tv Whatd You Miss Bloomberg February 19, 2020 4:00pm-5:00pm EST
another record on the s&p 500. another record on the nasdaq. screen, look across the pre-much everything -- there is there is not a sector down. those, they are not really taking too much of a hit. remembers important to equity markets are little bit off their highs. these are substantial gains, bouncing straight back. romaine: we talk about a lot of the chipmakers, the analog devices. they are all significantly higher on the day. tesla hope another 7%. virgin galactic, up another 3%. joe: are you serious? romaine: put your retirement fund into that. financial, something going on there. down about 12%. we have a little bit of breaking news from the imf saying that
argentina's debt levels are unsustainable. this is after the review we had been expecting. we will dig a little deeper into any and try to let you know impact from that decision. let's dive a little deeper into the action with our markets reporters from equities want. watching?hat are you abigail: i have volatility on the mind. the vix maybe receiving the panic index. the skew index is an interesting to. it could be hedging against a big move higher for stocks or could be an early look at volatility. in 2018 in the summer when the vix was smooth -- was snoozing, that is shown in yellow. part over the last year, both the vix and the skew index down. we see the skew index going back
to levels seen in 2018. that is ahead of the pullback we had last month around the coronavirus tragedy. take a look at this. we have a big divergence between the skew index and the vix. something worth keeping in mind. taylor: i wanted to take a look at the stocks index. it has been outperforming the general market. some of this is based on of the stimulus measures we are hearing from china to support the economy. you come and take a look at this chart i am showing. backs forward p/e ratios to trading 20 times relative to the s&p 500. we know within the stocks index, there is so much cyclicality. china coming out and saying they could provide some additional measures can has the potential to give some of these companies
a big boost in the market. i am looking at oil higher on the day. it is the supply side that is driving the rally that is crucial. let's start from venezuela were sanctions could meet the supply lower. in libya is where the story is key. one millionby barrels. those barrels were supposed to come back onto the market on the p stocks. shock significant supply for the opec producers. thank you. still with us, katie gry feld and brent judy. brent, i want to talk about where you like to put money or where you are interested in right now. you mentioned e.m. and small caps. classes thatasset
have not worked in a long time even though on paper they may be cheap. why this time will they be different and offer some meaningful outperformance is? brent: people have been consistently worried since the trade war was launched and we had the trade -- we had the fears that went away. if you pick your favorite and of the cycle indicator, take the treasury and the 10 minus two spread and you overly growth versus value, u.s. large purses u.s. small, the s&p versus em, they trade off the end of the cycle. people have been worried a recession was coming. we believe those lai's will turn back up. we believe the cycle will continue with economic growth strengthening. you will to be on the others of the trade that was the trade of the past.
a shift to more offensive as the cycle does move back higher and people stop fearing there is a recession lying in the next two days. romaine: the sense we are heading for a recession, that seems to be off the table. you couldis a sense even see a strengthening of the economy. can that happen or is the market going to react to that in the same sense if the fed takes that as a signal to move rates higher? katie: to your point that it seems most people have accepted we are not headed for a recession, that is broadly what i hear as well. there was some chatter around when the yield curve started to flatten again that perhaps there would be a new wave of recession chatter, but i think there is widespread acceptance that curve is being driven by global forces. that is not a good indicator for where the u.s. economy is. if you look at measures of the u.s. economy, i'm thinking about
the city economic surprise index. at least when i talk to people about the u.s. economy, there is still a good sense of bullishness. fed cut pricing has not moved all that much. joe: you point out that a lot of this is being driven by a global condition. brent, you are optimistic on global markets. what is your story or what is your explanation for why there is this persistent bid in the long end of the curve and once again, inversion chatter is heating up? brent: i agree there is the commentary there is not a recession coming. i think investors have been chicken little. they want to see it happen. the market trades off of what is happening today.
i do think there is a little bit of belief of, let's wait to see if it happens. the thing katie also mentioned was about the fed. the fed is not going to raise rates in 2020. the bar is high in the future to do so. when you add those things together, i think global growth does we accelerate. that pushes people towards something that is more conducive to rising economic growth. stays, therehe fed is still this talk we could see inflation and that this could be the one thing the market is not priced for at the moment. are you confident that if we do start to see a really -- a re-acceleration or see inflation creep up that the fed is comfortable enough wedding that run for a bit longer before it moves? brent: absolutely.
i think the shift of the fed is complete. from a cyclical basis, they are not interested in cutting off the economic cycle. the fed used to worry about cutting off inflation. they would do that every time even if it meant sacrificing future economic growth. the fed believes they can sacrifice or risk future inflation to try to get more economic growth. inhink inflation is a risk 2020. the market is not priced for that kid -- for that. metric has a different now. it was at two and a half percent. i think the fed is not going to tighten in 2020. 2021, the bar is still pretty high. if they do tighten, that will end the cycle. the cycle continues as does the market. joe: we got the fed minutes today. it did not have a huge impact, but confirming no indication of
any inclination to hike. there was some talk about the balance sheet and how they are addressing the repo market. does it look like they are making progress on was anythino write home about, it was the balance sheet comments. that is where a lot of focus is going to be with the fed supposedly on the sidelines in 2020. we know they have committed to keep buying bills through the summer. i have been talking with a lot of people. what is it look like on the tail end? q. week, not q. week, that has been discussed to death. romaine: the market has not really thrown a tantrum. katie: in has not thrown it attention yet it has been debated whether or not that actually that has an impact on asset prices. the psychological impact is huge. even though it has been well
telegraphed, until we see it, it will be impossible to know what effect it will have. joe: what is more important, the re-expansion of the balance sheet or powell's comments in october about the willingness or the eagerness to see realized inflation before they ever think basicallyng again, recalibrating the reaction function? brent: i think the comments you've just mentioned are the important thing. they may have learned a little bit of a lesson when they tightened, now the fed listens to the market. that is when they cut they were expecting to hike. i think that as a backdrop the fed is going to operate under until inflation does get far enough above the 2%. think the bar is still pretty high. that is why you are seeing the
how u.s. stocks closed today. thanks and chipmakers leave the market with a fresh record high. and lowth, wage growth mortgage rates continue to fuel home construction and if the u.s. as applications to build jump to the highest since 2007. beijing plans to seize control of age in a group. rocket stocks. the frenzy around virgin .alactic echoing tesla's around the reasons for the space really could bring it down to earth. joe: let's dive deeper into some of the economic data after a warm january housing start. it was not all bad news for the housing market. it was very good as permits jumped to their highest level since 2007.
housing data is always idiosyncratic. the overall trend, it looks really solid. >> i think if you look at the trend in permits, we months -- d nine consecutive months of increases on housing permits. the data is not very much impacted by weather and pardons -- weather patterns. joe: that is pretty clean measure of at least some sort of optimism industry space. >> the accommodative policies, slow interest rates. the severe lack of existing inventories is really boosting housing prospects. the question is always whether it will last or not. this is a very rate sensitive sector of the economy.
ratesl continue to see hovering around the same levels and then it will be positive for that sector. romaine: we are talking about the fed. we did get the minutes today. they kind of told us what they thought they would tell us. of whatevernse effect the fed is having on the economy that that is enough to sustain the housing market? >> that is what the fed things. they think the insurance cuts they provided last year will probably be enough for the theomy to withstand all of shocks, the virus and other things like that. joe: housing is a crucial component of the economy. when people buy a house, they buy furniture and laundry. positivel kinds of defects.
-- positive effects. this undermined but a lot of people say rate cuts do not do anything? that was a mantra we heard a lot over the last couple years. looks like we can point to an area in its the fed rate cuts contribute to a major aspect of the economy. >> i think it does make a lot of sense. this is the cornerstone of the whole theory. housing and other consumer autos areoducts like very rate sensitive. people do buy stuff when interest rates are low. that is helping the economy. the question is whether this tug-of-war between exile janessa shocks and strong fundamentals and who will win in the end. romaine: what about this idea of inflation? we keep coming back to it. we got the price data earlier today.
did you pay attention to that? >> we do pay attention to everything. really boosted by one special sector, trade margins. component,y volatile which goes up and down. it was up 10% today. do not look at month over month numbers. look at the trend. the trend is not going to accelerate that much. virus accelerated the strong dollar dynamic. i do not think we will see a flareup in inflation or anything. joe: is there anything to write home about in your view regarding the minutes today? i think it was an interesting set of minutes even though they were slightly outdated because of the virus. it tells us the fed are monitoring the risk. they mentioned the risk eight times in the minutes even though they only had one week of trying
to assess the impact. romaine: i went to bring you some breaking news. this is on a ceo change at ubs. being hamer is apparently named ceo of ubs. he currently is the ceo of ing. apparently going to be making the move from amsterdam to zurich. coming up on this program, a new arrival. democrats taking the stage in las vegas. but with the new target. we are going to discuss the latest. you're watching bloomberg. ♪
joe: the ninth democratic presidential debate takes place in nevada tonight. for the first time, our owner, michael bloomberg will be on the stage with his fellow candidates. although he is not competing in the state, he has been rising in the national polls. here is kevin cirilli. we all know him pretty well here at bloomberg, but for many americans watching the debate, this may be their first chance to see the candidate by many measures a second or third in a lot of the polls. the first time former new york city mayor michael bloomberg will make his debut. i am told by sources connected to the bernie sanders campaign that this is a welcome opportunity you for the democratic front-runner. bernie sanders can draw a contrast against bloomberg.
it is also an opportunity i am told i sources close to joe budden's campaign for him to cast himself as an alternative in what could be a contentious dynamic between bloomberg and sanders. senators look up for amy klobuchar and elizabeth warren. the klobuchar campaign feeling emboldened following her strong showing in new hampshire. former south bend mayor pete buttigieg is also feeling momentum following his showing in iowa and new hampshire. romaine: is this is going to be folks sniping at each other about their personalities or are we going to hear something substantive about their policy proposals? kevin: if you look at the track record of the past week or so, we will notice the political attacks against bloomberg have sharpened, not just from president trump but also from his democratic rivals. i am told that is going to
continue. are not competing here in nevada or south carolina. beenloomberg campaign has banking that super tuesday is going to be where they were able -- where they will be able to get most of their delegates. you talk to sources connected to buttigieg and biden and sanders, they feel every race counts. joe: go back to the calculus for sanders. we heard from the bloomberg campaign that this is a two person race. trying to make it seem like it is just bloomberg and sanders even though there are clearly other competitors. is that also the race the sanders campaign once? the sanders want the final one-to-one set up of the socialist democratic-socialist versus the wall street capitalist? upon my reporting, i'm hard-pressed to find anyone
outside of the bloomberg campaign who views this as a two-person race. poll came outole this afternoon that showed in terms of likely democratic voters, the sanders campaign is viewed as the most electable candidate amongst all of the democratic candidates. from the sanders campaign perspective, they feel they have the momentum as similar to the buttigieg campaign. they feel they have that momentum coming up. i do not see this field winnowing until at least after super tuesday given at least -- given the sense of unpredictability in the race. romaine: the last time you were covering a debate, i believe president trump set up shop across the street. where is he at? kevin: president trump has not showed himself inside this room
here at the nbc debate, but he has been tweeting throughout the day. romaine: our thanks to kevin cirilli and michael bloomberg is presidential nomination and he is the founder and owner of the company who owns this network. the new owners of forever 21 planning to keep most of the fashion chains u.s. stores open. will and property property -- they filed for a cup september. the chain opened their emerge in the coming weeks. thannetwork posting better expected sales. the company boosting competence among investors that it can offset subscriber tv losses. this is part of the t-mobile sprint deal where dish is requiring -- is acquiring some of the assets.
the new york area has the highest rate of bank branch closings in the u.s. the number of branches fell 6.8% . that is three times the percentage from the previous year. more consumers are turning to mobile apps. plus, the dense urban area can lead to a duplication of bank branches. that is your business flash. coming up, we are going to talk about the takeover in china. beijing trying to seize control of hna group. this is the biggest depth so far in containing the coronavirus. this is bloomberg. ♪
mark: standing outside his family home in chicago today, former illinois governor rod global image thanked -- rob global eviction thanks president trump. he was released yesterday after serving eight years of a 14 year sentence for corruption. >> we want to express our most profound and everlasting gratitude to president trump. how do you properly think someone who gave you the freedom stolen from you? he didn't have to do this. the republican president. i was a democratic governor.
this does not help his politics. president trump has a kind heart. this is an act of kindness. i believe it is the beginning of the process to turn an injustice into a justice. mark: blue going event was convicted in 2011 of trying to auction off the u.s. senate seat left vacant when barack julian assange's lawyers told a london courtce that president trump was prepared to offer the wikileaks founder a pardon if he agreed to say russia was not involved in leaking democratic national committee emails during the 2016 election campaign. assange is fighting extradition charges to united states on spying charges. hacked before being
published by wikileaks in 2016. the white house calls assange's claim a total lie. a representative from california ripped into pacific gas, saying they put great before -- greed before safety. pg&e's powerlines have been blamed for igniting a series of catastrophic wildfires in recent years that killed nearly 130 people and destroyed thousands of homes. 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. i'm mark crumpton. this is bloomberg. >> let's turn to china and the economy there under strain. beijing planning to take over hna group and sell off its airline assets. the latest example resident x --
president xi jinping's government trying to halt the coronavirus outbreak. hna has been no stranger to a lot of speculation about its debt load. we seem to get word today that china found an answer to deal with it. >> this could be the proverbial straw that broke the camel's back. hna has long-running challenges regarding its liquidity given the acquisition spree that its debt file to as high -- pile to as high at $26 billion. its aviation routes focus has -- roots focus has backfired due to the coronavirus outbreak, adding to hna's financial woes. we will find if the government will follow through with its potential takeover of the hna group, this is the chinese government considers other
mergers and a package. >> this news on hna, could it be the beginning of what the chinese government has to do ultimately to back up industries even beyond the fiscal boost everyone is expecting? >> there is concern over a pickup in corporate debt defaults. i want to highlight the pboc's quarterly monetary policy signaling -- singling out the steel industry when it comes to better access to credit for industries exposed to the coronavirus outbreak. we saw measures announced on wednesday, particularly for employers grappling with labor costs. when it comes to london, -- lend ing, pboc cut its medium-term loan rate. we expect the base rate for corporate loans will fall on thursday. we have economists seeing the
one to five 10 years followe -- falling by five basis points. area of the economy is what is not going on in macao, or what is not going on. macao casinos have been closed since february 5. they are set to reopen with limited operations, including wynn and galaxy. the remaining suspended have to reopen within the next 30 days. thinks -- with the ongoing travel restriction. the pboc warned travelers to hong kong to be prepared for the coronavirus, given hong kong reported a second death in the city. the agency putting in place a level one travel notice for hong kong.
thanks to bloomberg's sophie kamaruddin bringing the latest on the coronavirus. let's look at the role of insurance on managing business interruptions. joining us is a senior litigation shareholder. thank you very much for joining us. when it comes to the financial site, people expect we are going to see more disruptions, more companies exposed to shortages due to chinese supply chains. we got that morning from apple. what are the opportunities businesses have to insure against this kind of risk? what kinds of policies may we see? >> the policies most likely to provide coverage are commercial property insurance policies. most big companies have them. these policies provide coverage
not only for property damages to your own premises, but they provide coverage for lost earnings, called business interruption coverage. it can be a business interruption caused by damage to your own property or damage caused to a supplier or customer, or as a result of a government evacuation or act of a government authority. that is the hook into china and the coronavirus eventually for coverage. >> do we have any sense how much pressure this has put on insurers so far? a couple months ago, people were talking about the potential insurance claims related to the disruption from the hong kong protests. what kind of additional pressure is the coronavirus outbreak putting on insurance? >> it is too early to tell. there are various hurdles to coverage for these losses from
coronavirus. for there tone is be business interruption coverage, there has to be property damage somewhere in the can constitute property damage, but it has to be damage that causes thin other words, on a cruise sp where there are infected passengers and others are quarantined, the virus is present. a good argument that there is property damage to that cruise ship, and that could trigger coverage. likewise, in a factory, if there are infected people, an argument the virus is there. but if there is a precautionary step taken, evacuating where the virus is not found just to be sure it doesn't arrive there, that will be a hard sell for policyholders. insurance companies have various
defenses. they will vigorously pursue them. joe: how big is this market? how prevalent is it? do companies often have this? are there medium and small size businesses more likely to take out this kind of insurance given how catastrophic a description could be? finley: it is very standard in commercial property policy. large and small companies tend to have this coverage built into the standard forms. what is not clear is whether or not there will be an exclusion in the policies for biological arms such as this. as a general matter, most companies do have business interruption coverage. there are a variety of ways it works and a variety of circumstances it applies to.
the key is for businesses to get out their policies and look at them closely and compare the coverage against the situation they are facing in their supply chain or disruption of their own operations. >> when we have these disruptive events, does that increase awareness with regard to folks who did not have policies seeking them out? finley: it could. this is a type of coverage that has been around for a long time. the one area where it will cause new coverage perhaps is for this idea of coverage for losses from pandemics. the policies are not entirely clear as to whether they apply to that situation absent image to physical property. -- damage to physical property. some policies cover losses from illnesses and some don't. i expect this is going to be in
area in like the coronavirus -- in light of the coronavirus which will provide opportunities to sell products and more exclusion in policies that may already provide this coverage. it is something for people to look carefully at when they renew coverage. >> coming up, everyone knows what a tesla looks like on the outside, but do you know what makes elon musk's cars drive? we take a deeper look into what makes electric vehicles tick. this is bloomberg. ♪
through the charts. you are looking at stocks, and more specifically gold miner. >> we're looking at the s&p 500 and gdx. you have been relatively bullish. great call. stocks only seem to go higher. talk to us about your s&p 500 daily chart. you think there could be more upside. >> i am bullish on the s&p. the target is near 35. that is important, because we had a breakout year. 2018 when wen could not get a vote. that is 4% away. the breakout point is a 20% gain. since december 2018. for the term before -- we need m ore than 4% from the last four months. viewat would change this
based on the charts you are looking at? >> we have seen pullbacks before. we need to see a lower high and take it from there. >> what about lower highs on the rsi? there are some of those, which are worrisome the house? -- perhaps? you are bullish. let's look at gold miners. gdx may start to outperform. >> this is the gdx gold miners versus s&p and versus gold at the bottom. these are crazy numbers. gold sold bottom in august. since then, gold is up 36%. gdx up 60%. mind blowing to me. you see this outperformance versus both of them.
both versus the s&p and gold itself. >> would you be more confident if that downtrend of gdx relative to the s&p 500 were to breakout? what does that tiny bottom lead to make you think about upside? the nexthows -- in chart, we will show you why. x> let's look at this gd monthly chart. multi-yearabout a basis. gold already broke out. gold looked just like this last year. a breakout through this level gives us a measured move up to 50. >> that would be a pretty significant move. not quite a double. does history suggest we also need to see gold continue to
climb higher? >> exactly. i think we have a structural shift. gold goes higher. if it continues to go higher, it will pull up individual stocks like gold miners. >> do you think gold will make a new nominal high? >> yes. >> that will help gdx. does that mean we will see the dollar go lower? >> the dollar is very extended. questions recently have these asset classes together. it is the opposite of a market crash where everything goes down. this august markets see -- strongest markets see them moving together. >> coming up on this program, the hottest stock of the year is not testing -- not tesla, but virgin collecting -- galactic. we will talk about this record-setting run and why it ma
>> electric vehicles. a car that runs on batteries they work in lots of different ways. here is one of them. take a tesla, a 300 mile battery pack made up of 6000 lithium-ion batteries. inside the batteries, tiny islands of lithium move from a cathode to the anode. this generates the flow of electrons or electricity. these batteries pack a serious punch. lot of energy and you can reuse them a lot. to prevent the batteries from overheating, it uses a cool liquid that flows between the batteries. then an inverter changes the power to an alternating current.
think of it as a voltage that changes. it produces a rotating magnetic field in the motor, and voila, you have power. the drivetrain distributes that power to the wheel so you can drive your car. any electricity that is used is sent back -- isn't used is sent back to the battery pack. the chevy volt goes 238 miles on charge. miles.la can go 315 the cool part is the battery since low and flat on the bottom of the car. flat on theand bottom of the car. think of it as a skateboard. the u.s. average cost of gasoline is $2.55 per gallon. an electricfor e-gallon. prices can range anywhere from
$30,000 to $180,000. the personalities are big. the cars our sleek. -- are big. the cars are sleek. is it worth it? >> you can catch more of our special program premiering this friday, february 25 at 9:00 p.m. new york time. now there is another high-tech frenzy happening in a bunch of stocks, a lot of them related to space. one of them is virgin galactic. it has seen an insane seven-day move. come into my terminal. i have a chart that shows what is going on. the call options volume has exploded on my chart. that is the white bars going nuts. the yellow line is the market cap surging to $8 billion. for more, i want to bring in bloomberg's justin bachman from dallas. $8 billion company virgin
galactic. what do they have in revenue? what is it? do they have any business yet? justin: no. it is essentially zero revenue. there is no product being delivered, no service being delivered, and no sale. there are no real sales right now. >> new real sales right now, but the -- no real sales right now, but the consensus is people are $250,000 to get a seat on these rockets. is there a sense this will be a viable long-term business and not just some novelty that will flame out? justin: there is that sense. investors are buying the notion this is a new product, an entirely new thing to get in early on. even if virgin galactic is not
longer-term, maybe it is spacex or some other company. ,aybe blowing, and -- boeing airbus. the idea is people will travel in space for work and pleasure. and you have joyriders that want to go into space early. going into space will become a routine thing at some point, so why not get in early on the stocks out there? joe: there is an ostensible travel thing. it is not just like rockets with virgin galactic. what is the exciting aspect of the company that will disrupt the market? justin: investors are looking at the fact that this could be the early stage of what is called hypersonic point to point travel. traveling from new york to singapore, you could do that in notinutes or an hour and
travel all day. granted, nobody is building any vehicle right now that can do that, but if virgin sorts this out and start flying people, they get revenue and it becomes a business, suddenly they have the capital to invest in this other business that is a much larger market. every disney traveler to -- business traveler to asia or the middle east wants to go more quickly. >> i need one of those to get me from the east side to the west side of manhattan. we talk a lot about moon shots. moonshot.little of a when we talk about the competitors here, none of which i believe are public companies, when do we see them enter this space with any real authority? justin: virgin galactic says they are going to fly customers this year at some point.
blue origin, probably next year is the best guess on when they get people flying. if you see that become a thing for a niche product for people with the means to do it, others could do it. spacex has done a deal to allow people to fly on the dragon, an orbital flight much longer than the virgin flight. people will step gingerly. it has to be safe. it has to be cost-effective and repeatable. once you see that tempo, that will drive this or not. joe: bloomberg's justin bachman, thank you. numbers for u.s. jobless claims are out tomorrow at 8:30 a.m. eastern. >> norwegian cruise line and dropbox reporting tomorrow. >bloomberg markets is coming up next in the u.s..
iemi -- emily: welcome to ."loomberg markets we are doing special live coverage of the coronavirus and how it is shaking up industries around the world, including technology. we are bringing you the latest together with our colleagues across asia, some of whom are continuing to work from home for their own safety. bloomberg technology will be back in full force when the urgency of this global outbreak subsides.
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