tv Bloomberg Markets Americas Bloomberg July 12, 2019 10:00am-11:00am EDT
10:00 a.m. in new york, 3:00 p.m. in london, and 30 minutes into the fido -- into the final trading session of the week in the united states. this is "bloomberg markets." we are firmly above 3000 on the s&p 500. will we close there this evening? did all but close above yesterday. one of the poor performers, alumina. alumina is a very disappointing quarter. we are seeing that across a number of stocks, including daimler today, really weighing on markets here and in europe. 10 year yield back up to 2.13%, fallout from the federal reserve. impatient for rate cuts throughout the year. we will get to that with tom lee of fund strat. crude still firmly above $60 a barrel. the president tweeting out that
we haven't seen the biggest development as mexico on trade yet. nevertheless, the mexican peso weaker and above 19. let's see where we stand before the close. it's been a positive day in europe, right now moderating those gains. 1/10toxx 600 up just of 1%. bonds are selling off, and yields are higher. the french 10 year yield a measly five basis points. turkish lira one to keep an eye on. geopolitical tensions there as well with the delivery of missiles. we will be talking about turkey and lots more throughout the next two hours. let's get straight to that breaking news, the resignation of labor secretary alex acosta. the president is speaking with alex acosta right now. we will get to those comments in just a few moments. bloomberg's and adjutant joins
us from washington, d.c. -- bloomberg's anna edgerton joins us from washington, d.c. anna: it really looks like it just got to an untenable situation for acosta. he was kind of the face of this lenient plea deal that jeffrey epstein had gotten years ago in regards to allegations of sexual misconduct with minors. it is just not a good look for the trump administration, and although the president himself appears to not have asked acosta to resign, it wasn't something that trump was necessarily pushing for. there were others in the administration not comfortable with his being there. there are two elements to that. one was his connection to the epstein case, and the other was that he wasn't moving fast enough on the regulation for some members of the white house
-- on deregulation for some members of the white house. his deputy is expected to be a bit more of a stronger stance on deregulation. regardedis deputy is by democrats and labor unions as being more aggressively pro-business than acosta. scandal andepstein mr. acosta's career, how will this affect others in the circle that were around at the time this plea deal was arranged and agreed to? anna: that is something people are looking to not just on the the people but around him, including mr. trump. trump himself is to post to this case. comments about
epstein in the past, how about him looking women on the younger side. it is not a good look for his public view, especially as he goes into 2020 seeking election. that.: thank you for once again, labor secretary alex acosta resigning. he will leave his post in one week. of commentsperiod with reporters, president trump said he never went to epstein's island. global growth concerns mounting with an unexpected contraction in singapore's economy and a slump in china's exports sending a warning to the world economy as a trade tensions weigh on business confidence. let's discuss this with tom lee, global advisors co-founder, managing partner, and head of research.
we are about to get into earnings season is a bid way -- earnings season and a big way now. earnings are going to disappoint. but i think that the impact on markets, which has not been what .eople expected equity markets have done really well because pe patters more. vonnie: we've gotten an indication already of how earnings will go. several companies out in the last few days saying this quarter is not going to be great. aboverings the s&p 500 3000? tom: it's really the investors' conclusion that the speedbump in earnings isn't really a change in economic trajectory. it is really a speedbump causing inventory correction. a trade war is causing people to
take a step back, creating pent-up demand. i think the markets are basically saying when we get a trade resolution, either a detente or a resolution, we will see a pretty strong rebound in cyclical data, which is really bullish for earnings. vonnie: there's a lot wrong with this economy. even the federal reserve hasn't fully figured it out yet. we got inflation data yesterday. it looked better. we have payrolls coming in better. we've got stocks at records. and yet, companies are saying this can't continue. for how long does this rally continue? tom: i think if i took a step back and said, what do we learn in the past year, we learned that this trade war has caused a lot of the world to suffer, but u.s. growth has remained strong. that is a huge deal because it u.s. is anhat the independent engine that grows fine. we are seeing that stress in the fixed income and equity markets, the other markets haven't done
well. we have negative yield in europe. 14 high-yield bonds have negative rates. that is insane. but u.s. yields are still positive, and equity cash returns for the s&p is higher than that of europe, japan, and emerging markets. so stocks in the u.s. are really cheap still. vonnie: what sectors do you want to begin? tom: we want to be cyclically tilted. cyclicals have led you to date. i think even financials in the u.s. are really interesting. consumer discretionary. industrials are a good beta play on the idea that this is a speedbump on trade. i think it makes sense to be very cyclical. vonnie: we are going to be getting the financials early next week, some of the major ones. one sayingout, we could see strong earnings given that banks have historically traded relation to and that they have
been well below that traditionally. i want to ask a little bit about cryptocurrencies because this has been your bailiwick for a long time. playyou make of facebook's , and the amount of concern from congress and the last couple of days questioning fed chair jay powell about libra? tom: i think libra has a lot of promise. it is coming from an entity that's been very successful and really understands network effects. there's some great partnerships. but of course, because of the potential size, it's come under the radar and center stage for not only central banks, but congress and now the white house. know, in the short-term it creates a lot of uncertainty, but in the long term, i think it really validates what makes digital currencies and cryptocurrencies attractive. these are sensitive tip -- these are censorship resistant. it is a way to sort of not get so much value cap to the
traditional banking system, so it is decentralized finance. i think it is sort of a generational story. vonnie: while you might be very bullish on the actual idea, the technology even, at this point, one entrant into the market can destabilize the whole market or vice versa. we saw bitcoin rally forever on the facebook news. where would you be placing some money right now if you are going to? tom: when you look at emerging technologies, and i think cryptocurrencies is very similar to the growth of consumer stock in the 1980's. in the 1980's, consumer stocks trade --onster stocks were the monster trade. in the 1990's it was the internet. i think for anybody
individually, it is a good hedge against what could be destabilized currencies, geopolitical risk, and a long bet on secular trends. vonnie: what do you make of the federal reserve tilt? is the fed becoming more dovish? have we now baked in one rate cut this year and very little chance of a second or third? tom: when i look at the tightness in financial conditions that existed late last year, to me it screamed that there was a policy error made with that last hike. now financial conditions, while people might think they are quite easy, there's a lot of stress in the rest of the world and negative rates. while i think a cut is appropriate, otherwise we are going to continue to see more u.s.. the ultimately, the u.s. is a safe haven. vonnie: with that continue? there's been a selloff in european bonds because it seems
like the ecb might get into that space in a bigger way later this month. what happens to those funds? clearly britain is suffering outflows these days. europe obviously now as well. tom: i don't have an opinion on what is appropriate, but i do have an observation, that when you look at the first fed cut, and they've been setting monetary policy since 1971, the first fed cut at a time when the lei's are positive, which means we are not in a recession, the markets rally in the median gain nine months out is 16%. even if someone doesn't like what the fed is doing, it is very positive for these. but does it make sense for central banks globally to be easing? i think so. the cyclical data is weak. i think that insurance or and immunizing cut make a lot of sense in this environment. vonnie: you see another 125 points coming up for the s&p
500. 3125 is your 2019 target. you're obviously still interested in bitcoin and ripple and some of those. what about tech more broadly? it has been providing some kind of leadership. is it healthy? vonnie: yeah -- tom: yeah. i think tech is a really underpriced sector right now. tech is a huge cash returner. the cash return yield right now is staggering. i believe the buyback yield is well over 3% in tech. they are making a lot of money, and it is one of the three dominant sectors in the u.s., which is health care, tech, and financials. the two i would want to be owning his financials and tech. vonnie: is this healthy markets? is there enough interest across all sectors, and a volume? the vix is lower -- enough
volume? the vix is lower today, so there is calm in the market, but is it calm before the storm? tom: you would think it is complacency because the vix is low. i think this is not embraced by investors. i think investors are really skeptical of this market. you can see it in hedge fund data. i think there's a lot of cash on the sidelines. i think 3125 is conservative. i think there's a chance we could be at 3300 by the end of the gear. vonnie: what would that depend on? tom: i thing get is a combination of a fed cut, other central banks easing, and the yield curve telling us cyclical data is going to start turning up later this year. i think you will get a cyclical turn in the fourth quarter. vonnie: what happens currency wise, and how does it impact your outlook? obviously the u.s. dollar is going to be impacted by the likes of sterling and euro with the impact of brexit. tom: strong dollar is a tougher call. i think there's an argument now
that if the white house is more interested in a weaker dollar, there's a chance we jawbone a weaker dollar, which would be good for stocks in the u.s.. vonnie: the president has had some impact on some areas. at the moment, it is health care. there's still a lot of churn among the various health care sectors, but what will happen, whether it is drug pricing, pharmacy benefit managers, would you be at all confident investing in health care? tom: i think health care is very tough. that's because there's a lot more political risk. president trump, even if he's not popular, is probably one of the most powerful presidents we've had in 50 years. it's because he directly communicates through twitter. health care has crowded out capital spending, and it is hard to ask blaine wyatt's share of gdp has more than doubled since 19 -- hard to explain why its share of gdp has more than doubled since 1980. earnings has grown in the last five year, but health care share
market cap has fallen. vonnie: and then commodities. a lot of talk recently about commodities because of transients in fed forecasts and so on for inflation. where do you see commodities going through the end of the year? tom: commodities ultimately are partially cyclical, but mostly and inflation play. say what didhad to fund struts miscalculate this year, it would be interest rates. the fed has gone dovish and interest rates are lower. it is its -- it is not necessarily a pro-inflation environment. as long as the fed is easing, commodities are tough trade. vonnie: thank you so much for joining us. tom lee is fundstrat global managing partner and head of research.
president trump speaking. chair powell: under a lot of -- pres. trump: under a lot of pressure, he did a fantastic job, and he explained it. he made a deal that people were happy with, and then 12 years later they are not happy with it. you will have to figure all that out. the fact is he has been a fantastic secretary of labor, and alex called me this morning and wanted to see me, and i actually said, well, we have the press right out here, so perhaps you just want to say it to the press. but i just want to let you know, this was him, not me, because i'm with him. he's a tremendous talent. he's a hispanic man. he went to harvard, a great student. in so many ways, i just hate what he's saying now because we are going to miss him, but please, alex. costa: thank you, mr. president. over the last week, i've seen a
lot of coverage of the departed of labor, and what i have not seen is coverage of the incredible job was done in this economy or the jobs. workplace fatalities are down, bucking a three year trend. we had the safest year ever in mining, the lowest number a fatalities ever. i have seen coverage of this case that is 12 years old, that had input and vetting at multiple levels of the apartment of justice. as i look forward, i do not think it is right and fair for this administration's labor department to have epstein as the focus rather than the incredible economy that we have today. so i called the president this morning. i told him that i thought the right thing was to step aside. cabinet positions are a place
of trust. i submitted my resignation to the president, effective seven days from today, one week from today, earlier this morning. [inaudible] there is no need at all, as far as i'm concerned. i watched alex yesterday. i thought alex did a great job. you can always second-guess people and say they should have been tougher. they do it with me all the time. i make a great deal with anybody, and then they say, the democrats, it could have been better. 1.2 billion dollars settlement from a company, from cte. -- from zte. they couldn't believe it. the next day, the democrat said, you should have got more. i just want to tell you, this is
a person that i've gotten to know. there hasn't been announced of controversy at the department of labor until this came up. he's doing this not for himself. he's doing this for the administration. and alex, i think you will agree, i said you don't have to do this. he doesn't have to do this. [indiscernible] pres. trump: and we have, as , we have right now the deputy that will be acting for a period of time. he's a good man, highly recommended by alex. he is going to be acting, and we've already informed him. [indiscernible] why did you have a falling out with jeffrey epstein, and did you ban him from mar-a-lago? pres. trump: yes, i had a falling out with him long ago. the reason doesn't matter. i haven't spoken with him in
probably 15 years or more. i wasn't a big fan, that i can tell you. ,ow if you look at the remnants it hurts this man, and i hate to see it happen. i will say this, and i say it loud and clear, alex acosta was a great secretary of labor. what he's done with plans, and you see the plans coming one after another, you're just about done with the 401(k) and that happened, things that nobody would even think of, so it's very sad. but at the same time, he once the focus to be on accomplishments, not on what you're talking about. [inaudible] pres. trump: well, alex believes that. i'm willing to live with anything, john. i think you know me. i've lived through things that you wouldn't believe. alex felt that way, and he also felt we are doing so well.
the economy, the stock market just hit the highest point yesterday in the history of our country. our unemployment numbers are the best they've ever been. if you look at specifically certain groups, african-american, asian, hispanic, the best unemployment numbers in the history of our country. there are so many good things that he didn't want to distract from that. i understand that 100%. [indiscernible] pres. trump: what? ryan prevent you from making bad decisions? pres. trump: paul ryan was not a talent. he wasn't a leader when the people in freedom and great congressmen wanted to go after the dems for things they did very badly. he wouldn't give subpoenas, whereas nancy pelosi hands them out like they are cookies. paul ryan was a lame duck for a long time as speaker.
he was unable to raise money. he lost control of the house. the only success paul ryan had was the time that he was with me because we got taxes cut. i got regulation cuts. i did that mostly without him. but for paul ryan to be complaining is pretty amazing. i remember a day in wisconsin, a state that i won, where i stood up and made a speech, and they introduced him and they booed him off the stage. for him to be opening his mouth is pretty incredible, but maybe he gets paid for that. who knows? maybe he gets paid. [indiscernible] [inaudible] pres. trump: so people come into our country illegally. we are taking them out legally. very simple. it is not something i like doing, but people have come into our country illegally. we are focused on criminals.
we are focused on, if you look at ms 13, but when people come into our country, we take them out very legally. they all have papers, and it is a process. i have an obligation to do it. they came in illegally. they go out legally. what the democrats should be doing now is they should be changing the loopholes. they should be changing asylum. i've been talking to you about this for a long time. they should be changing asylum. there are so many things. let me give you the good news. mexico has done an outstanding job so far. if you look at the border, it is down now 30%, and that is only one week inclusive where they've gotten it together. the numbers just came out. it looks like it is going to end up being a little above 30% down. it is going to be down more and more. 21,000, and i say
21,000, mexican soldiers on the border, both their southern border and our southern border. we really have it in control. the problem is we have a big problem. the laws are so bad the democrats have to help us fix the immigration laws. but even with that, because of the job that mexico is doing, and yes, they may be did it because of tariffs, but they are doing a great job, and i appreciate it. [indiscernible] [inaudible] no, no.ump: who said that? >> democrats are saying -- pres. trump: anything you do, the democrats will say it is not good. in the meantime, they had a disaster. they had these laws that are so bad, catch and release. visa lottery. that was a chuck schumer law. it is a disaster. a lottery. you pick them out. a lottery. the democrats have caused
tremendous problems. what they've let china get away with for years and years. china has been ripping us off. they are not ripping us off anymore. companies are fleeing china because of the tariffs. right now we are taking in billions of dollars. and by the way, our people are not paying for it. they are paying for it by depressing the currency, and they are putting a lot of money. look, nobody has ever done what i've done with china, and that's fine, and we will get along with china, but you know, when i see a guy like biden who is weak and ineffective, and everybody who knows him knows he is a weak man, and ineffective man, president xi laughs that guys like that. with that being said, i would say this. president xi, putin, all of these guys go to bed at night and pray that joe biden or somebody like him becomes president so they can continue to rip off our country.
[inaudible] pres. trump: no, i had no idea. i had no idea. i haven't spoken to him in many years. [inaudible] sec. acosta: i've already talked about the epstein matter. i gave a press conference that, according to the media, was longer than any other cabinet official in this administration. i will reiterate what i said previously. my point here today is we have an amazing economy. we have unemployment lower than we have seen in my lifetime, and the focus needs to be on this economy and on job creation, on a decreased fatalities in the , andlace and in mining going forward, that's where this of menstruation needs the focus, not on this matter. [inaudible]
we are looking into it. the platforms are absolutely, in my opinion, 100% crooked. they discriminate against republicans and conservatives. they are 100% dishonest. that is my opinion, and something is going to be done. but i can tell you from personal experience, i see it. i had something happen this morning. i won't tell you about it yet. but these platforms are 100% dishonest. [inaudible] vonnie: that was president trump speaking there alongside labor sec. alex acosta, who has resigned. he will stay in his post until this time next week. it is now 24 hours after a news conference in which he defended himself and his role in the federal prosecution of jeffrey epstein.
once again, the president defending his labor secretary, saying he has done great things and is very sorry that this was one of the fallouts from the jeffrey epstein affair. he also talked about immigration , and we learned that during this time, the testimony of former special counsel robert mueller will be delayed until july 24. let's check in on the bloomberg first word news. here's kailey leinz. anna: a tropical storm racing -- ey: a tropical storm racing through the gulf of mexico towards louisiana. it is likely to cause up to $1 billion in damage. it has already shut down about half of the oil output in the gulf. president trump says there will be nationwide raids starting
sunday to deport those in the country illegally. the president told reporters, "we will be taking you out by the thousands." president trump previously postpone the raids. turkey may be one step closer to u.s. sanctions. the first shipment of a russian missile defense system has arrived there. the u.s. has warned turkey it would face economic sanctions if it goes ahead with the purchase of the system. it also says turkey won't be allowed to take part of the program to build the f 35 fighter jet. british chancellor of the exchequer philip hammond has put boris johnson unnoticed, saying he will fight any attempt by the likely next prime minister to leave the eu out a deal. he also won't back a proposal to suspend parliament in order to get a new deal brexit. chancellor hammond: if anyone were to attempt to suspend parliament to carry out an action which parliament were known to oppose, that would
provoke a constitutional crisis. kailey: global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg. vonnie: thanks, kailey. ford ceo jim hackett says the company's joint venture with volkswagen will help capitalize on new technologies. he spoke with bloomberg's david westin. >> you know, we are in close relationship with some of our but whatpartners, is to come to the automotive industry is really big investments in autonomous, big investment into electric vehicles, and it just makes sense, even for two big companies, to share some of their efforts to make them faster and more efficient. david: how does this fit with your restructuring in europe?
>> it helps the renaissance. in fact, this idea came in parallel as we work working on the thomas problem last year. in november, i was watching one of my favorite football games. i picked up the phone and called herbert and said, as we were working through this technology, it occurs to both of us that there is opportunity to expand the nature of this. he said, look, you've got to take a look at this architecture. it is quite humble, but it is really extraordinary engineering. it just started to fit together. because these teams were having these early discussions, it was easy to throw that into the mix and say, try and rationalize that. when we made the first announcements in january, we were right in the middle of that and had a lot of work to do. i'm not worried that here we are in july announcing these two
facets of the alliance because it really is going to be just in time for when we need it. david: interesting. we didn't do so well in that game, as i recall. [laughter] david: on the timing of all of this, is it fast enough? we are watching in europe and china the government's really pushing forward on emission free technology. will this be enough time to help volkswagen, for example? herbert: we think we are all right in time. be with alle will of this new technology driven by our ventures in china because we have a high market share in china, about 18%. theseply, we need vehicles by 2025. we are using that scale to be very competitive in europe, adding scale to make us more competitive. ,e will accelerate production
which will help lowe's companies considerably -- help lowe's companies considerably -- help both companies considerably. david: is this going to be passenger vehicles, suvs, utility vehicles? jim: it is initially passenger vehicles, but we are not limited. i just want to add ford intentionally is complying in europe, and will be in addition with the meb. it is just a faster way for us to make this conversion. david: what about latin america? you have an operation there, and you are corroborating on some things with some smaller trucks. david: as i came into the --jim: as i come into the industry, i learned that ford and vw had a jv in latin america that did very well. i think the difference this time is the nature of the products we are working on and he kind of issues we are addressing happen to be forward investments.
that is the better kind of challenge because it causes a win-win for both sides and a higher engagement because we are on deadlines, trying to meet targets. i have a little more optimism with this phase of what's been a good relationship between vw and ford over the year. david: joint ventures offer certain opportunities. they also offer some challenges as opposed to total integration. fierceyou take two competitors and have them cooperate some of the time and compete some of the time? herbert: i thing it is possible. we have a good track record. we shared some plans and technologies a few years ago. the companies have relevance to each other. i think we have a secret eyes view on what is going to happen in our industry. we are really, mentor he. -- very complementary.
we are strong in china and europe, and latin america, i think we are fully, metairie, so we can have -- we are fully complementary, so we can help each other a lot. but we decided so far is all very promising, i would say. vonnie: that was bloomberg's david westin with the ceos of ford and volkswagen. oracle has lost its challenge to the pentagon's $10 billion cloud contract after a federal claims court judge dismissed argument that the contract violates federal procurement laws and is unfairly tainted by conflict of interest. now we know the defense department specs to make an award in august, and that back in april, the pentagon had eliminated oracle and ibm as contenders. that left just amazon and microsoft as a final contenders. oracle decided to challenge that. it has now lost that legal challenge. the stock is down about 9/10 of
and so on. first, this is one of the first concrete pieces of fallout from the epstein scandal that doesn't have to do with it seemed -- with epstein himself. greg: yes. so much attention has been focused on him and his conduct, but this shows the first real repercussion in government at a very high level. the secretary of out as a direct result of this. depending on what comes out from the federal investigation here in manhattan, this could have repercussions elsewhere as well, well beyond epstein and into the world of wall street or business. vonnie: is it possible to know yet from all we've gleaned, and more will come out as the case proceeds, who else or what other department's might be impacted by this? greg: in terms of the administration, no. but in terms of his social circle, it went so widely in his little black book. he had all sorts of people. he was a bit of a collector of
boldface names. not everyone in this book had a close relationship with him. it consisted of people who he wanted to be close with and have show up at his parties so he could present himself as an intellectual, a mover and a shaker. there's a huge circle of people whose names show up, but that doesn't mean -- there is a much smaller subset of people closer to him are very concerned about this investigation. vonnie: president trump said he has never been to his island. he said that very expose atlee of human -- very expose atlee a few minutes ago. is president -- very explicitly a few minutes ago. is president trump completely cleared in regard to jeffrey epstein? greg: it doesn't look good as a general thing. the state much about the island, from our reporting, is true. the island was a private place where he did not bring a lot of celebrity figures. it was just young women and girls, and a few friends.
the former president bill clinton is a lot more closely attached to epstein because he went on the plane more often and spend more time with him, but i don't think the president is in the clear, because he was part of that same society, and until the conviction in miami 11 years ago, seemed to be a fan of his. vonnie: you've been looking into the finances of jeffrey epstein, how he came upon them, and it is difficult. there's a lot of opacity here. you have this wonderful story here that few doubt epstein is wealthy. he had a private jet and a helicopter to his private retreat. what more do we know about his finances? greg: very little. usually anyone who is a billionaire, especially on wall street, you contract trading patterns were stakes they own in certain companies that explain their wealth. there's very little of that with
epstein. the fact that he moved his company from manhattan to this place that is a tax haven, the fact that one of his major clients is closely associated with him and manages a lot of his money, it seems, just raises questions about how much money epstein actually has, where it comes from. so it is a mystery everyone is still trying to get to the bottom of. vonnie: what does this mean for regional prosecutors offices and other regional agencies? this is the second time we've seen something go-ahead in new nightwith r. kelly last as well, that didn't in other jurisdictions. greg: i think it shows, and this is why acosta had to go, it shows the power if you have a wealthy, powerful individual who is a target of an investigation, it can be more difficult for a local state-level prosecutor to
build a case because they don't have necessarily the same level of resources. that's where the federal government should be stepping in. this is why acosta looks particularly bad. he had the power and authority 11 years ago to really go after epstein and put out there the allegations of what we now know, but the fact that he didn't play the role of a federal prosecutor , and the u.s. attorney in new york did, shows the role of a federal prosecutor when dealing with a powerful or at least very wealthy adversary. vonnie: greg farrell, thank you. phenomenal reporting, which will continue no doubt. that is greg farrell for us. i want to point out that epstein's lawyer didn't immediately respond to requests for comment. moving on, the uk's chancellor of the exchequer philip hammond says parliament is dead set against a no deal split from the european union, and supports former prime minister john major's threat to take legal
action against the government. he spoke exclusively to bloomberg this morning. hammond: our limit is dead set against no deal, and the european union hasn't changed. the position of the european union remains exactly the same. the challenge for the new prime minister is to try to work with the same cards that the previous prime minister had, but to play them in a different way that hopefully gets to an agreed deal and the u.k. to leave smoothly from the european union in an orderly brexit that allows us to continue to work very closely with our european neighbors. vonnie: but chancellor, would butbe prepared --francine: chancellor, would you be prepared to vote the government down to bring a dodo brexit? chancellor hammond: i've always -- a no deal brexit? chancellor hammond: i've always
said a no deal exit would be very bad, it it is something that parliament will not agree to. we have to find a solution that parliament will agree. francine: but if there is a no-confidence motion, that is the last option to make a deal, would you second that? chancellor hammond: that's a hypothetical question at the moment. there is no such moment. it depends on the circumstances of the time. i take comfort from the fact that both candidates are saying they will seek to negotiate a deal so that we can have a smooth and orderly exit from the u.k. that is very much in the best interest of workers, businesses, and the entire society in the u.k., and i will do everything i can to ensure that that is the outcome we get. leaving with no deal in a disruptive and disorderly way will be very expensive for our economy, and potentially very damaging to the united kingdom.
francine: what would be more expensive to the economy, a conservative prime minister forcing through a no deal brexit or jeremy corbyn as prime minister? chancellor hammond: well, we don't have to make that choice. the best thing for the u.k. economy will be a conservative prime minister, a conservative government negotiating a good deal with the european union in delivering that in the orderly kay -- sot you and that the u.k. economy can get motoring again. there's a wall of investment that has been held off, waiting to see what the outcome of brexit is. once they are comfortable about our future relationship with europe, that we will be able to continue trading effectively with our biggest trading partner, that investment is going to pour into the u.k. economy and will provide a very strong background for economic growth over the next few years. vonnie: philip hammond there to
there,sulate -- hammond chancellor of the exchequer, speaking exclusively to bloomberg. oracle has lost its legal challenge to the pentagon's $10 billion cloud contract. federal judge dismissed the argument that the deal violates federal procurement laws. amazon and microsoft are the final contenders. a decision is likely next month. deutsche bank is reportedly giving reduced severance packages to hundreds of staff in london. according to financial news, the bank is trying to limit the cost of its overhaul, offering employees a redundancy package required by law, plus a one-time payoff less than 10% of salary. employees are also being paid for notice. of personalents computers rose 1.5% in the third quarter.
china's lenovo group held the number one spot over u.s. rival hp. that is your latest bloomberg business flash. still ahead, we looked at how tropical storm barry might affect the outlook for energy. that is futures and filters test futures in focus, next. this is -- futures in focus, next. this is bloomberg. ♪
get to that any moment, but on a drawdown alone, where do we expect things to go? phil: it should pave the way for a series of builds, especially with opec. they are probably going to start to add more oil production out there. i anticipate that one more drawdown on oil inventories, but from that going forward, we should see a series of builds. -- --ng into a weekend vonnie: we are going into a weekend of crazy weather. how might that impact things into next week's trading? phil: the market already prepared for the worst. half of production has been shut down in the gulf. once the storm passes, production should be back online fully. that is why we are in his bedding one more drawdown, but after that we should see prices start to back off.
you will see a bit of a tug-of-war on both sides, but i do anticipate over the future we are going to see 58 and ultimately $56. the demand just isn't there. the path ofprices, least resistance is lower. of --: plenty of chi plenty of geopolitical tensions in the atmosphere, from iran to turkey, to obviously all of the other threats from trade to brexit and so on. will any of those impact the price of crude in the immediate term? phil: not necessarily, unless it goes into all-out chaos, you see the strait of hormuz get shut down. i don't think that is going to happen. iran has made some pretty big threats, but i anticipate they will start to back off a little bit. on the geopolitical side, you would have to look at a different commodity asset like gold futures, may be looking at
something and more of a defensive play or put options on the s&p 500. the s&p back at a record high today, making all the headlines. i think once it is up at this high level, it is easy for prices to tumble down. i think there's better plays for the geopolitical tensions than oil, but i think oil is still working off the supply and demand, and oil is going to come back down. vonnie: quick word on rates this week because we had a little bit of a ride. the 210 spread is back out to 2024 basis points right now on shifting yields. how has that impacted the trades at the cme? phil: the big thing we are watching is the fed watch tool. if you look, they are pricing that july 31 meeting we are anticipating 77% chance we get a quarter basis point cut. there's a 22% chance they might have a 50 basis cut. it shows 0% that they are going
to leave unchanged. it is going to be a shocker, whatever happens. it is going to be interesting. it is historic times with this first rate cut anticipated. vonnie: thanks so much, phil st futures -- of oh rjo futures joining us from the cme. emma chandra is here. it did fall 5%. still down around 7/10 of 1%. they doubted back profit expectations, and then we heard from them again today. it is their fourth profit warning in just over year. it suggests things might not be quite as they seem over at daimler. they now see earnings falling significantly below last year's level, and second-quarter results will see a loss of 1.6 billion euros. they've attributed this to putting aside money for a number of provisions, including vehicle
recalls related to airbags, and having to put aside cash to deal with ongoing allegations of a diesel emissions tampering. vonnie: a new ceo has just taken over the reins. are investors seeming a little more skittish? emma: that is potentially the case. his big job seems to have just gotten a lot bigger. he needs to cut costs, restore profitability, and allow daimler and mercedes to hold onto that luxury car sales crown. so far, there are some people saying that he and his cfo, their strategy has been a little light on detail. a number of analysts perhaps saying this bad news allowed him to clean the slate. the analyst at ever-glory calling it "throwing indicate -- at ever core -- at evercore isi , "throwing in the
kitchen sink." of course, it isn't only daimler having trouble at the moment. we seen european automakers rally today, but if you look at that performance, it is not looking that great. vonnie: emma chandra, thank you. let's look at markets now. in the u.s., we are seeing the s&p 500 try to stay above the 3000 mark. we will look a little closer this friday. the dow up. good performance from the dow and the nasdaq, up just 1/10 of 1%. this is bloomberg. ♪ i don't know why i didn't get screened a long time ago.
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left in the trading day in europe. we are almost 90 minutes into the u.s. session. from new york, i'm vonnie quinn. this is the european close on "bloomberg markets." a little bit of a mixed picture. the stoxx 600 had been higher, but is ending the session pretty much flat, down about 1/4 of a point as we await the last 30 minutes of trading. bonds have been selling off in europe, particularly in france. mike up or dispense are getting out of -- market participants are getting out of bonds as it looks the ecb might just add to its bond purchases, which would leave little on the table for investors to pick up along the way. turkish lira weakening once again, 1.5 percent versus the u.s. dollar, as turkey accepts a delivery of missiles. we will dig into the details of why turkey might be doing this later this hour. in the u.s., we are seeing the s&p 500 holding its gains. it is