tv Bloomberg Markets Americas Bloomberg July 20, 2022 10:00am-11:00am EDT
announcer: from the financial centers of the road, this is bloomberg markets with alix steel and guy johnson. alix: it is 30 minutes into the u.s. trading day, wednesday, july 20. here are the top market stories we're following at this hour. capitulation or no capitulation? strategist debate the bottom. economists abate where the fed neutral rate is. thanks see pessimism. the housing market. rates rise. we dissect the industry with
cameron dawson --howard lorber. europe proposes a 50% cut in guest to manage its preparation for winter without russia. from new york, i am alix till. guy johnson is off today. the news is coming fast and furiously. it is really hard to know how we are going to be taking it. as all the bad is kind of baked in or do we need to prepare for things like the gas not returning for such a hawkish ecb? anna: so many of this week's risks, we received a big call to know the answer to that question. the sentiment is really a big way from these markets and through the u.s.. alix: let's get the existing home sale data. they are at 5.4% in may. that is a two-year loan. -- low.
existing home sales in june 2020, i feel like no one was buying any homes. as the market continues to roll over, it is curious what the fed ones. how much slowing to they want from it? anna: the week data, the bennies are on the housing market in the u.s. continues to come through. the negative surrounding the gas tour in europe also continues to come through. also, headlines surrounding germany. that reams that almost -- that rates that almost 5% of the german energy is down. the country should be open more spending. mitigating measures can still soften the blow. we have heard a little bit about german efforts to try to sway people's views toward less energy and the eu push. the president said he will turn those tax back.
soon, there will be no further flows of gas. alix: all of this really points to the fact that as we see all this bennies come out, even if the gas is turned on tomorrow, are we priced for that? at the same thing happened with netflix. the numbers were so grim going into it that it didn't really take that much to have a stock rally. anna: certainly. a number of different context, whether it is corporate earnings, geopolitics, where we are in stocks. let's get to the question of the day. the pin on which of those assets you're talking about, or maybe depending on where you are in the world, things might seem rent to those in europe than they do in the united states. let's talk to michael mckee and katie. michael commodes come to you first. let's give us your take on the rate in to this. we do have to ask how negative it has been, whether we are at pessimism. michael: from an economic
standpoint, i don't want to seleka two-headed economist, but there are things on both sides you to consider. that is the tough job for the fed. we saw for the fifth month in a row existing home sales fall. this morning, mortgage applications fell to a 22 year low. yet, median prices for existing homes continues to rise. that is still inflationary, still going to feed into the inflation numbers. that is the hard part about trying to figure out what's going on here. we have inflation and a slowing economy, a bit of stagflation at the moment. how do you respond to that if you are both the federal reserve or an investor? alix: on a market level, yesterday's rally was fairly broad-based. we are a little softer today. we don't know if we are at full capitulation or not. it is hard to understand in light of that. katie: we are not going to really know if this is the peak
moment until we are well down the line. if you look at some of the notes coming out this week alone, you have bernstein saying today that bank of america was wrong they had come out and said that they are seeing full investor capitulation now. what bernstein was saying that if you look at the mutual funds and etf level, they are still setting on inflows of hundreds of dollars. at this point, we haven't seen the money come out of the market that would mark that peak capitulation. if you look at other measures of cash, for example, there is still a lot out there. anna: michael, coming back to you, there's so much more on the fed narrative. we pushed it a good deal over the weeks and months. we got to the point where we are asking, are we going to get 100 basis points to dow that back a little bit? we need a good. to of fed goes. until we get a good sense of that, it is crucial to where we go on other assets. we have no if we reach people
pessimism. michael: the question is, does the fed go too far? did they push the economy into recession? there is a growing feeling that they are going to. there are always pessimists about the fed's ability to do this. but now we are at a 40% chance of recession, according to the bloomberg economics model. at the same time, analysts have only just started reducing their earnings estimate for next year. a lot of people wonder if the analysts are the ones that are behind the curve now. if they come way down, then maybe that tells the market to sell off a little bit more. we don't know. this is all up in the air. unfortunately for everybody involved, we don't have the data looking forward. alix: they also bring the question of what we saw with netflix. estimates were still low, they haven't done much, then we saw a stock rally. taking into account apple, wells fargo, morgan stanley, they turn their price boards cast. they look at the environments,
the impacts. we are quickly downgrading expectations in the numbers. katie: theoretically, you're seeing netflix not as bad as expected. that might be the mantra is weak get into the peak of earnings season. two-year points, estimates are finally coming down at to the numbers. can they come down fast enough to set up that positive surprise? it remains to be seen. coming out of bank earnings, for example, very, very mixed. how much we get from those earnings remains to be seen. we have big headlines on tech numbers coming up next week. it will be an important two weeks to determine whether we are at that peak pessimism level. anna: we had an interesting micro story around this in europe. the asml put out numbers on the chip industry. big disappointments for what they are announcing about the full year. we just wonder if we hadn't seen
people pessimism, perhaps there would be more to that news to spark a selloff. katie, that is the more fundamental side, thinking about where we are. what are the technicals about what they are doing here? >> we did bounce above the s&p 500 today. that will be important if we remain above that. you been trading above it since last april, really went last earnings season kicked into care. you did see some by ends to the risk. he saw even crypto get a bit. it feels like there is some sort of set up here for a sustainable move. i think some of it will come down to earnings, may come down today fixture. alix: we have to get to the ecb tomorrow, which will have a huge impact potentially. thanks a lot. really great for us today.
>> i still think that all the talk about whether we are in a recession, i happen to think we are, is of secondary importance. what is a primary importance is inflation. it needs to come down. the fed is not going to stop. in a recession, i don't think that will rest -- that will stop them. alix: the state of the u.s. economy, which is the question of the day, are we at pessimism? cameron dawson is joining us. the reason we got to the question is i feel like every economist now is increasing with their neutral rate will be for the fed. all the earnings expectations are still starting to roll over now, with a little more gusto. the positioning is already pretty thin. are we at that he pessimism level? >> it's a challenge with looking at sentiment and thinking about peak pessimism. it is a really core timing tool for market behavior.
we can see extremes in pessimism really persist for some time, so think about retail investors being very bearish all year and you have some markets going down. it doesn't really help us predict one year for returns, but it can be helpful in looking three years to five years out. it is helpful to see that we have some positive reaction to negative earnings. this means that people were already kind of on one side of the trade. they already became to bearish order shortening their positioning. even things like the banks or names like netflix, a lot of them are still in a lot of estate downtrends. you can see a rally off of maybe an oversold level, but if you are not starting to recover and break into a better uptrend, it remains to be seen if this trend can continue. it is more of a relief at this point and not necessarily a trend change. anna: [indiscernible]
we will keep that in mind, as we feel pessimistic at this time. there was it that little clip of jimmy anke talking about what he thinks. he was talking about how he thinks germany is already in a recession. is that important to you, where we are not in recession, and terms of how you are thinking about the market? >> it certainly is important because it has a big impact on earnings estimates. yes, we have started to see earning estimates come down, but it is only just likely. we are at 10% this year and 9% growth for 2023 and 2024. does not feel like equity analysts are pricing in a recession. it is easy to say that all of that upside in earnings is coming just from energy, but if we look at other cyclical sectors, exactech still up 14%
for 2022, industrial still forecasting 28% growth, and consumer discretionary still forecasting .1% growth, that does not feel consistent with a recession. it is a good question whether we are in one already or not. it is likely to get those two consecutive orders of gdp growth. but that may not be enough to call a recession, even the fact that the labor market and things like retail sales can function. we will see if we get that official recession call despite negative gdp. alix: to that point, amazon and netflix, i am wondering if you go into this, you don't want to be all industrials because of downgrade. what do you need to rotate into growth? >> this is a really important
question because tech has morphed over the past two years from being a cyclical industry, one that was sensitive because companies had tech spinning on things like hardware, to one that has appeared to be much more sensitive because of a shift in recurring revenue and software sales, as well as the dynamics around the pandemic. the tech sector actually saw earnings grow during the pandemic, where even other factors, like utilities, saw their utilities decline. the question is, going into this recession, do your growth and tech have those same kind of earning a zillion see they had during the last cycle? i think that is being called even more into question with the announcements of hiring from tech giants like apple, google, tesla. i think that rates the -- raises the question if they are as
resilient as they were back in 2020. anna: what are you seeing among small caps? i know that is one of the clues you look at to see whether there's any given the market. do you see any of them getting excited? >> it is so important when we are coming out of the major market lows to see risk and conditioning really take the lead. we really want to see investors clamor for risk, add data, that risk seeking behavior. this is often a really good signal of that. small caps actually made a low versus the market back in may. they did not make a new relative low in june. i think the challenge is that if we look over the long run, there really is one key driver of outperformance and that is liquidity. liquidity that comes from the fed. they typically outperform at the beginning of an evening cycle. any kind of rebound we have in
small caps today could be short-lived, as long as the fed remains in is tightening posture. alix: specifically related to earnings, is this going to be something like a kitchen sink order? they're probably going to throw anything into it, anything that they can possibly get out, so they can kinda find some kind of bottom, be really low, and build back from their? if that is the case, where are we going to be the most productive? >> that's a really good point. there is an article on your blog today that talks about this being the quarter to do it, this is the time to kitchen sink because expectations are already so low. you have the opportunity to just get the bad news out of the way. i think companies could take that on. we will see progress the earnings season. from there, leadership is what we really think the liquidity
environment is going to be and the direction of interest rates. we think that growth stocks, for example, we can't just thing about the earning resiliency, we also after think about the evaluation multiples. the view is that your credit see higher real interest rates. those growth valuations, which are up to 70% premiums on value, are still very elevated for further multiple compression. there could be the opportunity to possibly add to this, but it has to be very high quality. you want names that have free cash flow generation. you want them to have active balance sheets. given the environment, the time is not likely yet to return to this and really dumpster dive. anna: thank you very much. cameron dawson of new edge wealth. coming up, bitcoin gains for a third straight day. at least, that was the case with
anna: time for the bloomberg business flash. looking at the biggest stories in the news right now. housing affordability set to worsen early in the financial crisis. that is according to s&p global ratings. rising mortgage rates are making things evermore expensive by the end of the year, making up 20% of income. for a typical first-time buyer, that is the highest. for the first time, or manager has pulled the plug on an etf. [indiscernible] the fund gained only $12 million and assets since inception, a fraction of the flagship fund.
tesla reports earnings after the closing bell today. the electric carmaker is showing profit is under pressure. challenges include supply chain difficulties and locked out in china that have hurt its ability to make cards. that is your latest business flash. alix: thank you so much. bitcoin actually managing to rally today over 23,000, despite a softer market. now, once that crypto window wreckage is done, talking about the failures in risk management, redacting more stability going forward. that was the theme of yesterday's bloomberg crypto summit. one founder spoke to us about the event. >> i don't think what people expect it was the magnitude of losses that would show up in professional institution's balance sheets. it turned into a full fried -- a
full-fledged critic crisis, with liquidation and huge damage to confidence in the space, the infrastructure of the space. alix: what was your biggest take away from talking with him? was it easy to say, i was wrong then, but i am right now? >> i think it's interesting he kept to his price target. he made that price target earlier this year. you have to grow significantly to get there. there is a really interesting: out today that bitcoin has really made it when you stop comparing it to other assets. i have to say, even after this conference yesterday, i had a suffer -- a separate concert -- conference yesterday. [indiscernible] yep to stop comparing it to other things. i don't how long it takes to get there. you do see bitcoin charging higher. today, you see it charging close
to 24,000. the question is, is never cried right and is all the leverage taken out of the system, or is there a new low to be reached? anna: how many assets can relate to -- can really claim to be incomparable? where have we seen the wealthy and the crypto space, taking the crypto as the opportunity to go out and do deals, finder -- find cheaper assets? >> i think what's interesting here is that even said that some deals that are going to be done in the industry really do raise the question of moral hazard in the industry. should something be left to fail? it is interesting because there is a derivative play here. there is some exposure, where
there are a lot of questions about how bankruptcy will play out as to who gets paid and when. like mike nova grad and that fec, the real concern is not the investors, it is the consumers. right now, those protections, at least in some words of cryptocurrency, or certainly a more centralized version. the consumer is last on the credit spectrum. alix: i know they will be talking about their books, but do they feel like the worst has passed? >> they do. they keep saying so, but they have said so before. i have heard this before. 18,000 24,000, i have covered them since 2015. there have been other drive downs before. are we out of the woods until the end of the year? anna: thank you so much. nasdaq bringing in. [indiscernible] don't miss bloomberg next week.
alix: we are an hour into the u.s. trading session. picking up some steam here. the nasdaq up by almost 1%, thank you to amazon as well as netflix. >> green on the screen here, which is interesting because it is a turnaround from what we saw even a couple of minutes ago. the market did open lower, reaction to the furious rally of yesterday. up about .3%, but a lot of this is going to be defensively-lead. we are going to come back to that, but you can see the defensive nature of the nasdaq, are performing. that risk-on move is not cross asset. crude futures, down almost 2%.
we'll see the volatility continue to the downside. you want yields higher, we want commodities higher to suggest that growth story, that is what is driving the market. even the 10 year yield, hovering around that 3% level. with stocks it is all about the earnings of story. netflix, of course rallying. a less than bad, i think is the best way to describe it, subscriber laws. no subscribers are being bled out in europe and america, then if you look at the emerging markets, latin america, that is where you are seeing growth. that is helping netflix stock this morning. we should also talk about some mostly-better covid tests. it is morning as the covid situation gets better, how much of their bottom line -- how much does that help their bottom line? let's talk about bath and body works. they cut their second quarter eps estimate and outlook. that has everything to do with
consumer income. if you are concerned about recession, you are concerned about that ability to spend. let's talk about fake reviews. 13% lower after they took a right down to shut down their operations. you can see that showing up on their bottom line. let's go back to the dollar story. that is going to show up again in the earnings story. it did week and a little bit, coming back higher today. the question is, does it continue? the consensus trade is a dollar higher is going to be the norm. that said, you are going to see a little bit of volatility. doesn't flow into the stock story? i weaker -- does it flow into the stock story? let's hit the rate story as well, because it that is the last piece of the macro picture. existing home sales, is the housing market as tight as we thought it was? that is going to be a big question as well. anna: we are going to stick with that thing now.
kriti gupta, thank you very much. that big increase in u.s. mortgage rates keeps making homes less affordable, it seems. sales of existing homes fell last month to a two-year low. we are joined now by howard lorber, the ceo of douglas elliman, a residential brokerage company. really nice to speak with you. are you surprised as rates continue to rise in the u.s.? are you surprised at all by this data? howard: i'm not surprised, really, but i'm not so sure it has to do predominantly because of rates. what we have seen, as rates go up, many times that brings people into the market quicker because they have always heard stories of where rates were a number of years ago, and double digits, and so forth. i think that just the economic outlook and the inflation, and coming up elections, i think they have lost money in the
market. i think that is really more what is putting a damper on the real estate market. alix: have we then accurately seen the impact of higher rates in the housing market? howard: if you think about it, whenever they talk about rates, like recently in the fives, those are pretty much 30 year mortgages, conforming mortgages, which are in smaller numbers. you could still get adjustable in the threes if you have banking relationships. and then, of course, the wealthy it is simple. they can pay cash. if they don't want to sell anything from their portfolio because they're stocks are down, go to their bank or brokerage company and they can borrow against their collateral for 150 basis points. so it depends on what part of the market you are speaking about. anna: thinking about mortgage applications, away from the
luxury end, we saw that data showing a drop to the lowest level since early 2000 i guess the fed would like that to be to some extent to do with higher rates, because they are trying to slow things down a bit. howard: yeah, it is definitely has a lot to do with it. but that is on the lower end of the market. not on the middle and luxury end. which we basically do most of our business on the luxury end. but we do watch what is happening. it is the lowest mortgage application in 21 years. so, we obviously see that it is happening, and the question then is, who is it happening to? i would say it is happening to the people that are buying at the lower end, what we consider the lower end of the market. alix: let's go luxury then. traditionally in new york overseas buyers, foreign buyers would snap up new york city real estate. now the dollar is super high and
it seems like a trend that could be softening. what you noticing? howard: we see that. we are disappointed because we assumed that with covid under control, we hoped we were going to see all of these foreigners come into the market. and start buying houses. and it has not happened. and it has not happened just because of what you said. with the dollar so strong it is not going to happen. i think we're going to have to wait until things straightened out in the world and the dollar goes back to someplace near where it was before. this is not good at this time for foreign buyers to come into the market. it is good for american buyers, dollar buyers to go into the foreign markets. anna: certainly the weakness in the pound, weakness in the euro could be luring people. maybe this is an area of the market that moves on this metric, because you described
where you operate, but looking at the rent versus buy decisions that people are making at this point, as rents continue to rise, how does that look to you? howard: well, surely the rents are going up, and they are going up in the low rentals, middle, and very high. there is a lot of that, especially in the luxury markets. in the rental market is very strong, and there is a lack of inventory, especially at the high end of the market. so there are, i imagine there will be people that will decide, developers, that we will build a condo, maybe now they are going to make it a rental. this may be easier for them to get comfortable and get financing for it. but the rental market, at all in's, is very strong and continues to get stronger. alix: we're talking about recessionary fears, the fed having to go to a terminal right -- terminal rate of 5%. when you look at your data, what would stand out to you that
says, we are headed into a recession? howard: that is a lot to say. i mean, most people that are around today, they just keep going back to 2007, 2 thousand 8, 2009. that is not what we have now. some any different variables now. the war in ukraine. the interest rates going up. the inflation. the supply chain problems. there are so many factors, i'm not an economist. i'm in the real estate business, so i can't tell you what is going to happen. and i'm not so sure you could get too many people to agree on what is a recession. i guess the predominant opinion is, in your gdp goes down two quarters, is that what is normal? if that is normal, that could very well happen, but what type of recession is it? it is not going to be 1928. anna: right, let's hope not.
something that is not very 1928 is the phenomenon of work from home and that has led to changes in the housing market. you have seen demand for housing both in the u.s. and lots of europe as well. how is that influencing where people are buying at this point? the working from home option, but also the press to return to office? howard: the working from home office -- the working from home is not good for the real estate market, because people, when they work from home 100% of the time, they want more space. they want to have a room, they want to have it -- have an office. and they want to be many times, especially when covid was more active than it is now, they want it to be in the country. they want to get outside. all the things you could not do in these metropolitan areas. i think it is very strong reason for housing prices to go up.
now they have gone up so fast. they're going to have to start slowing down, because all of the luxury markets and resort markets are really -- like, in parma -- in parts of california, montana, all of these places, then the local suburbs like westchester, they have gone up fast and they have been sort of not done anything in years. so they are shining right now. alix: really love catching up with you. i'm selling an apartment in the fall. we will check back in with you on -- in a couple of months. howard lorber, douglas elliman ceo. you very much. the doe inventory coming at the bottom of the hour. you get inventories, but gasoline inventories saw a build. vaseline demand revised higher,
but gasoline inventories saw a build. potentially some reaction to prices. we have seen really high gasoline prices. may be people driving a little bit less, hence the inventory nd have been worse. shares back up as subscriber loss was less than expected. details next with the tech guru. this is bloomberg. ♪
ritika: this is bloomberg markets. coming up, leon panetta, former u.s. secretary of energy joining bloomberg television. this is bloomberg. keeping up-to-date with news from around the world, here is the first word. rishi sunak may -- conservative members of parliament vote to decide which candidates will batter to replace oars johnson. soon i finished first in
tuesday's ballot. it is the battle for second that is heating up. liz truss is the favorite to join sumac in the final. europe will start getting gas again through a key pipeline, but the russian leader has some conditions. he says unless a dispute over sanctions is resolved, gas flows will be tightly curved. the eu has proposed curbing gasp consumption by 15% over the next eight months. president biden will announce executive action today to confront climate change. he would see federal dollars to communities ravaged by heat. for now, the president is holding off on an emergency decree that would allow him to use sweeping powers against global warming. 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. alix: thank you so much. netflix lost on most one mailing customers in the second quarter
but the stock is up today. because it was less than half of what wall street actually feared. ceo reed hastings has a message for investors -- could have been worse. >> if there was a single thing we might say, "stranger things," but we are talking about using one million instead of 2 million. so, tough in some ways losing 1 million and calling it success, but really we are set up very well for the next year. alix: joining us now is michael pachter, over at wedbush securities. michael, always great to get your perspective. if he could have been worse, enough to be positive on the stock right now? michael: i think it is. if you look at -- let's just look at the u.s. and canada. they lost 1.3 million subscribers, and that is fewer than 2% of their total subscribers. they raised the price by 10%.
if you work through price elasticity and demand, that is pretty good. i don't think netflix is yet ready to accept that they are in a slow growth, high profit mode, and they talked a lot about that on the earnings call and in the letter, but they are certainly managing slow growth. they are cutting their costs, they are cutting back on content spend. that is the reason investors are excited. netflix is holding out hope they will return to hyper growth one of these days. in the meantime they're going to throw up a lot of cash, and that is good. anna: good to speak to you, michael. the company did not seem keen to think about increasing prices as one of the reasons they were losing subscribers, even the numbers you have given us. maybe you shared their view? michael: i have to say they are somewhat delusional when they talk to investors and they drink their own kool-aid. they do a lot of things that don't make a lot of sense. for example, thing all of their episodes at once.
reid rotted out on the earnings call. we are committed to binge watching. no other service does it that way. nobody. amazon does -- just tested it with "the terminal list." why doesn't netflix emulate the success of a firms like hbo, who have one tent as much content, and yet have much lower churn? they knew do everything like -- they don't do everything right, but what they're doing is enough to make the stock go up. alix: your $200 -- $280 target, is that valuing netflix as a slowing growth, focused on profit stock evaluation? michael: it is a high teens clack cash cash flow multiple, which means i think they are going to grow decently, but not 30% a year. more like 3% to 5% a year in revenue, with some leverage. that is above the market
multiple, but not materially. it is probably a 25% premium to the market. i think they are better than the average stock in the s&p 500. they are not tesla going from zero cars 500,000 cars a quarter. anna: is that changing growth expectations that we should attach to this business? is that something to do with netflix and how big they have become, or the competitive environment? others have made the point that the competition, there are more of them and they are better than they were. michael: obviously that is exactly the crux of the matter. if it were a zero-sum game and if it were that disney were gaining share and netflix losing share, that would be accurate. it is not zero-sum. people are cutting the cord. they are able to trade down to something like you to plus for $60 a month, and trim their capable and supplement it with streaming services. -- cable bill and supplement it
with streaming services. netflix is the biggest, therefore closest to fully saturated. i have over 10 years said they were going to peak eventually, and that finally has happened. my $280 price target is less than half of where the stock was trading six months ago. i don't think they're going to $600, and the guys who thought they were going to 800 were wrong and they have to reassess now. alix: definitely worth that victory lap, michael. i want to talk about amazon. we get earnings next week. that stock is up 3.5% today. it got an upgrade from jeffries, saying that this year the underperformance of amazon will reverse and we will see profit improving and the topline improving, and better growth, and higher-margin businesses doing better going forward. what do you think? michael: this is 2013, 2014 all over again. bezos got distracted and decided
to launch the buyer phone, and it was a disaster. he took his eye off the ball and let earnings turn negative in the stock got hammered. jassy came in and did the same thing, took his eye off of retail. to build out fulfillment centers. and he is just wrong. the fact is, if they want to be massively profitable they can be. his big mistake was getting rid of dave clark. his second big mistake was the head of hr. they don't pay people enough, and they are losing really good employees. the people looking at it now positively -- i am one of them -- say jassy is going to figure it out or he is going to be gone, and they are going to turn the profit direction back to massively profitable. they can turn on the taps on profits anytime they feel like it, and when they do the stock is going to work. it is trading at about two thirds of its peak, so it is down a lot still. there is still plenty of room for that stock to run. anna: if we are summoning the
parts and there is the retail side you think can turn our profits, the other side, the tech side as well around data and the like, what are the other parts? what are all the bits worth? michael: the two that nobody really seems to talk about enough our third-party sellers services, which is really just selling other people's stuff. that comes in and really high margins, 65% margins. the second piece is advertising, which people think it is advertising, it is not. it is product promotion. you know when you do a google search for a camera, canon will pop up to the top. when you go to amazon and search for a crockpot, hamilton beach will come up to the top, and they pay for that. that is massive, really high-margin, and growing nicely. as of the two hidden gems that are worth a ton. i could see amazon advertising
doubling or tripling in the next five years. alix: last question here. as we go undetected earnings that are going to hit. , half week we rated enough earnings to the downside? -- have we read rated enough earnings to the downside? michael: for unprofitable companies, probably not. we were starting to see bargains out there. companies trading at 6, 7 times that are not going away. over stock is trading at something like six times. it is not going down. maybe the stock will go down, but earnings are not going to drop much below that. really think there is opportunity for profitable companies. the big guys who are not yet profitable are really hard, it's hard to say how low is low for companies that do not generate cash. i'm not ready to say we have bottomed on those. anna: thanks so much, michael. michael pachter, managing
anna: welcome back to bloomberg markets. just over a half an hour to go before the close of the european equities session. the stoxx 600, down by .1% or so. we have not known where we are going and lacking direction this wednesday morning. the ftse was more positive than that early on, down by 1.7%. those worries about italian political leadership back in the headlines. you will hear from the prime minister later on today. and natural gas prices also in the mix. coming up, we will talk to john glen, reddish conservative party mp.
anna: it is wednesday, the 20th of july. stocks are mixed. the countdown to the close starts right now. quite the countdown is on in europe. this is bloomberg markets: european close, with guy johnson and alix steel. anna: welcome back, everybody. this is bloomberg markets: european close. guy johnson is off today. i'm here in london, alix steel in new york. in london, this is what european