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tv   Bloomberg Markets Americas  Bloomberg  December 21, 2018 1:30pm-2:00pm EST

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shutdown. mitch mcconnell urged approval of the bill that approves $5 billion the president wants. >> in my view, this legislation would be quite uncontroversial. and a more normal political moment. in a moment when both parties put the obvious national interest ahead of any personal spite for the president. >> leader mcconnell met with the president at the white house. after the meeting, the mr. trump "totallys quote, prepared for a very long the government shutdown." hadice ruth bader ginsburg two malignant nodules removed from her lung. no further treatment is planned. and85-year-old is resting is expected to remain in the
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hospital for a few days. more headaches for british holiday travelers. flights were suspended at again after unconfirmed reports that another drone had been spotted. all dayhut down thursday and part of wednesday night when authorities say drones repeatedly violated the airport perimeter. services are being held in scotland and the united states to remember the 270 panam killed when a passenger plane exploded 30 years ago today. an intelligence officer was convicted of the terror attack in 2001. he was released on compassionate grounds and -- into thousand nine and died three years later. global news, 24 hours a day on air and on @tiktok on twitter powered by more than 2,700 journalists and analysts in more than 120 countries.
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i am mark crumpton, this is bloomberg. ♪ vonnie: live from bloomberg world headquarters in new york, i am vonnie quinn. >> and live in toronto, amanda lang. welcome to bloomberg markets. here other top story that we are following from around the world. fading into friday. the rally in u.s. stocks proves to be short-lived at the end of a volatile week. wild, wild, washington. president trump says the chances of a government shutdown, pretty good if the senate is not fund his border wall. top $3 billionw
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as investors pull money from mutual funds and exchanged traded funds. on theet a quick check major market averages and we are continuing to see negatively and volatility on this quadruple. big declines, tech leading the way and that is the -- faang stocks. amazon down 5% but we are also seeing communication stocks extremely weak. the only bright spot you could point to is an increase in liquidity. that is been something that traders have been complaining about as this market has been trading volatile. have seenrtainly we the ups and downs today, and trending lower. you have to imagine that this washington bow in the senate and procedural vote for now, but the idea of a shutdown starting tonight is definitely weighing
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on trader sentiment. let's take a quick look at a few more asset classes. dollar, everything is green as i say that, but nike has a special story. it is up almost 7%. the dollar index is also stronger. of course, the 10-year yield trades back to 2.79%. it was at 2.80% earlier. anticipating a lot of volatility today, but there are a lot more elements weighing on this market than just quadruple witching. amanda: that is true. looking back in time, we are reminded that the s&p 500 swings 3% in recent weeks above the norms. butre used to volatility, you can imagine that there is some rather interesting gyrations going on increasing
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the volatility. time left,have more plus, i have session on monday. for more now, let's welcome romaine bostick. to us about trading so far today, what are the main elements? romaine: a lot more volatility . stocksay, we had 700 that hits 52-week lows, because we have not seen that in a couple of years. that is extending today. normally when we see these big things of these new 52-week lows, what we typically get is the type of companies that you would expect to star -- sort of fall out of favor. bank of america, goldman sachs, alphabet, lockheed martin -- these are real companies with tangible revenue and earnings that are at their lows not only for the year but frankly, quite some years.
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>> if i know the answer, i wish i could, but it is a where folksnto 2019 think the record profits at we saw the beginning of this year are not going to sustain. january, we had about 5.6% run-up. fallingare in december about 11% or so in s&p. the worst december since 1930 something. that is quite a book and to the year. -- bookend to the year. the sentiment seems so negative that i'm almost afraid to ask this question. months,look back over this is been a long, slow grinding in a market that a lot of people have been complaining was overvalued. is there a silver lining? romaine: there have been so many
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banging and strategists their drum about the valuation. they became cheap for a reason. there is another chart and when you look at the 200 day moving a kind on the s&p 500, of shows you the gap between where the price is right now -- this is where the nasdaq composite -- versus the 200 day moving average. that is the widest gap we have seen since the tech bubble burst in 2001. the sentiment saying there is nothing to buy here. until you get a catalyst, whether it is a fiscal stimulus, resolution of the trade dispute, or maybe a stronger-than-expected earnings season, i do not think you are going to see a change. vonnie: romaine bostick, thank you.
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and all of your beautiful flowers. romaine: absolutely, merry christmas. financials are trading and it is a good thing for wall street. our financee reporter. there is such a thing as bad volatility and we know this because banks are not taking advantage. what is going on? >> it is the summer. -- it is december. they are the staying on the sidelines. if you are a hedge fund or money manager, you do not want to take big bets in december. everyone is looking at bad volatility and saying, we have a headline from brexit, or a tweet from the president -- that is a one off event and that is not sustaining volatility that people can look at trends and make money from. the combination of these factors is stymieing the banks are
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making money. equity is a very volatile, but banks did not make that much money from equities because it is all very automated and they have slim margins on that type of trading. let's talk about what has happened with the banks. they are warning, bank of outlooktempering their on the revenue for the trading side -- are the reactions in the stocks a little overdone based on what we are hearing? >> it is interesting because the bank stocks are down about 20% this quarter so that is outpacing the broader the klein in the equity market. -- broader decline in the equity market. heading towards record profits this quarter, so why are the stocks falling so much. 's speaks to the bank ceo tempering expectations.
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we had one ceo talking with the trading revenue falling a few percentage points, citigroup guiding lower, and jpmorgan talking about flat trading. these declines might be overdone. vonnie: it seems like we have been waiting for a long time though. our executives themselves confused? theirsly, a lot of conversation depends on stock price, too. >> and we have heard very very bullish from bank ceo's. is missing is that investors my markets are actually saying, p profits -- what is next? it means that banks do not do as well of means that the fed has to slow down. everyone is looking forward rather than looking at this current set of profits. obviously, one of the
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-- one of theh big factors, how does that play out in your review? >> a pretty big deal. high interest rates are good for banks, that is not panning out as much as people expect them to. they're all these other factors with higher deposit costs, but banks are not doing as well are will not do as well in the future as they are right now. that is casting a clouded outlook over what is looking to be a very strong, quarter for profits. amanda: great to have you with us,=. have you with us. coming up, shut down, slow down. theident trump warning for lights could stay off for a very long time while mitch mcconnell urges to pass a spending bill in an effort to appease the white house. this is bloomberg. ♪
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♪ vonnie: this is bloomberg markets. i am vonnie quinn in new york. amanda: amanda lang in toronto. president trump said that it is pretty good at the government shutting down. this morning, the president tweeted that democrats will only this potential shutdown if he does not get the wall he is promised. that is not exactly what he said last week. pres. trump: i am proud, and i will tell you what, i am proud to shut down the government for border security because the people of this country do not want criminals and people level
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lots of problems and the drugs pouring into our country. amanda: kim wallace is managing director at the eurasia group. let's start with the nuts and bolts assuming that we do not see any kind of aversion of this issue and there is a shutdown, who suffers first are most? think it is really politicians that suffer first and most, i think it is probably the country and standing. there are a lot of issues that call and the question u.s. governance and they ranged from domestic and international policies, so i would say that markets and probably our allies the geopolitically will suffer first. vonnie: yesterday afternoon, this was a binary proposition that looks like we were going to avoid a partial shutdown. 24 hours later, things are very, very different. what is your base case? : the best thing i've
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heard is that the president trying to get out from under the mantle. he has been convinced that that is not a good place to be. usually that shows a sign of softening of negotiating position and reports from some of the senior staff coming from the white house meeting showing that the president wants a deal. beginning of potential negotiation that might stretch through the weekend, but nonetheless, still in negotiation. vonnie: would it need to be a $5 billion deal? he made the comparison between the total defense spending and a tiny fraction of that which would be $5 billion, but that would be a real wind down from the campaign position. kim: the word coming out is that the president would be willing to come down but there has to be a number attached to this. two weeks ago, the president had on the table a two-year $3.2 billion program for the wall.
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also, the uptick, i would not call it optimism but maybe construction, is that the president's language has changed to border security and away from the wall or steel slats. you see enough fund ability that leads you to believe that there is a chance for a deal, although, the clock is ticking. amanda: is there any change in the thinking around the ability to negotiate with the president's because of some high-level departures close to him. his recently, mattis -- has role on this changed with his ability to be led? kim: it is a good question. your premise is true that almost everyone in washington, particularly those negotiating this outcome other than the president, they have seen a consistent pattern of the backsent's behavior if he into the wall, he tends to fight more not les.
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-- fight more, not less. whiless being empty 400,000 u.s. workers and contractors and vendors do not receive their paychecks is not a good look. it is beginning to have some effect. amanda: how long could that go on, in other words, the optics of it are bad enough into your point, it does not look good in the world, but the practical pain that it causes? thise past beginning of year that i called the two-day shutdown, how long does it last? : -- kim: if the government is not open on monday morning, it is highly unlikely you will see much movement until january 3. change meaningfully and you have a different congress and a divided government. more uncertainty,
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but you can imagine that if the government remains close next week, january 3 and four would be very busy in washington. vonnie: bob corker has called the president's decisions and juvenile. this procedural vote through, then what happens, what is the procedure. -- procedure? kim: they have to go back and find out if there is a difference pass. thebill that was passed, senate could amend it and of the house does not accept that, it has to go through a different vehicle and there are plenty of bills laying on the docket, so they do not have to go to committee. but they would be busy on saturday and sunday and at some point, you have to rely on unanimous consent in the senate, otherwise you give leverage the people who would use procedure to block in the agreement. they are getting close.
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we will know by tonight's whether or not the negotiation is viable and whether or not they can get the sunday and avoid worst-case outcome. to kim our thanks wallace, managing director freed the united states at the eurasia group. up, u.s. leverage loan prices continue to fall. topus deepening as outflows $3 billion. this is bloomberg. ♪
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>> this is the fed the sides. let's head out. >> fed officials raise the target range. target range. ♪ u.s. leverage loan prices up fallen to the lowest since september 2016. investors pulled money out of loan funds out -- at a record pace with drawing more than $3 billion. for more, let's bring in bloomberg's leverage loan reporter. what is driving this? >> all of the financial volatility is causing less risk appetite and on top of
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that, the floating rate, there is a huge influx of earlier in the year because it was a hedge against rising rates and that is reversing. what does that do to both the prices and the returns on these loans? lisa: prices of fallen to more than a two-year low, the returns are still positive so that is still a standout against the car -- in the credit market. how is the timing of the outflows exacerbated the situation? lisa: that has caused prices to fall florida -- fall further . because we're hearing reports the price action suggests that
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it has fallen further than perhaps the outflows would suggest they should. amanda: does this mirror any other period in history? we had a large outflows in that way on through the end of the year. outflows.saw a large but in 2011, we had investment ,anks that other market makers having inventory for loans and they do not have that right now, so there is a large fear of what would happen in execution. would there be bigger volatility because banks have less inventory. the numbers were looking at what the outflows from neutral funds and ats. remainerlying markets healthier than those numbers, i would imagine. that is a retail basis selling out. lisa: yes.
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there is sooment, much volatility and their credits are also widening. next year, the expectation is that there will be a rebound. the excitation is it will rebound, but how longer, we do is itow -- expectation will rebound, but how longer, we do not know? amanda: bloomberg's lisa lee, thank you. facebook's move into a blockchain-based currency. it looks like they are dipping a toe with a whatsapp currency. implicationsve big and one imagines that it is the beginning of what you could get into for the pay in some banking systems. vonnie: it looks like they are
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using this to target countries outside of the united states, but also interesting when crypto has really taken a beating. the going -- bitcoin back below $3000. we know that consensus, one of companiest blockchain is laying off all of its staff. amanda: for bloomberg users, you can also watch anything you have seen here on gtv . you can see charts and bloomberg tv functions including analysis. from toronto and new york, this is bloomberg. ♪
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"all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. mark: i'm mark crumpton with bloomberg's first word news. the senate is voting on a bill already passed by this house -- the house that would pay for president trump's border wall
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and avert a partial government shutdown. senate majority leader mitch mcconnell urged approval of the measure, which includes $5.7 billion the president wants for the southern border with mexico. the president said the shutdown is looking more likely. president trump: it is possible we will have a shutdown. i would say the chances are probably very good because i do not think democrats care so much about maybe this issue, but this is a very big issue. mark: leader mcconnell met with the president at the white house today. after that meeting, the president says he is "totally prepared for a very long government shutdown." the turkish president is delaying a planned military operation in syria as american troops withdraw. the president heard one -- the president says he is prepared to back u.s. backed kurdish militants there. he assured that turkey would finish off the islamic state in


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