tv Whatd You Miss Bloomberg July 26, 2019 4:00pm-5:00pm EDT
not time to go into cyclicals. it makes sense that the small caps are on the decline. scarlet: how long can the late cycle last, specially with central banks last? especially providing so much wind? >> the market is getting the hint of that. after draghi's statements. rateyou think about what a cut will do for the u.s. economy, basically nothing. the rates have come down in anticipation for months and months of what the fed is going to do. and yet the housing market has slumped. the consumer is from the housing standpoint, that is not getting into the u.s. economy. that is a big part. the fed would have to cut rustic latest see that part, that group rebound. >> you seem to be a voice of call men caution when the market once -- wants to buy. the s&p and even the small caps.
than a fewp more percentage points. >> when you look at the s&p 500, we are not close to oversold conditions. we are not elevated but when you look on an aggregate basis, we are below that line where people start to get worried about a potential for things being too overenthusiastic. >> the major indexes have recovered, the s&p gaining 1.7%. last week, it had declined. we're back on the slow glide higher. >> what are you watching? asked fed next wednesday and i am thinking about bonds, 10 year yields in particular. the 10 year yield the last four weeks it has closed down three out of those -- higher three out of those four weeks. bonds are sliding into the fed, perhaps making the case that the
rate cut is priced in. this is a long-term chart. you see the great bond bull market. there is two different trend channels, the 10 year yield bouncing off of the higher when. , ithe tenure you hold 2% suggests that any rate cut or future rate cut may be priced into some degree as this happened in the past with qe but it is below 2%. look for a significant move lower on that critical life. ; everyone who is watching the fed next week it also we have many more earnings coming to the stage. if you look at earnings from above second-quarter earnings have looked good, three quarters of companies have beat expectations. we are tracking to see flat growth. where no longer expected to see a decline in earnings for the second quarter. if you look ahead, thanks have been bleaker. as you can see in this chart, there are 35 companies that have revised guidance for the next quarter. many of them, 60% of those
companies have revised guidance lower. that share is the highest in data going back since 2011. that begs the question, if the fed cuts, it will it be the be-all and end-all, but if we continue to see the trend progress going forward, is it going to be an issue for companies? >> thank you. still with us is matt perrone and vincent cignarella. one of the big things we keep revisiting this week in particular is the extent of the negative feeling get that is out there particularly injure -- in europe and japan and emerging markets when you look at investment grade. we saw you record low yields in europe. where does one go for yields if you're staying with fixed income? >> you have to get yield in credit markets, in emerging markets. you get paid electric premium for low default rates. we think you can, the credit
markets are still ok. that will be a continuing source and that is a late cycle phenomenon can earn your yields here for a while because we think we have time before the cycle rolls over. >> when we talk about cycle events and we're looking toward to next week, we have the fed but there is other economic data. i don't want to minimize it but how much does that matter? it seems like fed's reaction function of the market is not tied to put we are seeing in the economic data. it seems like there is something broader. >> you will see short-term reactions for jobs. what people have been ignoring and because there is not a lot of expectations is the trade talks next week. what i am hearing from sources that is interesting, the raising the meeting was moved to xi'xghai was president
advisors say look out the window. this has all those large corporations and the big banks. if this is not a trade deal this is going way so it is a shot across the bow back to washington. >> global optics. and you're looking at a week we have been bombarded with news when it comes to trade and u.k. -- u.k. politics and the ecb, power opportunities looking the u.s. vis-a-vis the rest of the world question mark >> we like they are structurally. the negative debt is a problem in some developed markets and shows they are having trouble getting an organic rose essence started. we like to favor the u.s. and long-term, we like asia, what is happening there so we look for an opportunity to get more advantage ofing near-term weakness for the long-term. that should be the second growth
engine of the world. >> retheme -- keep thinking thet everything like complete cycle. the negative yielding debt is unprecedented. there is not a blueprint to look at for all of this. when you think about what could that is not priced in, black swan events, what are you worried about that could happen? >> you great -- bring up a great point. the circle -- cycle is this time around. is this a long cycle or a series of cycles within cycles? it is we think a lot about. each is marred -- marching asynchronously. it makes the calculus player that hard to play as an investor. can spotplaybook, we opportunities when we see these cycles within cycles. to your point about negative debt. the risk we see is of a policy error. not necessary session is --
necessarily policy error. >> we talk about black swan risk aboutnd trump is talking putting tariffs on french wine but there is a broader issue, the idea that you have a president out there that is still sees it as his mission to write what he sees is wrong when it comes to trade. what -- how does that factor to plan when it is not clear what the next battle will be? >> as long as he stays with and policymakers are aware of what is achieving their overall objectives in terms of policy gesture as opposed to doing damage. i talked about the risk of a policy error that is meaningful, french wine will not move our economy that much. >> what is your black swan event? >> boris johnson. not wine. he said today he was not going to call a general election
before the 31st. he is playing hard baseball. they are playing it back and i don't think he will back off. there is a potential of a big accident, a little bit of a game of chicken and we get hard brexit. scarlet: thank you. that does it for the closing. at all be taking a look the events coming up next week including the jobs report and the fed. this is bloomberg. ♪
>> i am caroline hyde. here is a snapshot of how the u.s. stock market hit another record high led by technology. did youuestion is what miss? caroline: coming in better-than-expected ahead of a much fed decision. taking stock. more than a quarter of s&p 500 cut -- companies reported this week. what we have learned so far. second visiona fund extending his reign as the most influential tech investor. >> u.s. economic growth slowed in the second quarter two 2.1% was smallerp in gdp than expected thanks in large consumer.e american increased by 4.3% while business investment weekend. here to take us through the is dana peterson, a global economist at citi.
a lot of people pooh-poohed the rip port. -- we saw a real resiliency. people are spending despite the craziness that is going on. what is your take away, will that be enough to keep the economy going? >> i think so. we are still seeing the effect of that even this -- second quarter. affectssee some of the one week of into next year. the consumer is strong, confidence is high and government spending is also robust. >> kudos to you and your team. you are bang on the nose in terms of the target. were you surprised by a lesser business investment drag that had been expected. you were thinking it was going to be worse. >> we were surprised that it was not as bad as everyone thought. as much forecasted. that is something the fed will
be paying close attention to. there's a lack of business investment because of the trade wars and uncertainty surrounding them. think the decline in nonresidential spending was part of the trade war or are there internal issues going on with the u.s. economy that are separated from that? >> we look at the fundamentals they are very strong. -- i think that this is could be transitory. on monday mnuchin and lighthizer will be in china with renewed negotiations. see more business investment if we see clarity on that front. >> should the fed be worrying about it and should we be seeing pier 3 rate cuts being priced in? >> the fed is concerned about two things, the fact that the trade wars have weighed on not only trade but business investment.
we have been undershooting that 2% inflation target. provide anlooking to insurance cut to make sure that we get closer to the target and provide some offset to the headwinds. >> when you look at the data, there is a sense among some people and some of our columnists have pointed this out that the trade line on economic growth has been going down, long-term trendline and they were back toward 2015 levels on we had the recession that was not quite the recession. when you look at the data do you still see the u.s. economy on an upswing, a plateau, or are we headed downward? >> 3% was hardly sustainable. our expectation is growth will slow to around 2% which is not too far from potential. there might be some good news. congressvernment of and the president sign off on this spending package, we could see some upside risk to that growth rate next year as well as
for 2021.k >> how about the lower cost of borrowing and how that mechanism will help the economy. it might help inflation. that is what the fed is worried about. coming -- with a spend of they get a quarter of a percent off? >> we ran a survey of our readership and asked where do think the fed cut will go and most people said it will go toward higher asset prices. not so much toward consumer spending or business is feeling more comfortable with investing. >> this seems to be the worry among some people, some more bearish folks in the market. orthe fed is going to create inflate the assets even further, it could create an asset apple and people have pointed out the last couple of recessions we had were caused by asset bubbles rather than some economic problem's. is there a risk that if the fed does go on some sort of prolonged easing cycle we end up
acting the same position we were 1999-2000?or >> there is a risk of asset price inflation but it depends on what the asset price is. when we go back to the recession the bubble was in the housing sector. when you look backward it is more tech stocks and people do not -- things people do not own. it is important where those excesses might be. >> what about the other central banks? ,e had comments from the ecb mario draghi not sounding dovish enough even though he is talking about manufacturing getting worse and stimulus in september. is there a worry about how much bandwidth they have to stimulate europe? >> there is concerned there is face in monetary policy europe and not much fiscal policy space. europe is in a different position. europe has seen weaker growth
because of their linkages back to china and china is slowing because of the trade war and their own restructuring. i would not put the u.s. and europe in the same bucket. there are concerns about global asset prices being inflated by the amount of stimulus coming in from monetary policy. >> when you look at the response is there a risk we are entering a competitive stage between central banks or is this a synchronized effort to bring policy down to a similar level? >> it may be exponential synchronized action. when the fed became more dovish and powell signaled there will be a rate hike. many central banks help more comfortable with pulling stimulus to help underpin their own economy. this is not so much a coordinated effort but each economy trying to prop up their own growth.
that thewas a thought black swan was a hard brexit. u.k. a key risk? >> absolutely. we believe that the u.k., the downside -- downside risk to growth potential. >> thank you for coming in. coming up, loving it. salesg the big -- biggest gain in 10 years. can they keep up the momentum? this is bloomberg. ♪
new delivery partnerships and investment in brexit has helped to the bottom line. there are questions ahead. mcdonald's is facing rising labor costs which have resulted in some increased menu prices. and saying that they illegally recorded executives when they realized the spanish lender was backing out. today's allegations [indiscernible] which says the banks brought into his career and demand it followed through on his appointments. and shares fell after sales growth of its brand slowed from the red hot pace. even though sales gains were roughly in line with expectations and profitability keeps growing. the momentum [inaudible] key brands along to investors. >> time for smart chance -- charts with abigail doolittle.
, it is all about gold. abigail: we are taking -- and we our technical advisor back. such a tech -- a timely topic goal. it will be interesting to see what the meeting brings. >> fascinating breakout here. you have got asymmetrical theyear base and remember bigger the base, the higher in space is the potential. it is so symmetrical from the low in 2015 and we have targets that could take you first into the resistance of that to your top around 1500, 1525. the interesting thing is there is another principle of technical analysis. if the accumulation that follows the distribution which was at two-year top is equal to or greater than the size of the
distribution. this price maybe expected to equal or exceed the priors cap. the first time you will run into resistance as you get to those price levels but 1600 is possible. possibly even 18 or higher. it is an interesting breakout that is taking place in the gold market. >> it is interesting you're saying about -- saying that. he was talking about the possibility of a record high. do you think the breakout is for real and supported? >> the bullish and the monthly. also positive. this chart is interesting. this is the dow to gold and we can see here the peaks in the valleys. talk about what is happening. >> this is the dow jones industrial average divided by gold price. when the line is rising, equities are outperforming the dow. when the line is falling, gold
is outperforming. what is interesting to notice is that he care was 1929, the peak to 1968 and the peak here was 2000. we know those were the peaks in thattructural bull markets the equity market experienced followed by structural bear markets. as the lines came down, gold was art that outperforming. now we are at a point here where it is interesting that the equity market is hitting new highs and gold. >> what does that mean? does that mean that people are afraid of currencies, does it mean that we will see an equity peak coming into place and it does not happen overnight. it takes a little time. it is very key to watch this. if this ratio were to break down we would see a situation where gold starts to outperform equities. it does not mean equities have to go down. it does not gold up -- does not gold dust go up as much. >> before we do that let's look
at g dx. there are traders out there who gdx.to play the here hear breakouts through 27 taking place. if you make it through 32 which is this central peak amount that will equate to the six-year base that we saw in the gold chart itself and suggest that this could go higher possibly 240 why are you run into the next resistance and maybe higher. >> that is supported by a rising [inaudible] that is interesting you would take a play. would you prefer that gtx or gld? >> the historic relationship has been that the dod been -- done better than the g dx. it has not made a decision. on this breakout. >> if stocks in gold go higher,
may be the gtx is right. >> happy friday. great to have you here. back to you. >> we want to bring you up-to-date on some headlines coming from the president, president trump. he said it is a beautiful thing to have a strong dollar. he was speaking to reporters at the white house and said i did not say i am not going to do something about the dollar. he talked about the fed saying the fed acted too soon and too violently on interest rates. coming up, it was a big week for earnings with more than a quarter of s&p 500 companies reporting. we will take stock of the earnings season so far as well is what is coming up next. this is bloomberg. ♪
mark: the house judiciary committee filed a petition in federal court, seeking secret grand jury material. if the chairman says mueller's house testimony this week shows there was "considerable collusion between the trump 2016 presidential campaign and trumpns." and that mr. "engaged in multiple acts of obstruction of justice." not requested -- you have to go to court and request it.
specialous cases the prosecutor --i'm sorry, the committee went into court. and the attorney general went into court and supported the application. this time we are going into court today, i don't expect the --orney general to the u.n. human rights chiefs as the world's most powerful nations are turning a blind eye to the escalating crisis in syria. the syrian government has continued a relentless campaign against civilians in northwestern syria, and that the international community has responded with "a collective shrug." >> repeated calls by the united nations to respect the principle of caution and distinction in the conduct of hostilities has
relayed a relentless campaign of airstrikes by the government and its allies, has continued to hit medical facilities and schools and other infrastructures. says more than 100 civilians, including 26 children have been killed. they be apart coast guard has recovered the bodies of dozens of europe bound migrants who died after their boats capsized in the mediterranean sea. as many as 350 migrants were on board the boat. a top u.n. official described the shipwreck as the worst mediterranean tragedy so far this year. job, new into his british prime minister boris johnson was heckled by anti-brexit protesters as he arrived in birmingham to give a speech. the small group of dennis traders staged a protest outside of the police building as johnson visited the new home secretary.
collin johnson a bumbling callingand a liar -- johnson a bumbling buffoon and a liar. the visit to birmingham was part of johnson's pledge to recruit 20,000 new police officers in england and wales. global news, 24 hours a day, on-air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. ♪ >> starbucks surging, the coffee chain reporting its best sales growth in three years. ceo kevin johnson spoke to david westin about why he is bullish on china growth and the company's partnership in europe. china, i am son bullish on it for the long term. it is a large and growing addressable market. it is primarily 18 drinking
culture -- 18 drinking culture -- a tea-drinking culture. same threehe drivers, creating great customer experiences, beverage innovation and our digital mobile relationships all contributed to that growth in china. the same formula that has driven the success in the united states, our team in china -- we build starbucks in china, for china. we have a great team driving that. the results were phenomenal. >> you are saying a different approach when it comes to nerve -- come to your. you are teaming with nestle. nestle came out with their earnings. tell us where that stands right now. how fast is it growing? >> the global coffee alliance with nestle is a very important part of our strategy. the starbucks brand in
our stores. we have 30,000 stores in 80 markets around the world, and we create the starbucks brand in those stores, and with nestle we are now bringing roasted ground coffee and holding coffee to the dulce gusto markets around the world. on track to get to 16 new markets by the end of this next quarter. on thestarbucks coffee platforms, that provides a new market of opportunity for starbucks. witht spent several days the team in june. of the partnership is strong. we have plans for the future. i'm very optimistic about where we are going. is a lot ofthere concern about some slowdown in all of those locations. are you seeing it?
>> i was in china last week. you look at the fact that we grew a new footprint by 16%. those are performing well. -- in the u.s. customer connection scores are in an all-time high. our transaction growth was up three points and we had a 7% increase. at least from the consumer engagement that we are seeing, i would say consumer engagement is healthy. >> this week's earnings offered a glimpse into every major sector of the economy. we will get more quarterly reports next week.
cohost of the podcast, what goes up. gdp just shows consumers -- >> you look at personal consumption data, and it came out strong. you look at earnings across the board. ceo.eard from starbucks coca-cola reported earlier in the week, and they raised their revenue forecast. mcdonald's is a mixed story, because we saw less foot traffic , but still people are paying the higher prices. think about what we heard the banks reporting as well. they are consumer units were very strong. amazon,ven point to because sure they miss on earnings. the reason they miss is they incurred more costs. when you look at spending across
these consumer oriented companies, it has been very strong. >> let's talk about the tech oriented companies. we saw a great report out of twitter. a great report out of alphabet. >> we can get past the fact that amazon had this spectacular miss on earnings. amazon missed earnings expectations. amazon missed the consensus were like eight or nine straight quarters, it went through the moon. amazon is on an island. presidentgoing to trump, who is speaking at the white house. american wines: are great. thingidn't do the right
when they start taxing our companies. we tax our companies. him, i said don't do it. we are working on that right now. i just spoke to him. i have a good relationship. they shouldn't have done this. they are used to taking advantage of the united states. donek at deals that were with other presidents in this country, and it it's a disgrace countries have allowed this to happen. from $300 was making -- $500to $5 billion billion a year, now we are taking in billions of dollars from china, and it is all turning around.
try -- i don't think personally china would sign a deal. would say let's wait, maybe trump would lose it. like the people who allow these deals to happen. i blame the united states for allowing that to happen. if iran wants to make a deal, i can tell you we can make a deal. i'm going to wait for sleepy joe biden. we can make any deal we want with him. what else? we will be announcing sometime
fairly soon. they put a taxon, we said don't do it. we will be announcing something. it's called reciprocal, it's a reciprocal tax. you agree with that? you are a man that enjoys wine. you just won't enjoy for -- and joy wine anymore. -- enjoy french wine anymore. look. i think china will probably say let's wait, it's 15 months until the election, let's see if one of these people that give the united states away, let's see if one of them could possibly get elected.
they are going to be phenomenal deals for the country. i don't know if they are going to make a deal. in tens ofng billions of dollars worth of tariffs. the farmers are happy because i gave them $16 billion out of the tariffs and much more of that leftover. we have tens of billions of dollars in from china. leaders forpast allowing that to happen. china was totally flatlined. about andto came china joined the world trade,
they became a rocketship. it's a very unfair situation that takes place at the wto. i don't personally care that much. everyone says people pay for it. china has devalued their currency and they are pumping like into their society you wouldn't believe. us we have a fed that does quantitative tightening. have a normalized rate. president obama had no rates. betterl have a much economy than in his wildest dreams. there is something ok about that.
they acted too soon and too violently. i believe nine increases, a couple under her and a lot under powell. i'm not a fan. the dollar is very strong, the country is very strong. in onebeautiful thing way, but it makes it harder to compete. that we are doing very well. it's really become more the currency of choice. euro is now not doing so well. europe is not doing so well. china is not doing very well. the hottest economic country in the world. even guatemala wants to do business with us.
i could do that in two seconds if i want. i didn't say i'm not going to do something. dollar, there's a reason it sounds so good. having a strong dollar is having a strong dollar. strongntry has a currency, other countries have a currency down the tubes. it's a currency that is weak. germany is paying almost no interest. interests.t of the federal reserve raised the rates too fast and too soon, and they shouldn't have done quantitative tightening.
he didn't say a word to the united states. the have their disputes, two of them have their disputes. range missiles. and very standard missiles. that's the best question you have ever asked. about 17 minutes ago. he's a good guy, a friend of mine, and boris is going to be a great prime minister. he has what it takes. they needed him for a long time. let's see what happens. we just spent a lot of time when thes with the queen, one of
greatest couple of days i've experienced. we get along well. boris and i spoke. he is all set to go. on ae working already trade agreement. i think it will be a substantial trade agreement. we were actually impeded by their relationship with the european union, we were impeded on trade. we could do three to four and the times and couldn't do trade we could do with some people say is great britain. a word you don't hear too much is the word england. could do much much more trade .
when i heard they were going to build in china i said you can build and china, but when you send your product into the united states we are going to tariff you. we will work it out. i think they are going to build a plant in texas. if they do that i'm starting to get very happy. i do indeed. pretty soon. sayingto end up by guatemala has been a pleasure to deal with. >> you are listening to
president donald trump speaking to reporters at the white house. pretty wide-ranging list of comments. he talked about apple. potentially french wines, that's of course this dispute that has been butting over france's decision to potentially impose a digital tax on the technology and social media companies. this is bloomberg.
count bedsheets. opening the first equinox hotel in new york city. bloomberg spoke to the executive chairman and managing partner of equinox holdings. in thenox has been hospitality business for three years. tohave been serving members help achieve their goals. we feel the national -- the extension. defined a lifestyle movement from a fitness perspective. >> talk about the journey of reimagining attacking hotel equinox when it's an idea that came about earlier. it was a much more ambitious scale, there were dozens of equinox. l.a.,e santa clara,
seattle, chicago and houston coming up. >> our ambition is bigger than it's ever been. to 2008 whenack the recession hit, like many consumer facing businesses we retreated to ensure that our business was helping. ist we were surprised about how well be performed during that recession. from 2008 was a record year, and 2009 was a flat year. reimaginerages to what the equinox hotel was. we are also doing ground up construction. there is no flag i have ever seen that has come out of the gate so fast. that is made possible because of the related companies and my partners who have the capability and the expertise to do it better than anybody else.
>> do you envision other , other competitors? >> we are definitely working with other developers domestically and around the , other cases would be more traditional. >> we are right now in the .argest economic expansion what are those concerns or strategies to price that into the development? >> we don't see any slowdown from the consumer. a lot of people are predicting a slowdown will occur. right now we are very excited by what we are doing.
it's truly different. we are not just another hotel. even if this is a slow down it may give us access to better prices or the cost to build and develop may be lower. >> they are just a gym that is becoming a hotel, godspeed. they are pretty nice. i'm not sure what the cost is. click staying on brand. this.eek, do not miss meeting his chinese counterpart on tuesday for trade talks. >> the central banks announced with the bojsions
♪ >> this is bloomberg technology. a deal that reshaped the entire wireless industry. 5g, the justice department gives the thumbs up on t-mobile's acquisition of sprint. apple will not be exempt from china tariffs. president trump pushes the company to move production to the u.s.. france moved to tax