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tv   Bloomberg Markets European Close  Bloomberg  September 14, 2018 11:00am-12:01pm EDT

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the european close. vonnie: we have stories we are covering from around the world, stocks fluctuate after retail sales are less than forecasted, russia and turkey take action to enforce their currencies. and as hurricane florence slams carolinas, but the home depot executive in charge of getting supplies into the area. spoke to the home depot executive in charge of getting supplies into the area. janell speak with an sure -- anshu jain about lessons learned from the financial crisis. julie: it's nine minutes into the trading day, not much
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movement on the macro level in u.s. stocks, the s&p is in very tight ranges and the nasdaq doing the best of the three. up only 2/10 of 1%, it looks like it could be the fifth straight session of gain which will be the best since february the s&p and we are seeing some record highs -- or near record highs for the s&p. technology has been outperforming, and let's take a look at some of the tech movers, price targetsith raised by a host of different subscription revenues were beaten by nearly a third, raised had its target highest on the street. raised itsdia targets, also to the highest at the street, $450 is the
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prediction for that one, interesting. we are also looking at some deals that are getting some between lott tech and general electric, jp morgan flagging concern saying that the forecast for the deal are too ambitious, both stocks falling and rent-a-center getting another notice from the ftc for more information on its acquisition by vintage. $15 a share is the bid set to be approved, voted on by shareholders next week. the deal will close in the first quarter and we will see what happens with that. and we are looking at nice the utilityource, provider that owns those facilities that exploded in massachusetts overnight. they are taking a sharp leg lower in today's session, down 10% on the day. and one potential parallel situation we can look to our the
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fires in california. and what we have seen from pg&e as a result. take a look at the bloomberg, we have the stock versus a basket of utilities, you can see that pg&e has underperformed, there are a number of questions about what the liabilities will be old of the california legislature has made moves to cap liability. this could be a guide for investors who are looking into what the effect could be on nisource. vonnie: emerging markets are catching a break, enjoying its third day of gains thanks to russia and turkey. paul, is thatby it? crisis over? >> i think it would prepare mature to say that, there is certainly more breathing room. is that there are
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some efforts toward stabilization, earlier in the week we were talking about this 10 day run in asia. and we have put together does there'sys of gains, and finally more stability for the emerging-market complex, there's more confidence returning. vonnie: we have a great story on the bloomberg by then, talking argentina, hownd one is doing what you would imagine investors would want and the other isn't. and they are getting punished, what's that about? >> the situation is very difficult in argentina, because the leadership position from is that high interest rates fuel more inflation which is a bad or undesirable thing. severuseems quite the talking about -- -- but he is
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intent on talking about that. there is pressure from the bank showing that there are few other options other than a hike. there's a difference in communication which makes it a than situations elsewhere, where the central bank will shift things to be more aligned. julie: i wanted to bring up the bloomberg and look at these currencies of the week, where we have seen some significant bounces in things like the turkish lira and the russian ruble. the argentine peso and the brazilian riau are noticeable laggards. what's interesting to me is the talk of contagion, it has largely receded or it has been priced in. what are you hearing them european investors? of the key things is how much contagion is there and how interconnected are these?
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on the face of it, the problems these nations are facing is reasonably idiosyncratic. we got to the point where it felt like there was a more thatal contagion, the idea people are putting money out of emerging markets indiscriminately, and so that people are bouncing to other markets. we have heard from a lot of bulls through monday, people saying i think the value is here, there, because it's cheap or looking for the areas of strength within the complex. so there's a search for value more than anything else, regardless of pockets of weakness. down again,ing those questions about contagion. one more thing while we are the one more thing while we are the subject, more generally, there is also the strength of the dollar, there has been a setback
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in terms of what the u.s. currency is doing, and so there's some breathing room for the markets. -- emerging markets. that 25and russia got point basis increase which was not anticipated, only does the people anticipated it. is it enough? it hasn't moved a whole lot. >> i get the impression that although the forecast from analysts are still looking for the rates to be unchanged, the consensus is that if they did not like them they would still come out bullish. that means today's reaction maybe wouldn't be as extreme if it had not been a total surprise . the central bank may need to hike again as well, and there is tonty of signs to the intent draw a line onto the ruble. the great unknown for russian bad wills how
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sanctions be from the u.s. when they come through? and will they be able to stand up to that? will these countries get relief from higher oil prices? >> it's interesting, oil is inking strong, especially the ones that affect the european market. this yearation show between currency and the oil market is fairly weak. it has not filtered through in the same way that you might expect, there are so many stronger forces at work in terms trade, andtariffs, confidence. despite the fact that confidence may be strong that might not be enough support. stepping away from emerging markets, i want to ask about the pound. we are seeing a bounce, not just on the week, but also august lows.
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it does seems like there is a little bit of relief and optimism creeping into the brexit conversation. we will talk more about this but i'm curious from the markets perspective, is that how investors are reading it? confidentould be more . everything we have seen over the last few weeks has pointed to less of a risk of a no deal brexit, instead of crashing out of the european union with nothing to protect it. but the pound is still stuck -- 1.30.e point 30 there is still concern in the options market. i think traders are unwilling to conclude that we will be all right until we are absolutely there. that situation that may the pound has another
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fight, but i think the upside is the people want to see evidence, show us the money before they are confident enough. paul, ithanks there to do want to point out that in the united states, prosecutors have arrived for the plea hearing a paul manafort. he joined his counsel at the hearing in washington a few moments ago. he has decided to plead guilty to charges brought by special counsel robert mueller and avoid a second criminal trial. let's check in on the rest of the first word news. >> hurricane florence is not about the wind, it's about the water. fromme ashore not far wilmington, north carolina. it has been downgraded to a category 1. the hurricane is likely to cause a deadly storm surge of water, which could reach 11 feet. --ecasters believe it will
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forecasters -- it -- buildings have been ripped apart and power has ordered the knocked out. more than 8000 people in the philippines may need to be evacuated before tyson makes landfall. typhoon makese a landfall. hong kong is bracing for the storm hit as well. bostonble exposures in seem to have come from natural gas lines, these lotions and the gas line injured one and killed 10. explosions from the gas line injured one and killed 10. global news, 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists in more than 120 countries. chandra this is bloomberg. vonnie: -- i am an much on drug, this is
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bloomberg. coming up with will talk to the executive of home depot working to get crucial supplies into south carolina -- north carolina. and paul manafort agrees to plead guilty to avoid a second trial. we will have the latest. and we will share our interview with of the former ceo of deutsche bank. this is bloomberg. ♪ ♪
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vonnie: live from new york, i am vonnie quinn. julie: i'm julie hyman, this is the european close. we have more on our top story -- one of our top stories, paul manafort has decided to plead guilty to charges brought by special counsel robert mueller. this would allow manafort to
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avoid a second criminal trial but it's unclear if he will operate with the probe of russian election interference. we are joined by kevin, our chief washington correspondent. what have we heard from the white house? in terms developments of whether or not president trump would ultimately decide to pardon paul manafort, the previous campaign chairman. we should note that he is scheduled to plead guilty with in $30ller's team million worth of money laundering charges and $15 million in tax evasion. he was found guilty of these charges in an alexandria courthouse a few weeks ago. but with particular regard to bob mueller's investigation, whether or not there would be any type of political part we don't know. the president has defended upon manafort in previous public comments, including here at the white house, just after that alexandria court proceeding had been finalized. he is not said whether he will have any issue of pardoning,
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which would set off a political firestorm. it also notes how quickly bob mueller's team is moving. he has secured guilty pleading not just from paul manafort, but the president's previous former personal attorney and longtime fixer michael cohen. vonnie: we know he won't do anything until at least the midterms coming up in november, there's really a short window that's already closing. is there where we might hear something before then? >> there's really no concrete timeline, everyone on capitol said theyi spoke with had not been given any clear indication of when exactly the mueller probe would wrap up. republicans are asking for this to be wrapped up sooner rather than favor and the president has said as much, but with regard to the midterms it does suggest that this is the biggest wildcard. should bob mueller's team
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release some type of report, whether that would motivate democrats to get to the polls even more than the republicans or the base of the republicans to get to the polls, that is hard to factor. the president has been aggressively hitting the campaign trail, backing candidates throughout the so much and not talking about the mueller investigation, focusing more on the economy as well as democratic leadership. i can tell you that the issue of impeachment comes up quickly, especially when you talk to republican strategists and even some democrats. republicans are trying to make this case to independent voters that should democrats take control of the house of representatives they would force this issue of impeachment and therefore not be able to accomplish the president's economic agenda or deregulatory agenda. but it's a nuanced take because there are many democrats who feel the issue of impeachment may not come up, but also feel
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that taking back the house and senate ought to lead the democratic party in a new direction. julie: i wanted to mention that the hearing has begun, and that confirmed thatas he wishes to enter a guilty plea . we are just confirming that that is happening. himself ors manafort the mueller investigation come up in democratic campaigning? is of the president has not spoken as much about it, have we heard from democrats? >> we have, in particular you are hearing a lot of pressure in terms of the direction of the democratic party, what type of leadership should assume power in the house of representatives for example, with nancy pelosi automatically get the speaker should position if democrats were to take control? that heavily impacts this. what is next for paul manafort? he faces years in prison, a
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decade is what we frequently hear from legal analysts. i think it's worth noting that this is someone who is intricately involved in the details of the republican nominee. everything from the party delegates and the overall orchestration of the campaign. he is now pleading guilty to bob mueller. much, as we you so heard earlier, we do not know if manafort will cooperate, but it could get him more leniency at sentencing if he does. from new york, this is bloomberg. ♪
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vonnie: what is the scene in fayetteville david. >> right now they have overcast skies, and raining pretty steadily, wind is not too bad, but residents in this county woke to warnings from the natural -- national weather service that a couple rivers could overfill their banks, possibly by sunday. we are keeping watch on the cape fear river and the noose river. those being the most problematic. julie: fayetteville is on the northwest edge of the eye, away from the eye of the hurricane. david, what kinds of preparations have we seen residents making? they are little inland, but there have been a lot of warnings. correct, on the eastern side
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of fayetteville and the south side is really the worst. that is where there is the biggest portion of the cape river winds through. i spoke to a resident who said he had to evacuate yesterday, he's on the more northwest side. we are close to four brag, -- fort bragg. we have lucked out so far on this side of town. vonnie: and power has already become an issue, 500-2500 homes and businesses are without power homes and businesses are without power, are they trying to bring in generators? people are hunkering down. you are not seeing a lot of trips to stores, and a lot of stores are closed. what you have and you are just trying to ride it out -- and stores are close. you have what you have an your
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just trying to ride it out. i am watching the roads clearly from where i am matt, and for the most part it seems -- from where i am at, and it seems pretty desolate. julie: how is the gasoline situation? you typically don't just see the bread and toilet paper but also filling up their cars. >> the ironic thing is that where i was first at in raleigh, you saw a huge run on gasoline. earlier in the week, almost a kind of panic. as i travel to south there was a lot of gas available, so the people in raleigh heard the word and started to top up their tanks even though they are more on the farther edge relatively speaking out of harms way. into the problem of gasping available. if you travel across the street it's more sporadic, but we have trucks coming in and refilling gas tanks.
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it's not quite a situation like florida, where trucks cannot get to the gas station. vonnie: and research is saying it's down between 10 billion and 20 billion, have you spoken to other residents and businesses? >> we have sent a lot of time with the farmers, especially the hog farmers. i think it's too early to know if they are having damage because they are away from their farms. spoke to was pretty optimistic that he would not lose any of his hogs to the storm. he is not quite sure if there will be the spillage of waste at this point. the plan is to not have spillage from these lagoons. but he was certain he would not. when you are looking at livestock in this state, is a concentrated in certain areas closer to the coast or spread out? >> you are dead on.
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it's really close to the coast, mainly concentrated in sampson and do clinton counties. counties. this is what makes the state number two in the country behind iowa for pig farming. vonnie: david, in fayetteville, covering the hurricane. we will return to you, and thank you. a quick check on the markets as we head to the european close in four minutes. are up at in germany 6/10 of a percent. this is bloomberg. ♪
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paul manafort is cooperating with u.s. prosecutors. that means robert mueller is receiving cooperation from paul manafort. this is coming out as we speak because we know that paul manafort had decided to plead guilty to charges brought by robert mueller. conspiracy against the u.s. and conspiracy to obstruct justice by tampering with witnesses. he has agreed to forfeit some properties but the big headline is that he is cooperating with the special counsel. quite stocks finishing the day over here. let's see how the majors did. the euro stoxx 600 ending up higher by 4/10 of 1%. that makes it the best week since july. helping it out was the dax. that is getting a big helping hand from autos. volkswagen is one of the big gainers. have a similar story in
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france as well. the biggest gainers in this market were automakers of more than 5/10 of a percent. let's switch over to the individual companies. i wanted to start off of volkswagen. they were ending the day higher by 2.2%. that is after they are sent to be spinning off their tracking unit into an ipo. investec is also moving higher. this will be its biggest gain since february. the company is spending off its money management unit. bank is dots falling 1%. they are being investigated over a money-laundering probe. there is only in 33% chance of the ceo will survive the scandal. i want to show you what some of
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the currencies does today. we had some big moves. versus the u.s. dollar note trading at around 116. breaking a four-day winning streak in the euro. we are also seeing those swedish krona no posting some losses. after a report that missed analyst estimates. , the dollarruble falling against the ruble after a decision from the russian bank to raise interest rates for the first time since 2014. >> breaking news on blackstone. it's expected to raise $18 million for its biggest real estate fund ever. it is expecting that it will raise 18 elegant dollars. -- billion dollars.
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we will bring you more as we have it. a spokesperson declined to comment. for a look at u.s. markets, we can see that the dollar index has regained ground. it is still below 95. partially because of the currencies that are moving including the turkish lira which is weakening today. it reading a lot of ground. the ruble is down. the two-year yield i want to point that out because it is rising. it is now at 2.78%. let's have a quick look at the macro movers. crude finishing out around $69. primarilyis stronger because of the central bank action of the 25 basis point increase. you can see the other commodities are losing ground again as well as gold and copper
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which is down 4/10 of 1%. this is eyeing the hurricane in the u.s.. there is still no word on trade. will we get the tariffs on china? that the next week? too many questions. lehman, thereter have been drastic changes. the former co-ceo of deutsche bank spoke to us. first thing i would point to is the fact that banking today is dominated. that perhaps is an unintended consequence when you set the men minimum standards of capital that high, what wound up happening is that a few firms have tended to dominate wholesale banking. almost all of them american. those are the two things i would say are different today versus a decade ago.
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you get a $3 trillion balance sheet and there are trillion dollar market cap companies which did not exist back then. the second thing, is price discovery at the margin is being done by the central banks. you have both of these things happening at the same time. banks being categorized as regulating utilities, who is the marginal precedent for credit? for the longest time in the u.s., where mortgages were price was driven by the bond buying program. that is editing away. what will happen in the europe and globally, banks need to come back into the price setting mode to work in a more dovish >> are banks the want to do that price setting?
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are highly, there regulated institutions that behave like utilities now. secondly, the nonbank securities industry is to perform that function before 2008 and it is gone. . goldman sachs and morgan stanley are banks. >> that is a very interesting question. were setting banks the marginal price of risk perhaps overly so between 04807. no one wants to go back to that again. you are making a separate point ,hat the broker-dealer model middle sized firms which were dynamic and very client focused but wholesale funded -- it wasn't jpmorgan it was morgan stanley. players for those firms. what has happened post crisis is
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the hyper which is done very well. i believe there is more room for the middle sized not all things to all people and you will see some of that. >> that is what you are doing now. trying to build a firm of that nature. >> many firms will try and occupy that space. we're hoping to expand. >> do you worry at all about the risk that is once again building sheets andnk balance private credit for example and purview ofeyond the regulators? >> the first thing i would point out is the banks are in good shape. there will still be debate around it. these are well run highly regulated, well-capitalized stable funded. when the banks are in good shape, you have a stable anchor in one corner of the market.
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have we had imbalances? there have been month the places of rapid growth. some intended and unintended consequences of the last 10 years. as the banks have shrunk their role, other firms have stepped in. qe has prevailed those low interest rates have produced capital out of certain sectors into other sectors. we know what many of those are. the concern that i would have is the holding capacity of the firms or funds which will big assets, it is not stable which is what we had in 0708 and i don't see that. certain aspects, you consider has been rapid growth. we should watch it closely. i don't see an analogy to 2008. >> where you think the next crisis will be? >> impossible to tell.
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sovereign balance sheets have to be looked at. in and notme to own necessarily emerging markets -- you are not the only one to say there may be a sovereign debt crisis. toyou have many more tools be in a sovereign debt crisis. if you thousand eight was because there was the playbook area there is a playbook. is not the most pleasant one. back to breaking news. the case for paul manafort who he says to go on trial, that manafort is cooperating with the special counsel. paul manafort is cooperating the special counsel. going to plead guilty but we did not know if
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cooperation was part of that. now we do. let's bring in our chief washington correspondent. do we know anymore than that? what kind of cooperation or how far this might go for the special prosecutor? of paulooperation manafort is secured with bob mueller's team. some type of arrangement that would suggest he is willing to provide any of the information and details to the special counsel pertaining to a host of different aspects of this investigation including the election meddling in interference. as of now, we should note that inl manafort giants michael: terms of cooperation. manafort becomes the central focus point of this investigation. >> is there any reason to believe this will impact the
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trump administration in any way? that this be cooperation wouldn't necessarily mean anything? >> this impacts the investigation but we don't know what the timeline will be. in terms unknowns here of when bob mueller's investigation will wrap up. by cooperating with the special counsel, it presents the fascinating situation where the previous campaign chairman is cooperating with the very person who is investigating this administration for possible election interference. meanwhile, the president could ultimately decide to pardon this whole entire investigation. convictions,re indeed. that -- ew york, >> we had the bloomberg scoop on blackstone betting bigger on real estate.
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they are now said to be rain that's raising $18 billion. guest. us is our when it comes to real estate investing. if $18 billion is this fund, what does the landscape look like? >> we are seeing these funds pick up speed. this is a great scoop by our colleague. the last on blackstone raise real estate was in 2015 and that was 15.8 billion. this is a step up. we saw carlisle saying it was raising 5.5 billion. the numbers are clocking higher and higher. we are seeing a tremendous amount of capital flow into the private equity space. the pension funds are looking for ways to bet against
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deflation or protect themselves against rising inflation and diversify from stocks and bonds. has that something to do with his push for more real estate? >> have a huge space there and john gray has led some other bigger deals in real estate and it is one of their biggest profit drivers. they have expertise there. talking about having the 10th anniversary of the collapse of lehman brothers. i can't help but think as i listen to talk that there is a huge demand for real estate. you have passion funds who want to diversify. there are echoes here. is there anyone who is worried about all of this money pouring in? >> we are definitely seeing people start to say this could be a problem. who say theople valuations are so high so with all of this money going into private equity where do they find places to buy low and sell
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high if the valuations are already high? there are other people saying the u.s. economy still looks strong, globally there are some spots to buy and do well so they have opportunities. particularly in the private they are seeing whether or not there could be cracks coming. >> blackstone is not commenting but when you scoop something muchthis, do we know how of the $18 billion is already been raised? that is a great question. our reporters don't know yet but they did find out that we are hearing that the company will go out marketing this fund later this year. they are just getting ready to launch the marketing for this fund and that there will be targeting 18 billion. >> thank you, peggy. let's check in on the bloomberg first word days. >> hurricane florence is
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battering north carolina with 90 mile an hour winds and a potentially deadly storm surge. moreindsey arent apart and than 60 people had to be rescued from a metallic collapse area homes and businesses have lost power. the forecast is expected the carolinas to be drenched with water and flooding. americans took a breather from spending last month. we tell sales -- -- small wage gains and higher borrowing costs are the reasons it is likely to cross quarter. japanese prime minister says he will meet again for more talks russian president vladimir putin. who wants the two companies to find a piece trader. russia after from meeting with peyton and attending an economic
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conference. 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. bloomberg. >> from new york, this is bloomberg. >> from new york, this is bloomberg. ♪ his is bloomberg. ♪ we had breaking news.
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tesla shares are psychic higher after a report on electric which looks to be an online industry publication. up 2.6% after electric reported that tesla will be the lower end of its model three guidance. periodicdoes production checks at tesla and says tesla produced close to 6700 vehicles over the last seven days.
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closed its record. we will keep on watching those shares. >> bank of england governor says and no deal brexit would be painful. most of bank of england is prepared for it. i'm know deal scenario could lead to higher inflation a weaker pound and lower economic output. during the speech he said the boe is ready for all possible exits. in our guest. weree any closer than we at the beginning of the process? >> it has been a big week. the politicians have come back to parliament after a long summer break and he has had a big boost of confidence. he has decided to stay on for another seven months.
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that means that there has always been this tension between brexiteers and remainders about whether mark carney is doing a good job and some of the progress. the fact that he is been asked means that he will try to steward the country through the economic tension and turmoil of brexit for a little bit longer. give to theether to plan that the bank of england has? he also painted some dire pictures of what things could look like in a worst-case scenario. >> after tuesday when they announced he would stay on for longer, thursday was a day when everyone was talking about what happens at the u.k. doesn't get a deal. as part of that, there was a big
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three-hour cabinet meeting. he was invited in. he laid out the stress test that the bank of england does and all the different scenarios brexit. the worst-case scenario is that prices could fall by 35% and inflation would go up and interest rates could go up as well which is interesting. his says it could be a bad situation. >> was is doing for central-bank communications? clearly he has to have models for different scenarios. there is a lot of guesswork going in there as well. how transparent is he being with markets? will they want more transparency? >> one of the reasons mark carney has been criticized is .ecause he said we don't know there are all these different potential scenarios.
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best case scenario and worst-case scenario. today he wrote an opinion piece in one of britain's biggest .ritics he said i am here to stress test and see what could go wrong. i am not here to say everything will be ok and hope for the best. i think him coming out this week and talking openly about what is happening, that is going to be a good thing for the governor. >> thank you. from new york, this is bloomberg.
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live from new york, i'm vonnie quinn. this is the european close on bloomberg markets. time now for stock of the hour. it is adobe systems. shares are at an all-time high and remain -- we have the
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lowdown on adobe. >> this is been quite the run. i remember six years ago, adobe moved to the subscription style model. the stop selling and licensing photoshop and other software and it was widely derided at the time. the growth they have had an subscription model has been phenomenal. it is revenue growth that has been running at a clip of 30% in the side of the business for the past few quarters. the shares are having their best day today and they are on a phenomenal run. or $2.75$23 a share now. i pulled up the analyst recommendations on the terminal. it shows the price spread between their targets and where is now. >> it came out this morning raising their price target to
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325. that is a street hybrid it is a 275 now. when you think about adobe, you look at other companies in this race. they have had phenomenal runs as well. autodesk. salesforce, they are all up 50 or 60% year-to-date. a lot of this is from the same issue. most of the analysts who are raising their price target on this company are saying that the industrywide trends are going to favor the rest. >> thank you. coming up on balance of power, jerry brown joins us to talk about his ambitious plans to get california carbon free in the next 25 years. this is bloomberg. ♪ to rent a movie?
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from bloomberg world headquarters, welcome to balance of power where the world of politics meets the world of business. we're going now to fayetteville north carolina. london. let's start with fatal, north carolina. can you hear is a can you give us a report? >> i can hear you just fine. so far, the biggest areas of concern are on the far east side to the north end of the coast around new bern. that is where the outer band lashed out overnight. you are starting to see it move inward a little bit. where i am, in cumberland county, it is not quite so bad. you see some steady rain and
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