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tv   Bloomberg Markets Americas  Bloomberg  February 19, 2020 1:30pm-2:00pm EST

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1912. political experts say an influx of new residents could challenge the president's hold on the state. one of the most important counties is maricopa, which includes phoenix. a senior pentagon official who reportedly warned the defense department against withholding aid to ukraine is stepping down. he certified lasted that the defense department had seen enough anticorruption progress ukraine --ine -- in he said he was leaving at the president's request. the administration's delight in releasing that aid was central to the president's impeachment. standing outside his family home in chicago, rob mccoy of fitch thankedlagojevich president. he was released yesterday after
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serving eight years of a 14 year sentence for corruption. he was convicted in 2011 of trying to auction off the u.s. senate seat left vacant when barack obama won the presidency. about 500 passengers left the cruise ship diamond princess today. the quarantine failed to stop the spread of the coronavirus among passengers and crew. 79 more cases were announced, bringing the total to 621. japan's government has been criticized over its decision to keep people on the ship, which some experts have called a perfect virus incubator. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪
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shery: live from bloomberg headquarters, i'm sherry on. >> come to limburg markets. here are the top stories we are following. markets rebounding as investors look past fears of the coronavirus. more is considering methods to prop up its economy. what it all means for central banks. set totral reserve release and just half an hour. one key metric hitting a 40 year high as companies look to lock in lower rates for longer. let's get you started with a quick check of the markets. we are seeing session highs.
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with tech and energy leading. once again, record highs. we are seeing oil at a high. sanctions,have the to mention rising tensions in libya. take a look at some of the philadelphia semiconductor index. it had quite a week when it comes to those chipmakers. the miss of apple and those supply chains disruptions. we are seeing those measures coming out of china, including, perhaps, those bailouts for hard-hit industries. this index at a record high. john: a solid start to the year when it comes to construction activity.
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of january reached the highest level since 2007. there are a number of factors behind this. mild weather was one. however you slice it, and encouraging sign for the economy at a time when there have been concerns about sluggers business investment. -- sluggish business investment. the imf reiterating it sees a rebound in global growth this year. the optimism coming as china considering further measures to shield its economy, including cash infusions and bailouts for the airline industry. joining us with the latest is sophie. she has in hong kong. let's talk more about what the imf is saying and what could potentially derail their outlook. sophie: a further spread of the coronavirus or renew trade
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tensions, either of those could derail global growth. the imf sticking to the estimate they made back beforeary, which was travel was halted in wuhan. suffice to say, containment efforts are key to all of this. the imf expects that following the disruption to the economy there will be a. of stronger catch-up growth has this experience -- as they experienced in the wake of the sars outbreak. they come under further pressure if employers face difficulties paying wages. shery: despite all of this beijing keeps insisting they will be able to achieve their economic goals. what new measures everything? sophie: we are seeing potential plans to boost cash injections. we have seen the parties say
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they will boost investments. when it comes to h&h group, hit shift to focus on aviation. that has seemingly backfire. it is in talks with the government for a takeover as it has been unable to meet its financial obligations due to the pressure from the coronavirus outbreak, which has hampered airline activity. continuethese moves and we don't necessarily see signs of improvement for the economy, is it possible that we could continue to hear these kinds of announcements coming out of china? sophie: that is the expectation. potential outlook from chinese policymakers that was meant to be published in march.
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he will have to access the impact. , which isn hubei china's fourth biggest manufacturing hub for autos, we are seeing that knock on effect from parts shortages. nissan may be bracing for potential destruction of its plants. -- disruption of its plants. --plants in that prominent the province stay off, it could cause nissan to move production to japan. shery: thank you. now the fallout from the coronavirus is just one of the things the fed will be watching in the coming months. it releases its minutes at the top of the hour. it seems to be the balance sheet that has investors talking. ian lyngen here.
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there is expectation that we will get a meaningful debate on the virus, but i guess the key question is how bad does the virus have to turn out to be in order for the fed to jump into action? ian: i think one of the key questions is, you're not going to know how bad the virus is until after the fact. my concern is this. of uncertainty in terms of what the virus is doing, as well as the impact on the economy. other this for -- through the multinationals, uncertainty, hasn't really run its course. it is the point where that gets extreme enough to prompt the fed into action is what the market is waiting for. shery: we have seen the impact on multinationals. which is prompted central banks to act in the past, right? ian: it is consistent with what we saw during 2018. we saw equities selloff because
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of the trade war. expect volatility, which tightened conditions. even in 2019 the fed preemptively cut rates even further onto the notion that the trade war was going to extend. let us not forget that the trade war was still wonder -- underway on top of what is going on with the coronavirus. that has been pushed aside because we get a phase i deal. how much more of that preemptive narrative do have left? ian: at this point, once they start cutting they really have to cut. by that i mean, we are not going point cut. we will see the fed hold office long as they possibly can and a 50 basisdeliver point cut. three of them in a row gets us to an hundred 50, give or take. in key we will be back on the table.
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will be back on the table. john: you talked about those risks the fed is watching. buildingntion that permits data for the month of january, what is the markets general take on the health of the u.s. economy? is: overall the market interpreting the economy as being on solid footing, with a somewhat downward bias. pullbackoned about the in some business spending. the flipside of that is the fed did deliver that 75 basis points of aggregate rate cuts in the 2019. there is a lagged of monetary policy. the fed has made a very big wager that there preemptive weight cuts -- rate cuts will be enough to avoid a recession. the problem is that was before the coronavirus.
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now that we have the coronavirus, the market is the twoat data in distinct periods. it is easy to look at the housing data and say hey, it is all pre-virus. we are not even to the post virus. . -- virus period. terms oft about in treasuries, generally speaking? what is worth watching in the bond market? ian: for treasuries we are expecting our range, it will be a relatively low range. 1.75% in the 10 year yields. that is a dramatically different backdrop than one might expected even 18 months ago. the reality is that the next move from the fed is going to be a rate cut. and as we listen to incoming commentary from fed policy
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officials, we will be trying to skew the odds of whether that is that you want event, q2 event, or later this year. shery: it seems an age of the focus seems to be moving to the fiscal side of things. --g kong, south korea, japan how long will the endless stay on the fed here in the u.s.? if we use the financial crisis as a guide, what we saw during that. washat period is the fed quick to ease monetary policy. more from the fiscal side. it is obviously an election year. that complicates the scenario. even overseas there has been a push to see more on the fiscal side. how much can they do? and what is the political appetite? it is a big unknown.
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they're going to overpromise, --er liver, both in europe under deliver, both in europe and in the u.s. john: before we go, and terms of the messaging from the fed, are you going to be watching for in the communication? the notion that the fed is going to stay on hold and wait and see until there is a material reassessment of the outlook will be reiterated over the course of the next two or three weeks. that is the company line. when we start to see phrases like eminent downward risks or trying to prevent something -- whether it is preemptive or fine tuning -- that is when i would start to get a bit more concerned. this will be an event over the next several weeks, not months. en.: helpful insight, -- ian.
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thank you. on key measure of risk rising to a 40 year high. we will have that metric next. this is bloomberg. ♪
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♪ this is bloomberg markets. average duration of corporate debt has risen to the highest level since the 1970's. this is companies lock-in record low borrowing costs. bringing player. number credit report. pay to have you with us. was this inevitable?
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claire: we are in a world of record low yields. it makes sense that these companies would say, i want to issue debt as long as possible. if you are an investor, a bond is going to offer you a little more yield than something like the five year range. are you willing to accept those raider risks of ending money for 30 years instead of just five or 10? you discoverd about the appetite, where it is coming from? are we talking about pension funds? whore: when you think about buys these bonds, the traditional buyers are those pensions, those insurers. need to match a their assets with liabilities. we talk to investors that said, i have no option but to look at these longer dated securities. that is companies saying i'm
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going to bring these longer yelled bonds. have: the downside is, we seen craft tines being cut to junk. is the average borrowing time now? claire: when you look across the index, we are at an average of more than eight years. that has been steadily taking up over the past few years. one of my favorite stories is jcpenney. back in the 1990's that came out, they were investment-grade. they did a 100 year bond. john: just to bring it back to the fed, which we were talking about earlier. when we are talking about these long dated bonds, could they be a wildcard? claire: definitely. we don't really know where rates are going to go. one of the big risks of these
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products is when you are looking at a longer duration bond, that has a lot more interest rate risk. a few years from now rates are higher, those bonds can get whacked. a 40 year bond, if interest rates rise by 1% you could lose 20 points on that bond. john: interesting story. bloomberg claire boston. we are going to take a break. coming up, acting in solidarity. we will be live from ontario where protests have altered roadways as environmental activist fight the construction of a gas pipeline. this is bloomberg. ♪
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♪ this is "etf iq." -- bloomberg markets. shery: a look at some of the biggest business stories. another sign of a strong real
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estate market in the u.s.. housing stocks pulled back from a 13 year high, but remained at a healthy level in january. the rate under 1.6 million units. shares of allied financial fell the most in almost six years. agreed to by subprime lender card works. allied has been seeking to diversify beyond auto lending. dish network posted better-than-expected sales in the fourth quarter. the company is boosting confidence taken offset subscriber lawsuits. -- losses. dishes acquiring assets that would let it compete as a wireless carrier. john: justin trudeau calling for
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patients as indigenous rights protest that have brought rail traffic to a halt across the country drag on. joining us for an underground effective -- and on the ground perspective is heather wright. what has it been like on the ground? heather: it is day 13 of the block here. a small group of protesters have been camped out just south of the tracks here. solitary --nding in solidarity with the first nation community in british columbia who are protesting the construction of a national gas pipeline. this blockade, it started on february 6. they have not moved from this site sense. this has halted rail service for much of the company. the corridor from toronto to
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montreal, it has been shut down to freight and passengers. there is now a lot of pressure being put on the canadian government, on justin trudeau to bring these blockades to a stop. there are a number of goods that travel along these rail lines. there are communities in the eastern canada that are growing concerned about not having chlorine to treat the drinking water. the community here, the people here have been steadfast in that they do not have plans to leave this area. they are standing strong and hoping to get high number of demands, not only related to the construction of this gas pipeline, but also other things that they are hoping, other issues they are hoping the federal government can address. ,hery: prime minister trudeau how much has he been able to do
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so far? he did meet yesterday with some of the opposition leaders. noticeably absent was andrew scheer. trudeau said he had disqualify himself from participating because of remarks made yesterday. yesterday,hat met they talked a little bit about the need for dialogue. this is a very sensitive issue. the issue of indigenous rights here in canada was back centuries. -- goes back centuries. that is what we are seeing leaders from a lot of the parties trying to navigate through. they also have to balance that with the need to get things moving again. there is growing concern about what is not being shipped along these rail lines. we are also seeing laos starting. layoffs starting.
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that we heard from viarail 1000 people will be temporarily laid off. even more numbers for you. as of yesterday there were over 500 trains that had been canceled, affecting 100. --re is growing frustration 100. heather, thank you very much. of course, for bloomberg users you can interact with the charts. from toronto and new york, this is bloomberg. ♪ when it comes to using data,
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design your own data with xfinity mobile. it's wireless reimagined. simple. easy. awesome. mark: i am mark crumpton with "first word" news. julian assange's lawyers told a london court there will provide evidence that president trump was prepared to offer the wikileaks founder a pardon if
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you agree to say that russia was not involved in leaking democratic national committee emails during the 2016 presidential election campaign. assange is fighting extradition to the united states on spying charges. emails embarrassing for the democrats and hillary clinton's presidential campaign work hacked before being published by wikileaks in 2016. democratic presidential candidate michael bloomberg faces his rivals in person for the first time tonight in las vegas. he will take part in his first debate could the latest national poll has bloomberg in second place with 19%. bernie sanders leads the way with 31%. bloomberg is the founder and majority owner of bloomberg lp, the parent company of bloomberg news. the united nations security council received an update on the humanitarian situation in syria, and the news was not good. >> we are alarmed


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