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tv   Bloomberg Markets Americas  Bloomberg  July 19, 2017 2:00pm-3:30pm EDT

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scarlet: we are live from bloomberg world headquarters in york over the next hour. in markets, a winner in the fixed income battle. morgan stanley topping its biggest competitor, goldman sachs, for a second straight quarter. in one of wall street's most hotly contested arenas. a new bloomberg poll finds that fewer than one third trust bank executives and billionaires. in politics, president donald trump trying to rally republican support at a lunch with senators taking place right now. could the health care impasse leave the president without any legislative victories for 2017? let's get up to speed here. two hoursts close in time. >> we have the s&p 500 and the
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nasdaq trading at record highs. the nasdaq up for a ninth day in a row. some bullish action for the major averages. the dow up the least, up .2%. near session highs. some bullish action as earning season is getting underway. stick to the tech heavy nasdaq and the nine-day winning streak. cap tech -- the month of july has been very kind for technology and for the nasdaq. that pullback has been erased. june being the first down month for the nasdaq in eight months has also been erased. the certainty and bullishness for the highflying sector back on. these are the big highfliers today. microsoft, apple
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commandments on -- microsoft will be reporting tomorrow. therest of these companies following week and the first week of august. investors are migrating back to the true and tried technology names. that is according to paul sweeney. we all think of 2000 as the big tech boom. this is the s&p 500 information-technology index, we see the big boom, the bust and now, recently, the s&p 500 index for technology has risen to new adthrd highs and the bre is better. his valuation too high? this chart may suggest it doesn't even compare to what happened back in 2000. times in the 2000. now 19 times.
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that double puts valuations in perspective. julie: now, to washington, as president donald trump tries to revise his stalled agenda. stepped up the pressure on senate republicans to get a health care bill passed. >> my message today is really simple. we have to stay here. we shouldn't leave town and we should hammer this out and get it done. julie: joining us now from capitol hill is so he'll comport. -- said he'll comport -- sahil kapur. i'm a bit confused. i don't always understand how washington works, but i thought health care replace was dead. is the president pushing for something that has already moved on? l: he's pushing for something that died several days moran ofsenator jerry kansas and senator mike lee of utah came out and said they cannot support the latest version of mitch mcconnell's
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health care bill, which was taking into consideration every concerned that republican senators had voiced. since then, we've heard president trump say if they cannot pass that bill, passed the repeal only bill. senator mcconnell said let's do that. now come a trump is saying let's go back to repeal and replace. the president is not making the scheduling and easier. isay, what he's trying to do more about cracking heads and twisting arms than informing them or trying to bridge these complex policy differences. thiswas more you promised to my you better deliver on it, we better deliver on this. do you want to be a senator? is having a hard
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time giving up on this. this was one of his signature legislative promises. julie: when he makes a joke like that against senator heller, what power does the president have? he is trying to crack heads and issue veiled threats. what does he have as leverage? still popular with the republican base. everyone of these republican senators goes through a republican primary. yes cap president trump is not somear overall -- olexander heller is likely to have a lot of trouble with democrats in a general election heller issenator likely to have a lot of trouble with democrats in a general election anyway.
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trump is a lot more popular than they are. scarlet: originally, the senate was going to delay its august recess by two weeks. is that still in effect? ahil: it looks like that is still the plan. senator mcconnell wanted to do a bunch of nominations and a defense authorization bill. it looks like they will do those things now. there are some nominations coming up that the senators are voting on this week. senator mcconnell will try to pass a defense authorization bill as well before congress breaks. he has a bit of extra time now. they obviously have a full calendar in the fall as well. scarlet: thank you so much. let's get a check on the first word news this afternoon. mark: the president said
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senators should not leave town for august recess unless they act on legislation to repeal and replace obamacare. at the white house luncheon with the gop senate caucus, the president also said any republican senator who opposes starting debate on the legislation is saying they are "fine with obamacare." >> we are so close, the way i look at it, we have no democrat help. they are. -- they are obstructionists. they are looking for single-payer. single-payer will bankrupt our country. mark: the president also faulted republicans for never discussing how good their health care bill is. john mccain office says the arizona senator is recovering comfortably after surgery to remove a blood clot above his left eye.
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the statement released today by a spokesperson for the senator described him as being in good spirits at home with his family. he is staying in arizona this week to recover. in france, the first major test of emmanuel macron's governing style. the head of the french military has quit in a dispute over defense spending. he openly criticized proposed cutbacks and president m acron shot back by saying "i am your chief." he openly criticized proposed turkey's prime minister has --laced or stop 11 ministers the finance minister is the only high-level cabinet official to keep his position. the announcement came a months after president or the one your -- president erdogan regained leadership of the party. global news 24 hours a day,
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powered by more than 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. scarlet: coming up to my morgan stanley wraps up the earnings and season for the trading trend. julie: we will assess wall street's second-quarter, next. this is bloomberg. ♪
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julie: this is "bloomberg markets." scarlet: in earnings news, shares of morgan stanley rising today after the bank outpaced one of its biggest rivals. morgan stanley's fixed income trading be goldman sachs for a second straight quarter. it's equities trading also outperformed goldman's as well. clearly, morgan stanley hasn't
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steered away from fixed income while goldman sachs is staying true to their fixed income roots. compare and contrast how the two have pursued their strategy and how that is showing up in their results. >> under chief executive gorman, they shrankuple -- fixed income by 25% and laid off a quarter of their people. they've installed some new equities executives. what you've seen is that they have held up far greater than goldman has. shrankeven though they the fixed income business come the revenue with still higher than that at goldman. there is something technically within that trading business that they do differently? >> goldman has stuck to their guns. they've said it no matter the environment, we will hold our
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franchise and maintain the basic footprint and we will stay in commodities. recently, it has been a bad quarter for commodities. they've had to start thinking about strategically changing that footprint in commodities. that's one of the main reasons they underperformed the quarter. scarlet: what does this mean for james gorman and how he moves ahead? for a while committee was really known in wealth management. does this mean he will put more efforts into fixed income? we will just enjoy it and continue with our strategy as is. quarter, 40% of the revenue came from wealth management. 50% if you include the investment management firm which creates mutual funds.
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when you have a business called a yield stock which gives up an annuity like not high volatility type of stream of revenue, you will get a higher valuation from the investment committee. you have seen that in their book. julie: when you look at the desperatetlook, how is it going to be as bad going into the rest of the year? volatility is still nonexistent. >> what in the political climate do you think is going to change? unless you have these events that cause a lot of reason for repositioning, what is going to change? we are heading into the summer. we are in the summer, we are heading into the second half of the year. scarlet: steady as she goes. what will we learn from the regional banks when they begin
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reporting in earnest over the coming weeks? >> for the regional banks, i'm looking at are they benefiting from the interest rates. net interest margin, making loans, credit cards -- that business is pretty stable. julie: thank you so much for joining us. staying on wall street now, according to a new bloomberg national poll, wall street's efforts to improve its image has failed to sway most americans. let's go to john mccormick in our chicago bureau. night andinner last there was a discussion of wall street ceos and not a terribly favorable one. tell us about the numbers. john: most americans would agree. here on our poll findings, we are nine years after the financial crisis and the industry and market ceos are
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still viewed in a pretty negative light, less than a third of americans view them in a favorable way. scarlet: what about ceos? a lot of the wall street ceos have been vocal about what they think is missing from the current environment and why they can't get done what they need to get done. jamie dimon being the latest example. john: wall street banks and corporate executives have the exact same number in terms of net favorability. 31% viewed favorably by americans. both groups had the same number, not very good. worse scores than the president of united states is getting right now. julie: another finding of the poll is that who this country has elected president notwithstanding, people generally don't have a good opinion of billionaires. thought it would be interesting to ask this question
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because we have our first billionaire president. -- do you more distrust or admire billionaires in general? it depended on the billionaire. some love bill gates. basically, we found a majority distrust billionaires more than the admire them. if you are a billionaire also on wall street, your numbers are not very good right now. julie: when you talk about the wall street ceos, wall street has been trying to make some efforts to improve their image. what have they been doing? why hasn't it been working? trying to reach out on a variety of issues. education, other topics you would and traditionally associate with wall street executives. it may be somewhat landing on deaf ears. is prettyrican public skeptical about this group to
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begin with, they think they are out for their own industry, the message may have a hard time getting through to the public if there is this high level of skepticism from the messenger. scarlet: next week, we have the federal reserve meeting. it is not expected to do very much. you asked americans their impressions of the federal reserve. numbers are up significantly in terms of favorability since the financial crisis. people recognize the fed has stepped in and have done things that help the economy. we asked about janet yellen for many years now. she is a person who toils and anonymity. the majority of americans don't know enough about her to offer an opinion. we may hear a lot about janet yellen on this channel and in markets, but for most americans, she is still very much an unknown. julie: it did surprise me how
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many people approve of the fed's performance while not knowing who she is. scarlet: she prefers to stay in the background. john mccormick, thank you so much. still have, to pull a -- chipotle singing a new tune -- enlisting rza in a new marketing campaign touting its ingredients. ♪
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scarlet: this is "bloomberg markets." anotherffering from yet safety scare come much folate is teaming up with a wrapper from the wu-tang clan to generate some buzz. -- another safety scare, chipotle is teaming up with a apper from the wu-tang clan to generate some buzz.
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craig has more on this collaboration. we are being a bit clever in the introduction -- this is something that came up before the latest food safety scare. >> they've been working on it since the beginning of the year. the timing was an ideal for them. they had a big event last night in soho to announce this. they can knowledge the timing wasn't great, but said we are focused on running a business for the long term. they didn't have this issue and then call up rza and say let's do this. julie: you cover the fast food industry in the past cattle industry. -- and the fast casual industry. what is the trend of getting a cultural spokesperson? does it work? lebrona example has been -- he stepped away from mcdonald's. people saw this as the new model
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where athletes want a stake in the company. lebron associated with mcdonald's, that is a lot of exposure in the traditional marketing sense. the world has changed. now commenced to graham posts from a celebrity using the product is more important -- scarlet: we have to bring up the bill ackman. his first tweet ever was a picture of him eating at chipotle and touting this new ad campaign. >> ackman is the largest shareholder in chipotle. is in the restaurant trying this out. --h rza and all this stuff someone sees the website, it is well done.
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does that make them want to have lunch at chipotle? scarlet: when we talk about this partnership with rza or this marketing campaign committee this website doesn't allow you to order food. it is just to generate buzz. is this something analysts or investors are talking about at all? >> chipotle has felt for a long time that they don't get the credit they deserve for being this clean menu pioneer. everybody across the restaurant landscape is making some kind of health claim. that has frustrated chipotle because they say we've been doing this for a long time. we are the originals, we are the best at it. we don't believe these claims being made by competitors. this is designed to hit home the 51 ingredient thing. does that person then go have another burrito that week? that's an open question. julie: one of the biggest threats to their clean eating
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image has been these food safety situations. , what ist in virginia the company doing to address this? >> the company is -- the restaurant is back open. they closed it for two days. nora virus can happen to anyone. it is not e. coli. e. coli would be much more fun a mental in the food supply -- fundamental in the food supply. it does indicate how serious of a problem they have on their hands when a single sneeze can send the stock down 7%. they need months and months without negative headlines. norovirus can happen anywhere -- julie: if it happens at other fast food restaurants, it doesn't have the same effect. >> it's the most common foodborne illness.
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the problem is this company has a tarnished brand and they are trying to come back. you for giving us an excuse to play a video of rza . oil is rising after weekly inventories came in with a bigger drawdown than estimated. the commodities closes next. from new york, this is bloomberg. ♪
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♪ from bloomberg world headquarters in midtown bloomberg this is markets. commodity markets are just closing in new york, so let's look at some of the most talked
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about commodities. let's start with agriculture. sugar is the big gainer today. got a touch of frost this week, which is raising supply concerns and sending sugar up by nearly 3%. two metals, there is not a lot of movement in gold so far and platinum today. the dollars climbing to 10 month lows so that could be holding back the gains we might be seeing. and crude oil is also a bigger mover on the day, up about 1.5%. it has been hovering around $37 a barrel, adding to gains after the u.s. saw a drawdown of 4.7 million barrels last week, well ahead of estimates. take a look at where the drawdowns were on this map. the gulf coast oil producers saw a big drawdown, as well as the east and west coast. but stocks were higher in the midwest, rocky mountains, and minorities. the enough to push up oil prices.
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-- big enough to push up oil rises. scarlet: that is one piece of the puzzle, opec is the other. we discussed whether opec will agree to deeper cuts next week when it meets in russia. >> what we are sure of at the moment is that although the opec cuts agreements and the non-opec cuts agreements, for the six months as a whole as it has been operating so far, has been reasonably successful. for the month of june, the latest data for which we got reliable numbers, the compliance rates have slipped a little bit. it we will have to wait and see what they decide. opec is responsible for its own decisions and we are observing it, just like everybody else. scarlet: is there anything opec can actually do to regain control? we have never seen opec and russia hold hands like this.
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when you look at the oil rigs coming back online in the u.s., are they powerless? when you look at the oil rigs >> the u.s. situation ise interesting because when the u.s. was ramping up initially, the first part of the revolution a few years ago, to the extent which production increased took everybody by surprise, and when $50,rice went from $100 to the resilience of the shale sector took everybody by surprise, and the resurgence, to some extent, confounding us. but it is not just the u.s. shale producers. another factor that has changed significantly since the opec iseement came into effect that libya and nigeria are >> the u.s. situationseeing then increased are medically. we think it has gone up by about 700,000 barrels a day -- dramatically. we think it has gone up about 700,000 barrels a day since the beginning of the cycle. and that is due to the -- and that is also considering the cut from the opec countries.
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so they are seeing their cut diluted by two members. >> you are one of two people that has tangible experience working in venezuela. we do not talk enough about venezuela at the margin of oil. where do they stand right now? want to walk too far, too fast down memory lane here, but the state of the venezuelan oil industry is very, very poor. a great deal of time is spent by theirs not able to do jobs properly, see their families, interruptions to power supplies, there are various problems affecting the industry. but production today still remains at about 2 million barrels a day, something like that. where this problem is. they are not able to refine as much oil as it would like because of the state of the refineries. it is actually importing gasoline, which is an incredible situation, but so far it has managed to keep shipments of oil to the united states, for
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example, and reasonably high levels. >> the entire industry has had to adjust within your iea powerpoint. there is a lot that you discussed about bringing cost down. has all the easy work been done, or can cost come in even further? >> we think that most of the relatively easy, low hanging fruit has probably been achieved. but we should never underestimate the ingenuity of industry. the oil industry is all about men and women putting on overalls and hardhats every day, making things more efficient. so we should never underestimate their ingenuity, but i would anticipate that most of the significant cost and efficiency approval have probably been achieved in this cycle. from now on, it may be an issue of cost beginning to rise. we were not expecting cost to rise very sharply. >> i know that is extremely difficult to protect the price of oil, but i will ask you anyway. are we still in a range bound?
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formally publicly forecast oil prices, but what we are able to say is based on our current outlook for supply and demand. scarlet: mitch mcconnell is speaking at the white house after meeting with the president. let's listen in. >> we like to talk on the phone, we have had a lot of conversations. he has talked to a lot of members, and one of the outgrowths of discussion today is that the vice presidents, the secretary of health and human services, and the cns will be on capitol hill tonight working with some of our members who, at least so far, have had some getting to yes. let me describe what yes is. it is the motion to proceed. we cannot keep the commitment we made to the american people to repeal and replace obamacare and replace obamacare unless we get
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on the bill. so next week, we will be voting to get on the bill. of you domind those not cover capitol hill that this particular type of bill is totally open for amendment, there is no way i or anybody else could prevent members from having amendments, and any 51 of us can pass them or change the bill, but we cannot have a debate until we get on the bill. week, we will be voting on a motion to proceed. and i have every expectation that we will be able to get on the bill. it seems that this surpasses your original position. so instead of repealing or replace comer a place at a later date. allthe agenda was to do it at once. where are you on that? >> we have two options here. there is a large majority in our conference that wants to
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demonstrate to the american people that they intend to keep in realitment they made actions to repeal obamacare. i think we all agree it is better to both repeal and replace. but we could have a vote on either. repeal,d up voting on it will be fully amendable on the senate floor, and if it were to pass without any amendment at all, there is a two year delay before it kicks in. so the take away from what i am telling you is nothing is harmed by getting on the bill. offered as at is substitute first, it is fully amendable. >> given the president's comments today, are you experiencing some political whiplash year? >> it is pretty obvious we have had difficulty in getting 50 votes to proceed. to disabuse any of you all of is that notion
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that we will have that vote next week. we will vote on the motion to proceed to the bill next week. >> [indiscernible] you going to have an august recess? >> we are going to have a motion to proceed on the bill next week. that was senator mitch mcconnell outside the white house, following senate republicans meeting with the president. we heard his comments earlier. the president's comments earlier, where he was encouraging them to if not repeal and replace, which is really better, at the very least repeal. o'connell is now saying that he is confident that the senate will proceed to the bill next week and the bill will have a motion to proceed, which is something the president talked about as well today, and pointed out that even if it is just a repeal bill, it will be open to amendment. i do not know if that raises the question of whether the amendments will be reform
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amendments or -- scarlet: we could have a vote on a repeal bill, or a repeal and replace bill. he did not address any questions wereem to know that there any political whiplash as to how the president is now addressing health care, which everyone thought was dead on arrival. julie: but whether it will proceed to a vote, he does not have the vote. so we will see what happens. coming up, let's talk about something different then politics. the network behind house hunters is looking for a new place to call home. from new york, this is bloomberg.
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♪ bloombergs is markets, i'm julie hyman.
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scarlet: and i'm scarlet fu. let's get a check on transport with abigail doolittle. >> this is the three-day intraday chart on top of the nasdaq. that was putting in record highs for a second day in a row. on the bottom, transports down about 1.7%, so not participating in the rally we are seeing. dragging on transports today we are seeing trains and planes. first up, this company beat estimates, topline by 3%, bottom line, 8%. but hunter harrison, the ceo, set the bar too high. from a bloomberg intelligence analyst. one-time items were included, this would have been a one penny miss, and a 50 -- a $5 million buyback was not included. down 6%, they also beat out the airline.
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they say it is the future, the guidance is too aggressive relative to capacity, while the revenue measures were less than and investors were looking for. weighing on other railroad and airlines, we see kansas city southern, and also american airlines and southwestern airlines down, but nonetheless theee some weakness in transportation index. a big question has been valuation overall for the markets with these record highs, is it too high? -- itk at the airlines does not necessarily handle valuation, but have these gone too far, too fast, up more than 40% over the last year, and above the two day moving average for nine months, the longest such time before 2013 and 2014, and the rsi momentum indicator
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overbought just weeks ago, now dipping back down. we could see more weakness ahead for airlines overall. this is as earning season progresses, we will know. might bemajor deal coming into cable tv business. sharesnetworks are surging. a person familiar with the matter says that both discovery communications and viacom have held talks with the owners of and food network. >> there might be some cost savings potential there. from an industrywide perspective, you have consolidation on the distributor side for pay-tv, lots of other options available for over-the-top usurers ship -- viewership of content, whether it is youtube, netflix, and you have permanent cost inflation. any rational market but his offense would be looking to combine here -- participant
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would be looking to combine here. hardlyi think he would agree with what tim is saying -- it is about time. scarlet: a few weeks ago we wrote that it makes sense were discoveries to start thinking about this. we did not figure that viacom would also be interesting, but shows. has some great tv they are very popular among women, which is a sweet spot for advertisers because women tend to be the spenders of the household. it makes sense that right now, they would look for that leverage and scale. but they would be doing this defensively because of the changes that have taken over in the media world. in the skinny bundle world, which is where we are headed, is it better to offer more or fewer channels? has been argued that distributors do not want programmers that have too many networks, because they want to streamline what they offer to consumers. >> that is absolutely true.
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the thing with discovery is that they are having a problem with their contents, where it is not the must-have content for skinny bundles. they have been left out of youtube and sling tv's basic packages. they need to offset any sports programming filling up a lot of these packages. and these companies, discovery, viacom, are in talks with this tribute or's to create an entertainment only bundle package, which would be great -- distributors to create an entertainment only bundle package, which would be great for scripts as well. -- scripps as well. scarlet: it sounds like among analysts, discovery seems to be the favorite in term of being a better strategic fit for scripps. >> it would make sense for by, as well as they were not in the situation it is in right now. they are struggling, they have a new ceo that has a great
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strategy. he has decided to refocus on their six core brands, which include mtv and pet and comedy -- bet and p.e.t. comedy central. they have a lot of debt right now, so it is probably best to not do any big is pure they want --see some brazil at the --scilla the -- at about also financially, it makes sense. discovery is a more attractive partner for scripps. they can afford to level up a little bit, offer cash, which i imagine that the shareholders, including the controlling family, would want, and their stock is not unattractive to holders. i do not know if scripps shareholders would want viacom stock right now. some whoso you have hold sway over any kind of intentional deal. do we have any indication on
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whether these insiders are looking for this are not? >> you have malone on the discovery side, redstone's on the viacom side, and the scripps family, we do not know what they are thinking on, but now is a good time for them to sell. they were on the top of their game late last year, they are coming off of it as their itings start to decline, so think now is a good time to think about partnering with somebody. julie: this will certainly be interesting. our thanks to our bloomberg economist, and you can find her column online. a time for the bloomberg business flash, look at some of the biggest stories in the news right now. thousands of the time as vehicles have been approved to hit the road while regulators develop safety standards and state rules. panel unanimously approved legislation. and the full house legislation and commerce committee could vote on the bill as early as
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next week. the convictions of two former bank traders have been talked down by a new york federal appeals court. anthony allen and anthony conti's testimonies were deemed invalid. allen received a two-year prison sentence, conti received one year. the banking -- bankers could still be retried. stock allocations or not their lowest level since 2008. according to this bank of america, merrill lynch survey, they are 20% underweight. and that 80% of investors believe that the u.s. is the most overvalued region. interesting. that is your business flash update. julie: coming up, we will turn our focus back to the market as the nasdaq and s&p 500 hit all-time highs, the dow is there as well today. they are all getting boosts from earnings reports, and qualcomm set to report their earnings
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after the training. more on that and what it you miss -- in what did you miss a bit later. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg.
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♪ this is bloomberg markets, i'm julie hyman. scarlet: and i'm scarlet fu. let's get him inside on what is driving equities as the nasdaq and s&p 500 climbed to record highs yet again. >> it is earnings season, and we look at what the market has done. this is ultimately what it comes down to. here are a few things that will be really important. let's start with some of the sectors, because these are big ones. financial and tax. -- heck -- tech. these expectations should carry earnings this quarter. hear what -- what we are looking take this back to
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july. the blue line is looking at the financial sector, the white line is the tech sector. you are seeing a big jump up, or at the beginning of the year analysts were getting bullish on both sectors. iny are slowly slowing down financials, while tech is getting good expectations ramping up. these are important, because banks so far have been a bit rocky, but now could potentially withhold the rest of the index, which has a big expectation and forward earnings and trailing earnings. from a more conceptual standpoint, the underdog story for earnings is how much we hear from eeo's, how much these corporate executives are actually willing to give expectations. i am looking at from bank of america. this is the number of times any kind of guidance is issued by a ceo for each earnings quarter. there is a general slope down here over the past number of years with the lowest number of guidance is issued by ceos last quarter going all the way back
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to 2000. ceosations will be that will have a bit more clarity on what the political scene means and what the outlet for some of these economic numbers mean as well. here is another, this is the margin pressures. the bottom line shows the margins in the s&p 500, they come down a little bit but are still close to the high. the top panel, the blue line is the labor cost, the white line is ppi. some of the labor cost catch up to some of the inflation we seen, that could apply pressure to not the bottom line are the top, but the middle line. i think that will be pretty important here as we set out what this all means in a really important earnings season. but the first quarter we just had, that was the biggest jump in years, 15%, that now we get to the bigger numbers, i think. julie: and the other elements here has been politics. so the earnings do get even more important. i wondered when you are talking
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about, we are not seeing as much guidance being issued, if politics is a part of that equation. if people are waiting to her about tax reform, how health care reform or lack thereof could affect the bottom line, and do not want to go out on a limb and make the forecast given those factors. >> that is a big part of it. i had breakfast with someone new works with a lot of these ceos, and what he said is that these people are eager to go out and spend that access. we saw those things get ratcheted up, but whether or not they can do that within outlook that is unfamiliar. a lot of these corporate executives hope that the trumpet ministration will do things that are conducive to the bottom line, but they just do not know. and from what we can see with health care things are not looking great for clarity. scarlet: the other thing is the lack of guidance means that that is not compel investors to come off the sidelines and go into equities. you talk about bank of america, they have also indicated that u.s. stock allocation my money
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managers are at the lowest since 2008. the position is not there, and they are not hearing anything from ceo's why go in? >> here is something else i am looking at, which is formed flows. if you look at what is happening in the past three months, that has not happened since the start of the bull market. we are getting ready to go for a fourth. i think this will increasingly get more clarity from ceo's and that will help people get off the sidelines. oliver renick, walking us through the charge. we really appreciate it. we'll to trade talks about the u.s. and -- coming up, we will do trade talks about the u.s. and china. from new york, this is bloomberg. ♪
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>> it is 3:00 p.m. in new york. i'm julie hyman. scarlet: i'm scarlet fu. welcome to bloomberg markets. ♪
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and bloomberg world headquarters in new york in the next hour. in politics, the trump administration off to a rocky start in china. they lashed out against the trade imbalance. your policymakers looking for more clarity for mario draghi. more from the checkmate -- the chipmaker after the bell. let's get a check on markets. >> we have records from the s&p 500 and the nasdaq. now nine days in a row.
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record highs second is -- for the second day in a row. shares are down sharply. this is an interesting way to look at it. it is a one-year chart. the blue lines represent record highs. we have had tons of simultaneous record highs for the major averages. today the dow is not hitting a record high. >> take a look at what is happening sector was for the s&p 500. way to see what is happening. energy, let's take a look at what is happening with oil
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trading higher on the day up 1.6% after a bullish department of energy report. bigger than expected estimated for both. gasoline along with inventories, helping a wide spectrum of the energy complex. the second-best sector i did not point out was materials. these are known as fertilizers. the green is rallying today. when theymay think are higher, there will be more fertilizer. a bit of a rally there. it mayport tomorrow and or may not come for information on possible quota. finally, trading higher despite or aact there is a rally strike. they are still running normally.
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they seem to be rallying on that fact. >> the u.s. china contents of economic dialogue takes place in washington. tensions were apparent from the start. criticizing china over the u.s. trade imbalance. for 50% ofw counts the u.s. goods trade deficit. productjust the natural of free market forces, we can understand it. but it is not. it is time to rebalance trade and investment relationships in a more fair and equitable and reciprocal manner. >> both sides canceling the closing press conferences today as well. international economics and policy correspondent michael mckee mckee has been covering the story. he joins us from treasury.
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this dialogue is usually a highly choreographed event. have we ever seen a situation where there is criticism at the start to open the proceedings? >> you sometimes see sharp rhetoric with two sides far apart. what is interesting is coming after the buddy buddy relationship that donald trump and president paying -- ping displayed. they set up a 100 day action plan. they set up this meeting. not -- this is quite a smooth as in florida. china had produced more steel than ever before. take a listen to treasury secretary. and frank have open
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conversations about balanced relationships that provide a level playing field and we will discuss economic and financial policies that will generate healthy and sustainable growth in our countries and globally. down theeans bringing chinese trade deficit, which shrank but is growing again in 2017. toare today's talks designed be part of an ongoing dialogue or do they hope to come out with actual increased goals met or policy directives? >> a little bit of both. they hoped for results on the lines of a 100 day action plan. particularly the financial services field allowing more u.s. credit card companies having agencies operate in
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china. they may still announce that this will be an ongoing dialogue . they want to set up a one-year work on the issues throughout 2017 into 2018. >> thanks to michael mckee at the treasury department. insight on where relations may be headed. gary says chinese to open up its markets to more. that the u.s.tant stake out its position in terms of specific types of rocks or services or markets. that are now close to u.s. companies and how they open up. chinaited states presses for a timetable or commitment, and measurable commitment to
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opening up so many sectors to the chinese economy that are now to u.s. participation. china is america pauses number one export destination outside of canada and mexico. to a trade between china and the united states support and create millions of jobs here in america as well as millions of jobs in china. the more that we can sell goods and services to china, the more jobs we create here at home. of the needsany and demands of the chinese consumer and companies of china. thesed to keep pushing propositions. >> what are the best ways to push those? is it just through dialogue, sanctions, tariffs, other measures? is the carrot or the stick more successful than the other?
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>> it will only lead to a trade war. if the president were to follow through on the promise of 55% tariffs, there is nothing to stop china from doing exactly the same thing on u.s. products. whether it is boeing airplanes or soybeans or wheat or beef, medical equipment, automobiles, that would hurt the u.s. economy and that would raise the price of goods american consumers purchase every single day, department stores, hardware stores, and things like that. it would also eliminate jobs. so many jobs in america are export related now. china is a huge market and that would have a major impact on the u.s. economy. in a trade war, everyone loses. there are no winners. >> what about the u.s. cooperating with other nations
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and whose interest it would be to get china to stop practices question mark are you optimistic the u.s. can lead a cooperative effort on this? >> there are many opportunities for u.s. cooperation with some allies and trading partners to make sure china opens up its market, treats foreign companies fairly, gives them equal opportunity to compete in china, and we believe in competition, we believe superior and high-quality american quat -- products will do well in china if given a chance. scarlet: let's get to the bloomberg first word headlines with mark crumpton. mark: mitch mcconnell's book
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today after meeting with the president and a member of the gop caucus at the white house. mitch mcconnell: i want to start by thanking the president and the vice president and -- who has been totally engaged in everything we have done for the last two weeks. >> the bill will be open for amendments. he says vice president pence and health and human services secretary chom -- tom will be on capitol hill tonight. the supreme court dealt a blow on the travel plant -- travel ban, rejecting his bid to bar entry to people already in the united states. last month, they let the president start restricting entry from six mostly muslim countries which means the government must accept people with grandparents and cousins and other relatives in the u.s.
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a partial win on a separate issue, temporarily blocking a lower court ruling that would have open way for potentially thousands of refugees. , scheduledarguments for october 10. rex tillerson a showing of office that coordinates cyber with other countries. it is part of his departmentwide reorganization. the office of the court nader for cyber issues is under -- established under president obama in 2000 11 and will into the bureau of economic and business affairs. the -- that will -- threatening to strap -- slap: with sanctions. eu said today is close to recommending poland face a procedure that could create --
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pave the way for voting rights. overall would force all supreme court justices into immediate retirement. global news --global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. >> coming up, perspective on tomorrow's ecb decision. he shares what he has to say about why the central bank has no fundamental bank from -- for withdrawing stimulus. this is bloomberg. ♪
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scarlet: this is bloomberg markets. julie: the central policy
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decision is out tomorrow. hawkish guidance widely expected. thepoke about the choices ecb faces. >> you would have thought, central bankers speak, and you try and really successful meetings. the markets have not moved. it seems unlikely he is trying to prepare for the action coming given disagreements. in his position, i would try to because this and say we're thinking about things and zara -- and we're slightly concerned they overreacted. we had not decided on anything. the crucial thing is about the falling inflation number.
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think about if it was .7 above two, they would think about acting. is heading in the wrong direction. there are clear issues of fundamentals. piece recently criticizing the fed and its policy, largely based on that. alreadyfed experience resolved some unknowns from exit strategy for the ecb? or has that competition it? >> i do not know it has complemented it. people misrepresent, if you like, how much knowledge there is about the process of removing the stimulus, slowing purchases. decided to start to do quantitative easing, the discussion went on between the are being bank, bank of england,
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and the fed. we do not have a plan of what to buy, what the impacts would be. andeal plan on the way in no real plan. it may not be a good thing to hear. there is no fundamental plan. we do not know the economics of withdrawing stimulus. what is the speed by which you do it? we do not know. central banks have to watch and see. england hasn't started to sell off the assets. this is tiptoeing into the unknown. i do not think it resolved anything yet. you have to tread carefully, which takes us back to it mario draghi will do.
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tread very carefully. the dartmouth economics professor earlier on bloomberg markets p rely coverage on the ecb decision and mario draghi's news conference. coverage begins at 7:45 a.m. in new york. a look at some of the businesses -- biggest business stories in the news right now. $7.1 billion. according to people familiar, the acquisition will double to help meet growing demand for faster wireless service. 4.75 nine dollars stock offering to help pay for the purchase. big blue was on the downside after reporting with revenue is thessed estimates, it 21st consecutive quarterly decline in revenue for the company. a turnaround plan enters its fifth year without progress.
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martin shkreli's trial is on hold. attorneys say the investors need to be present for questioning. he is accused of operating his company and hedge funds -- that is your business flash update. >> a quick update. his stock got a pop over the last hour or so because of sale foroking for a their oil pipeline joint venture. the process has begun and has been initiated and there is no guarantee it will happen. the news of that prospect has sent the shares higher by 12% to we will continue to monitor the headlines for you. from new york, this is bloomberg. ♪
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bloomberghis is markets in midtown manhattan. i am scarlet fu. >> running mate for today passes options insight with the manager from kk international. joining me in chicago, another day, another set of records. if what you're seeing is priced into the options market expect any kind of uptick surrounding the balance of earnings season? >> you can find pockets of expectations. the ecb announcement is being washed. i would not say it is priced into much at this point. it is expiration week.
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see any initiation, and might be longer dated. you are seeing certain sectors and certain stocks elevated implied volatility. >> i know you're looking at facebook. seeing that activity. both of us seeing bullish activity around the stocks? >> yes. both stocks seeing sit member options activity. seeing call buying. >> speaking about earnings, you're heading to microsoft reporting after the close tomorrow anticipating the earnings there. you have got a calendar spread. talk me through that. >> you talked about elevated volatility expectations.
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in microsoft, elevated expectations when you look at the weekly options. 74.5 strike this week in the august 11 strike. volatility collapse should we sit mark saw stay in the range tomorrow. microsoft, surge in based on the opportunity to participate in the upside. i'm looking for to collapse cert -- should we see it -- how much do you think that would -- the range will be? implied volatility is around 4%. average price change has been around 4%. it will be that range or tighter? >> the expectations have been priced into weekly options. options, in the weaker i think it is probably priced in but if we see anything in that range, you will see the front
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option collapse in the back option hold its value. you still have the opportunity to roll out that position because you hold onto the longer data option. >> we will watch the numbers. , walking us through microsoft options strategies. just want to recap again the headlines about an hour ago. lpi, the ticker here, resumed trading because it had searched. the company has confirmed processing, the store owner of its pipeline system, they have looked at selling 100% of these.
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+++ no guarantee a transaction will happen but they're working to look for buyers and according to our reporting, the deal could be about $2.5 billion. >> we have not seen much activity for the whole company level and energy. we have seen some assets moving around some companies. that seems to be more common over the past few months. >> it is one of the most productive oil fields in the world. activity. be >> energy stocks down. s&p 500 members. >> still ahead, the trend of the dollar could set investors overseas. wednesday. we will joined next. this is bloomberg. ♪
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mark: it is time now for first word moot -- news. mitch mcconnell says his republican colleagues will take a vote next week to debate the bill to repeal obamacare. spoke today after a
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working lunch telling them the bill and current form -- we will have more on the gop health care plan coming up. voter fraud commission first meeting by criticizing the it failed comply with the request to turn over voter information. president trump: one has to wonder what they're worried about. i asked the commission, what are they worried about? there is something, there always is. many states refused the request for detailed voter data and party registrations.


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