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tv   Bloomberg Markets European Close  Bloomberg  February 8, 2018 11:00am-12:00pm EST

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vonnie quinn. this is "the european close on burp -- on bloomberg markets." mark: top stories we're covering from the bloomberg, majors are down 1%. the stoxx 600 is also trading lower today. then we ask the t-mobile chief executive about his strategy for dealing with slowing subscriber growth. is online television the answer? shutdown,overnment the latest on tense negotiations to reach a deal that the house and the senate can live with. check out what's happening to european equities. thet of deja vu, down for eighth day and night after the biggest increase yesterday since april of 2017.
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jumping 2%, declining to that sort of magnitude in germany, for the euro stoxx 50 itself in belgium, also lower today. we had one day of respite yesterday, but the trend is right much a downward one. sterling on the rally today, up by 8/10 of 1%. mark carney saying that u.k. interest rates may need to rise at a steeper rates in originally thought to prevent the brexit weakened economy from overheating. they 77% chance of a a high before the announcement. look at on yields rising today, the u.k. five-year is up by nine basis points, in the wake of a more hawkish bank of england, with bond insurance being your final column of their. subject shares earlier rising 6.2%. the chief executive weathering the low volatility of the late
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2017 better than some competitors, returning the bank equities trading business to traditional strength, the lender posting been better -- posting better-than-expected quarterly restructuring charges at the bottom line. crediting into the news, one year into the restructuring for costs and risks, the credit starting to get help from the revenue side of the equation. lending, income from income up by 7% in the fourth quarter, dropping by 22%. will talk about the banks in further detail in just a second. commerce is talking the trend, they may resume dividend payments for the first time in three years, a sign of a turnaround by the chief executive, gaining traction for a fourth quarter revenue,
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beating estimates with a net income of 90 million euros ahead of expectations. shares at the end of the day, down by one point 8%. 90 minutes into the session in the u.s., under a bit of pressure, julie? julie: looking worse than earlier. maybe i jinx that when i said we haven't been looking at as big a swing. here they come, or at least the downward leg. they are near the lows of the session. looking at an intraday chart of the s&p 500, you can see what is going on with all three major averages in this accelerating downturn, hitting the lows just before 11 a.m., still near the lows of the session. take a look at the bloomberg, it shows the swings we have gotten in recent days. as you know, we didn't see these swings very much until the last week, but now every day we are
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getting swings of at least 1% between the high and the low. it happened again yesterday and again today. what is responsible for the selloff? i will refresh as we are talking to see what groups are selling off the most. as i mentioned earlier, curious that financials in particular are selling off as bond yields are pushing higher. typically that helps the banks, for example. we did not see a move in the bond market presaging this downward move in the stock market. interesting to note there. refreshing this one as well, these are the movers in the s&p 500 on an individual basis. microsoft, facebook, amazon, jpmorgan, intel, jp, some of the biggest drags. watch this up-and-down ratio in the s&p, for stocks down for
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everyone that is rising. mark? market: the bank of england, holding rates steady today. sterling surging, suggesting they may need to raise rates faster than previously indicated . joining us now from outside the bank of england, what is that feeling outside the market? when will this for rate cycle to send from last year? when is it likely to happen? >> i would say that the market is interpreting this as a hawkish hold. what i found interesting about the reaction today is that when we got that dovish hike, yields dropped right eight basis points and today you are seeing the exact reverse of that in the other direction. markets have started fully foring in a rate hike august. may make him much more into
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play. before it was just over 50%, now it's roundabout 75%. why this repricing? as you said, it was no change to the rates and a unanimous decision where they expected it itht be a seven to vote, but was the message in the inflation report and in the press conference where the market seems to have seized specifically on the phrase that might hike to a greater extent than what we had thought in november. not only to a greater extent, but someone earlier. after the price conference, whether this was a more -- a warning to the markets, mark carney reiterated the words gradual and limited. but the market doesn't seem to be listening. that or they are just not buying it. not buying any kind of balancing he might have tried to make in the news conference versus the options that came out early on in the inflation report as well.
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given the uncertainty around brexit, how certain can investors be about the pathway of interest in the next year or two? market, you brought up a key point there. really wellthis up in a comment around bloomberg stories, calling this a brexit contingent hawkish signal. even mark carney brought this up again in the press conference, saying that their forecasts were always predicated on a smooth brexit. reference points could be subject to change if it doesn't go the way that they expect. earlier this morning before the decision they forecast, they were forecasting before the decision, a rate hike in may, but it was specifically contingent on the u.k. getting that transmission deal with the eu at the end of march. i keep saying the word contingent.
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so does mark carney. as you pointed out, these forecasts, the fact that they have seen stronger growth this the before they did in forecast on inflation, it's all subject to change depending on what happens with brexit. , -- mark: nejra, great job. results and for some insight into the european bank, top banking executives, talking about the executive first. here have's -- here are some that has spoken. >> yes, i'm positive overall. i'm pretty considered that it will be on the turbulence of the markets. we have good growth prospects in particular in europe. what do we see? a bit of a movement on the longer end of the curve.
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our expectation is that we will likely see no movement on the shorter end of the curve. in the medium-term, the real economy is stronger, much stronger in europe than in other parts of the world. and in italy, the fundamentals are strong. not only are they looking at demands, but investments. that is the story of fundamentals being strong. joining us now, our europeaneditor for markets. low volatility at the end of 2017, things have changed. seems like a long time ago, but it did whether the low volatility at the end of the year compared to peers. >> that's right, and you saw that particularly in that fourth quarter. structured products have been very much in the news of late, given the exposure that some of them have had to those that we
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have had this week. stressing that the bank hasn't had any sort of negative exposure to those types of businesses. mark: the bank didn't have to suffer those types of consequences, his words. in the credit you have been going through a sweeping restructuring of cutting costs and cutting risks. are we seeing benefit to revenue? elisa: yes, what is interesting is that today's earnings, you are seeing banks in different stages of their trajectories. on then, relying mostly trading businesses than the other banks. unicredit, admitting to this massive restructuring. what we are seeing there is the ceo taking all the boxes. revenue growth, lower costs, de-risking. investors clearly liking what they are seeing. but the bank isn't only getting rid of the stock, which has done
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aggressively, but they are also pushing themselves for the economy to recover. have the italian banks had to be more aggressive about defending themselves since rate alley out and his like when public with the short positions? elisa: the ceo was fighting back quite hard today about that setback, and if you look at the share prices for the last few months what you are seeing is, in particular, they are ahead of capital. in the the funds that they are able to generate for their investors, paying out 85% of profits to shareholders, that's the next plan. mark: thank you. t-mobile'sing up,
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john legere joins us to discuss the move into online television. this is bloomberg. ♪
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live from london, i'm mark barton, along with vonnie quinn in new york. the european close is roughly 15 minutes away. markets lower on t-mobile following earnings projecting a slowdown in subscriber growth. that is been a big story in many markets online. the t-mobile ceo, joins me now. is true, the easy ads are gone. it's the 19th quarter in a
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, inof one million net adds 2017, we took 80% of all of the phone growth in the industry and in q4 our post payphone nets were greater than the sum total of at&t, verizon, and sprint. if you look at it, we did 891 post payphones in q4, 2.8 million for the year, 80%. when you do the math, 1.9 million in addition for the year, our growth is certainly not slowing down. you are probably referring to guidance. just in general, the landscape. it's true, the on carrier carrier campaign was hugely successful, but now you are looking at new strategies, like a shift to online streaming, which you said you wouldn't do, but are now. i apologize for
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interrupting, but we have a total market share of 19%. onhave 16% market share phones. there are tremendous -- there is a tremendous amount of room to grow. on a daily basis this quarter, to 14 courting 1.91 verizon. 1.84 to one with at&t, 1.4 with sprint. we are gaining customers every day. we aren't new to video, right? we have been playing in this space. allow, it was a way to free video streaming for customers. then we moved to netflix on us. we just heard just a company called layer three tv. we haven't announced what it is we are going to offer, but i will tell you that it's something like this. your smart phone has never met your tv. your smart phone knows everything you want to watch on
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social media. has all of your skinny bundles, etc.. millennial's in general, they don't want to stand in front of a big square panel. we are going to bring something that is the integration of streaming and social media and content, driven by the smart phone. sling, one of these. we know vaguely what it's going to be, but will it be able to compete with at&t and verizon? now that they have acquired content providers? they are both so confused and distracted. think about at&t. they bought directv for, oh my god, billions of dollars. the business that they bought is declining, right? they create this and do you know how they sell it? they tell customers that i will sell you unlimited, but only if you take directv now in a bundle. a bundle isn't something you
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want with something you don't want. don't get me started on verizon. iconic 90's or, 80's internet company. they bought yahoo! for advertising. go 90 was the biggest debacle ever. right now they are lying to america about what five g is. at the super bowl, they took a 5g tablet and used 28 gigahertz a phone call.ake saying -- hello, can you hear me? 5g is huge and it will be gigantic. vonnie: what about spectrum? john: we have 54% more spectrum than verizon and at&t. by the way, not only do i have more, verizon doesn't have enough.
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the network is choking. it is slowing down because they can't handle unlimited. what we just bought was a nationwide gigantic swath of 600 megahertz low hertz spectrum. anyone that tells you that isn't , theost prime spectrum reason they are claiming it is not what it is his they didn't show up. verizon didn't show up for the auction, comcast backed down. we cleaned their clocks. vonnie: geographically, where do you invest? guidance and have been very consistent, constantly deploying. we already deployed 580 in the 600 megahertz. the big issue is that as of right now, which is different, five years ago i had 33 million customers. my net worth was not nationwide. squarelion, 325 million
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miles by the end of this year. the big play, though, is i'm having my distribution catch up. 2800 stores last year, 260 million with network expansion, retail expansion. bringing it to cities around the country. here to for you on the, bad and worse. vonnie: do you see further consolidation down the road? now, butby the wayside are you back talking? john: listen -- no, you're not talking. -- we're not talking. my. is that all content goes to the internet and all internet is going mobile. our industries, by the way, they are defined by the .nfrastructure that you build if you build a cable, you are a cable company. if you build a wireless, you are a wireless company. companies don't care. people need to have access to
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content. players like us need scale and or the ability to migrate. where else are you looking? cash flow, are you looking at dividend, better dividend, more buyback, or a search for a new target? john: yes, yes, and yes. listen, we have $2.7 billion in free cash flow in 2017. compound annual growth in free cash flow, including the buyback of shares, that's tremendous free cash flow. we are the only player with service revenue growing in the margin space. we do have that option. we aren't interested in what we are doing for organic migration, but we realized there are ways to grow scale. there are things that we can put together with t-mobile. one of the things that we have that is great is a brand. vonnie: you are not opening that right now. john: our brand is huge, it
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stands for something big and getting bigger. 16,400 stores in a nationwide network. deutsche telekom was already made public. in the share repurchase program we are doing, not only are they not going to sell shares. they discussed plans to also buy shares. this is a great investment for them. you still consider yourself in competition with the bay wireless providers? john: no, they are dead. we're way past them. vonnie: who is your competition? who do you consider to be the companies you are in competition with? obviously, we compete with at&t and verizon, but they are easy, distracted. dumb and dumber.
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we compete with them clearly, but in a totally different way. loving your customers, it's foreign to them. they are easy. , t-mobilehn legere president and ceo, thank you. this is bloomberg. ♪
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vonnie: time for the latest bloomberg business flash. putting $4 billion in commercial properties in the u.s. up for sale according to a marketing document seen by bloomberg. new york, include chicago, san francisco, and minneapolis. they have $29 billion in short-term debt in cash and earnings to cover. for the first time ever, twitter has posted real revenue for the first time in four quarters. improving their apps and added
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video content, persuading advertisers to spend more on the social network. operating ae is network on twitter called tick-tock. that is your business flash for this hour. mark: check out the board, the major indices are down by 1.5%. bond yieldss back rising today and gold falling today as well. the close is three minutes away. this is bloomberg.
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mark: am mark barton with vonnie quinn, stocks finish up the day in european trading.
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falling afterre the biggest increase since april of 2017. we are seeing volatility back with a vengeance. on tuesday the european fear week, and -- this four trading days, the european gauge is down by 3.7% and we haven't had the fifth trading day and we are on track for the worst week in two years. i want to tell you about the bank of england, look at sterling today. we are up a third of 1% now when the bank of england announced its rate changes, and it hasn't changed. it may have to rise at a steeper pace to avoid overheating, money markets are now pricing a 77% -- before the
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announcement, that is the bank of england, and we are seeing the 10 year yield rise as a result of that. totalget to the earnings slump isl industry coming to an end. by pack of $5 billion of shares also preventing any further dilution to shareholders in the company script program. of rivalstimates exxon, chevron, falling short of estimates missing on cash flow shares. let's finish with swiss re. the company confirmed they are in talks with softbank about the
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japanese company taking a stake and could purchase a third of swiss re according to people close to the transaction. is successful, it will grow to the growing number of stakes. shares up by 2%, and that is a look at the european market. vonnie: we are lower in the u.s. market as the dow is down. the same for the s&p 500. and apple is higher by a quarter of a percent, and the s&p 500 is adding to its losses for the session, but we all know what did happen as there's four hours left. look at othera assets and how they are reflecting volatility. the dollar index well above 90 -- that is in latin america and the united states, but looking
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to the previous board, showing the dollar is little bit more supported today. it is about 89, so adding to the gains versus other currencies. 2.84%r gilts back up to -- to hear yields back up to 2.84%. he is anticipating there's going to be a two-way free exchange and will see 620 by year end. mark: global markets feeling it and with the chief financial economist, so much excitement out there, what is going on? seeing ist we are
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that it is out of the u.s. and not driven out of europe, and there is more confidence in recovery and also the german coalition coming together, which may lead to more spending in creation ofalso the safer access in the eurozone. this is all good news for the eurozone, so what is happening to the u.s. is driving markets. kenneth spill over to the central bank policy and maybe change the direction -- can spill over to the central bank policy? david: it is focused on the thatce sheet, whether includes u.s. treasuries, that was a theme for this year. and the ecb, we are heading towards bonds later it's your, thepcb is helping recycle
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eurozone, particularly germany and u.s. fixed income. that will come to an and potentially later this year. mark: at to the gilt market and sterling, you saw my chart their, down. we went into the meeting believing he would be more what new stuff did we get out of today's meeting? david: we were expecting the back to raise rates twice this year, and today confirmed that and it can happen in may and again in november. every february they do a supply check in the u.k. economy and believe that they are forecasting -- the output gap is diminished and the expect a economy to grow in a faster trend and wages to pick up momentum.
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because of this they expect to rates, raise interest but it is a process, and it could be the case they could get away for raising rates twice more in 2019, but it depends on brexit and how the transition goes. much will it be depending on how is it goes? we might have to change assumptions completely. it's a stretch to say that, but the air is filled with risk, but at the and of the day we are moving towards a transitional phase. the bank of england can work its way through that, and obviously they are assuming trend growth is going to be lower and will the things they focused on is investments in the u.k.
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it has been growing but it should be stronger than what we have seen and that is due to uncertainties created by exit -- brexit. the bank of england is going to react by raising rates slowly but surely. they also have a meeting in march -- one should be aware of this meeting in march as well. vonnie: what can you anticipate will happen to economic growth and at what point this u.k. face difficulty again? what we are seeing globally in terms of growth -- what came out of the inflation report is the strength of some of the uk's main trading partners, particularly in the eurozone. and is helping the u.k. driving the u.k. along, but at the end of the day, the u.k. is going to grow the next couple of years.
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is week forgrowth an extended. , but the bet is it will be 1.5, and the central bank thinks it will be won at three quarters, but it certainly is lagging. mark: how much slack is there? that classic question that is difficult to answer. i believe 25 bits of gdp -- no precise signs that these numbers come with a huge margin of error, and the proof in the pudding is the u.s. in a way. if wages pick up this year, then that will confirm the banks are reeling -- no the rate is 4.25 -- from 4.5, nudging it.
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datau look at the official , and you look at the index number and analyze the change in the which is what we can to look at, that has picked up. it is running closer to 3%, and also the banks reporting regarding difficulty in the u.k. and wages are likely to rise this year and rise in 2019, and this is where the bank is. it is expecting wages to pick up an economy to grow slightly faster than the trend, and thinks it is right to think about raising rates further. they cut rates only after the referendum, and if there hadn't been a tech referendum, rates in the u.k. will be higher than they are now. there -- david owen. expected toe is
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pass a two-year spending bill to of art a government shutdown tonight. faces a rocky road in the house, and democratic leader expressed objections about the lack of language on immigration within unprecedented eight hour speech. some conservatives are opposed because it increases the spending bill. house speaker ryan thinks he has the votes. president trump thinks -- addressed the national prayer this morning after a high-profile annual event that brings together leaders and theticians and spoke about power of god's love of americans, especially during the response of hurricanes and mass shootings. benjamin netanyahu is brushing aside several corruption probes says it may-- media lead to an indictment, but netanyahu insisted the investigations will find nothing.
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philadelphia has been waiting for this day since 1960, and that is the last time the eagles want a title. is super bowl victory underway, and schools are off and they are being handed free beer. global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. you seemed very pleased reading that last story. let's get a check of the markets because they are picking up steam -- the dow jones average , the s&p is down 1.5% 500 is down, and the nasdaq is down 1.3%. up, and goldield futures, not that much movement
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there, although the dollar index today is at 90.25, the little strength of the dollar index, the vix that started all is at 29 right now. this is bloomberg. ♪
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vonnie: global markets under pressure, let's begin abigail doolittle for an update. >> we are in selloff mode. abigail: there's session lows speaks to the fact of uncertainty and volatility we have seen this week, even last week. worst week forhe major averages since early
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january and february of 2016, so a continuation of that again. a lot of jitters, and we see the base up at 29, not moving back down. through get volatility the doubt in the last five days, and has been quite the right for the dow. down 16 points, and still uncertainty with all this meandering weeks to the fact that either buyers or sellers know what to make of the fundamental situation. the selloff seems to come out of nowhere, taking a lot of investors by surprise. we did have that big rally last year, the one piece of the selloff, overbought conditions. we look at the bloomberg chart, this is the s&p 500 on top over the last several years. 500 for the last
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two years climbing, a spectacular 20% move up, the best since 2013, overbought conditions relative to the today average in yellow, and that tells us the sentiment was overextended, frothy. we see that today moving average at its highest level, going all the way back to 2011, so now we have this move lower, they say correction start slowly and happen suddenly. we can also see based on the prior action that when it gets overextended, it tends to reconnect. the has happened for russell 2000, and the german dax well below the two day moving average, suggesting there is more pain ahead for stocks, and beyond overbought conditions, other sources of pain, rising rates. the big story last year was the identity -- the idea that the
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yield curve was flattening. shooting inflation expectations and setting investors off guard. perhaps easy money is gone, and what it means for asset classes, there is a bearish assessment for stocks and perhaps for the commodity complex. 1.6%, down for its fifth day in the row, the longest moving stretch for oil since april of last year. oil is considered to be a growth another silo in the risk asset. complex telling us this is a coordinated selloff of various risk assets. it repricing of risk and technical indicators suggest that the selling action could continue, and oil certainly a piece of this commodity complex. vonnie: we are back to november
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levels, abigail doolittle, we will be keeping an eye on every tick. saying they are poised to pass a bipartisan budget deal, but the bill might run into trouble. at the house nancy pelosi expressing her concerns, with a speech that lasted eight hours. we are joined by kevin cirilli. is there any possibility that democrats and the house freedom caucus might kill this bill? know. we just don't ultimately, a version of this bill will pass, avoiding a government shutdown, and this be a second government shutdown this year alone. i spoke to sources close to the freedom caucus and becoming this is fiscal irresponsibility.
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the question becomes if there's enough members to significantly derail this. i can tell you that senator john orman has said publicly that the senate is expected to take up a vote upon its bipartisan deal sometime this afternoon. would kick it back to the house of representatives where they have to do this. deficit hawks in full force saying this bill busts through the budget cap, they don't like it, they think it is too much government spending. vonnie: it was a bait and switch . what happens to that back to daca, where does it leave daca recipients? kevin: we are monitoring paul ryan's press conference which is currently ongoing. the second point i would raise is that they are up against a
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tight march 5 deadline, the site for eight hours, but technically a filibuster, but for all intents and purposes the nancyterized as one, pelosi regarding dreamers -- there was a massive protest on capitol hill yesterday. she was of course defending them and getting congratulations from house speaker paul ryan saying he will take up some type of immigration debate on the floor. but it is not what progressives want. coupling it with resolutions, and they have to get it done by march 5. we should also know that part of this to your bipartisan deal is raising the debt limit through march 2019. go back to this eight hours speech and what type of support does nancy pelosi have?
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i understand some members don't want her to make a stand on immigration. kevin: i will keep this quick. unitedgressive force is on this issue, but for all intensive purposes, so is silicon valley and the business community who are pressing the issue as well. vonnie: thank you kevin cirilli. will no doubt return to him throughout the day. the markets,ack on major indices under pressure, and the dow is down 1.4%, and -- s&p one point 4% lower what the police are to blame for the s&p, and the nasdaq is down 1.3%, and apple is the only stock higher in the dow. justhat volatility index selling below 29. this is bloomberg. ♪
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vonnie: let's get back to the
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markets, and major indices under pressure. we are joined by bloomberg cross asset reporter -- what is responsible? it is a big move from this morning. >> i can tell you what is responsible but i can tell you what has played out. we haven't normalized at all in terms of volatility, the major -- is in complete disarray. vix futures contracts is upwards increasesncertainty over time, completely reversed right now. thatg the selloff we had, spread completely blew out. it has loosely been tracking stocks since friday and that spread we are able to pull up basically shows you that the volatility complex has not
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normalized, even if we do get bounces, until it goes away, history shows us that those episodes have lasted pretty much up to a month. we could be on pins and needles for some time. is >> the active contracts, what that shows you is as traders are pricing the risks, that front month contract being traded more richly at a premium. that loosely tracks the downside in stocks, typically in a normal market, you will see a fairly stable spread between those two contracts and stocks drifting higher. what we saw the last year doesn't exist now. narrative on monday
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and tuesday was that this is a healthy correction, is that still the case? >> so far people are still saying that, nothing about the fundamentals of this architect changed, but the fundamentals do not seem to matter one bit. whate not trading based on the earnings season was, but what we are seeing is a bit of indiscriminate selling and some moves in options that suggest that a lot of the focus suggest that the broad based selloffs will continue in a sense that tech volatility is priced the less expensive than general stocks. vonnie: will continue to monitor. ♪
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the senate is expected to quickly pass a clear spending bill that will avert a government shutdown tonight. it faces a rocky road in the house. hery pelosi emphasized
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objection to the lack of language of immigration is an unprecedented eight hour speech yesterday. some conservatives are proposed because the bill increases domestic spending. house speaker says he has the votes for passage. click's prime minister says the country is not going away from the u.s. and europe -- turkey's prime minister. >> i want to make it clear, we have had relations -- we had a rough patch in general, turkey is basically a relationship with europe is back, and i think the , wetionship with the u.s. have huge disagreements of what they do in syria. u.s. is providing weaponur


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