tv Bloomberg Markets Americas Bloomberg February 26, 2020 10:00am-11:00am EST
york, 3:00 in london. from new york, i am vonnie quinn. i am guy london, johnson. onnie: a lot to get to and a lot of places to begin. home sales for january coming in stronger than estimates. continuingle markets to show strength. the previous month was also revised higher. --gher, after a few days a decline, specifically between 6% and 7%, we are seeing a relief rally today. adding also to tjx, the s&p 500
best performer. yesterday we had a very different morning session then afternoon session, the 10 year yield got down yesterday, it was an all-time low, six basis points off of that now. a definite sense of relief in the treasury market. it was below $50 an hour, back above that now. we will continue to monitor that situation. and all is well in the world, despite the fact that we are going to be tracking the coronavirus in the next two hours. about, a lot talk of stories we need to focus on, european stocks are stabilizing, the u.s. markets opened, and we saw that stocks one positive, drifting by little. is -52.an ten-year but things are looking more positive.
and today we see germany potentially talking about loosening the pursestrings. this laterk about on. and there is talk that maybe some of the spending the market has been anticipating in the upcoming budget may be deferred until later in the year. pretty amazing that we have been speculating for and it may so long, have taken the coronavirus to get them to loosen pursestrings. guest with us joining us in the studio. lisa, what has happened in the last week or two as coronavirus fears have ramped up. have your clients been calling you and saying what should we do? lisa: we've been fortunate, our clients are focused on the long-term. they do want to know the impacts
on global growth, but we've not seen a lot of changes in position just yet. tonie: but it is something take seriously, you have governments around the world taking action, including germany talking about actually moving away from its long and hard held belief that it should hold onto the pursestrings for the coronavirus, not for europe, european growth or potential tariffs but because of this disease. it is something we need to watch carefully. we agree and we think it's a key factor to monitor going forward. i think when you look at the spread of this particular virus, we had good numbers on global growth. they were still at moderate levels, expecting to percent gdp and a little lower elsewhere in developed markets. really the magnitude of the impact is going to be the key.
but really there's a lot of uncertainty. we don't know how the containment efforts will go. and governmental responses could slow down or dampen economic activity. cash andn investor had was looking to invest, would now be the time to put that money back to work in the stock arc it? if you were putting the money back to work, where would you be looking? we are advising investors to stand on their current positions which are slightly overweight on usx these. haveeally this is that we a very supportive economic environment when low interest rates and moderate inflation. and we have been seeing strong trends. corporate earnings had been able to come in than most -- better than most expected. we don't know where the coronavirus will head in terms of global growth or u.s. growth.
right now we are advising clients to maintain their positions as we monitor the situation. are you anticipating a policy response? rate cuts being priced in, how would that change the game? lisa: there's a good likelihood the fed could act, if you look back at the last round of rate cuts, there was a cut. theyhey have indicated will monitor economic conditions. if they see potential signs of concerns, they will be reactive to that. you are telling your clients not to do anything panicky, if you look at the 10 year yields which have hit a record low, that must be affecting how you are thinking about. certainly the bond market
is signaling some potential. if you look at it from the other perspective, in some ways it makes equities more attractive, simply because yields are more unattractive at this point. another reason while right now -- why right now we are advising our clients to stand pat on our u.s. equities. vonnie: lisa, thank you. let's check first word news. >> thank you. president trump is blaming the news media over the coronavirus outbreak. he tweeted that they are making the epidemic look as bad as possible. the president will hold a news conference on the virus at 6:00 new york time. that comes after government health officials warned us that a government -- a coronavirus outbreak could cause serious disruption. and the data shows that china is
struggling to get back to work due to the virus outbreak. there are fears that have curtailed spending. many factories are not working at full capacity due to a lack of staff according to bloomberg economics. china's economy is probably running at 60% capacity as of last week. there is a group in the indian capital -- violence in new delhi is almost the worst it has been in a decade. protesters were demonstrating against the new religion-based citizenship law. there is a look to overhaul u.s. surveillance powers, setting up a messy fight that could unravel political alliances. a house committee opens debate today on the foreign intelligence surveillance act. president trump said the law was misused during the investigation of russian election interference. 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. vonnie: thank. come it -- thank you. president trump is set to speak this evening at 6:00 p.m. on the u.s. response to the coronavirus. we will look at the mixed messages coming from the white house and government health officials. this is bloomberg. ♪
asda. 1999, purchased back in everybody was concerned about it being owned by walmart. is said to be focused on selling a minority -- walmart is selling a minority stake, private equity is front and center in all of this, but it is set to draw interest from private equity businesses. walmart working with an advisor to explore this possible stake sale. asda was purchased back in 1999, and then aldie turns up in the u.k., but it's a lot harder for the big four retailers in the u.k.. they were pushed by walmart to explore a possible deal with another u.k. dealer called sainsbury. the u.k. regulatory authority says that's not going to happen, competition is not going to be good with this deal, and so they
pulled the plug. now it looks like walmart has maybe had enough and is potentially selling a minority stake. vonnie: let's check walmart's shares, they are dropping. the markets more broadly. here's abigail doolittle. on the interesting, wednesday session overall around withlobe, we started off the asian section -- asian sessions being lower in their indexes. the stoxx 600 down once again, it had been flipping higher, down to 6/10 of 1%. all three gains and major averages are up more than 1%. let's put this into the context of the recent selloff. , overallfive day chart volatility with coronavirus fears doing more work on the downside, that seems
to be the message of the stoxx 600. we go to the bloomberg terminal, we are looking at the 200 day moving average. the past test has similar slices, a 9% drop in a short period of time, which has produced downside and volatility. this could be bearish for the stoxx 600, and also the s&p 500. let's take a look at the energy complex over the last five days. huge declines for energy on the -- on the coronavirus and it looks like global demand will be cut into. guy: looking at the credit market, that space for energy is very painful. let's look at it in more details, president trump will brief the public on u.s. efforts to prevent the spread of the virus. that comes after government health officials warned that a coronavirus outbreak in the united states could cause serious disruption. we are joined now by josh wingrove from the white house.
a straightforward question, our health authorities on the white house on the same page? >> i think they're trying to pull it together and be on the same page. you had to cdc and others warning that this could have a notable or severe impact in american daily life if we get an outbreak on u.s. soil. but president trump has been trying to say we have it all under control. we have him returning from india this morning, saying he will get a briefing on this and then give a news conference. that to seeld be on whether the language changes, one ally of his was on tv saying it could be both. we need to prepare to ratchet up our efforts, but so far it has been good but we need to do more. in particular the question that remains is how much money is the u.s. willing to spend on this. congress is at odds with the
president's funding request, he wants to $.5 billion, half of the new money. 8.5 billionnt dollars, all of it new money. vonnie: how did they come to an agreement? do something else suffer because of it? money,here will be new whether it's as much as democrats want, is somewhere in between. not a lot of people are saying no new money. in terms of response, we've not had a major response on the administration in a few weeks. they started funneling flights to certain airports and restricting the admittance of people, foreign nationals, non-americans coming from china. that was the last big card that donald trump laid. all eyes are on him to see if you will take another step. we don't have any indication as to what the steps will be and it's getting more difficult as we see the cases multiply two different countries. upferent factors are adding and you cannot just target
flights from a particular region or people from a particular region. will this be an election issue? it's an election issue because it's a market issue, we've seen the president worried about the markets, he's essentially running on the economy and if the coronavirus or anything else starts getting -- giving the investors a jitter and 401(k)s drop, that will cause dissension as much as anything. that's the real lens through which he is doing it. the administration also says that safety is its number one priority. there is a safety concern, they don't want to have debt -- death thats. soil, but i think as long as it affects the markets it's on donald trump's radars. lazar -- alex azar is testifying now on the budget, he's talking about the funding
and $5 million has been awarded for funding. they don't want people to panic appear in theappear in the u.s.. i think it's generally accepted, service members in korea are now testing positive for the the vi. what else can the administration do, if there is a widespread outbreak in more states than just those that have already been affected? josh: they will have to funnel resources down to local authorities who will have to contain things. supplies, masks and the ability to trace things back. a lot of it will be out of their hands, helping other agencies do the work. josh, we always appreciate it. thank you. trump'sed for president news conference on the coronavirus response.
vonnie: live from new york, i am vonnie quinn. guy: this is bloomberg markets, i am guy johnson. democrats ripped into each other ahead of the south carolina primary, the main target was the frontrunner, bernie sanders. getot only is this a way to donald trump reelected, we have a house to worry about. we have a senate to worry about. >> i like bernie, we came in together, but i don't think this is the best person to lead the ticket. >> i dug in and did the work, and bernie trashed me for it. tracked muchasn't of anything. >> donald trump thinks it would be better if he's president and i do not think so. vladimir putin things that
donald trump should be president and that's why russia is helping you get elected so that you lose to him. remind,i was -- just to mike bloomberg is the owner of bloomberg lc. let's get to south carolina, kevin cirilli is standing by. the verdict on who has the momentum right now coming out of the debate? then: i'm not sure trajectory has changed significantly since last night, senator sanders still poised to make significant gains, in one week today on super tuesday. if you look at the polls in texas and california, he's leading or running neck and neck with joe biden. and last night, in the spin room come i was talking to top advisors from the biden campaign, they say they still feel they are poised to win here in south carolina this weekend. they are hoping that would be a launchpad to launch them into
more momentum on super tuesday. if you are outside of washington, trying to figure out what this means in the long term in the weeks ahead, you can expect some candidates to drop out in the second half of next week. a moren look to see narrowed field on the next beta inge, and more of a contest the next month or so. this is now i fight for 1991 delicate -- a fight for 191 .elicates -- delegates if he comes close but cannot get that, becomes a private fight as to how do they stop him from being able to claim that he would be able to be the nominee? speaking to advisors in his campaign, they feel that with the peralta have delegates, -- porac -- plurality of delegates, the nomination is in. guy: thank you.
this with ouron bloomberg contributor. says that it did not change much last night, would you agree? >> i do agree. the only change i could think of is that some voters in south carolina who were not particularly familiar with some comments mayders's have learned a little more about him, i don't know how that will sit with some voters in south carolina. beyond that he remains the frontrunner. vonnie: can he be president trump if he's the nominee? this was the question last night and it is the question this morning. >> i think it's tough for him to beat president trump in the good economy in the states that decide this race. if this was a truly national election and we did not have an electoral college, i think it
would be a different story. but this race is going to be decided in florida, ohio, pennsylvania, michigan, and wisconsin. and i think running a democratic-socialist to pete buttigieg and joe biden and amy klobuchar's point, makes it tough. defending fidel castro, that's not a winning message in florida, even for democrats. guy: how far ahead does biden need to be ahead of sanders in south carolina to keep his trajectory going at the moment? he picked up a little bit, having an ok night last night, does he have a shot? he definitely needs to come in first in south carolina, the stronger the better for the biden team. it would also help with the other moderates dropped out. right now the moderate lane is so crowded, it's difficult for anyone to contest bernie sanders
. as long as they all stay in there, this will be his to lose, he will likely get to the 1991 or close to it. the best thing for joe biden would be a number one finish in south carolina, and by super tuesday some of these moderates dropping out, particularly those in the single digits like amy klobuchar or pete buttigieg. vonnie: it seems like has so much momentum but he may be one of the earlier ones to drop out. where is elizabeth warren? she put in a good performance. jeanne: pete buttigieg and elizabeth warren are to have the best debaters, but both will probably have to think long and hard after super tuesday about withdrawing. i think elizabeth warren will likely have to do that. she has not placed in the top three in any of these contests so far. if this continues it's hard for her to get the money to keep going and to continue past super
tuesday, same for pete buttigieg. for yourhank you analysis last night's debate. don't forget to tune into our special coverage of super tuesday with a live analysis of the democratic contest on march 3, 7:00 eastern. let's take a look at where we are, straw -- stock prices are rebounding, 1.2% on the dow and s&p 500. up 1.5%, still lower, fractionally. wti is back below $50. this is bloomberg. ♪
markets. >> president trump holds a news conference on the coronavirus this evening at the white house, he is a company by a top government health officials. the centers for disease control and prevention have offered up more predictions. the news conferences at 6:00 new hong kong is trying to cushion the economic blow from the coronavirus and political unrest, there is a budget packed with giveaway, including a one time cash payment to almost every adults. thatmists are forecasting the economy will shrink. the pentagon says that it will need additional funds to strengthen and modernize its nuclear weapons program. this will include $29 billion the next year, increasing
gradually to 38 billion. this was an effort started under president obama, to replace aging systems. jeremy corbyn accused boris johnson of being a part-time stayed at his, he government owned country manson -- country mansion. 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. vonnie: thank you. we want to bring you up to speed on crude oil inventories, they came in out more than 400,000 barrels. that has oil rebounding, we were below $50 a barrel for sometimes and we are back just under the
$50 a barrel mark. crude oil inventories, much less than anticipated at 452,000 barros -- barrels. inoline inventory is coming a little lower than estimated. more on the markets now, the recent selloff is not the start of a bear market according to byron, who joins us on the phone. since thursday, the s&p 500 has lost almost 8%, but we are rallying today. is that the end of the scare for the s&p 500 this time around? >> i don't think it's the end of the scare, the scare will loom over the market for a long time. i think it is a snapback from the sharp declines of the last few days. but i think we are not out of the woods yet. vonnie: you said we were going to see corrections of more than
5% before we get to 3500 on the s&p 500. are we still on the way to 3500? i'm not giving up on the 3500, but i do think the correction should be more severe. it will depend on how the coronavirus could impact the west. the president is optimistic that it will not be too severe, but supply chains have been interrupt it around the world. that there'slear going to be a sharp slowdown in china. this is one of the drivers of growth for the whole world. so i'm not willing to say that we are in the clear yet. do you think of a u.s. ten-year at 135?
put the moneye to somewhere, they don't want to put it in equities, so they put in in bonds. . think that's a low yield saying there's not much of an economic signal. demandit's a supply and story. i don't think it has any economic significance. vonnie: and federal reserve -- we knew that one of your surprises was that he would lower rates, but beginning the all-time low, is that helping the fed chair? byron: i do think the fed will respond, i note -- the threat -- respond to the threat of the coronavirus by lowering rates. at the beginning of the year when i said the fed would lower rates two times, i thought the economy would be disappointing.
but i did not think it would be disappointing because of this virus. i had no idea the virus would hit, even though there were paces of it in december before the surprises were announced, but now that the coronavirus is here and world growth is slowing, i think the likelihood of two rate cuts is much higher. vonnie: does everything happen in an orderly fashion, does the fed break for a meeting to lower rate? does the market continue to carry itself in an orderly way, or do we get an emergency cost or falling out of bed for the market at some point? know. i don't i think we have to see. if the coronavirus has a mild impact on the u.s., i think we can skate through this.
i for a recession becomes clear i think you'll see a central-bank response. if a recession becomes clear, i think you'll see a central-bank response. the fed will do everything to prevent us from going into a recession. we have a generous monetary policy and running large fiscal deficits. so government spending isn't really available as a tool to get us out of the recession. so we are going to do whatever we can to prevent it from occurring in the first place. we are also what's happening with the democratic process for the democratic party. do you think the markets, do you think risk assets have fully priced in or at least partially priced in the possibility of bernie sanders becoming president? byron: i think the market still
believes donald trump is going to have a second term. that's what the markets want. sandersthink bernie winning the election is in the market. yet,not the candidate there a lot of opposition to him, even though he's a front , iner and likely nominee don't think that his ultimate victory is in the market at all. if president trump wins election again, do we have the same kind of response from the markets and the economy over the next four years? in the second part of that question, since we saw the selloff, did donald trump do something -- can donald trump to something if the fed doesn't? byron: donald trump during the
campaign will do everything possible to be reelected. i think that's important to him. act, hehe fed does not will, but even as the fed does act, you can expect some action out of him that will ensure his reelection. always a pleasure. thank you for joining us on the phone, we appreciate it. andn with his latest view what's happening with the market. let's take a look at what's happening here in europe, this is the picture we find ourselves iran,not as grim as early we are basically flat but negative. earlier on.s butre basically flat negative. the numbers right now, we will head to the close shortly. this is bloomberg. ♪
>> live from the principal room, coming up in the next hour we will have more insight on how the coronavirus will affect markets. this is bloomberg. ♪ live from new york, i am vonnie quinn. guy: i'm guy johnson. this is bloomberg markets. our stock of the hour is diageo, the british distiller that makes johnny walker. shares are actually on pace for their fifth consecutive day of decline.
warnings about the impacts of the coronavirus, diageo saying they will cut sales by 422 million dollars this year, that's about 4%, that comes as bars, restaurants, in large parts of china are closed down because of the outbreak and that is crimping demand for alcoholic beverages. the virus spreads to countries like south korea and japan, and they say it is impacting sales there as well. the asian market makes up about for -- a fifth of the kind -- the company's revenue. the question is how long this will last. they say they do expect things to get better but it's really hard to tell the duration of the downside. we have an analyst in new york city saying it's possible that the asian business is going to be lossmaking and a second half of the year, noting that the same analyst saying that it is
clearly worse than they have heard from their peers. there are questions as to if there are more downsides expected. we've heard a lot of experts, noticing a cutting of the revenue growth. and another beverage company cut its outlook for profit growth by about half. as a group, luxury stocks are down. there is an underperformance with nearly 9% right now. that's your stock of the hour. our thanks to kailey leinz. vonnie: disney down two thirds of 1% with a surprise announcement that bob iger will ceo, and theown as coronavirus is continuing to loom over the company. princeton, and
media analyst for bloomberg intelligence. why was this such a surprise? bob never really shied away from questions of succession. did we does not expect it? the think that was it, timing was really a surprise, we know that his contract run through the end of next year, and i think investors are expecting an announcement in 2021, so announcing 22 months earlier was a bit of surprise. is this signaling continuity at disney? >> they have made this service to streaming, and you mentioned that he's a veteran of the theme park division. expectingk people are kevin mayer, who runs the consumer business to be named, having said that, i think he brings a wealth of potatoes -- i
think he has a wealth of therience, and the core of theme park business is building the relationship with the consumer and the engagement and having the data and building a good pricing strategy. so from this perspective i think that there's a very solid track record and proven expertise. to see it's hilarious these succession battles, and you ofyou -- it reminds the series of successions. in this case, what are the main priorities? to get the company to rally around him? bob iger was revered. >> those are going to be some whathoes to fill, but from we hear, he's well-respected, he's a consensus builder, he has expertise across many divisions.
and bob iger is still going to be in the executive chairman role through the end of next year. investors' help any fears, helping bob evolve into that leadership role. note,n a more serious let's talk about the challenges for this company. how big of an issue is the coronavirus for me disney -- for disney? they could take a big hit. >> it's definitely a headwind. they've closed two asian theme parks, in shanghai and hong kong, they have already said that if the parks close for two months, the income will be hurt by almost 300 million. so it's a roadblock, but i think the bigger issue for bob chapek is maintaining the momentum
across the different divisions, most notably streaming and ensuring the collaboration. vonnie: thank you, that's a great analysis from geeta in bloomberg intelligence. guy: and let's talk about company, a ceo spoke exclusively to us earlier. >> we are watching china carefully, it's very important for us. around 200 people in shanghai and beijing day in and day out. is that there is clearly some uncertainty in relation to the movement of people and the supply change. as we are having this , we are looking at
a key part of our profits. the product so far as moving with no issues, but we are watching carefully. as you have pointed out already, we know the chinese government will implement -- and you could argue that they are taking some steps at this point in time, we know from past history, a stimulus package could be very intense. >> whitey think you are not seeing any difficulty in shipping to china at the moment? because the economy is not doing as badly as we think it is? or is it because people are still buying? far, we see the crisis in the service construction and manufacturing sectors. steelmaking, the
illumina majors, the coppersmith have been unaffected because it's difficult to stop, you can only slow down. impacts on our business have been limited, but the situation can evolve quickly. but we are confident the chinese are taking the right steps. the key element that we are watching in terms of uncertainty is getting people to go back to work and the government to manage. see trains are working well but trucks are not moving. that's what we are watching, putting trucks on the road. >> given that intelligence and the 200 people with the situation on the ground, what is your assessment about growth in china? in our mindno doubt and the models we have, china is likely to experience negative growth in the first quarter of
this year. this'll be the first for a long time. we aren't quite sure what the shape will be. we are monitoring this carefully, as you do in terms of a traffic jam in j -- in shanghai. and we are seeing a small uptick. that is the ceo of rio tinto speaking to us earlier on. vonnie: checking the u.s. markets, drawing a different picture today than we have for the past few days. the s&p 500 up 1.6%. i can tell you of the 500 plus members, 50 are lower now, and many of those are cruise liners, and companies like carnival, and some of the energy companies. the s&p 500 is higher, but so
was the dow and the nasdaq, up 2%, semiconductors are bouncing hard today. all of thendex has elements higher. index up 20 five, stow some nervousness out there, we are off of our high for the last few days, this after the 10 year yield set a record. are seeing some relief at 135. this is bloomberg. ♪
for example, where is your supply and demand in the oil market alone? >> if you look at the crude oil market, i think supply and demand is a bit of an imbalance. i think the oil price will be right around that $50, just .elow that i think in the energy space, you could potentially make some money on gasoline. knocking to be taking cruises. there's gonna be a lot more driving going on. i think gasoline demand is going to be off to a great start. guy: intern -- grains, weterms of have the coronavirus and weather issues in brazil. how does that impact prices? >> it's tough to say.
we've not started planting in the u.s., we think that prices are near a cycle bottom, there is a question of do they throw out those food products, especially in china that could be somewhat contaminated. they could be importing more from the u.s.. and there's no telling how fast it will spread in south america. a lot of what if's. but i market that traders are really -- a market that traders are really disappointed in his the silver market. of silver is an industrial manufacturing. we are seeing apple, samsung, toyota, and volkswagen. they either come off-line or the demand is not there. vonnie: so what is your best trade? days,had some wild including with gold. gold was really
disappointing. you may want to look out with the call options on gold going farther out in case another shoe drops, but it looks like along the u.s. equities we will snap back with a 50% -- on the last selloff. we could be tracing back up thousand points. points -- up 1000 points. guy: let's take a quick look at where we are sitting with the market and see what the situation looks like as we count down to the european close, big volume today, we see some signs of stabilization. the ftse is up, the taxes down, airbus is the biggest drag. this is bloomberg. ♪ good morning!
will be a hit for the coronavirus. we will speak to the ceo of suez this hour. and berlin looks to loosen the purse strings, at least on a temporary basis. why the markets are not more excited about that news. guy johnson with vonnie quinn in new york, we are counting down to the european close on bloomberg markets. ♪ vonnie: we are getting a nice bounce after four days of decline. up to 8% on the s&p 500 since warningrsday, and a that the treasury yields are back up, the 10 year at 135 is probably nothing to write home about. all of the stocks ar