Transcripts For BLOOMBERG Bloomberg Markets 20151130 : vimar

BLOOMBERG Bloomberg Markets November 30, 2015

Markets. Here in the u. S. , unchanged this morning. Now we are steadily moving lower and lower. If you want to take a look in my terminal, the bloomberg chart here, i have the dow intraday. You can see we took another leg lower and we are coming down lower now at noon as well. It looks like all the pressure is on u. S. Stocks as the european stocks slow at the close. Scarlet within the dow industrials, what is driving the measures lower . Matt we are on retail sales because of black friday and cyber monday. The biggest loser, for example, is nike. Nike is the biggest loser on the doubt. There has been in a lot of talk about discounting today. Piper jaffray is concerned about discounting. Under armour. People are concerned about discounting at lululemon. Maybe that is the reason you see the weight on walmart and nike. Watson did say that cyber monday sales would be of 18 across the board. Disney is also a big weight. We are here friday . Scarlet i was not here friday. Matt you were smart enough to take off. It proves what we already knew about yes ken subscribers. Epsn subscribers. They are weak. Losing 7 million, that prompts continued concerns about cord cutting could be sought disney fall and it continues to step down today. Im assuming you have every kind pn you could possibly subscribe to. Scarlet every possibility come every which way. Matt you are not the concern. Scarlet were singlehandedly supporting espn and disney. Laurie keller has more from the news desk. Laura thanks so much for the focus may be Climate Change, but todays paris conference is also giving readers a chance to let against the islamic state. The race is on to convert promises into success against terrorism on the battlefield. The European Union and turkey to sloweed on a deal the flow of refugees to europe. Turkey says it will increase Border Control from and in return, the eu will contribute 3 billion to help refugees. It will restart negotiations on turkeys bid to become a member of the eu. Pope francis met with muslims in a mosque in the wartorn capital of the Central African republic. The pontiff visited six children in the hospital. Violence between muslims and christians has escalated in the two years since muslim rebels overthrew the countrys christian president. It is his final stop on the threeish in africa trip. In the u. S. , the university of chicago campus called off classes after receiving an anonymous threat. Back to you. We have some news. Scarlet as you are looking there, christine lagarde, managing director of the imf, speaking right now. They have approved adding the chinese yuan to the reserve currency basket. Lets listen in to madame lagarde. Garde the imf also decided based on the actual International Use and trading of the renminbi that it meets the conditions for being determined a freely usable currency. This is the second criterion. The first one is based on trade. The second is the freely usable currency. This determination, which has been made today, will become 1, 2016, in october order to allow for the institutions, the central banks, and all users to prepare for the new basket of currencies, which moves from 4 currencies to 5 currencies. Renminbis inclusion is clearly an important milestone in a journey that has begun months if not years ago. A journey which is a transition towards more marketdriven principle of the macroeconomic framework of china. It is a milestone in a journey , indeed cometinue and include certainly more reforms that will add to the existing reforms that have been decided by the chinese authorities in the last few months. It is also a journey for the institution. Very hard in the last 2 months. We have tried to cooperate as with theossible chinese authorities, with authorities around the world ,rom which our users of sdrs data collectors, and this journey will continue, because we will continue to monitor that complianceons and from all authorities of all five currencies actually satisfy those criteria. We also believe that in addition to being a milestone in a journey, it is also going to right asn the special this currency of currencies, because the basketball now currencies five the u. S. Dollar, the euro, the yen, the british pound, and the renminbi. And it will clearly better represent the International Community based on those 2 criterion of trade and the freely usable currency. Takeof that, i will happily some of your questions, and i would simply for those of you who care to remember initials rather than words, just coin the renminbi as inclusion in the sdr as a clear indication of the reforms that have been implemented and will continue to be implemented, and is a clear stronger representation of the Global Economy in terms of our special rights. Thank you. Madame lagarde, a couple of questions. Thank you, madam. Im a reporter with China Business network. My question is, would you elaborate more on how it would mean for the renminbi and its liberalization reform . Also, what is the waiting for the r d in the sdr basket, and what is your application as the waiting may change as the renminbi delivers more in the future . Scarlet and you have been listening to christine lagarde, managing director of the imf, at her press conference in washington. The imf financing that it has added the renminbi to the reserve currency basket called special drawing rights. Analysts say this is of huge importance in terms of recognition, and politically questionable whether there will be a mature impact for investors. Be discussing this further on in the program, but for now, i want to bring in denny blanchflower, a professor of economics at dartmouth college, a former member of the Monetary Policy community at the bank of england, and he joins us from hanover, new hampshire. Lets start first on the chinese yuan drawing special drawing rights. This was not expected not unexpected. Yet it is important and symbolic for many reasons. Tell us why it should matter for investors. Im not sure at this point it really does matter for investors. It is clearly an important political move and it will take a while for it to actually be lamented could i think be implemented. Acceptance ofan economic reality. China has become more important in world trade. There really are five major currencies in the world. I think it is a bigger political move that economic move. We will see. I think it is an acceptance of the importance of china in the world. The acceptance of economic and political reality is what i would call it, rather than an Immediate Impact on markets. Danny, you are just looking at the market reaction, the chinese yuan, the trading there. This is the Dollar Strengthening and the chinese yuan weakening. Move in termsle of the percent change from a day earlier. We are all expecting that. What it does mean is that chinas currency and the Economic Reforms plans are under bigger scrutiny than ever. What does this mean for how the Chinese Central Bank communicates its intentions and plans to the Investment Community . Will beopefully, it rather clearer than it has been in the past and will push rather more credible Economic Data and credible statements of where it is going. The International Community now says you are part of the International Basket of currencies, but you have better shape up on telling us what you intend to do, and open up, if youd like, so the world can understand. Especially at the moment, where it certainly appears that china is slowing. The extent to which it is slowing, we will see. But that certainly is what it appears in the data, and we have seen today Oil Prices Falling like matt, presumably because of a fall in chinese demand. The credibility of what is going on in china is important. The central bank to can indicate what it is doing, but also to come clean exactly of what is going on in the chinese economy. China is usually important now. Scarlet lets talk more about other central banks. Huge week this week. You have australia and india announcing decisions tonight. Then you have pulling and canada on wednesday. Of course, culminating with the city on thursday. Of all these different culminating with the ecb on thursday could of all these different central banks, which has the potential to spice the most surprise the most . Danny golly. Well, in a sense, the ecb is the big one. People are expecting an additional stimulus of 60 billion euros a month. Maybe we will see more than that, maybe we will see a bigger move to negative, not least because inflation is still surprising to the downside. Ecb thought we would see rising inflation. Half the member countries are still in deflation. We are still seeing very tight fiscal policies. Always they, the size and the scale of what has gone on in the ecb is very important. It is interesting in some sense that the central bank we are talking about here, there was no real expectation there is no real expectation they will be thinking about raising rates at the fed. This is, if you like, qe wars from Interest Rate wars. Everybody tried to get there Interest Rates down against the dollar and the fed is proposing to help everybody out by helping the u. K. And economy by raising stresses in the currency. Interesting days. Scarlet interesting days, and the following week, we will have the Federal Reserve as well. One thing that mark carney, the governor of the bank of england, has highlighted as a concern is the property market. If you look at the mortgage lending chart, it basically measures market is on Investment Properties 50 deaths accounted for most of the growth in market is since 2008. What kind of new measures is the boe likely to take to slow down this kind of growth . Danny it appears there will be sunday from the Financial Policy Committee rather than the Monetary Policy committee to get some restrictions on growing house prices in the south. I think it illustrates actually that house pricetoearnings ratios are really growing in the south of england, but one size doesnt really fit all, because house prices arent growing outside of the south. This is a problem. You perhaps can fix it through financial policies, but what we have seen is really relevant to the ecb, too, relied on Monetary Policy. The danger is that what is right for germany isnt right for and in thegreece, u. K. Come what is right for london and the southeast is not right for northern ireland, where house prices are 40 below where they were at the start of the recession. I think we will see a chance to try to impact a chance to try to impact house prices, but the problem is that one size the impact in the south of england and doesnt actually work in the north. Scarlet one size doesnt fit all across the euro zone or in the u. K. As well. Danny blanchflower, thank you so much. I surf economics at dartmouth. Professor of economics at dartmouth. We will have lightbank coverage of the ecbs interestrate decisions on thursday. Danny also giving us reaction to the imfs announcement that it has a put adding the chinese currency, you want, to the reserve currency basket. Christine lagarde giving the announcement just 14 minutes ago. Much more coming up on Bloomberg Markets. As the Federal Reserve gets ready to raise Interest Rates, bond dealers are predicting a major drop in treasury debt supplies could what does this mean for longterm yields . The Holiday Shopping frenzy continues online in what is expected to be another record cyber monday. The traffic has one retail giant stumbling and it could put a major dent in sales. In order for the megamerger between sab miller to go through a couple of beer brands need to be cut loose. Scarlet welcome back to Bloomberg Markets. I am scarlet fu. Matt miller has a check on individual movers. Matt i think i will start with fitbit. Does that sound ok to you . It was raised to overweight at barclays. It was also raised at bank move bank of america. Barclays saying it is a valuation, saying that current valuations are too compelling to ignore. ,ith todays gain in fitbit pretty substantial, were looking at 30 times future earnings. I would say pretty strong valuation, depending on where you look. Lululemon is another one that got analyst action today in the other direction, cut to an underperform over at sbr. They are lowering the price target on lululemon 242 dollars from 55. Shares are reacting 5. 5 . That is because of concerns about high Clearance Levels and difficulty expanding internationally. The Clearance Levels are also concerned at under armour. Piper jaffray saying that under armour is heavily discounting, and that seems to be concern across the board for not only clothing retailers, but we are also looking at concerns that automakers are discounting quite a lot. Tomorrow we will get auto sales out and we should have a record november, 17. 7 million the lowest forecast. That is still a record. That is because they are discounting as much as 6 , some of them even more. Terms have been growing longer and coming out with more incentives. Matt making it easier for you to buy a car, part of the reason they are selling more and more cars. Maybe this could be a problem for lulu and under armour as well. Scarlet matt with the individual movers in todays session. There was a big drop in treasury supply come up to 26 , according to bond dealer estimates. It is one more recently that the fed can end the registry policy without causing a drop in borrowing costs. Oining me is Lisa Abramowicz why does this matter to investors . Sa first of all, when you talk about the fed raising rates, you get a lot of concern that all of a sudden yields will start surging upwards and we will lose all our money and the fixed income that we are saving life for when we retire when we are 98. We start wondering, what are we going to do, etc. . The shows how complicated equation really is, and how the factors at play are multifaceted good we just had the chinese yuan accepted as a reserve currency. China has been trying to devalue the yuan by selling treasuries. That has been pressure that would push yields up. On the flipside, less supply coming, particularly in the long end of the curve, the longest dated bonds. That would keep the lid on the potential yield. I would argue it would keep the yield even more with yields plunging or potentially falling more than people expect. Expectedwas this an consequence of what people are seeing . Wall street analysts have been steadily ratcheting back expectations for how high the yields might go. Now the forecast is for the 10year treasury yields not to breach 3 by the end of next year. People have been pulling back expectations. Surprise would be if the lack of supply actually doesnt have the same effect, because selling pressure, whether coming from china or potentially domestically, outweighs that. At the same time, you have the widest gap between the german bonds in nine year. Scarlet just pointed out talking about the european Lisa Abramowicz, thank you very much. Still ahead on Bloomberg Markets, online sales are crushing brickandmortar sales this year. What does that mean for cyber monday . Scarlet welcome back to Bloomberg Markets. The Holiday Shopping frenzy continues in what is expected to be a record cyber monday could targets website has already crashed from heavy web traffic. Stone fromis brad San Francisco. What are the numbers you are hearing for estimates with cyber monday . Well, lets put it this way a lot of people are goofing off today. On track for about 3 billion in sales today come up about 15 from last year. This has been a season of inflection points, turning point in retail. The number that jumped out at me are half shopping business coming through mobile smartphones and tablets. The reason this is important is it favors players like amazon and ebay. People dont visit a lot of websites on their mobile phones and their tablets. They want to visit one app. It is good for those company, probably a challenge for the physical retailers and malls. Exactly, especially where you require people to try things on as well. What are you hearing in terms of the shift to more experiences buying and services buying . How does that affect a company like amazon, which is still pedals physical goods . Brad what are people looking for now . Theyre looking for selection, they are looking for convenience. That is why amazon is putting so much emphasis on next day and sameday delivery. The physical retailers who have not put an emphasis on the convenience aspect nordstrom was tacked this weekend. They do a good job with the customer touch. For some other company, it is a big challenge. Scarlet brad stone, i was noticing going to the stores on monday, it was totally empty compared to what i expected or i should say on sunday. People talk about black friday being won today it extends to the weekend. Cyber monday, you could argue, is cyber holiday for the rest of the month, really. Brad one lesson of the Holiday Season is the window shopping has expanded. People are shopping before thanksgiving, and as we saw last year, the shopping craze continues until christmas. Scarlet brad stone, thank you so much. We have much more Bloomberg Markets coming up after this. Scarlet from bloomberg World Headquarters in new york, welcome back to Bloomberg Markets. I am scarlet fu. Laura keller has more from the news desk. Laura the focus today in paris may be on a Climate Change confere

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