since 2009. It is worrisome. , youave had a bearish view know, on your last segment. Today, you sent is a tremendous daily turn on the s p 500. Messagemplicity and the is a strong. Walter this is awful. It is a bearish rising wedge. This is the entire year, from december 2018, 2347 and up. Technically, this should have one marginally, higher high. We never got that, where is it . It is mia. Not only do you not have that, but there is a gap here and here. So all the price action is a big reversal pop. And you have gapped down through the bearish wedge support line. It could hardly be worse. Abigail i actually mistakenly marked it as a broadening formation, but you are right, bearish rising wedge. When they are successful to the downside, they act quickly into the true target could be in the lows. Could you see that happening and what sort of timing are you looking at . Walter i am looking for that load to be broken by q1, i think we will be around 2150, maybe 2100. Abigail what is interesting about the weekly chart, this is a chart that we at bloomberg made probably in may or june when we were talking about it. Then john, another guest, he presented something similar. You have a similar chart. We are all looking at the same big bearish pattern. Talk to us about why this low will be broken. Walter if you break down the component pieces, it is a textbook perfect expanding triangle. Starting here, a leg down, the b here at c up, and from here to here is 1. 618 of the leg up from here to here. This is astonishing precision. This is not coincidence. You can see a little better here , theap reversal top acceleration lower. If you work out the similar patterns, what you are targeting is it something between 21502100. If that holds, this whole entire thing could still be one massive bull Market Correction<\/a>. But little solace to anybody long up here if the bull Market Correction<\/a> is not going to end until the 2150 area. Abigail we will take it as it comes, because this is the pattern that broke from 2007 into 2008. I know analysts do not want to talk about the what, but lets talk a little bit about the uncertainty. This really tells us that the buyers and the sellers do not have a better idea, but because it is getting wild, it goes to the sellers. Talk about why. Walter it is because in general people are long and they have been bullish through this entire pattern. And every time it takes a big themnd recovers, it makes even bolder dubai all the way up. So you have a market even bolder to buy all the way up. So you have a market expecting nothing less than a continuing advance, then the market is hit with a trade war and what the bulls have been thinking is, we will be saved by a rate cut. Well, if you look at history, a trade war versus an Interest Rate<\/a> cut, that is kind of like a versus bambi conflict. Abigail and there are probably sellers at the top waiting to take advantage of may be some of those perhaps too optimistic buyers who are long all the way through the pattern. Walter zimmermann jr. , thank you. Caroline godzilla versus bambi. Coming up, the protests in hong kong bringing a serious drag on the local economy. We will look at that ahead. This is bloomberg. Caroline with protests in hong kong region on for 17 weeks, the economy is taking a big hit with retail sales plunging by a record amount in august. Joining us is sherry on. Ahn. Shery we are talking about a record plunge in retail sales, if all of 23 on year on year. Jewelry sales, luxury goods are up. And housing is sliding 47 . This has to do with the fact that there are not as many tourists coming in. We are talking about things falling 39 year on year. Joe it was exposed, who are the Luxury Companies<\/a> i know swiss watchmakers sell a lot in hong kong, who should be nervous . Shery they should be nervous, but also local retailers. Landlords are taking a hit. Retail, office space rent, this is all coming down. Have beenrotests happening in key locations around hong kong, not necessarily focused in one area as we saw in 2014. Romaine every time things go bad in hong kong, we hear from who has had a bet against the hong kong dollar in the past. How is that shaking out . Shery it could pay off, because the hong kong dollar is slumping to a weaker level between 775 and 785. Are comingnk costs around, but we have seen george soros make that bet in 1998. And bill ackman also bet that it would strengthen. That did not pan out either. Romaine ok, thank you. For more on these stories, do not miss daybreak australia starting at 6 00. We will hear from the verizon ceo, coming up. As well as the indonesian president. Caroline that is all. Technologyoomberg is coming up next in the u. S. Joe this is bloomberg. Im taylor riggs in san francisco. Coming, record rollout. It was a new high for tesla deliveries, but they did not meet the lofty predictions. We break down the numbers. Resist, theible to meatless burger craze looking like it is here to stay. We have a conversation with the ceo of impossible foods. Microsoft","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia801000.us.archive.org\/34\/items\/BLOOMBERG_20191002_200000_Whatd_You_Miss\/BLOOMBERG_20191002_200000_Whatd_You_Miss.thumbs\/BLOOMBERG_20191002_200000_Whatd_You_Miss_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240716T12:35:10+00:00"}