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tv   Bloomberg Markets European Close  Bloomberg  December 21, 2018 11:00am-12:00pm EST

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guy: here are the top stories we are covering from around the world. the wall of worry. president trump warns of a very large shutdown if they don't fund his border barrier. you are looking at live shots from the white house. and the fomc is listening to the markets. chinese signaling significant tax cuts and a range of other short-term measures designed to stop the slide in economic activity. higher, michael hintze will be succeeded. the industry looks to bring in fresh blood to navigate these
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rapidly changing markets. let's talk about what is happening in europe. volume relatively high when will we get a rebalance. pricel watch the auction as. coming from john williams from the fed early, driving risk assets firmer your europe is still down by .4%. higher and s&p popped and then rolled over a little bit as we climb the wall of worry around the government shutdown. this is how the chinese markets finished up overnight, coming through down through the october 19 low. that seems to be the catalyst for the chinese authorities to talk about more stimulus, currently traded down by 1.24%.
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let's check in on the u.s. markets. likely to have a massive amount of trading, could be as much as $24 billion. by thelling things up bootstraps. s&p up .3%. the dow up a half percent. nasdaq declining a little bit. let's get deeper into what is moving. we had the s&p 500 hire right now up 1.5%. futures trading lower, similar to the nasdaq. lots of uncertainty. the worst week for major averages since march. forworst quarter on pace the dow and s&p 500 going all the way back to 2008. we do have small gains for the s&p 500. this is reflected from a sector composition standpoint.
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not so positive about this in the defensive sector like utilities and consumers. that is important to look at and suggests that there is bear shacks and third -- bearish action. 8.5%, the best percentage performers for the s&p 500. quarter, thetrong third quarter of growth. u.s. and china going well. foot locker going along for the ride. carmax up after disappointing sales. the stock turned around and had been down in the premarket. morganm up 4% as j.p. has added the chipmaker to its focus list, saying the 2019 tailwind should help his company. we have some green on the screen. if we hopped into the bloomberg
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and -- i am not going to look at this. bloomberg into the and the terminal, this is an interesting chart. we are seeing the s&p 500 in relation to the 200 day moving average. in 2015 and 16 -- 2016 when it was a correction, right now the same thing. and thethe s&p spread 200 day moving. 10 percent below the 200 day moving, similar to 2015. there is similar to this year and 2011, where it's -- we see the s&p down by more than 14%. that may suggest today's volatility could move to the downside. guy: abigail, let's stick with the global markets. we are joined by a chief economist and he is also the author of escape from the central bank trap.
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i don't think we have escaped from very much. the fed causing volatility this week. we have wind to do some back over the last few hours. the priceyou made in action in december and the gyrations in the markets? we have gone from euphoria shock created by expectation of growth and improvement in emerging markets and rising oil prices to synchronized selloff because of the fears of a radical slowdown deleveraging, and liquidity. we have lost about $15 trillion in the markets and capitalization, which is 1/5 of how much it went up in terms of market capitalization post qb. -- qe. now is're seeing right
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where you can look at opportunities. while it is true that we are , we'rea global slowdown downward revisions of growth and we are not necessarily in an environment that we think will lead to a global recession or something like that. thinks may not be as bad as things are portraying. a lot of investors are saying they're waiting to january and waiting to see what happens in the first weeks and months of next year before committing to be conviction trades. what signals will we get in january and february that will allow people to take a more positive view of the world? what will tell me that the world is not that bad in january and february? we are likely to exceed consensus showing growth estimates are not going to be
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down dramatically further. investorsfact that actually believe that central -- ratessing rights and stopping qe. out of the hype and the excess created by the central banks and looking at fundamentals. of not just macro growth, but from the corporate perspectives. earning estimates continue to be down but not dramatically. guidance is not that bad. we are seeing it today with companies that are publishing results. guy: absolutely. vonnie: what are the growth estimates for next year? daniel: goal estimates. vonnie: growth estimates. daniel: gold has been a topic i
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have been discussing the sporting. growth estimates will move around -- this morning. growth estimates will move around 3%. it will be probably down to the level of 3% but moderate but not dramatic levels of growth. mentioned, what are your estimates for gold and ?r. question mark daniel continuous inflationary pressures, technology, commodities falling, currency depreciation from countries with very high u.s. dollar denominated debt. inflationary doesn't help gold unless it is an environment where growth is ok but not phenomenal. gold can be an asset in order to
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noterve some value, but what i would consider something that would rise dramatically in an environment but not dramatic recession. talk about how we invest money next year. chinese authorities signaled they will be delivering significant amounts of stimulus next year, trying to slow the economy and deal with the slowing economy. they talked about tax cuts. how big an impact if the chinese go for it in terms of the stimulus process will it have on the global economy here and investments i will be making? daniel: we need to be cautious about it. remember that the chinese have been in fomenting stimulus after stimulus -- implementing stimulus after steam us in 2018. the chinese bank is already conducting an aggressive monetary policy and injecting
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liquidity into markets. we need to be at least cautious about expecting radical changes. what they are trying to do is moderate the slowdown. the slowdown means 6% growth or something like that. i think that we should be cautious, and if there is a big bump in commodities or inflation assets, it will unwind the trade into the second half of the year. guy: the new york fed came out and said the rate hike view is not a commitment. fed had to 2016, the pull back and pause. is that what will see here again, a prolonged pause from the fed? they also talked about the fact that the fed is listening to the market. ?hat do expect from the fed it singles too, will we get two? will listenpe they
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to the economic data and not so much the markets. past of made in the delaying hikes because of a market bump or volatility, that has led to some problems of losing the ability to build tools into a changeup cycle. it is very logical the fed will not raise rates as much as expected at the beginning of the year cause inflationary pressures are coming down. i understand that. i hope they don't believe that stopping rate hikes is the solution. image,d give a very bad information to the markets. it would signal that the fed know something that is much worse than we anticipate. isnie: daniel lacalle staying with us. let's get to first word news. : the country wants
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arsenalt -- beef up its by buying u.s. weapons. japan's military spending would be a seventh annual increase. japan sees a worsening security environment in the region with potential threats from north korea and china. republicion in a czech coal mine. the deadliest in almost three decades. the mine in the eastern part of the country exploded nearly 3000 feet underground. one person remains in critical condition at the hospital. memorial services being held in scotland and the united states to remember the 270 people killed when a pan am passenger plane exploded over the town of lockerbie 30 years ago today. libyan intelligence agent was convicted in 2001. he was released from prison on a
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compassionate ground in 2009 and died three years later. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm courtney donohoe. this is bloomberg. stocks withtney, gains. the dow flat. s&p 500 down .2%. nike performing very well. irish authorities hit a generic drug maker with an investment of $1.8 billion. the fix is elevated today but is down in the session but still above 27. it is going to be one of those days. this is bloomberg. ♪
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vonnie: from your, i'm vonnie quinn. guy: and london, i'm guy johnson. this is "the european close." back to euro, we are still with daniel lacalle. i asked you on the brake what europe will look like in 2019 and you do not have a positive answer. : 2018 was supposed to be the perfect year. you have growth coming from the stimulus, improvement in core capital and margins from banks, emerging markets, commodities, everything helping the european trade. look at what has happened. 2019 doesn't look very good. continued expectations of growth , which looks
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impossible. i was trying to figure out how you get to double-digit earnings growth. capjust that, but mostly conglomerates acquired at high multiples abroad. the negative effects of commodity slowdown, currency risk, etc. see what isult to going to drive markets further because you have slowdown in the economy in europe. guy: doesn't sound like things are going to change anytime soon. daniel: no. guy: are we just done with the cycle around europe? daniel: it is nowhere to be found in the large names. companieso look to very much in particular. they have not done particularly badly. you are talking of names that are not going to deliver stronger growth next year, in
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fact, they will see the slowdown coming from both emerging and local markets. it is what it is. demographics, low growth, high taxes will not deliver multiple expansion. is the typical case of a value trap. vonnie: how do you invest through brexit? daniel: i am quite more positive on the u.k. then on the growth of the european union. theink that we are seeing latest economic data from the united kingdom is showing much stronger numbers than actually what we have seen from the european union as an aggregate, and did bite france and italy. -- hindered by france and italy. they are mostly commodity related and earnings outside of
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the u.k.. they have performed quite well precisely because of that. i believe that is what you need to look for, companies that growth,argins, defend and have the lowest exposure to stagnating markets like the eurozone in the next couple of years. vonnie: for how brexit actually happens, what do they see for the british pound? daniel: that is a tough one. that is the million-dollar question. i think there will be a negotiate of process -- tive process. it is a base place to start new negotiations. neither you the european union nor the individual countries can afford to get to a no deal
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massiveecause of a trade surplus that exists between individual countries and the u.k. it self. at the same time, the u.k. has a surplus in services with the rest of the european union. there has to be a deal that is mutually beneficial. it is not going to be obviously the one we have seen. it will take longer, nothing we haven't seen in the past. i am actually positive that there will be one. is going tolacalle stay with us. we are nine minutes away from the end of regular trading here in europe. from london, from new york, this is bloomberg. ♪
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guy: live from london, i'm guy johnson. vonnie: in your, i'm vonnie quinn. this is "the european close." guy: michael hintze is stepping
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down as the ceo of the hedge fund. rolet is stepping in. walk me through what is happening at this particular hedge fund. this is a high profile name. >> it is. growth is growing rapidly at a time when hedge fund industry is shrinking. grown to a record. they started with about 14 billion in 2018. my kids wants to -- michael hintze is a strong leader who it can take it to a completely different level. they are a big hedge fund firm but they are not blackrock or
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pimco of the world. -- hedgehese pets funds think they can grab some shares and pension funds. that is what is going on. vonnie: what is the secret question fund other hedge funds are seeing outflows. they are a credit focused hedge fund. mosttrategy is not to lose from notowth has come the hedge fund side. that is one reason why it they have been able to grow. they look at sea qs as someone qs and that works in their favor.
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guy: we are seeing a significant change of the guards at some large hedge funds. is that a generational thing? it is partly generational. the old guard is finding it difficult to make money and some are just giving up and shutting down shops. others are basically looking for and gettinghere that talent and hope to sustain and grow the business for the longer term. vonnie: european equities indices were down and they thought hedge funds were a better strategy then perhaps in the united states where indices do not drop as much. that is the problem with the industry that for many years hedge funds promised don't look at index funds. we're not supposed to make money
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when the market is going up and up, but when the market crash they not only made money -- failed to make money but they lost money. that worked against them. the reason for that is that after years of markets going up in one direction, most of these portfolios were owned by leverage payers. they suffered. guy: the world is changing rapidly around them with technology and the effect in the markets. nishant kumar, thank you very much. this is what is coming out of the markets. this is the picture in europe. this is bloomberg. ♪
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guy: 30 seconds ago until the end of regular trading. we are actually finishing flat here in europe. gray, flat, the
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ftse doing the same thing. the cac 40 doing the same. market, let us show you what is happening here. these are not actually doing much as we come to a close eye relative basis, we had a choppy session. theser ago we saw comments coming through from john williams, we are being affected by what's happening stateside with a potential partial government shutdown. but europe is finishing reasonably flat. we are waiting for the rebalancing after the close. be aware of that. going to be something that is a feature, it's not as dramatic as it is me united states. nevertheless it something you want to pay attention to. it's coming to affect on monday morning. i wanted to talk about what the month has delivered for the european market. the stocks looks a little like
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this over the month, we are not quite done yet, but 5% relative to the united states is not bad. was at 10%,growth europe was on a relative basis outperformed. europe is starting from a much different place than the u.s. markets which are playing catch-up. let's speak quickly about weume, today is an expiry, are seeing outside volume as a result. we normally get outside volume at the close, that's where we are project did to finish -- projected to finish today. that big jump in volume is going to be here. see the bigo outside day in terms of the volume, there is a massive spike day overll work our
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the next few minutes. we will show you some of the stock action and we will see what happens over the next two minutes. we will monitor it. but we are now into the -- and that's a look at the european markets. --nie: in the u.s. waiting we're in the u.s. waiting on political news, there is a lot of trading going on. the s&p 500 is higher by almost lower, nikes been is obviously the best performer, and we have some unfortunate performances. 2.8 0%.ear yield is at then there is a lot going into the trade. gold futures are interesting, we are a little over today at 12 .614. screen, allross the
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of these currencies are weaker versus the u.s. dollar. they will be finishing the day at 6.91. a vespa is higher today, it's a down day across the board. interesting considering the wild swings we have seen. we have had wild swings all week. i and the fx --ategist is joining us in how big of an impact will this --e next year question mark will this have next year. we saw john williams making these comments, and we have seen some dramatic drops. ?s the fed going to pause is the fed going to deliver something more market friendly in 2019? >> i don't think it will pause.
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i think the message from powell 's saying that nothing will stop us from doing what we have to do . it's important, does that mean raising rates three times? no. the inflationary pleasure -- pressures remain. but the fed does need to move into the next cycle and that's a than thertant factor moves and the volatilities and markets. before, aboutsaw what happened at previous and upns, these things being absorbed and adjusted by markets. and markets need to get used to the facts, interest rates are going up. that should not be a problem. that should be an opportunity. vonnie: and we have vince, some of the week for us? tradingnk the week's
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has a lot to do with year-end. we are seeing traders not really wanting to hold positions going into the final days. from an equity stan part -- standpoint, this market is starting to collapse and there's no incentive to hold on and be underweight versus your competition. for the fixed income and fs, the month is the much done. whatever trade you are being on by a customer, you're dumping that back out again. no one is holding anything in to thousand 19. this is been a continuation from early october, where oil prices rolled over as a result of his a result of the situation in anda, that seems to persist energy prices cannot hold a rally. the equity markets follow. that volatility will stay with us for a few more weeks until january. guy: a lot of people don't want to hold positions, but you also
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looking at the conviction rates for next year and they don't have any. they are worried about what the beginning of next year will look like. usually at this time of year you say what are you going to make money on that year? now there is none of that. to what extent is that affecting what we are seeing? yesterday we saw all of the highest volumes of the year, is not unlimited volume, there is a lot of shop. what you said plays into that. all of this volatility that is going on as people move thend out of trades without real confidence to hold on to anything. the only thing i'm hearing from people and for what trade they want to carry into 2019, and this could be dangerous, is to pile into e.m. and get out of u.s. assets and the dollar. what we are going to seem to quarter and coming year-end, and month and for 2018 is the potential for a large dollar by going through the market.
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if that happens it will see a runoff in e.m.. portfolio managers have been putting on that position, and they will start the year in the red. vonnie: would you be comfortable with recommending that daniel? >> i agree with vince. it's a dangerous trade into a massive maturity ward -- war over the u.s. dollar. the debt in the u.s. market could pile up into the u.s. dollar. there were perceptions of the dollar would be low in interest rates would be low and it's a dangerous position. emerging markets have fallen are verylly, but they far away from the corrections that we have seen historically in a bear market for emerging markets. and those maturities that we in u.s. dollar debt
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and local currency will be refinanced at higher rates than what we are seeing. and impactsiquidity on equity important. 2018 as a revisit parenthesis, we need to go back to repeating the same trade at 2017, which showed the dollar long emerging markets, it's dangerous because we are not paying attention to the slowdown, the currency risk, and the maturity wall in bonds. guy: thank you very much. vonnie: let's get to first word news. you caught up, the u.s. is planning to withdraw 7000 troops from afghanistan, officials say that represents about half the country's forces on the ground. the move comes in the wake of
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jim mattis resigning from his post, and as president trump tries to fulfill long-standing promises to bring forces home. the 17-year-old war in afghanistan is the longest military conflict in u.s. history. is delaying agan planned operation in syria as american troops withdraw. he said he is waiting to strike at kurdish militants after speaking with president trump. he assured his american counterpart that turkey would finish off islamic state in syria, and soon they will be able to attack kurdish fighters without u.s. intervention. pro-independence demonstrators rallied over meetings. some protesters clashed with police and separatist groups and unions. hasspanish prime minister been led byst has
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the region's failed drive for independence. global news, 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists in more than 120 countries. i am courtney donohoe, this is bloomberg. the we are through rebalancing process that will take effect on monday, there's not much going on around them but we have seen european equity markets finishing flat on the day. but not on the week. cac are is back and the at the closing numbers, we will carry on the conversation when we take you through the cable show on the radio and all of your bloomberg devices. this is bloomberg. ♪ loomberg. ♪
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vonnie: time now for the global
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battle of the charts, you can see these on the bloomberg by running gtb go -- gtb go. opec has announced production cuts and i wanted to focus on u.s. crude production, that's going to be one of opec's biggest threats. take a look at my chart, this top panel is showing the u.s. government's domestic output forecast. respected crude production to a rise 11% to average more than 12 million barrels a day. what's interesting is that even though they are trading in the upper 40's, producers don't seem that concerned. take a look at the bottom panel, we can see this with uncompleted wells steadily rising, showing that they are waiting for a rebound to ramp back up. you can find the chart on the bloomberg. vonnie: thank you jessica.
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battlerou are the other -- you are the other battler. guy: it's a crazy week because it is witching day, it's a crazy day so we are going to give you a lesson on what we have seen in the past. the blue lines with these yellow volumesalos are the s&p for witching days and rebalancing days. massive spikes in volume on all of the berbers -- periods that we get. options, serious of and there's a lot of turnover. the the thing we are seeing. this is really driving it up, and the volume has already been elevated, coming through the holidays, this is what many not wanting to see.
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it provides a lot of opportunities for moving things around, and to think about what is going on next year. a lot of these options are moving forward into next year. it's a crazy day going through with volatility spiking around this. my real message coming off of this is that you could settle down and shut are the positions for the week, we are not done yet. vonnie: i love the chart and the presentation. , todaycking a winner it's jessica summers. congratulations. this is bloomberg. ♪
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guy: live from london i am guy johnson. .onnie: i am vonnie quinn this is the european close. republican senators are meeting with president trump with washington on the brink of a partial shutdown. ,e are joined by kevin cirilli
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he is live on capitol hill. our senate republican leader still meeting with the president? we speakre meeting as here on capitol hill, staffers are on edge as the government is set to partially shutdown nine government agencies including the department of homeland security by midnight tonight. earlier today president trump has been tweeting, saying that democrats will probably vote against border security and the wall, even though they know we need it. the dems do not know there will be a shutdown that will last for a very long time. people do not want open borders and crime. chuck schumer had something to say when asked. that thisshame president, who is plunging the nation into chaos is throwing another temper tantrum and will hurt many innocent people. the trump temper tantrum may
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produce a government shutdown, but it will not get him his wall. >> it's impossible to look at the new slow in the last 24 hours in a vacuum. the departure of secretary mattis is weighing on several top republicans minds as they meet with the president. president ishe being rally -- having said that the president has had the base rallied by ann coulter, guy: she talked about the fact that he would not get elected answer but his full term. -- does trumpas have a point but to push for a pointdoes trump have to push for? >> the freedom caucus is still
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in line with the president strategy, the math becomes more complicated in the senate, he would need to clear a 60 vote threshold in order to get the procedure out of the way to get to a vote on the budget. and it is impossible to find it right now, he would need about 10 democrats to get that threshold. i am hard-pressed to find any democrats who would work with him on this point. the president is prepared to have a long government shutdown he tweeted, but he started this week with a policy reversal saying he would able to have a compromise and move some of the funding for his border wall, and he even tried to back off on some of the terminology. a president has -- the president has multiple positions this week , and we are hours before a partial government shutdown, hours before he is set to go tomorrow log of where he will , where hemar-a-lago will remain while the government to shut down and he golf. we will have to see what happens
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at that meeting. the presidentnow is scheduled to leave for mar-a-lago. can you bring us up to speed on the schedule? really all negotiations and strategy in terms of keeping the government-funded and have a deal, let's remind ourselves that on january 3 democrats are set to take over the house of representatives. i spoke with a staff earlier today who said they are not sure who the white house is trying to negotiate with. are they trying to negotiate with paul ryan? or nancy pelosi? people one of those seems to be focused on how mitch mcconnell would be able to get any type of compromise. at the end of the day i spoke to another republican staffer who suggested there is no better political chess player than the senate majority leader. it will be interesting to see
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what the messaging on this meeting at the white house is following the meeting with senate republicans. and the departure of secretary mattis, while completely different and i don't like to confuse the storylines, but the volatility of the market, secretary mattis is to partner has put this presidents -- matt is possible leadership mattis'sve -- leadership perspective back to where they were. vonnie: thank you kevin. talktalk of the hour, we are looking at the generic drug maker, para go. they are dropping to the lowest level in eight years, this comes from a prominent analyst, with last year's target low at 46. they received a surprise tax bill for $1.8 billion from the irish government. this is a shock. tax authorities are
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saying they want that money back and that the dollar value you put out there does not include potential fines, as well as other interests that could have collected. they are saying this could drag on for some time. and this relates to a sale of a subsidiary they had back in 2013 , the company treated this in a way where they only paid 12% on the sale. irish authorities are saying they should have paid about 33%. right now you are seeing shares down about 24%, that has been true since 1994. vonnie: how was this not telegraphed? >> that's one of the reasons for the cuts, they are saying that they should have been more forthcoming. this was clearly not something that cropped up today. it was working its way through the regulatory process, but that investors didn't seem to know about it took many by surprise, that's why they are seeing a severe selloff in the stock. guy: how will the company
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respond to this? >> they said they will fight it. and that it will take a long time. they were clear that this is not something that will be resolved soon. ireland is already involved in a couple of fights over taxes with the company and the e.u. has pressured ireland to deal with some of the foreign companies that have used ireland to escape higher taxes in their home countries, that includes apple and a few others. --appears that para go perrigo is caught in the middle of this. vonnie: and ireland has to stay in lockstep with the e.u.. romain, thank you. we are keeping our eye on the open, ande door is republican leadership is meeting with president trump, they have been for more than an hour and we will keep you updated.
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right now the dow jones industrial average is up 3/10 of a percent and the s&p 500 has erased its games. it -- it's gains. twitter is down about 6%, but there is a great performances up 4%,ke, foot locker broadcom got a nice a shut out from it just -- j.p. morgan. the euro is weaker versus the .ollar, and the british pound balance of power is next. this is bloomberg. is is bloomberg. ♪
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>> from bloomberg world
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headquarters, i'm david westin. welcome to balance of power, where world of politics meets the world of business. we have a looming government and our correspondent in washington on the sudden resignation of jim mattis. the president is currently meeting with republicans from the senate. >> all of a sudden, the discussion has become about the filibuster in the senate, that's the only thing that keeping the senate from passing the measure that the house passed yesterday, which would fund the government for two weeks and includes the billion dollars the president requested for his wall. the reason i cannot pass is because he needs at least nine democrats to get on board for the filibuster. the president wants to get rid of the filibuster. so far mitch mcconnell is not ok with that option. >> it's all up to mitch mcconnell, he has tweeted to mitch mcconnell to get on board, he wants to use the nuclear option. if they did


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