tv Bloomberg Markets Americas Bloomberg September 30, 2019 10:00am-11:00am EDT
a.m. in new york, 3:00 p.m. in london, and 30 minutes into the trading day in the united states. from new york, i'm vonnie quinn. guy: from london, i'm guy johnson. welcome to "bloomberg markets." vonnie: it is the final trading day of the quarter, and we are in the last day of september. the s&p 500 today, a little bounce up 0.4%. no huge moves. the best performer in the s&p is -- isands on an upgrade upgrade.brands on an i thought i would point to the 10 year yield at 1.69%. money flowing out of treasuries today, and crude oil down another 1.1%. we've been talking about the dynamics -- we'll be talking about the dynamics in the crude
oil story in just a bit as well. guy: we've barely gone anywhere when it comes to stocks. over three months, up by 1.36%. bond yields getting absolutely crushed. we see prices jump. we see equity markets under pressure. it was a real what cup call for the market. after that wake-up call, we kind of gone back to where we were. what does fourth quarter bring? number last year's fourth quarter? december, incredibly rocky. this is the picture we have in europe. . stoxx 600 trading at session highs. we are up by around 0.3%. we have the holidays. we have china closed the rest of the week. volume is abysmal today. euro-dollar also under pressure. we see data out of germany on the cpi front. you had a whole bunch of other factors. the dollar continues to make
gains. you continue to see the dollar index pushing higher as well. if you want to watch the chancellor of the exchequer in the u.k., on his feet in manchester right now, that is on your bloomberg. $1400 --ing at trading at $1491. what a quarter it has had. vonnie: china vows to continue opening its markets to foreign investment. we are joined by brendan murray, bloomberg trades are in london -- trade czar in london. is this posturing, or is the trump administration really looking to decouple financial markets? reporter: as we reported friday, these discussions inside the white house are in early stages. no decisions are really imminent. you can already see the impact
that these ideas are having in setting the tone for a round of trade talks coming up next week in washington. concernpressed some about how such capital restrictions would be a bad thing going forward. i think the main focus now is to see if the chinese trade negotiator brings a deal to washington next week, and if he does, what is in it. guy: peter navarro on tv a little earlier on pushing back. nevertheless, how is this going to affect trade talks next week? how much of a game changer is it? obviously you are going to have a pushback on a story like that. on,e discussions are going so it remains to be seen.
as you mentioned, china is on a weeklong holiday right now, so we don't know how much behind the scene discussions are going on. we would expect that both sides would try to come through next week's talks with something to show for it. thanks very much indeed. bloomberg's brendan murray. vonnie: for more on the market, legations of the latest trade of elements, we are joined by chief wieting, citigroup investment strategist. does this turn into a flow war? en: in the near term, we should be thinking about this story as perhaps an additional globalf worry for capital markets.
in particular, what would happen to the u.s. exchange rate and the chinese exchange rate, and how that would be the front and center concern. china requires savings inflows. to any extent that savings inflows to china would be limited, it would tend to create weakening in their currency. for a near-term market issue, the ability of that to also weaken other emerging markets currencies and send global share price is lower, that, we would think, is one of the unintended consequences, and there are many unintended constants is on this for to -- unintended consequences on this particular issue. you put some restrictions on capital flows. if either were to pass or if there were to be something unilaterally set up by the administration, would it affect the u.s. more or china more? steven: i think in these types of issues, it tends to be both.
it tends to be a concern for markets. the u.s. is an international borrower. it isn't relying just on china. a lot of times, these concerns get overwrought. in particular, it has to become actual policy. as we seen before, when it was when idea or another disentangling these two economies, that cannot be done without some significant pain for both economies. i would just say here, i think more importantly, ever since the beginning of the trade skirmishes back in early 2018, markets determined that this was not going to be some sort of surgical strike. that this is one particular issue between the u.s. and china that the world could agree on. essentially, this is going to be intentionally something that is used in a larger way against a whole variety of trading partners. so again, the amplification of this potentially to other markets, to the european union, for example, or anyone like
that, that is one of the unintended consequences we have to consider. of course, we saw friday there were large drops in u.s. listed adr's. whether or not that ever gets involved in any of this, you did see some broader pullback in risk-taking generally because of the concern that we will not have free, clear access for by,stors who are protected broadly speaking, u.s. market involvement. that there could be something lost here for the ability of u.s. investors to make their own decisions like that. guy: the fourth quarter pretty rough last year. how do you handicap this year's fourth quarter, and you think trade could once again provide a catalyst to take risk assets lower? said abouth all i this particular worry, for all i set about all of this, positioning and markets is lighter. the main concern that we had last year was the federal
reserve was taking the u.s. economy potentially off-track. that uncertainty about quantitative tightening, the fed planning rate hikes 10 through 13 for 2019, those were all very big issues that hampered liquidity at the end of the year in a very big way. the outlook for monetary policy has come nearly full circle. there's a lot more worry in the market place right now, and global interest rates have hit all-time record lows, while more and more central banks are easing. i think there is a path in 2024 recovering in manufacturing and some cyclical repair. i would not think that a downturn is our base case view at all, or that share prices are going to drop from here. but i think policymakers across the board have to be careful at the moment. guy: are you surprised that in the third quarter, stocks have held up so well? we are trading their records. we had a very bumpy august, but july and september have been pretty solid. we are kind of finishing where
we started. nevertheless, all the headwinds at up to quite a significant group. you would have thought stoxx would be lower. correctionsink the over the course of the third quarter were very gentle. some of the issues were in fact quite serious. e u.s. was expanding its trade war beyond china, that was a significant point. we saw the u.s. reacted that in a way that was less disruptive. we saw monetary policy become easier. we think that is cushioning the market on the downside. what we also had is marginal new highs in corporate profits. while i don't think the third quarter is going to go down as a particularly great one for the prophets recovery in the united states, i think the path to make at least marginal new highs a few percent higher in 2020 is very much there. that's what is going to matter. that, plus where we are in terms of credit risk, in terms of interest rates and earnings. if there are going to be some
policies that are going to derail that, we will take that into account. there's a lot of worry, so i would not expect a repeat of last year's fourth quarter at all. say investors are gripped in a mania of doom or no doom mentality. is there something that could catalyze us out of that? steven: that's really the sentiment. we had this view that the inversion of the u.s. yield curve, which was marginal come up mostly driven by the federal reserve itself reacting to its own mistakes in monetary policy, which lowered interest rates across the board, and they are still catching up, but the idea that when the yield curve inverted, we had a self-destruct button. that the economy would instantly collapse. all of these sorts of things seemed really over-the-top and exaggerated in terms of concerns. we suddenly go back to come away to second, we are not doomed. but there's no real notion of how fast can we grow. what is good?
what is bad? all of these sorts of things. certainly what we see in the bond market, pricing in a very depressed situation overall jumps to the conclusion that there's a lot of bad news out there. certain things didn't happen. we didn't see american interest rates suddenly gravitate down to where we are in the euro zone. that still has left some opportunity in u.s. fixed income. the fed has only taken back two of its rate hikes. i still think there is a great deal of worry at suddenly, somehow, the world is supposed to look like 2009 again. i think that is not the case. we have plenty of legitimate policy concerns. we have real economic weakness in tradable goods, but this is not another 2009 situation. guy: i think we are probably all relieved to hear that. chief wieting, citi's economist and chief investment strategist, is going to stay with us. let's get a first word news update. here's viviana hurtado. viviana: hong kong is cleaning
up from a weekend of protests, bracing for more. protesters bombed police. they responded by using teargas and water cannons. bigger protests are set for tomorrow, on the 70th anniversary of china's communist rule. teenager greta thunberg being credited for redrawing the political landscape in austria after 7 million protesters rallied around the world for climate change -- around the world over climate change. the austrian green party nearly tripling their support. that sets them up as a coalition partner and shows how the environment is moving to the top of the political agenda in europe. saudi arabia's crown prince mohammed bin salman warning war with iran would bring down the global economy. the prince telling cbs' "60 minutes" he prefers nonmilitary action. he denies the killing of
journalist -- he denies ordering the killing of journalist mo khashoggi, but says he takes response ability for what happened. israel, prime minister benjamin netanyahu making a last-ditch attempt to form a coalition. 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 viviana hurtado. this is bloomberg. guy: thank you very much indeed. of the.'s chancellor exchequer is currently on his feet in manchester at the party conference for the conservative party. some of the headlines coming out of that speech over the last couple of minutes, the u.k. is planning to raise the national living wage to 10 pounds 50 -- the nextpounds over five years. there's an expectation that we will see both fiscal and
monetary policy being used relatively aggressively if there is to be a hard brexit. if you want to watch what is happening up in manchester, you can do so on your bloomberg. is the function, as ever, and you will see the chancellor on your screen. this is bloomberg. ♪ >> restoring our rightful reputation as the party of law & order. [applause] ♪
asia we started off interestingly lower. shenzhen 100 down 1% ahead of the holiday for chinese stocks, celebrated the anniversary of the people's republic. we are looking at modest gains as investors continue to deal with all sorts of uncertainty factors into the possibility of a volatile fourth quarter. big cap is really helping out, at least in the u.s.. apple up 1.3%. jp morgan boosting their iphone volume forecast, also saying sentiment has drastically improved. they've raised their price target to $265. up 2.2% after promising results from a cancer drug study. 0.8%, saying their
entertainment unit is looking more solid. let's take a look at a five-day chart of oil. oil down 5.3%, the most on a five-day basis going back to november of last year. the big boost up we saw for brent crude, the most ever, basically gone after that unfortunate drone attack in saudi arabia. also down on the quarter. speaking of the quarter, it is shaping up to be a pretty interesting quarter. lots of mixed signals here. take a look at the dollar with the s&p 500. not all the indexes are higher. the nasdaq and the russell 2000 lower. the dollar is higher, up 2.6%. theutility index up 8.6%, sixth of quarter amro. a bit of defense there. i know you are interested in that italian 10 year yield. amazing that it has shed 130 basis points nearly on the quarter, the most going all the way back to 1993. a bit of a mixed risk appetite for the third quarter.
it is going to be interesting to see what the last quarter of 2019 brings. guy: huge outperformance for btp's over the last month. august was a month dominated by what was happening in the bund market when we got all the way down to -70. still with us, steven wieting, citi's chief investment strategist and chief economist. you have reduced some of your positions. you are still overweight in the united states. you still like japan. you still like the u.k. what about btp's? what about the bund market? steven: if a particular country like italy can tighten relative to the core, that is possible, but these are already substantially low yields for the case of italy. if you think about the kind of mania we almost had in the bond market in august, where you had some 30 year debt in germany and switzerland have a 10% monthly return, the notion was that we
would be able to drive massive capital gains in these bond -200ts as we could get basis points, all the sorts of things. just don't comport with the notion that used to have zero yielding cash as legal tender in these economies. the ecb has lowered its rate to -50 basis points. i'm not sure if they would go any deeper than that. -75 basis points and switzerland. unless we change our financial structure and have a truly cashless society, it becomes harder to get yields to decline even more. on the back of that, we are turning over your money in return for 90% back 10 years from now. a number like that is even before inflation, and calling that a way of preserving wealth, this is really not for us. so we have very low positions there. there are ways that these yields , with conversion into u.s. dollars, can be turned into positives, but basically, the value is being be hedge in
particular. we wanted to move away from the most overvalued, richest bonds in the world. in the united states, yields looked low, but they are still positive. we arethe risk spectrum, not taking an amazing amount of credit risk, but there is a lot of value still in high-grade, short duration, and very long-term municipal bonds for u.s. taxed investors. but put some of that to work in some of the developed market equities we've been underweight on. vonnie: goldman sachs saying it could expand fiscally by about 1% without triggering the death break exception rule, and perhaps even 2%. at least, the finance minister thinks so. do you imagine that will be done? do you imagine there will be any political appetite for it? steven: this is a solid potential upside for the euro zone economy. we haven't had much of that lately. nowidea of fiscal expansion
, it is certainly not going to cost anymore in terms of debt servicing burdens when you take a look over the longer term. whether or not germany specifically needs that. but you have to say again, and our point of view is, the amount of immediate fiscal expansion you will see driven from this is probably a lot less than that over one year, but it is interesting. if we were to have a hypothetical downturn some years from now, what would be effective, more bond purchases or fiscal expansion? it is probably very much the later. that offers little green hope here that they could be some policies to address the next downturn. certainly a bit of a spur, probably less than the figures you cited, for 2020. vonnie: are thinks to steven inject --iti chief our thanks to steven wieting, citi chief investment strategist and chief economist.
♪ guy: from london, i'm guy johnson. vonnie: from new york, i'm vonnie quinn. this is "bloomberg markets." it's time for your latest bloomberg business flash. after a to multiple's year, deutsche bank is back where it a tumultuouster year, softbank is back where it started. uber's sagging valuation and wework's calamitous attempts to go public. in china, timo has gone live, betweenry joint venture alibaba and another company.
alibaba has pretty to chinese consumers could make up half of the luxury market by 2025. that is your latest bloomberg business flash. guy. the still ahead, conservative party conference is underweight in manchester. exchequerllor of the is currently speaking, making headlines on the u.k. minimum wage, to be raised over the next five years. there is prime minister boris johnson. this is the picture we have. we are trading at session highs when it comes to cable. the ftse 100 is absolutely flat. the stoxx 600 up by 0.3%. volume very, very low. this is bloomberg. ♪ eñ
bloomberg first word news. here with the details, viviana hurtado. viviana: president donald trump is suggesting adam schiff be arrested for treason. he's also demanding to meet the anonymous whistleblower behind the probe. schiff says congress will hear from the whistleblower soon. it's a matter of arranging security clearances for this person's lawyers. the administration is report that the white house discussed delisting chinese companies from u.s. exchanges. the u.s. treasury department says there are no current plans to stop chinese companies from listing in the u.s. over to the state of maryland, where tomorrow, a law that raises the legal smoking age goes into effect. the new law raises the age to berkus -- to purchase cigarettes, cigars, and vaping products to 21. the law does not apply to active military personnel. more problems for boeing. the company's $2.8 billion
upgrade of the air force surveillance plane was delayed by an almost year-long closure of two classified laboratories developing software for the project. the air force says boeing worked to regain certifications for the labs. 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 viviana hurtado. this is bloomberg. guy: thank you very much indeed. the conservative party conference is underway in manchester. u.k. prime minister boris johnson is launching his campaign to win the next general election. he will speak later this week. the chancellor of the exchequer has just been speaking to the party faithful. he says the party has to get on with brexit. >> what they don't seem to understand is that millions of people voted in good faith over three years ago.
it was the biggest exercise in democracy our country has ever seen. and they always forget one group of voters. that is the millions who voted not to leave the eu, but now completely respect the result and want us to get on with brexit. guy: the chancellor of the exchequer. bloomberg anchor anna edwards is there for us. we've seen the first big set piece event of the conference, but is this a tory party that feels knighted? -- that feels united? anna: good afternoon to you, diane vonnie. it isn't -- guy and vonnie. it isn't a tory party united. the government has fallen out with a lot of numbers of the tory party. some mps leaving the party to become independent, or at least falling out with the way it is being run. javide heard from sajid
there, with deeply of why it is -- with the plea of why it is important to respect the referendum, he talked about the preparations in place for no deal. he also went on to talk about some of the things that maybe the bloomberg audience cares a little be about, from spending to government policy to increasing the living wage and other infrastructure. the prime minister, apparently, in his spare time, makes and paints buses. so there is the structure on interest -- so there is the focus on infrastructure investment. want to get brexit done. the trouble is the media and investors are distracted by scandals in boris's private life and the efforts being put together in westminster to discover his plan. vonnie: javid also said no one knows the exact cost of no deal. in westminster, opposition parties are trying to prevent no deal. how is that going?
anna: indeed. we've seen in westminster the opposition parties and the rebels i talked about, the rebel group of tory mps that have been rebelling against the leadership, try to forge some kind of path ahead. we spoke to the former attorney general dominic grieve, one of t,ose who wrote the benn ac the act that many commentators think prevents no deal from taking place on october 31. we asked him if a government of national unity could be possible. could those tory rebels ever continence having jeremy corbyn in number 10 as prime minister in order to deliver that government of national unity and prevent a no deal brexit in the future? this is what he had to say. >> it is very much dependent on whether the labour party leadership are prepared to back it and to accept the reality, which is it cannot be led by the leader of the opposition. it is not a criticism of him. agenda, highly partisan
which he is entitled to hold, which is, in my view, leading a government of national unity. anna: dominic grieve speaking as one of those rebel mps who's been trying to work with opposition leaders to scuttle the plans to deliver brexit, deal or no deal, on october 31, certainly to stop the no deal element of it. clearly, they don't see i to i on everything. what you heard there, the ash they don't see -- they don't ee eye to eye on everything. what you heard there, they clearly do not see any corbyn government ahead. boris johnson has called for an election. we will probably hear more from him later this week when he speaks at conference. he's been pushing for a general election now for some time. what he perhaps didn't count on is that the opposition party won't give that to him. he needs the support of the opposition party to try and get
that general election through. perhaps the government is considering ways to try and avoid some of that. certainly he wants to push for a general election. a lot of the messaging, the pledges, the giveaways, invest in the health service, in the police, in schools, all of it sounds like the run-up to a general election. everyone expects one to come soon. the opposition parties want to make sure that no deal is firmly off the table before they give the ok for that election to take place. guy: thank you very much indeed. easy week for anna as we continue to monitor what is happening at the conservative party conference. anna edwards will be reporting on all that for us. vonnie: meantime in hong kong, protests are intensifying. this weekend saw one of the most violent in four months, just before tomorrow's holiday marking the 70th anniversary of communist rule in china. our correspondent stephen engle has more. stephen: this is the epicenter of what were some of the more
violent protests in the 17th consecutive weekend of unrest in central hong kong. police firing tear gas. they used a water cannon with blue dye to help identify some of the more hard-core protesters. they fired rubber bullets and beanbags against the advancing protesters who tried to storm the legislative council building and the government offices behind me. they were throwing molotov cocktails, as well as any projectiles they could find, including bricks. they also set up a barricade, several barricades, and let them on fire, including at the entrance to one of the subway stations in the next-door neighborhood. it was a violent evening. this morning it was more calm. the streets were clear. however, it could be described as a tense calm because october 1, tuesday, is a public holiday. it is the national day in china, the celebration of the 70th anniversary of the founding of the people's republic of china. protest organizers say they want
to rally again here in hong kong. thater, police have banned rally, and organizers are appealing that band. nevertheless, the last time we police, the the protesters showed up anyway. they say it is rally, rinse, repeat. stephen engle, bloomberg news, hong kong. vonnie: our thanks to bloomberg's stephen engle. coming up, fannie and freddie now allowed to boost their billion.5 we will discuss the next step in the trump administration's push to free the mortgage giants from government control. this is bloomberg. ♪
♪ vonnie: live from new york, i'm vonnie quinn. guy: from london, i'm guy johnson. this is "bloomberg markets." vonnie: time now for our stock of the hour. credit suisse shares heading higher today before a board decision on who will take the blame for the bank's spying scandal. kailey leinz is here with more. it is almost a transparent game of who is going to be the scapegoat. kailey: it is really interesting. the board is meeting today to decide exactly who is to blame, how they will get punished. that decision is excited to be released overnight. of course, the scandal has played out quite quickly over the past 10 days. a senior banker who was leaving for ubs, they were scared he , and thish clients all started with an arrest made because he made a claim. senior-level involved is in -- senior-level executives are
involved in this. the stock is higher today because the board is set to be backing the ceo. several high liver shareholders -- several high-level shareholders expressed support for him, saying it would be really imaging for the stock and shareholders if there were some kind of management shakeup from this because thiame has led a very successful turnaround, reordering thing -- turn around, reorienting the bank. it really has been outperforming its banking peers, so maybe the chief executive will be staying on out of this, giving some optimism to the market. vonnie: kailey leinz with our stock of the hour, credit suisse. thank you. we have some breaking news. guy: we certainly do. it is kind of confirmation of what we already knew. wework is to file a request to withdraw its ipo prospects. we already knew this was going to happen. this is the confirmation that
that ipo is, for now, not going to happen. co-ceos are the saying the ipo is being postponed to focus on the "core business." i'm not sure we knew that this was actually going to happen, that the whole ipo prospectus would be withdrawn. it is a pretty substantial move. we know that the two co-ceo's were appointed after adam neumann stepped down. there has been a whole raft of changes over the last couple of weeks, mostly coming from pressure from the likes of softbank, which owned a massive chunk. both adam neumann himself owned a massive chunk of wework, said the difficulty was to get him to change his voting shares so that he would have less than a majority of the voting power. that happened just at the end of last week. he went from having the power of 10 shares per share to having only the power of three shares per share.
that is very likely what made this possible. guy: absolutely, but i think given the valuation difficulty the company was clearly having, with going from the mid 40's and high 40's down to around 10, clearly this was a business struggling to find a valuation. as you say, that has resulted in significant management changes. we've now got two bosses. it has led to a suspension of new leases, we understand. this was a company trying to refocus on the nuts and bolts of his business and understand how to generate value and produce a pastor profitability. i don't think anybody saw the ipo happening anytime soon. i'm not sure from a regulatory point of view how long the current filing would have been relevant for. i think formally, they have no withdrawn it, so that puts that to bed, but nevertheless, there was an expectation that this one was likely to not happen, at least in the near term. vonnie: wework saying, "we have every intention to operate company."a public
i think it was really just known on the street that there was so much difficulty, it was going to be impossible to find some kind of valuation. it was almost becoming a joke at this point. let's bring on someone who has been following the story from the beginning, sonali basak. the crash and burn is complete. sonali: at least for right now. just because they've withdrawn their ipo prospectus doesn't mean they don't need to raise .oney the $6 billion credit line they were in talks for is probably not likely. they were talking with goldman sachs and softbank to get another injection of equity. "the financial times" has said that could be more than $1 billion from softbank. at the same time, the clock is ticking for softbank as well because we are looking to see whether they are going to have some sort of write down of the stake. guy: what does this mean in terms of the way the business now?tes for
regardless of the financing story, regardless of where the ipo is going, what do we know about how this company is going to change tack? clearly a pastor profitability, to get gross margins higher. all of these stories need to get resolved. how is that going to manifest itself in the way that we were up operates -- that wework operates? sonali: we are not going to see this rapid growth we have seen the last couple of years. obviously we have seen them grow a lot slower, which means by the time they hold any sort of ipo, they are going to look like a much different company. let's see also whether the new ceos that are in leadership right now, whether those are the permanent ceos or whether there will be somebody else that comes in to help lead this company into the next phase. the other thing i have to mention is there is wework, and the story as it stands on its own, but a whole bunch of other up.rk competitors coming how they raise more financing will be really interesting, how they decide to grow and compete changework, will also
how investors look at wework moving forward. vonnie: let's recap. wework is recalling its ipo prospectus. this is after i'm sure they realize they didn't have much of an option. they are saying in a statement, "we have decided to postpone our ipo to focus on our core business, the fundamentals of which remain strong. we had every intention to operate wework as a public company, and look forward to visiting the public equity markets in the future." no timeline there. will the street take wework seriously again? what will it take for that to happen? sonali: it will take a lot of turning around. if they do decide to ipo next year, the company will look so wildly different from what it looks like now. a lot of these companies like to focus on the ceo, and adam neumann, there was some heat around him. up until a couple of weeks ago, we had bankers standing by him, even in the light of rising
pension. so the company will look different, but again, let's see how they look competitively next year if they do decide ipo. in the near term, softbank, if they write down the stakes, let's put this into perspective. jeffries had to write down the stake of more than $100 billion on a less than 1% stake. can you imagine softbank, with more than 39% stake, how much they may have to write down in the coming weeks? guy: it is going to feel quite painful. i think that is probably an understatement. let's talk about the choices the company had. did it have any choice but to withdraw this ipo? we kind of joke about the fact they didn't really have any options. did they have any options? was this the only one? itself had a lot of issues the past weeks, but look at how the market has perceived all of these ipo's. certainly the ipo's that have been technology companies, but not quite. smile direct club come up --
smile direct club, peloton, any service company that had some other hardware component that was not quite techy, they did have a rough time in opening market. so wework was already facing public evaluation, but investors are already coming down harder on these companies that don't have fast growth tech company profiles behind them. on top of that, you did have, as vonnie mentioned, the issue of voting shares, which is lesser now with wework, but there's two is a disparity. vonnie: thank you for continuing to follow the story. again, a bit of a bombshell statement here from the new co-ceos of wework, delaying the ipo to some future date unspecified. fhsareasury and the jointly announced this morning that fannie mae and freddie mac will be able to boost their $5 billion respectively
to protect against potential losses. this is a key step in the trump administration's push to free the mortgage giants from u.s. control. how much of a sigh of relief will hedge funds be breathing today, jesse, and what is the? path forward jesse -- what is the path forward? step: it is an important because they were never going to get their hands on the money oft was the massive billions dollars in profits that fannie and freddie were making. that has all been required to go to the treasury. every quarterly profit that company makes since 2012, they've been required to send that to the treasury. these companies need more capital. in their current state, they are in no position to be able to endure losses. but the hedge funds would like some of the company's profits, their argument the and that we are big shareholders in these
companies. we should be getting the u.s. government. guy: we are almost a year away from the election. how much of the change in these businesses will happen by then? will will the democrats treat them differently? jesse: democrats will absolutely treat them differently. it is hard to see elizabeth warren or even joe biden pursuing a policy that will enrich hedge funds. you would think with liz warren, she would do anything to potentially not enrich hedge funds. democrats think that these companies should have strong affordable housing mandates, be helping lower income borrowers get homes. the current mnuchin treasury department, they are not opposed to that, but they are not as vocal in pushing that as a motive. canherman nguyen and the
get these out of federal controlled by the election, i think it is pretty unlikely. i think mnuchin would tell you himself it is pretty unlikely. there is so much that has to happen besides allowing them to build up their capital buffers to get to that point. vonnie: i spoke with the fhfa director earlier this month and asked him about when fannie and freddie would need to raise private capital. let's have a listen to his answer. >> the first thing i think we need to do is start to retake capital, and we will have to have a number of months of retaining earnings to show the track record and that cushion before they can go to market. again, emphasizing process driven and calendar driven, the earliest you could see going to market would be fourth-quarter 2020, but 2021 is more likely the case. i do want to emphasize, a lot of things need to be done before we can get to that point. vonnie: it sounds like we still have a long ways to go, maybe even 2021 before this private
capital raised. waterlly throwing cap up ash basically throwing water on the whole thing, saying capital is impossible to raise. jesse: there's optimism that the trump administration wants to do things with these companies. we kind of had a decade-long process of purgatory, and these companies, they are so volatile, you could even argue that a strong wind can push them around. every utterance that comes out of a trump administration official's mouth about the urgency, the desire to get them out of federal control, you routinely have big days where the stocks are up just based on those comments. i looked a few minutes ago, the stock was up. it is a symbolic sign that they are making progress, which is important to people. guy: we will leave it there. thanks, as ever, for your time. bloomberg's jesse westbrook
♪ talk about the news we've had over the last few minutes and just recap what we've got from wework. the company is formally withdrawing its ipo prospectus, i.e. formally withdrawing its ipo.egistration for an for co-ceos saying, "we've pocided to postpone our i to focus on our core business, the fundamentals of which remain strong." this is bloomberg. ♪
european trading day. from london, i'm guy johnson. vonnie: in new york, i'm vonnie quinn. this is the european close on "bloomberg markets." guy: in european markets, it is the last day of the quarter and the month. this is the picture we find ourselves with over these last three months, and i think it is absolutely fascinating. july, nothing really happening. just drifting sideways, very tight range. then everything blows up in august. we get negative send it -- we get -70 on the german ten-year. equities get absolutely battered. then we bounce back. as we caught rotation within we would -- within the market, nevertheless, in aggregate, nothing has really changed. risk assets have held up to a lot of bad news. let's look at where we are today and figure out what the picture looks like. we have got holiday thin trading. that is certainly