Index continued gains. The s p down despite several companies doing well today, the best of which is apache, finding success in suriname. The dollar index up 0. 4 . Weaker euro, weaker british pound. Really, the only currency that isnt weaker against the u. S. Dollar is the yen. Stronger, notvens a huge reaction to the continued anticipation of what might come next in the u. S. Iran conflict. Guy lets talk about what is happening in europe. Brent is on offer today, seeing a little bit of weakness when it comes to the oil market. Europe is a little better bid today on a slightly calm her market. At 1. 1141. Vonnie casting doubt on claims there baby powder causes ovarian cancer, talk about this study with Johnson Johnson. Reporter one of the issues with these cases, which claims that talc outer produced by j j talc powder produced by j j gave women touch of cancer is attending to assess what is the Scientific Evidence for whether or not this happened, and this is early hard to do. To try and confirm that sort of thing, you really need a massive study that can look over years and years. It is always a big problems with these type of product claims. This study that has just come out is published in a very reputable medical journal sponsored by the u. S. Government, federal and private researchers, that looked at 200,000 women. They looked over their history of baby powder use as well as their cancer. It finds a very small difference between the two groups of those that use these baby Powder Products and those that did not. It is essentially saying that there is not a strong link here. This is probably excellent news for j j in terms of weighing the evidence that is going to be considered as we deal with thousands of candidates heading potentially towards trial. Guy how potentially with this data affect those cases . Drew one of the key questions is exactly what type of information can be presented at trial. [no audio] drew all sorts of things that can cause cancer. You have issues of genetics, just bad luck, age. All of those things could come into play. Identifying and trying to pinpoint the risks from a particular product is very, very important in terms of how a judge or jury is going to assess what potential liability might be here. I think this is going to have significant locations. It is going to be considered along with all of the other evidence as some of these cases begin to go to trial or potentially be settled. It is an amazing stock reaction. In the last two minutes, we have a spike on that story, and now Johnson Johnson is down 0. 4 once again, so we will see how the market digests this throughout the day. Our thanks to drew armstrong, who leads bloombergs health care coverage. Guy lets turn to the wider markets. Investors try and grapple with escalating tensions in the middle east and what is happening with the macro data. Macdonald,is lucy cio of Global Equities at Allianz Global Investors. What is more important for investors right now, what is happening with data coming from the Global Economy or what is happening with the geopolitical risk . What should it be . Lucy macro is always more important, unless the geopolitical is impacting the macro. In the instance with the u. S. China trade war where that clearly had a macro impact, the u. S. Iran so far has a little impact on oil and gold, but nothing else. So it depends, but nearly always , you are looking at liquidity growth and inflation. Guy everyone who i have talked to has told me if you want to know which way it is going, you look at liquidity. Lucy in some ways, theres less concern about liquidity because of what the fed and the ecb have said they are doing. A year ago, there was concern about the direction, and qe was a concern. Weve got some certainty about that now, but you get some more uncertainty on the political side. But i think it is the liquidity and Interest Rate that is more important. Vonnie what shocks is elians is allianz looking at . Lucy within politics, we will need to see how it is developing between the u. S. And iran. Clearly if things escalate, it could begin to have a macro economic. About the moment, it hasnt. Which is the oil, main transition mechanism into the economy, is relatively subdued. Vonnie given that, where would we see the shock . With theet class asset class be able to withstand it more broadly . Lucy where we would see the impact would be coming through the oil price. East is not addle huge part of the Global Economy. It is what happens with the u. S. And china on the trade war, which hopefully we will get some earlystage agreement, that is far more important as far as the Global Economy is concerned. Stocks are quite unloved at the moment, possibly even described as toxic. If oil goes up, that may even continue to go up. Is this argument, or will it encourage people to revisit the idea of owning oil stocks . Your i think it depends on investment philosophy. Yield, theresrm concern about growth from equality viewpoint. It is more difficult to make that case because do not only have concerns about the ability to forecast the oil price, but you also have low returns, and you have oil concerns with the environment. I think if you are looking at of year, theres a lot interest there. Guy the s p currently trades around 18 times. Whatear average would it take for the first number to mean revert to the second number . Lucy its not that expensive. Guy but it is still above the average. Lucy its about average, but then, Interest Rates are below average. When you look at other asset classes, things do not look that expensive. The yield for the msci its about 2. 5 , which is growing slightly. Last year, it was the market ebound that was rerating. Vonnie you say that you are favoring health care and Consumer Staples right now. Give us the reasoning behind that even that there is some uncertainty relative to what is going to happen with with spec to the next u. S. Election, and also there is a little question mark over the u. S. Consumer right now. Lucy we are favoring health care, but on the other hand, we are also favoring some more cyclical areas. We think some of the defensive are lookingreas quite expensive, and some of the more cyclical areas are showing a bit more value. The more stable end of the has gots, health care its own idiosyncratic attractions, that we think theres some value there that is associated with political risk. When you look on the more cyclical side, theres interesting stocks within the industrials which we think are discounted because of concerns about cyclicality. We think it will have more durable and verse five businesses than in the past. Is going tocdonald stick around. Vonnie. Vonnie lets get a check on broader Global Markets now with kailey leinz. Kailey we are looking at a mixed picture for Global Markets, seeing outperformance in the europe in europe with the likes of the dax. The ftse 100 roughly flat. We are lower in the u. S. Now, just about three points on the s p 500. Weve clawed back a lot of earlier losses thanks to strength in the semiconductors, but the broader narrative overhanging the market is the broader tension between the u. S. And iran. In the oil market, brent crude prices are actually about 1 lower today, the first day in four they have fallen come on those escalating tensions in the middle east. R giving back some gains we are giving back some gains, but still higher over the past four days. Is ridiculous at the sox index, that is higher by the better part of 2 today. Some of the big outperformance include microchip technologies. Sales were stronger than analysts expected. Analysts see a bottoming in the industry. I want to happen to the terminal here at gtv and take a look at fundamentals, specifically on durant pricing. On the white line, there was a pretty dramatic decline in that pricing from late 2017 until the middle of this year, but analysts have been saying that that signals a bottoming in the chip pricing cycle. That is what has really led to a lot of the optimism in the sox index, here in the blue. It rallied 60 in the last year, and those are rallying today. Vonnie thank you for that. The function gtv allows you to browse all of the recent charts featured on bloomberg tv, catch up punky analysis, even save your favorites for future reference. This is bloomberg. Vonnie live from new york, im vonnie quinn. Guy from london, im guy johnson. This is the european close on bloomberg markets. Lets check in on the bloomberg first word news with cornie donahoe. The head of Irans National Security council said that retaliation would be a historic nightmare for the u. S. , exploring 13 possible scenarios. They said the u. S. Would suffer consequent is at a time and place of irans choosing. Japan striking back after the daring escape of carlos ghosn. Havecutors have sued issued an arrest warrant for his wife carol. An deathbeen rocked by puerto rico has been rocked by a 6. 4 magnitude quake that hit earlier today. It was followed three hours layer by an aftershock measuring 6. 0. Beenast one person has killed in widespread Power Outages have been reported. U. S. Imports fell to their lowest level since 2014 as exports rose. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im courtney donohoe. This is bloomberg. We are back with lucy macdonald, Allianz Global Investors cio of Global Equities. We had the ism Services Today better than forecast. Ism manufacturing was disappointing. Do you anticipate we will get any hint as to how the u. S. Economy is doing, how the consumer is doing, and the next month . Lucy we will be really looking at the earnings season more than the macro data because we want to see whether these companies which have begun to recover, whether the earnings are going to come through to support that. In that context, looking at microchip yesterday, where Quarterly Results came through better for about a year, is very encouraging. You have response to different geographic territories in different industries, so surprised to the upside is very interesting for a crossover. Vonnie how much more can the semi and semi equipment rally go . Lucy from a cyclical perspective, it looks like it is turning now, but the more interesting thing for us in turn in the median turn is cyclical growth in that sector. That, we think, could give it some more legs and give it more of a rereading. But from a cyclical perspective, youve had quite a lot of that rerating. Guy lets talk about industrials. Which industrials do you like and why . Lucy the industrials we like 10 to have diversification of end markets and have been investing quite a lot in software, giving themselves more visibility to their end client. That is, we think, one reason why should have high ratings on some of these companies. Everything is becoming a tech company. Guy just give me some ideas of which names i should be looking at, and why. Presumably a Software Component means they have a close religion to put their customers a close relationship with their customers. If you talk to some of these Big Industrial companies, they visualize it. It is amazing. Lucy that is about the data they now have some of the relationship with the client, and the greater visibility it gives them on what their client is going to be needing. One of the reasons Cyclical Companies have typically had low ratings is because they have no visibility. You can see that their businesses have become more stable, more stable returns, and they have had summary ratings, but i think they have had some reratings, but i think that is a structural change. Vonnie theres going to be a new boe governor. We have some more certainty on brexit, although a lot of questions remain. Does anything look cheap in the u. K. . Lucy i think the u. K. , despite the rally it had over the election, still looks cheaper than average on any basis. Arean that, the midcap and appeared to mystics still look and the pure domestics still look relatively undervalued. Area, some m a in that and that will support the value. Some of these companies are relatively small, and there is more interest for a u. K. Specialist, but from a global standpoint, it is investable again. Guy lets talk about the earnings season. Where should i be looking on the p l for the best indication as to which stocks i should be owning . What is it we need to be looking out for this time around . The story last year was a nonevent. Where is it going to shut up going to show up this time . Lucy we need to see some topline. We need to see that because last year was a demand slowdown, and particularly as a result of the trade war. So we need to see that stabilizing and improving a little bit. But on margin, theres been more cost suppression the last couple years. Margins are starting at a high level cyclically, so companies which can show they can maintain margins i think it more cost pressures guy that is where the danger lies . Be yet wage cost, input cost, whatever it is . Lucy as a result of some of the tariffs. Those companies which have been able to push those through my the same with wages. Guy we look forward to the earnings season. It is not that far away. Lucy macdonald, Allianz Global Investors cio of Global Equities, for key very much. Equities, thank you very much. This is bloomberg. Vonnie its time for your latest Bloomberg Business flash. Goldman sachs wants to highlight growth in its consumer business and get more credit from investors. The firm is revamping the way it divisions. Oaktree capital is the latest company to part ways with a Senior Executive over a consensual relationship. A senior investor left as a result of his relationship with a colleague that violated oaktrees policies. He helped manage the firms distressed debt unit. That is your latest Bloomberg Business flash. Guy lets take a look at where european markets are. Three minutes to go, this is the picture. Ftse 100 unchanged. The dax is outperforming today. Finian doing reasonably well today. The German Market up by 0. 8 . Cac fairly flat, but oil acting as a drag. This is bloomberg. Guy 30 seconds until the end of regular trading. That is the picture. Outperformance from spain. London outperforming. Spanish markets come up quite well. Banks have done reasonably well. Some of the industrials less so. Dax trading higher. Cac 40 fairly flat. A positive narrative out of asia. Since then we have faded. Still in positive territory, up. 3 with the reverse of yesterdays u. S. Session, where we did rally. In terms of individual markets, we have a lot of oil. Ftse 100 is negative. It has a lot of oil. The dax has a lot of cars. It is positive. The cac 40 only up. 1 . Take a look the sector story. It tells that narrative clearly. At the top, Technology Trading reasonably strongly. Chips continuing to do well around the world. A strong connection to the auto sector, up around 1 . Bit. L trading up a little volume has faded as the day has progressed. Lets take a look at the bottom end of the market. Crude is trading softer. Oil and gas down. 5 . Utilities softer. Food and beverages softer. That implies the market is risk on because the bond proxies are softer. That is the narrative from the sector story. Individual names. Infinium up 5 . That is solid performance. A medical Technology Company upgraded. That doing the trick when it comes to alltime record highs. This stock is stating is trading at an alltime record highs. There seems to be an issue with private jets. Dassault numbers not looking so rosy. Down 2. 9 . Not quite as many private jets being sold as the market was anticipating. That is the european close. Vonnie Joaquin Phoenix at the Golden Globes telling people not to use their private jet so much. The s p 500 down about. 1 . The dollar index is strong, up. 4 . Demand for havens, but primarily in gold and the japanese yen and u. S. Dollar. No movement in treasuries. That movement happened and now we are done. Stabilization continues in oil. 62. 47 on wti in spite of i ran threatening 13 different scenarios. We do not know what they might be yet. Apache is the best performer in the s p 500. It struck oil in surinam and the last time it struck oil it did not have so much success. It is sending that stock up. Kellogg got an upgrade at credit suisse, giving that stock of boost. Semi and semi equipment in the s p 500 are up 1. 5 . Level, up 2 . Sox all of that, on the downside, progressive is the worst performer in the s p 500. The insurers are having a tough day. Guy lets turn to markets politics in london. Members of parliament are beginning three days of debate in the brexit bill. Live shots from the house of commons. Joining us is bloomberg executive editor stuart wallace. This is a done deal, isnt it . Getting this across the line. This is the brexit bill Boris Johnson promised and we would leave the european union. The bigger question is what does this tell us about what comes next . Stuart i think we need to look at it. Yes they have a clear majority. Yes they are unlikely to pass any amendments the government does not like, but there are amendments on the table. That could throw up interesting debate. Onave to say when i spoke , he said the chances of failure were small. I would tend to take his judgment. We have to think a long way to go before we get a trade deal, that is what we should be worried about. Vonnie absolutely. Boris johnson says it will be done by the end of next year. That is already long. Almost nobody is agreeing with him. What happens assuming the bill gets passed . Stuart that we get a thursday vote, and if it goes forward it will go to the lords. There is a legislative process that will follow. As guy pointed out, not expecting any major fireworks. The focus on the trade deal and they do not there do not appear to be many optimists to get a trade deal done