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tv   Bloomberg Markets European Close  Bloomberg  August 16, 2018 11:00am-12:00pm EDT

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markets. here the top stories. global stocks high turkey finance minister trying to reassure the markets as trade talks between the u.s. and china are scheduled to resume. brexit talks resume in brussels. anxious,estors getting with the country's bond market says about looming challenges. stocks arising today. i from portugal finland and sweden are rebounding today. from the big decline we saw yesterday.
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investors are enthusiastic about talks about talks about talks. investors are enthusiasticcurret the dollar. sterling is up. market yielding italy is down. rising afterre their selloff yesterday. the big day for earnings. earnings growth will be held back this year by higher chemical prices and unfavorable currency moves causing the german maker to cut forecasts. hurting earnings per share. that is henkel. this is carlsberg up as much as 4%. its profitraised
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guidance amidst soaring demand. it is also bringing cost of its businesses as to whether a slowdown in a more established market. that is carlsberg. this is why card. payment processor raise the forecast from second time as it benefits from the accelerating global trend toward digitalization. the payment processes. with interesting about the stock is that it continues on its upward movement, it could replace another bank on the dax index.
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90 minutes into the session. how's it looking? let's take a look at the major averages in the u.s.. we have seen an outperformance of the doubt today. overall the sentiment is more positive as mark pointed out. we have talked about talks happening between the u.s. and china and also covering commodities, a drop in the dollar that appears to be helping matters as well. as for the movers and components of the doubt that are contributed. walmart is doing quite a bit of nine and a half percent after the comparable sales hit a 4% gain. e-commerce up 40%. boeing shares are rising. productionf the 737 is leaving at the end of the year. there been production issues with that. is going to be replaced by the chief of the 777 production.
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potential ubs see a upside to the stock. there are also metals producers that are bouncing back today. if you look your we have a broad rally. copper features are bouncing. several of those that are gaining in today's session. to put it in perspective, look at the bloomberg at these metals prices. you have gold in white. copper in blue. zinc in yellow. it have big games today, but hardly registers as a blip when you look at the week year today. that is something to keep in mind as we look at the bow for we are seeing today.
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finally, bringing it back to the u.s. stocks. we have what's going on with the retailers, with the exception of macy's which is bouncing back little bit after yesterday's decline. jcpenney is really pulling down the department store group after they posted a wider loss than estimated. they will continue to lose money for the full year. we have walmart on the one hand yes but then we have the other department stores. sears has been consistently week as well. kohl's is also going to be reporting. we will see if their numbers help salvage the performance for this group. let's get more insight on the market. stephen isaacs is here. these crises don't end with a whimper. have we not seen the bank? >> the pressure is still on. let's look at the cost of the crisis.
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because is twofold. one, a vast accumulation of dollar debt. a large number of em crisis. secondly, and appreciation in the value of the dollar. an increase in interest rates which means those debts are more expensive. that is the origin of the crisis. that trend is not going to end because the fed is intending mode. the u.s. economy is pushing forward nicely. we will see maybe 4% for the third quarter. the medicine is still being taken by a very sickly patient. as you are indicating, when his head, ands come to a it will be with a bang. >> where will that happen? >> when i see a bang what does that mean? does it mean a default? triggeredmaybe even
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inside the western world as well. something somewhere will cause the next big final letdown. it might be into the first quarter next year. it could big fella beans or somewhere else. often these debts are well hidden and it is only when they come due that they start to hurt. that is my prognosis. i think the dollar will head higher into 2019. not just in the em well, it is happening everywhere. that is the trend. prices,es u.s. stock they have two forces at work. strong earnings and walmart today. the other side is raising interest rates and a rising dollar which is obviously bad for the repatriation of earnings. the u.s. market is going to swing around.
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i'm not sure that we have a definitive turning point there. em,rtunately for people in just because it's cheap doesn't mean you should weighed in. wait for the crisis. >> what you are describing, that is a duck and cover situation. it's pretty dramatic. how long do you think we will have to wait? what should investors seek doing in the interim to protect themselves or brace themselves for what can be coming? >> i think you can pick up some nice yields in u.s. dollar assets. if you don't risk your capital in momentum stocks. if you look at the u.s. dollar on its own, the u.s. treasuries shorter and of the corporate bond curve, you will gain -- getting paid a reasonable return. i think that's the right thing to do.
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the history emerging markets has been boom and bust. that is what it has. all of the big long-term story about -- the facts are, a gaza because down. the moment it is going down and wait to be patient. aboutyou can still lose a considerable amount of money as investors have done this year. if there is a crisis, a bang as you put it whether it is in turkey or elsewhere, is that going to take the rest of the world with it or can it be fairly contained? muchthink there is not as synchronize containment. on an immediate trading day or week everything tends to go up and down. over a longer time scale of a couple of years, i don't think it has quite as much impact. i think one can afford to say it
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will be a buying opportunity. if we are looking at em, which ones what i be looking to reengage with, i like latin america. see some reasonably pro business government. in argentina they are struggling with the legacy of problems but it is a reasonably pro business government. something in brazil. -- the crisis may be less infectious. , ione is pausing and waiting would be thinking latin america. china, i am less sure about. that is a very big problem. i'm not sure many people understand what is going on in china. the debts. changes, theency chinese have been able to devalue their currency but hasn't lost for too long because the vast inflows due to the
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trade has managed very quickly. and it has started to strengthen again. we are in a different situation now. they are no longer in a trade surplus. think it does -- the debt situation in china is very dramatic. what are people ignoring that? >> they are comforted by the fact that the official foreign-exchange service is still substantial. historically, the government has been able to spend their way out of the trouble. it has been a hiatus. i am leaving china alone. i'm not trying to make a big call on it i just think it is a dangerous place and i am not comfortable with seeing that is an opportunity. latin america is more interesting. >> thank you, stephen isaacs.
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next we will focus on brexit. turkey the government has ruled out capital controls as a wave -- easing the financial crisis. rainy in and narrowing the current account deficit were priorities. turkish lira gaining while he spoke. for the first time in two months the u.s. and china will resume negotiations your trade speeds. it will be at a low level. send a minister to the u.s. later this month. the chinese delegation will meet with the treasury undersecretary. they have reached an agreement inmate but trump backed away from that deal soon after. president trump believes his tariffs on imported steel will rescue the industry. he told wall street journal the people may complain that steel prices are little more expensive , but they will eventually fall. he says the tariffs protects an
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industry that is essential to national security. >> she was known as the queen of soul. singer aretha franklin has died in detroit after a career that lasted decades. she suffered from advanced pancreatic cancer. she was 76 years old. ♪ live from new york, i'm julie
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hyman. counting down to the european close. let's talk about frexit. talks between the eu and u.k. resume in brussels today. the eu is signaling wants to make september a decisive month. theresa may favors a late autumn deadline. this is raising concerns about
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britain's decision to leave the eu. >> not on everyone's radar. it's an interesting microcosm their what is going on. jpmorgan, they are the biggest employer in the town. it was voted to lead the eu. the is the story across u.k.. theare starting to see nurse from stop small businesses and companies across that town about where the talks are going and what the impact is going to be. apocalypse a looming but the opportunity cost. jpmorgan has said they are going to hire more back-office staff areas they are to go to poland.
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this is an enormous pain. it is an added cost and frustration. the university is saying no applications from the eu. problems the staff storages string to emerge again. these trends are starting to build and have an overall negative impact. seeing that affect replicated all around the country. >> exit discussions resume in brussels today. what is the glass half-full scenario in the next month or so? >> i would a five to hold their breath for any kind of big breakthrough. building up their energy perhaps for another fight when they all return in a few weeks time. britney set up its position.
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what they are arguing about now are discussing is not really about the future trade deal. everyone needs to know what they need to know down now is a withdrawal agreement. that's what is to be agreed on by the and this year. avoid the transition to and no deal brexit. there's the northern ireland in the framework for the future trading relationship. you can imagine how some sort of could come together with they can get the agreement. there is surely a lot more argument over this question to come when mps return back in a few weeks time. >> i want to bring in stephen isaacs. as you look at the brexit back and forth, how are you treating
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it? what do you think will be the outcome? >> funds. they have nice fudge. cu was an establishment remain a coup. onemate -- theresa may adjustment to come back with some sort of a deal. she has crossed any rubicon from red lines were being able to orchestrate a position where government can handle a note brexit scenario. she is on the defensive. the europeans are on the offense .f areas they will come back with something. the problem is can they get to parliament? was supreme court decided at the outside -- asset of the brexit upset is that any deal has to
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get through the houses of parliament. that is where the arithmetic becomes interesting. looking at the electoral maps, i will say at least 100 mps probably vote against this deal. it is not going to be a good deal. the government are problem -- trying to spin it. the government and has to rely on policy. -- labour party. can labour party support that deal? for two reasons, the answer is no. first, they are the opposition. who wouldn't want to kick the government when it's down and say you promised a great brexit deal and this is a dog's breakfast. the second is what does corbyn
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really think. corbyn gave a speech last week called building in britain. this was interesting. this is an industrial policy. he has always believed in. corbyn wants to make massive interventions across the economy. they can do it in a single market. what couldn't be a better opportunity to ultimately see brexit. a they've been leaning toward more softy type of deal. speech gave an important to three months ago about britain should remain a member of a single market. not the single market.
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there been very careful and clever to court the remainder growth -- vote in the populace. when the chips are down, they will vote against the deal and i think theresa may will have to resign. big calls insome the last few years. >> that's right. when you think about how to labour party behaves throughout this process. they have made their moves when it is to their advantage. for corbyn and mcdonald, the aim is to gain power and i don't think for them was sort of it would dampen some of their ambitions for what they want to do with the economy. when the chips are down in the moment comes when you have to get this through parliament, you can very much see a scenario when they will choose the option which helps to destabilize the
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government more. within one is a general election. politics andlking i want to talk economics for a moment. we heard today that you haven't had this economic apocalypse that was predicted. what you think? is that so coming? >> that is a fair comment. he was referring to the scare margaret -- scaremongering. that the economy can't stand any scenario except being inside a single market. if you consider the 2000 containers a day arriving from china and we don't have a single market with china, that paperwork is processed area as we are seeing as the effect with , mores. tariffs and china sophisticated economies are more adaptable than people give them credit for. it is an issue of confidence.
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>> it's been a pleasure. this is bloomberg. ♪
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we are heading to the close of european markets. after yesterday's biggest selloff since june. every group on the stoxx 600 is gaining today on optimism surrounding the resurgence of talks between the u.s. and china. ♪ this isn't just any moving day.
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simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. mark barton. stocks finishing high today. yesterday's big loss.
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investors cheered by news of talks between the u.s. and china. warmer weather extended discount stores encouraging shoppers to open their wallets. sales gaining 17% since june. the estimate was .2. the increase led by online sales, food and clothing. britain is enjoying the way the summer listings pending. world cup help boost sales of food and drink as well. interestingly the weather is keeping britain away from a high street of online spending. i want to come back to the mining industry. mining stocks getting hammered in recent weeks because of concerns about china. what we are seeing, the sector trading at its lowest level.
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the cheapest level in five years. turkeys turmoil also spilling the em the dollar rising spilling over into the em space is well. fiber the biggest global mining companies losing about $15 billion but the combined market value since the start of this week. that is through yesterday. i want to finish with the big decliner in europe today. the entire government beginning the process of revoking its toll road concession in the wake of that tragic bridge collapse in genoa. has provoked major finger-pointing in italy. it's like a move by the populace government to revoke the toll road concession which would affect atlantia and its subsidiary. the has thrown atlantia and its largest shareholder the benetton family into a fight to salvage investment and protect its
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fortunate anger over the tragedy . increase the shower shares atlantia down. that's european markets. >> here in the u.s. we are seeing the sentiment over those trade talks restarting between the u.s. and china. also give a risk assets a list the dow getting a lift. you can see outpacing gains on the s&p 500. that is the walmart effect. again in the shares of the company after earnings and sales the estimates. we are also seeing cisco on the rise. another dow component after its numbers be estimates. then it is the phenomenon that we just heard mark talking about created that is a weakness that we have been seeing in commodities and metals in particular. that has flipped at least for today. with the u.s. dollar weakening by a third of 1% against a basket of currencies. the bloomberg commodity index showing really brought strength
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across commodities. energy, agriculture, and metals as well bouncing a little bit today. when you dig a little bit more into what we are seeing in the broughtcks, it is strength. everything in this field is green today. we're seeing gains across all of the groups. top ofr staples are the the list. walmart again is responsible for that. financials and industrials and materials also gaining. materials and energy in the middle there. again we see this bounceback in commodities. >> beware of italian bonds. that is according to goldman sachs which has a huge shift in the italian bond market is on the horizon. the bridge collapse is raising concerns about the collapse of the euros earns third-biggest economy. the italy two-year and 10 year yields are at a high. meanwhile, stocks today at look at the mid index continuing
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six-day losing streak led by this stock atlantia. a big drop both in the bond in the stock market. we're seeing this clash between the benetton family and the populace government. house is going to play out? you say the populace government, this is a coalition government with various power centers and it. it is not a whole government that is on board with this talk of taking a concession away. the faster movement and luigi demaio. haula play out, there are laws in italy about these things. away, take a concession there is a whole legal procedure. there has to be proper cause. it is through the end of going, it will end up in the courts and that will decide it. it seems to be that despite all
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the rhetoric, the government is not looking to take the entire concession away. there seems to be more focus on taking the concession away just for the general area of the highway. it may not even be taking the concession away. they may be's settling for a big penalty. that settleles these things and i'm sure everyone is going over the fine print right now. >> this goes back to the question of infrastructure. infrastructure spending and italy's relationship with the eu. that settle thesehave the two populist forcs differ when it comes to their view on infrastructure? >> you have seen it being played out here the five-star movement is tending to be against major infrastructure projects in italy. big don't want these new trent franks through france. there is a pipeline coming from the caspian sea. they have been against these infrastructure projects.
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smallague of his base is basement, they are in favor of these things. there is definitely a split. you have seen how they have reacted to this. five-star is focused on the company where selby has gone off sayingessarily factually that this is because the eu prevents spending for infrastructure because of the eu fiscal constraints. there have been not the figures being bandied about to say that this is not really the case. italy does spend a lot in maintenance and the eu is not the one that tells italy how does and their government -- money. labor. dilip division of >> to focus in on genoa as well, there would be a infrastructure projects there because they have to rebuild the bridge. it the time went on that? how much this crippling the city
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? is it preventing business from getting done? >> we don't know all the details exactly of what is going to be , butp as far as bypasses this bridge cuts read the middle of the town. it is not only a major link from the north of italy and france to the south, it is also a major artery within the the. it is italy's second-biggest port. what sortsow exactly that there will be in terms of rerouting traffic. it is a major blow for the economy. they are talking about having this bridge built in five months. that sounds ambitious to most people. there has been a long-delayed plan to build a bypass through the hills behind jenna what that
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would remove most through traffic from this bridge. would only be a local artery instead of a major thoroughfare. had been blocked by opposition from local groups. that will be another flashpoint whether or not this gives impetus to build this major bypass project the hills behind genoa. >> i want to move to the sovereign debt market in italy because there is the story that goldman sachs is now saying maybe domestic lenders will be as interested in buying domestic debt going forward. important a support have those domestic lenders been? >> huge. italian debt is bought by italian bonds. that is a fear of feedback because the banks are in trouble they may not by sovereign debt and that will further in trouble for banks. it is a major thing. there are various regulatory
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changes the goldman sachs points to four reasons as to why italian banks made by less italian debt in the future. it is a major issue because they theided a backstop to exciting government when they lend. it is also meant that the italian government is less problematic than the have seen because it is held by the titans to a than france's debt which is held by foreigners. is mostly held by people outside of france. it is a major issue for the thai government. >> thank you, greg. >> let's check in on the bloomberg first word news. >> jurors have begun deliberating in the trial of palmetto four. prosecutors say he earned $60 million advising politicians in ukraine. much of it from the irs and then
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lied to bank to get loans when money dried up. his defense countered that he was in global because he left the particulars of his finances to others. the u.s. housing industry tried to regain its footing and started the second half of this year. action rose less than forecast in july. there was a rebound in groundbreaking for both single and multifamily homes. residential starts were up to an annual rate of just under 1.2 million. u.s. labor strong market is piling up. first time applications for unemployment benefits on his intimate fell last week to jobless claims were down 2000 to 212,000. by more thanowered 2700 journalists and analysts in more than 120 countries, this is bloomberg. >> thank you. conscious the uncoupling. of the s&p fallout 500. this bloomberg.
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♪ you continues charts on the
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bloomberg by running gtv . that won thee guy botc tournament? >> i live on the west coast where it is good and sunny. >> welcome back. be good news could for u.s. equity boards. the s&p 500 has been moving in lockstep with ip index. recently the correlation has eased up. says heightened volatility in tech could cause a new direction. it has been easing up.
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it is nowhere near as high as it was in february. it has come down from a high of 0.95%. the question now this chart raises is that a concern anymore? example, is for this one for the bears? >> he still has the magic. i have to question whether he is in san francisco if he is describing where he lives and sunny. let's talk about eating out in the united states and what it can tell us. more people are eating out. abouteel more comfortable what is happening with the economy. we have seen a surge in spending a u.s. rent trust -- restaurants. spending is up 1.3% in july.
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we're talking about 61.6 alien dollars. the three-month annualized gain, 25.3%. a huge search here. is the biggest gain that we have seen in the data which goes back to 1992. what does this mean? some economists are saying that this symbolizes people are going out and spending some savings they are getting from tax cuts. also, it could be because restaurants are raising prices. is it a question of traffic or increase prices? it depends on the top two. some economists are saying it is a good sign that people are eating out. when you look at industry data, good customer traffic be declining? maybe it's a question of raising prices. , that's reggie's look at this chart and all the others. i like the conscious
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uncoupling. i would go for a title we are so i'm going to give it to julie today. my floor manager who is the chelsea band is going to run on set any minute. i am going to quickly say this is bloomberg. ♪ live from new york on julie
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hyman and i'm mark barton. cisco systems is growing again. wall street is thrilled. ceomberg spoke to the cisco chuck robbins following that report. >> we had a good quarter. the innovation we are bringing
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to our customers is being well received. we saw growth across all of our technology areas. this transition that we talked about, the business model work is continuing to take hold with hours description business continuing to grow. we have a lot of things happening around us right now. performance,t our we have clearly driven a significant amount of innovation in our portfolio. our teams have done an amazing job. we have a very strong global macroeconomic environment to operate in. we have some dynamics with the rising dollar. in thes some uncertainty emerging countries. we have the tray dynamic. we went to deal with those as they evolve. right now things feel pretty good. >> we what's talk about the
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transition in detail because it is clearly successful. you bring up the u.s. dollar. hedged?mething you have this atve gone through various times over the years. our teams know how to manage it. processes thatf our teams deployed when this begins to occur. out the otherome side but it is something that we have dealt with overtime and we will deal with it again. it the deal of running a big multinational global business. our teams the how to handle it. >> i want to understand the pick up the we are seeing in the business. are you saying rising business confidence or is something else happening? i talked about this on our
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call yesterday. there is clearly a lot of business confidence and economic tailwinds right now. same time, i think the launch that we did last year in our intent-based networking those things are resonating with our customers. at a catalyst 9000 that we launched that has a software's instruction on top of , that says there is the intervention there. -- innovation there. we will take both when we get them. give me some insight on what your customers are investing into. what are the areas of lower priority for them at the moment? >> if you look at what's happening with their customers, they are undergoing a fundamental shift in that historically have run their
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applications in their private david -- data centers. have sasalso applications. other traffic is flowing is fundamentally changing. they need to deploy security that is fundamentally changing. they need to rethink their i.t. infrastructure. we are at the heart of how they think about that. that is a big thing they are focused on. >> that was cisco chief executive. stop of the hour is walmart. the best sales gain in a decade is powering them to their best stock gain since 2008. this was a pretty extraordinary quarter for the company. they had fallen going into the second quarter.
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analysts hailing our second quarter results as a banner quarter. showing sales. their sales growth was powered by grocery where the sales rose the most in nine years. they are refreshing their fresh food offering. also, click and collected is being popular. the ceo was saying they are continuing to aggressively roll out the strategy. that is part of them taking the fight to amazon who of course bob whole foods less year. the e-commerce growth was up 40%. for walmart.
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but 40%0% market growth. one other winner to mention with walmart is the walton family, they are the world's wealthiest family and they just got 11.6 billion dollars richer. on the other end of the spectrum, we had jcpenney. they are not doing very well. dropped 27 percent at one point. it is still down over 20%. it hit an all-time low. there are misses across the board. inventory management seems to be the big issue a jcpenney. that is tipping margins. they are having to hold were clearance goes to get rid of stock is not being sold. they still don't have a leader. the ceo left to join the lows earlier this year. lots of issues there.
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i'm looking at the analyst commentary. the shares are currently worthless. they were downgraded to underweight at jpmorgan. thank you, and the. looking at the biggest stories in the news right now. amazon may be on the verge of disrupting another industry. shares of british insurance price comparison websites felt today. talking about creating a rival website. in onhe bank is cached the turmoil in turkey. they are in the process of overhauling the fixed income business after years of underperformance.
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had of the get what happened at the end of today's trading day. we rebounded from yesterday's biggest drop since june. stocks arising with investors cheered of talks of talks between the u.s. and china. everything is rising today. declines monday, new move on tuesday, declines yesterday. of better thany expected retail sales in the u k. this is bloomberg. ♪
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shery: midnight in hong kong. from the headquarters in new york, i'm shery ahn. david: welcome to balance of power with a focus on intersection of politics and economy. shery: back to the drawing
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board. the u.s. and china prepare for the first official talks since trade negotiations broke down. how do we succeed education system in america? former education secretary answered that question and weighs in on the trump administration. guilty or not guilty? the jury and paul manafort's broad trial is deciding right now. we are at the courthouse and will bring you updates. david: hopes were raised again overnight on word that a mid-level delegation for china was traveling to washington to meet with counterparts. for the politics we bring in bryan murray a republican strategist and former strategist.


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