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tv   Bloomberg Markets European Close  Bloomberg  July 31, 2019 11:00am-12:00pm EDT

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european trading day. from london, i'm guy johnson. vonnie: from new york, i'm vonnie quinn. this is the european close on "bloomberg markets." guy: we are clearly waiting for the fed a little later on. european volumes are like today. the stoxx 600 trading at session up 3/10 of 1%.-- market trading now three basis points lower. prices rising as we anticipate the fomc. vonnie: the dow has turned very fractionally negative, just down a point on the s&p 500 now. we have advanced micro devices on forecast for game console sales that didn't really please the street. it is down more than 7%. maker,nic arts, the game higher by almost 8% because order"ars jedi: fallen
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is looking to perform, so that has the stock nice and higher today. of most him course -- of molson coors brewing is leaving, the ceo be replaced by of miller coors. we want to know if the fomc can thread the needle? what does he need to get done today? guest: the first thing is 25 basis points. everybody knows that if he doesn't cut 25, he's got a credibility problem in the markets.
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25 is done. i think you'd like to do 50. he and others have given indication that if you're going to do something at this point in just come it's really at this level of rates, you need to go big. we've had reasonably stable sobers from the economy, he'd have a hard time getting the hawks. what it comes down to really is anything, he if announces on the balance sheet, and what he announces going forward. guy: expectations are dovish going forward from here. got four rate cuts priced in at the moment. is that too much how does he find himself some breathing room -- is that too much? how does he find himself some
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room?ing some of the softer data is maybe pointing to the downside, but in aggregate, the situation looks ok. at the moment, the market is kinda pointing towards sequential cuts coming through, 50 basis points this year. do you think people try to move the market away from that? i'd flip the question you're asking a little bit and say, what is victory for him in terms of cutting? we know that inflation is a lagging indicator, so whatever he does today, you are not going to see the inflation response for a while. the question is, what is it that in theying to accomplish markets? i would say the answer to that is a positive yield curve from three months out to five years. that would alleviate a number of issues for him. one, it would help weaken the dollar a little bit, which is part of what he's trying to do in terms of favorably impacting global growth.
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is 25 enough? no. what it be better if he did 50 and one-shot? i think show. but then the balance sheet moves out there, and there's different parts of that which can make a big difference in terms of the shape of the curve. he can announce they are going to buy treasuries inside of three years exclusively. he'suld announce that going to take that one half of the treasury rolloff still going into cash and start reinvesting it. most importantly, he can pull forward the timing of the reinvestment of the mortgage in october that starts going into treasuries to now. that is what i would call stealth qe because it makes the fed the net new buyer of treasuries. if you look at the rolloff on an annual basis, that could be anywhere from 15% to 25% of net new treasury issuance.
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not moreally if important than just a 25 basis point cut, which is already in the marketplace. vonnie: and arguably, the market has been pushing for this rate cut. you could say that the market got what it wanted and didn't necessarily react to what federal reserve members were saying. if we get the 25, will the market start pushing for another 25? steve: the market is already looking for 75 to 100. that doesn't mean the market is going to be right. if they want to shock the market, they will do 50. but as we said, they will be 25. the market will not be satisfied with 25 alone, unless it starts to see much stronger economic data, and you begin to therefore see the market express that in a shift in the curve. vonnie: well that shift in economic data have to come in the pce? we are getting it elsewhere. we are getting great jobs numbers. data,eat housin
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but it has not been terrible. steve: if you look in the second quarter, if you take that consumption number, which was really a bounce back from the first quarter, and brought it back to the sort of normal average over the last several years, second-quarter gdp would have been about 1% real increase. anything less than 2% is a deflation or disinflation because you are drawing both -- because. you are growing below trend. we saw the increase -- because you are growing below trend numbers. we saw the adp numbers increase. if employment is settling down, it also means that the fed can argue that is normal given the extent of employment and everything else, but that is growth in consumption spending going forward.
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i think the thing also to understand is this is most unusual, and in some ways a historic fed move. we are not on the precipice of recession, as you correctly point out, but we are doing two things. one, he's fighting inflation. i don't the guy ever thought i would love to see the day where i heard a fed chairman say he's going to be tough on inflation, meaning he wants inflation to be higher instead of lower. the second thing is this is a rate cut for the world. if you go back for the last several years, with this program and others, we've been talking -- aboutlar dollar borrowing around the rates are much higher than the rest of the world, you will get a tightening of global financial conditions.
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thatis part of reversing and helping the rest of the world because the fed understands you have 30% of gdp in trade. it matters. guy: europe doesn't want a higher dollar. it is going to lean in on that. the ecb is going to respond. sorry, the europeans don't want a weaker dollar. they want a stronger dollar. the last thing draghi once in the world right now is a stronger euro. if the fed cuts today, it's going to be 25 basis points. may be signaling another 25. the ecb is going to lean in on that. who do you think is going to win that battle? steven: that is a great point. it would be nice if the europeans actually came to understand because so much of world trade transacted in dollars rather than euros, and so much of their surplus and trade goes through emerging markets, they would actually benefit from a slightly weaker dollar.
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but we know that penny is not going to drop for them anytime soon. so who's going to win? i think the fed has cut its opportunity here in july and september. if there's not any leeway or any movement in the dollar as a result, then we go back to the white house. i think they are set to attack europe on trade, and i wouldn't be surprised if after brexit on october 31, you start hearing a lot more from the white house about weaponizing the dollar. guy: that is interesting. out?w does that work the president has ruled out intervention at this point into the currency markets. do you think he's going to reverse that decision? there was a meeting a few days back in which he said that ain't going to happen. i think it was lighthizer that wanted a 10% reduction. do you think the president is going to change his mind on that? steven: first of all, trump has shown he can change his mind at any moment. [laughter] guy: fair enough.
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steven: i think a lot of that pushback is more about timing than anything else. he wants a weaker dollar. in some ways, having a weaker dollar, a positive curve, having a little bit more inflation reverses policy that last song was 40 years. getting back to the point, it is very simple. the dollar belongs to the treasury, and the treasury has an exchange stabilization fund. it would instruct the fed to do what it wants it to do in the open markets, either through option swaps or direct currencies. it is all legal. it is all within its mandate if it chooses to do so. will they do it towards the end of the year? there's an awful lot between now and then that could change. vonnie: steve blitz is sticking with us, ts lombard's chief u.s.
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economist. stay tuned for our special coverage of the fed coming up later on, at 2:00 p.m. eastern, 7:00 p.m. in london, two :00 a.m. thursday morning hong kong time. we are fluctuating between a few points of again and a loss for the dow and the s&p. the nasdaq holding onto a gain of about 2.1%. there's a big surge in sterling today, at 1.2230. the 10 year yield in the u.s. 2.037. this is bloomberg. ♪
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♪ vonnie: live from new york, i'm
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vonnie quinn. guy: from london, i'm guy johnson. this is the european close on "bloomberg markets." let's get an update on the first word news with courtney donohoe. courtney: the trump administration is working on a americans import cheaper pharmaceuticals from canada. the pharmaceutical industry is facing complaints about drug prices from consumers and the government. for the second time in a week, north korea testfired two short range ballistic missiles. conducted as u.s. secretary of state mike pompeo headed to asia. he will be in bangkok for a conference of the association of southeast asian nations. he had hoped to meet with a north korean delegation there, but that meeting won't happen. the crowded field of democratic candidates went at it again last night. 10 of them squared off in a debate in detroit. bernie and elizabeth warren had to defend their progressive politics against attacks from low polling moderates.
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sen. warren: i know how to fight, and i know how to win. i took on giant banks and beat them. i took on wall street and ceos, and their lobbyists and lawyers, and i beat them. i took on a popular republican incumbent senator, and i beat him. courtney: the second night of the debate will feature front-runner joe biden and kamala harris. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm courtney donohoe. this is bloomberg. vonnie: thank you. let's get a check on global markets now with abigail doolittle. abigail: at this point, we are looking at very small moves. major averages in the u.s. fluctuating between small gains and declines. everyone waiting on the fed. the s&p 500 up fractionally, the nasdaq up just a little more. in europe, the stoxx 600 up about an equal amount.
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emerging markets underperforming, down about 0.5% ahead of the fed. interesting considering any dovish tone should in theory help emerging markets, perhaps an early tell that it won't be as dovish as investors are hoping. let's take a look at a four-day chart of the 10 year bund yield, down four days in a low, hitting a record low. accommodation of the various central banks' economic data. down -44 basis points yield. many are saying that while we have decent economic data in the u.s., it would be very hard for the fed to leave rates where they are for negative yields around the world. interesting to think about for sure. as for big movers on the earnings front, apple beat and provided an outlook for the current quarter that is pretty solid. amd down 7.6 percent, the
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worst day since january. there outlook weighed on by gaming console chips. ge was higher in premarket, but now down 3%. this despite the fact they did raise the outlook. just talking about apple having its best day. take a look at this chart. in pink is apple, and orange amazon, and white soft. last year apple was in the $1 trillion market cap club all by itself. right now trying to get back up there and join microsoft. it will be interesting to see whether investors bid up the shares as the summer goes on. vonnie: abigail, thank you for that. the u.s. and china wrapped up a new round of trade talks in shanghai. the white house called the session projective -- the session productive. still with us, stephen blitz, ts lombard chief u.s. economist.
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how are you modeling it into your forecasts? steven: basically, we think there's obviously a lot of politics involved in this. there's a lot of midwestern farmers getting hurt by what's going on. i think it becomes kind of like an arms troops. i don't -- arms truce. i don't think they could possibly get to a full agreement. i think they recognize that. i always thought they would just do agreements in steps. let's agree on what we agree on, but we can't agree on, negotiate that, and have the existential threat of tariffs weighing on that to make sure there's progress, & what we can. i think -- and sign what we can. i think that is the tack they are taking. i would expect some small
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agreement come through sometime in the fall. vonnie: do we get rallies off of these small agreements if that indeed were to happen, or does the market look past them because they are not very economically material? steven: i think what you get is rallies or at least relief rallies just on the idea that the situation between the u.s. and china isn't going to get worse. i think it is just a sign that they are moving towards an agreement. they recognize it is going to take longer. negotiateve years to an agreement with japan, so china, we don't have leverage over them, so it is going to take a long time. that is a really realistic assessment to have. the idea that trump isn't going to go in there and blow up the world with 100 what if i percent tariffs -- with 125% tariffs or whatever is fading away.
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with the fading away of china as being front-page news, it does free him up to look at europe. making the new ways he's , my understanding is the playbook is set. whether they execute or not, we will see. once brexit is out of the way, l be athink there wil brexit of sorts, having exit out of the way, even a small agreement or truce out of the way, it opens up for him to start attacking europe. guy: a bunch of questions. do you not think that what we just saw overnight in shanghai was evidence that the chinese have decided that they are just going to try and wait out the president? there's an election coming in 2020. as a result of which, from their point of view, the most logical thing to do right now, the best option right now, is just to wait and see. the cost is getting lower and lower of that strategy.
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plays intohink that what trump wants to do, which is simply to get these small this.ents, agree on may be a few months from now, we agree on something else. it just shows slow progress. he can still say he's being tough on china on the big issues, but helping his base. the chinese weight attitude dovetails well with trump's plan. guy: you talk about the fact he's going to attack europe after brexit has been done. is what you're alluding to that the president is waiting for the u.k. not to be part of the eu before attacking it? steven: i don't think it is so much a question of not being part of the eu, which obviously is what is going to happen, as it is just waiting for that uncertainty to become certain. ends up that certainty
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being, whatever agreement ends up occurring, i think they just want that bit of volatility out of the way before focusing on europe and what they are going to do. vonnie: steve, thank you. our thanks for all his time to lombard chief ts u.s. economist. this is bloomberg. ♪
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♪ guy: from london, i'm guy johnson. vonnie: from new york, i'm vonnie quinn. this is the european close on ."loomberg markets it is time for a look at some of the biggest business stories in the news right now. the turnaround at general electric is showing progress. ceo larry culp is trying to stabilize the ailing manufacturer. second quarter earnings beat expectations. a big takeover in the eyecare business. the maker of ray bans sunglasses
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has agreed to buy dutch company valued at up to $8.1 billion. it has more than 7000 stores. it owns chains such as lenscrafters and provision. carlyle group trying to one up its rivals at the first private equity giant to create a class of shares that would make it eligible for the s&p 500. it has optioned class shares as a shift to a corporation to boost its stock price. that is your latest bloomberg business flash. let's get a check now on u.s. markets. we are seeing small gains for the s&p 500 and the dow, relatively small gains for the nasdaq. typical perhaps before and fomc decision. also seeing no movement in the dollar index, although sterling is moving and the euro is so slightly weaker. yields just small movements.
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we got a big drawdown earlier in crude inventories, and we are seeing wti moderate gains at $58.23. guy: let's take a look at what is happening in europe. we are waiting for the fed. volume in line with european equities. cac is trading up a little bit. banks generally having a good day today. the pound is trading higher, but off of multiyear lows, in fact, record lows. the ftse 100 is suffering a little bit as a result of that. it is all about the fomc. that is the news we are waiting for. the european close is next. ♪
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of: 30 seconds until the end the session in europe. volume is light. we are waiting for the fed. everything is on hold.
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there have been some stock stories, but in aggregate we are just waiting. we need to hear what jay powell has to say. ftse trading down .5%. the pound is trading higher off multiple year lows. elsewhere, the dax trading up .2%, feelsc 40 up like a holding pattern. you see we're looking at reasonably light volumes. let's look at the sector breakdown. we are seeing weakness of the top 10 d of the market. construction doing well, retail is doing well. , travelgas doing well and leisure, that is the air france numbers. air france, we talk to the cfo earlier in the program. the bottom end of the market, the real estate story hurting the market. that sector down 1%. a look at some of the individual stock stories.
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they are important. i know today is more of a macro day and about what is going on with the fed. airlines in focus in europe. air france setting the tone. we talked to the cfo earlier. the market loves the numbers it got today. delivering 8%. iag is trading higher. i want to talk about iag. it is trading in sympathy with air france. what i will say next is more but public service announcement. iag lost a court case in the u.k.. that case was designed to stop its pilots going on strike in august. i know a lot of you spend a lot of time on her planes crisscrossing the atlantic and europe. it looks like iag could be facing stripes. -- stripes -- will be facing strikes. credit suisse is trading higher. that is look at the european close. vonnie: let's have a lacrosse assets. -- major indices fluctuating
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the major moves are beneath the surface. on fomc day, all eyes are on the 10 year. gold futures down slightly. we also had crude oil inventories, another drop-down that was larger than expected, four times larger. we saw crude oil rise more than 1%. still $58.41. let's get the some of the movers in the stock market. apple is moderating gains. above 5% earlier. analysts are pleased with the quarter even though sales of iphones were at the lowest since 2012. the attention is turning to services and other apps. analysts are looking pleased. streaming technology is doing extraordinarily well. one of the best performances in the s&p 500. a couple of upgrades. analysts are seeing no downside
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inside. different story for amd. game consoles, the future not as bright as it was. amd provides chip for game console makers. it is down on that forecast. and the story here not just that the current quarter has passed, but the current seo is stepping down -- the current ceo is stepping down. it looks like -- unless the new ceo decides to do something completely different, analysts are saying he will continue to not work. guy: interesting. let's turn back to the banks. they day for european bank earnings. credit suisse and bmp breaking some of the gloom with results that beat their wall street peers. credit suisse ceo warns the negative interest rates are challenging for his bank. >> they do not make life easy
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for us, particularly in interest rates are a challenge. we have different answers. , weou look at the revenue are quite pleased because transaction revenue is strong. i mentioned the reactions we took toward the end of q1 to make sure we would go up in q2. guy: talking early on. cfo told us the bank is making progress in efforts to take over 168 billion dollars in hedge fund assets from deutsche bank. >> the interaction between the teams of deutsche bank and bnp is doing very well. the speed at which this is progressing is faster than expecting. from that point of view, we are pleased with the discretions and interactions we are having. guy: let's go-to move on to get is -- let's go to milan to get a
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sense on what we should read with european banks. lisa martinuzzi joins us. we had three banks beating on trading. let me know why. lisa: there are different reasons behind each and every one. credit suisse has been restructuring. what they have seen in the last few quarters is a rebound, particularly this quarter of rebound in their fixed income business, and an equities business that has also appeared to have turned the corner. revenue was flat, but that is a considerable be -- a considerable beat above the street. credit cfo talking about suisse narrowing the gap with the top five in equities, which is very important. it is the top banks in that space that make money in the business. over on bnp, you had a
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restructuring plan. the bank accelerated earlier this year. what they are doing is trying to focus more on deals with faster margins, or more industrial type volume business. there again, they didn't up significant fixed income, less in equities. different amounts, but what you are seeing is picking up activities from other european players such as deutsche bank that instead are retreating. vonnie: beyond trading, some of the other core activities did very well as well. lisa: yes. ,f you look at credit suisse the two almost $10 billion worth of money in private banking. -- this isig is this a big business. you have had margins of growth
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and that business holding up. that is very important. at bnp you at the commercial banking businesses where revenue was somewhat flat, but stable. the bank has been cutting costs and therefore preserving the bottom line. guy: talking about negative rates. he finds himself in a difficult position. the ecb is about to cut rates. bits.y at -75 people are talking about emergency meeting taking place. how problematic would be for the likes of ubs and credit suisse if we were to see the s&p going even further -- the snb going even further? lisa: they of spoke into this being a further headache for them. you saw today at the top of passing on the cost to the customer. ubs are he does that. -- it is acharging
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sign of the difficulties that all banks face. the europeans with the ecb rates coming down, but of course the ringin the eurozone is tie which is easing the effect of the decline in interest rates. guy: we will leave it there. thank you very much indeed. alisa martinuzzi joining us from milan. vonnie: we are counting down to the fed latest rate decision followed by chair powell's latest news conference. we have a preview with carl riccadonna. we are expecting 25 basis points. it would be unusual if we got 50. how likely is that? unlikely that would we would see a 50 basis point move, that that took great measures to telegraph this do markets, even
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going as far as to backtrack on misunderstanding from the fed -- the new york fed president williams. they made a strong effort to shape expectations. the consensus is probably pricing that in, which tells us that maybe 2:00, when the rate cut happens, will not be the market moving development of the day. 2:30,, it could comment when the press conference begins and perhaps jay powell will provide more clarity, not about today's rate cut but future rate cuts. when they will be coming and how many could be coming down the pipeline. that would be the surprising move to markets. guy: do you think the market away from pricing sequential cuts? carl: that would be the wise decision to make. if he follows through with another 25 basis points of easing, then with the prospect and hard brexit in october
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other economic developments in october, which could pose headwinds globally, including an ongoing lack of improvement in trade war resolution. the fed could get roped into additional easing later this year. theune, when they published dot plot, even the most dovish members of the fed were favoring only 50 basis points of easing from this round of insurance cuts. if the fed does not win the market off the expectations there will be a cut today, a cut at the next meeting, they could get roped into a feeding frenzy from the market, where they struggle to reshape market sentiment and get boxed into doing more easing than they wanted to orchestrate. vonnie: that is going to be the delegate thing today. how does the fed reassert dominance over the market? challenge, a big
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because in q4 they tried to lead the markets last year, and that had disastrous consequences. that is why their backtracking today. they will have to let the data speak for itself. also, they will have to try to ne market- to jawbo expectations. the fed reshaped that through fed speak. they would be wise to take advantage of an impressive streak in the economic data to get that messaging across. if they wait until the economic data weakens and say it is weak but we will not give you more accommodation, they risk running into the same types of problems we saw in the fourth quarter. issuerst month, junk was at a record we had not seen since 2006. you've seen spreads tightening in ig and high-yield. the credit market has been going crazy. is there a fear within the fed
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that if they deliver more than 50, that they are going to stoke that market, or send it completely in the opposite direction. you look at how markets are positioned and put equity to one side. other markets, pricing is elevated. carl: financial conditions, we can look at the bloomberg financial conditions index on the terminal. improved considerably over last month, month and a half. this will be the reason for the dissent we will see at today's rate action. to anticipating two dissents today's rate cuts. that from boston and kansas city. both hawkish leaning policymakers that will be against the easing because the economy is on sound footing current one of the major we have heard this,
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economy is- when the performing relatively well. when you have the economy performing at trend or better, policy sets and accommodative stance and moves further in and accommodative direction. you are running the risk of inflating financial assets. we saw that through the insurance cuts in 1995 and 1998, and there is a real risk that could happen again in the current environment, especially the unemployment rate as low as it is. the last time we were this low we were walking on the moon. this leads me to believe we may not be at the peak fed funds rate. we will have a maintenance cut and if the cycle extends we will be back above current levels. guy: -- vonnie: unusual to see two dissents. carl riccadonna with us. stay tuned for bloomberg tv. we have special coverage today at 2:00 in new york, 7:00 in london, and 2:00 a.m. thursday
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morning in hong kong. guy: european markets wrapping up the day. a downdraft through the ftse 100 in the auction process. now down .8%. quite a sharp dip during the auction. 7586 is where the ftse finished. the pound going higher. continental markets, very quiet session. we have seen light volume. we are waiting for the federal reserve. as a result of that conversation we will have the top of the hour, tune into bloomberg radio and the cable show. live on dab digital radio and all of your bloomberg devices. this is bloomberg. ♪
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vonnie: live from new york, i am vonnie quinn. guy: from london, i'm guy johnson. this is "the european close" on bloomberg markets. let's get a first word news update with courtney donohoe. courtney: the us and china wrap up new rounds of trade talks in shanghai and the white house calls the talks productive. the next round of negotiations will take place in september in washington. china is putting more pressure on taiwan. beijing is suspending a program that allow individuals in 47 chinese cities to travel there. a government agency cited the state of relations between the sides. china accounted for almost one third of the visitors to taiwan in may. now chinese can visit only as part of a tour group. boris johnson met political
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leaders today northern ireland, where he faces the task of restoring the collapse elf asked government and funding a salute -- belfast government and finding a solution for the border on brexit. northern ireland is likely to be among the hardest hit areas if it goes wrong. says apollo global management has never done any business with jeffrey epstein. epstein is in jail in sex trafficking charges. bloomberg has learned that black met with epstein from time to time in apollo's offices. global news -- 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 am courtney donohoe. this is bloomberg. vonnie: thank you. time for the stock of the hour. it is molten cores -- moulton c oors. abigail doolittle joins us more -- joins us with more. abigial: they missed earnings and they missed sales estimates
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and it has to do with the declining beer market. consumers leading toward spirits and wines and premium beers. 20% of their business -- volumes down once again 5%. if we going the bloomberg, we can see how bad this looks, and ugly picture going back to 2014. this is a picture of the volume growth. up and down, up and down. the yellow line is 0%. 5.6%%, straight down, down -- in 2017, straight down, down 5.6%. they also announced the retirement of their ceo. a new ceo will be taking over who has been with them a long time, suggesting a turnaround plan. guy: a new ceo, a turnaround plan in prospect. how quickly is this going to happen? abigial: that is the million-dollar question.
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it is a big ship to turn. it will take them quite a while. they also have to address the problem between the terminal, and here's the terminal. you can see the ugly volumes. they are fighting to turn that around. 20% of the business, premium beers, they need to be set up and make a better pricing mix against the mainstream beers. going to have to compromise margins according to one of our bloomberg intelligence analysts who are saying they will have to cut pricing to some degree on sentremium beers and marketing to get u.s. consumers to start going toward some of those brands and away from more mainstream. six months to put the plan in place and 12 months before we start to see results. could be time before we get positive news out of molson coors. fox, andking to duncan
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he was saying this is such a big problem around the beer market and what is going around with them for so many years, he can probably not tweak the current strategy. they will have to have a new strategy which will affect margins coming in, compromise those in the near-term and have over the longer term a better pricing mix between the premium and mainstream beers. vonnie: stock is down 7.8% and our thanks to abigail doolittle. guy: it is that time of day. coming up next, our global battle of the charts. this is bloomberg. ♪
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guy: is that time, time for our global battle of the charts. if you're interested in these charts, you can find them on your bloomberg. gtv is the function. we can find these charts we will show you. kicking things off is eric
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balchunas. eric: defending accommodative has created the beta vortex. everything is moving more toward looking at data. here is the correlation of all hedge funds. the hfr fund weighted index. it is at its highest level and 92%. unfortunately it is trailing the s&p. hedge funds are caught in the middle. they are not alone. active mutual funds all see correlations tick up because money is chasing funds that are doing better and the ones that do better look more like the s&p 500. the s&p is sucking and a lot of strategies and down the road these funds will not provide the diversification some are hoping for, especially hedge funds, which you would hope are an alternative. the alternative funds are largely being ignored for the time being. guy: the beta vortex. nice. vonnie: i think we need
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background music for this segment. it would up the ante. without music, my chart is about european banks. we were just talking to elisa martinuzzi and she had good news about the major banks including credit suisse. some of those we are not expecting to do well on certain metrics, but that does not mean as a group overall we are seeing positive sentiment. we are seeing the opposite. negative sentiment. this blue line is banks priced in euros, it is down, and it is tracking the citi surprise index. we talked about french gdp data and surprise -- even those groups we were reporting on earlier on. not all the rosy picture for the european banks. you can see that chart on the bloomberg gtv . ,uy: the causality is that data ecb cuts, bad news for the banks.
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it relates back to what eric was , and we heard this a lot from the u.s. banks, it is tough to get conviction trade from the hedge funds which has been benefiting the banks. beta vortex will have to when. there is no other way we can go with this one. e's chart is useful as we are watching so much european bank action, but it is all about the fed today. eric balchunas will win. power is coming up next. david westin will be talking to the vice president's chief of staff. good afternoon. ♪
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david: from bloomberg world
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headquarters in new york, i'm david westin. welcome to "balance of power," where the world of politics meets the world of business. on the brief today, carl riccadonna on the fed decision in less than two hours. shawn donnan in washington on the apparent lack of progress on the u.s. china trade talks, and kevin cirilli into choice on what to expect in the second round of democratic debate. carl, the fed in just a couple of hours and we have one set of statements in may, another in june. in may it was about patience. in june it was about monitoring closely. what we hear this time? carl: more urgency to act. they highlighted elevated risks, especially external risks like glowing global growth, hard brexit, ongoing tensions in the trade war. i do not think those have been resolved or improved so i do not think they will suggest conditions are worsening, yet there remain at an elevated level which will mean


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