tv Whatd You Miss Bloomberg November 21, 2019 4:00pm-5:00pm EST
overtaken warren to be pulling average for the first time. that might be something to watch. joe: all the billionaires have to come back out into in a few rounds but how much that would hurt them. a few seem to like president buttigieg. the hong kong situation is a matter of concern. but ifket seems to be ok we don't get an official announcement by the end of the year, markets start to field questions. caroline: it seems that questioning pulled the stock market lower today.
big move. key under performer is the small caps. watching?hat are you >> we had a small decline for major averages. for the s&p 500, three down days. first time since early october. let's put in context of the technical part we have been looking at for months. all, with the rsi going appropriately from overbought to oversold, then the range everyone was talking about when the range was breaking out, we have this multiweek melt up, but today, we have these three small down days. we may see the s&p 500 move down toward its but 50 day moving average. supporting a pause or consolidation. but there is an area here where it lifts up and down.
we may be starting a new higher range. >> speaking of higher range, a big day in oil markets. the most active west texas intermediate oil contract, rising 2.5%. lateis the highest since september. futures up 1% or more across the entire oil curve. the brightucers are spot today. exxon mobil up 2.5%. xle, sp, you have , they arerry and mlp among the biggest gainers. oil and energy etf's up even more. part of this is being attributed to optimism about the trade talks and what that means for the economy going forward, but there is talk among analysts
that is giving a lot of fodder for the bulls. west texas intermediate could test its highs. its estimates for brent and wti. a lot of people talking about the opec meeting coming at the beginning of december. some even saying opec fed institute further cuts in production to keep prices rising. >> i am taking a look at income oriented investors. if you are one of those, you are predicting growth or high paying dividends. that is a question that citigroup global strategists tried to answer this week. if you take a look at this chart, they are recommending dividend momentum strategy, saying that in the last three years, it was all about stocks looking at high dividend growth rather than dividend yield terminal charts. return comparing a 51%
relative to a 28% return in and decks that tracked higher than yielding in shares. citigroup saying go with the dividend momentum strategy. scarlet: thank you so much for setting that up. still with us his chief investment officer for deutsche bank wealth management in the americas and across asset reporter. mike was talking about energy stocks and how they are catching a bid for the second half they are still the worst performers. we saw oil prices picking up here. and is your outlook on oil energy stocks? >> they are deep value stocks. notwithstanding recent price movements, we have a be nine outlook.- benign there is a concern opec might not extend its cuts when they meet in december.
we expect another round of oil into the marketplace from nigeria, norway, guyana. there is a lot of supply coming into the market. we will see a sustainable uptick in the price of oil given where the demand is and our outlook for growth. a good rule of thumb we have gdp growth, subtract 2%, that is oil demand and that tends to be significantly positively correlated. you are looking at a 1% global growth in demand for crude and given this one million barrels of supply coming on board, don't expect a sustainable rally. ofing said that, the parts the energy complex we do like, refiners would be one. especially saying that we need to use high-quality crude going forward. that might create some demand for refining capacity. that might help the refiners. credits inwhat the
this space have been doing. bloomberg high-yield u.s. energy index was up double digits total return in april. it is now flat on the year. that gives you a sense of how the smart money has been feeling on energy. a downcast of you for quite some time. caroline: meanwhile, let's look at breaking earnings news. --y's in a lackluster nordstrom third-quarter revenue, a be the highest estimates, still down 2% year on year. the estimate was $3.58 billion. we are seeing account staying steady. growth staying steady. an improvement and they are pulling out the four-year adjusted earnings-per-share expectations. that is a slight improvement. some retailers are doing well and some are doing badly. you can't just say retail
apocalypse. can't they all just do the same thing so we can have a cleese -- a clean narrative? i just want a clean story that affects every company. caroline: do you get a rate of the consumer from these numbers or do you look more at the economic numbers? >> we look at them, but our thesis has been, if you are a u.s. investor, we are asking investors to focus on domestic stocks. stocks, look at those sectors and industries that taylor to consumption rather than business spending. the third one would be to look at those -- there is a little more cyclical, so we do like consumer discretionary space. eight lululemon for example. the underlying premise would be focus on
quality. i know it is a broad term, but we are looking at companies that have operational models that have predictability of cash flow, dividend paying companies. someone expanding their dividend payout ratio. then, not too much leverages. if you're looking at a slow growth environment, you would rather do well to avoid the leverage companies and sectors. a moment ago, we were talking about oil. so much of oil rides on gdp. what is happening in your view with the global trough narrative? is that intact. >> it has been, what is it, 10 hours? i think if you think about what has been happening since september, sickles, commodities get off their lows. buts partially trade talks,
it is second derivative on global growth. you need that to continue to be confirmed. if that story goes the other way, it was really only one print that got us into that story again. you do need confirmation from the preliminary numbers. that will be one thing that does help guide action and treasuries. scarlet: we will be getting numbers in the u.s. on friday. to wrap things up, are you of the mind that as we see global growth stay in these low single-digit numbers, that it might be time to look at overseas markets because they have potential for catch up in a way the u.s. has maxed out on? >> i think the first thing we are trying to do is not get tentative to invest in the market. it is very tempting because the markets have had a tremendous rally. that on the fixed income side, you don't get much yield.
investorsity side, are concerned. it has been such a strong rally. it is highly unlikely that we repeat 2019. cash becomes a very tempting asset class. tacticalanding some position, i think the first thing to do is be invested in globally diversified. do your point, it does make sense, especially with this historical precedent. up,ever pmi starts to move they tend to outperform the u.s. we are seeing policies from pboc, cutting primates. i would not be surprised if for the time being, the focus shifts from outside the u.s. into these markets. i look at our 12 month forecast. it is high single digits. with emerging markets doing
slightly better. scarlet: perhaps em and international first. chief investment officer for deutsche bank wealth investment in america and bloomberg news across asset reporter. that does it for the closing bell. romaine bostick is stepping in for "what'd you miss?" where we will be looking at schwab's plan to buy td ameritrade. this is bloomberg. ♪
bloomberg world headquarters. caroline: here's a snapshot of how u.s. stocks closed down on the day. joe: the question is, "what'd you miss?" caroline: charles schwab capitalizes on the industry with offers to buy a key rival. cautious trade deal optimism. china's chief negotiator could be closing in on a trade deal even as violence in hong kong divides between the u.s. and china. investors remain nervous. a mixed bag for retail. reports on earnings while macy's adds concern. the latest coming up. ♪ joe: let's get right in with the big story today. charles schwab tightening its grip on the retail brokerage industry with talk stuart acquire td ameritrade. the deal has not been announced. jmp is a senior analyst at
securities. thank you for joining us. here?s the opportunity obviously, scale, but without scale, what can they do without? -- with that? >> at a high level, consolidation occurs because it makes sense. there are huge expenses in these deals. also revenue opportunities. you have got schwab as the largest custodial platform. 25% of market share. ameritrade is the third-largest. combining two of the largest platforms. they can do more with the assets, get them for a better price. on the retail side, a lot of opportunities. best active options trading platform. schwab has not historically had a great success there. schwab has a great retail platform and they can do more.
ultimately, you have the expense opportunities as well. romaine: talk more about the advisory side. when schwab was heavy in proprietary funds in a fee-based brokerage, it looked like they could ride that for a while. we saw costs come down to next to nothing. why am i supposed to believe that the advisory side will be different long-term? >> we talk about the advisory side on interest. these firms have continued to widen the mode between what they offer for what they pay. there is virtually nothing on their platform. they give up tons of service, technology, and they keep 100% production. the other competitor platform, those platforms are keeping a fair amount of the production. it is a very compelling economic offer to the advisors. the question is, now that you've got a bigger combination where there is economics that are
likely to improve for both firms, can they give away even more to advisors so that will further widen the offering for them? it is pretty compelling from that side and on the retail side, this was not the deal that people thought would happen until we all woke up into her surprise. it was more about buying e*trade. that created a lot of conversation today, but at the end of the day, consolidation in this space makes sense. that might drive more consolidation down the road. the million-dollar question we are getting, you still have the schwab and ameritrade, where timing may get pushed down. -- from: they could buy a regulatory perspective, they could be three in one? >> it is a fair question, a question we are getting a lot from clients. schwab being a large firm has 8% investable assets. these firms are going after all investable assets.
not just self-directed trading. you have to look at it from that perspective and the perspective of the customer. customer has been the big winner of pricing cuts. consolidation continues to help going forward. that is the big question between if schwab and ameritrade get together, do they cut even more on options or give better cash or better terms on balances? there is a lot to consider, but the end customer is one of the biggest beneficiaries. joe: is this the plan all along when schwab announced that it cut brokerage commission to zero? schwab's own stock took a hit. it would be much more painful for its rivals. it has so many assets, it is so robust and the other is a fee-based advisory. do you think this was sort of the idea all along? it put competitors in a position where they had to sell?
>> i'm not sure if the cuts occur just to do this deal, but they definitely go together, meaning that taking commissions to zero remove a barrier to consolidation. schwab is not going to want to pay for revenues. they know that they are taking them lower over time. now that those revenues have been removed from commission side as we have gone to zero, they are reflected in the stock prices. it does remove that barrier and you have to think about in some ways, ameritrade has always been a premium in terms of price and now ameritrade is at zero on equity commissions just like schwab. ameritrade has a premium platform, so you're not paying a premium to get it. their growth the last month and a half has been better than others. in some ways, schwab created a stronger competitor and that might be playing into the assets here. caroline: always great to have
you. thank you for making the time on what has been a busy day i'm sure. let's get you some breaking news. remember, the chief executive announced they would be stepping aside. missing overall earnings. the lower end of the range remains, but we are seeing a pop up after hours. romaine: we are seeing breakdown. banana republic down 3%. it gapped down 7%. old navy was the one bright spot for the company, down. we will see what kind of turnaround is caroline: around. caroline:from new york, this is bloomberg. ♪
joe: we just want to recap earnings from nordstrom. not all of retail earnings have been that bad, although many have. nordstrom surging 9% after hours, the employer adjusted eps beating expectations. eps beating expectations and so forth. a lot of retail names bad, but nordstrom bucking the trend. romaine: another key department store out there, shares may be falling after his chain cut its profit outlook. ceo telling investors the company is locked and loaded for the fourth quarter. sera fromg in washington. i have read through this press release, listen to the conference call. one thing that stood out was this idea that some
underperformance might be related to location. they are not doing all that well. they did mention lower tier malls were a drag. that is important because it calls into question a major strategy of macy's, which is that it wants to keep open these stores. this raises the question of whether that is a good idea. considering ao be more aggressive store closure program. these results bring that to the four. joe: some of these big unicorns that went public, people get very interested in marginal unit cost. i wonder if we have to sort of do the same analysis with a company like macy's where it is trying to figure out which aspects of business are still profitable and thriving. macy's and isg at
the reversion out there where it can be consistently profitable? >> macy's does have valuable real estate. 34th street herald square is a great example of that. monetizing real estate by spinning it off. that is one way it can become healthier. at the end of the day, sales are key and it is struggling. e-commerce results were a good example of that this quarter. years, first time in 10 have lower than double digit growth in e-commerce and when you consider the market overall growing 15% and retailers like target and walmart putting up 30% digital growth, we have got to say to yourself, what is macy's missing? caroline: pretty damming that it is going to become a real estate company if it makes things work rather than a retailer.
they said they are locked and loaded for the next quarter. it seems as though they are trying to say the past is behind us, we are now in check and going to make the most of the holiday season. >> we have heard that from macy's before and they thought they had promotions locked and loaded last year. they didn't. loyaltye change their program a bit in the last couple years and are trying to figure out how to make that work in the framework of the holiday season. i have no doubt macy's will be pulling out all the stops. one thing you have to give it credit for is it is pulling many levers. off-priceng the business, renovating stores. it is dabbling in rental and resale and consignment. it is throwing a lot of spaghetti at the wall. the problem is, when you look at the top line numbers, it does not seem to be working. to gete: always great your expertise. thank you. more capitalout
scaling back its business. the firm announced it will return money from three flagship funds. bacon himself is effectively quitting the business after three decades near the pentacle of global finance. are in the line of fire. he will apparently be focusing and sports oriented properties. i don't know what those are. romaine: i assume that means buying a sports team. you saw the writing on the wall after the crisis. they are trying to capitalize on that shine they had. 2012, we that back in were talking about charles schwab. 10 basis points index and get 24% per year. that is a lot of savings. joe: i would rather own a sports team. [laughter] coming up, china cautiously optimistic but will the continuing tensions in hong kong
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bloomberg's first word news. testifying on day five of the impeachment inquiry along with dave holmes, fiona hill, the former national security council executive was questioned by lawmakers on what former national security advisor john bolton meant when he told them that rudy giuliani was a hand grenade that was going to blow everyone up. that what mr. giuliani was saying was explosive in any case. he was on television making incendiary reports about everyone involved. he was clearly pushing forward issues and ideas that would
probably come back to haunt us and in fact, that is where we are today. mark: hill says the discussion with bolton centered on what could be done about giuliani's alleged smear tactics against former u.s. ambassador to ukraine. house minority leader kevin mccarthy because the attempts by the democrats to impeach the president a political hit job. mccarthy told reporters i don't know how many more people they want to try to bring forward but every time they do, it goes right back to the case that the president did not make conditioned. >> when you pause for one moment, is a different than any other hearing we had? we are talking about impeaching. we are talking about removing the highest elected person and changing the fabric of democracy. we should not take that lightly. alexander hamilton warned us about this.
mark: recalling the testimony by gordon sondland, u.s. ambassador to the european union, mccarthy said, every time he was asked what the -- where there any conditions on aid to ukraine, he said no. five, hearings wrapped up moments ago. the u.s. senate has passed a four-week temporary spending bill, sending president trump the measure to put off a government shutdown until december 20. funding was set to run out at midnight. senate voted 74-20 in favor of the stopgap after it passed the house by a wide margin. is prime minister has rejected his indictment on an array of indictment charges saying the countries witnessing what he calls and attempted coup against him. in a defiant statement, he said the indictment stems from what he called false accusations and a systematically tainted investigation. attorney general for israel said the indictment was a heavy hearted decision based solely on
professional considerations. he charged netanyahu with fraud, breach of trust and bribery. the attorney general rejected suggestions at the indictment was politically motivated. netanyahu's main political rival says the indicted prime minister has no public or moral mandate to make fateful decisions for this state of israel. global news 24 hours a day on the air and @tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. if. -- this is bloomberg. romaine: china's chief trade negotiator indicated he was cautiously optimistic about reaching a trade one phase deal with the u.s.. this as two types of diplomacy warned of the dangers of escalating the tariff war. here with more from washington, our white house coverage for bloomberg news. this gave a little bit of hope
to the markets. how much stock can we put in the comments and what do we know about the state of negotiations? >> i would describe myself as cautiously pessimistic. we are not seeing a lot of movement toward with the white house likes to call a phase i trade deal. we also reported that the chinese have invited the top trade negotiator to beijing for further talks. he declined. trump said yesterday that the chinese are not giving him what he wants. i presume that means they are not moving toward enacting any constraints on -- or protections for intellectual property. the chinese have also complained about the level of agricultural purchases that trump has demanded, saying they don't want to write any specific amount of purchases into a trade deal. there is a lot of obstacles that need to be overcome in a short time. tariffs are expected to go into
effect on the 15th. if i had to bet on any outcome right now, i would bet donald trump does not sign any trade deal with the chinese. headlining we are that. >> i hope we don't. don't trade anything based on me. that's how i look at it. i don't see much action. joe: in the meantime, in addition to everything else, further complication that conch on legislation is expressing support for the protesters, which china has said -- in your does that factor in? >> for sure. that is part of my cautious pessimism. the chinese have said a couple different things about this legislation and the same remarks were that they were cautiously optimistic. --hink he indicated
see how that doesn't influence trade talks. caroline: cautiously optimistic or pessimistic about the tariffs? >> i think donald trump could find a way to delay that round of tariffs. it would not surprise me at all if he comes out and says enough progress has been made toward a deal, even if there is no progress at all. caroline: we thank you for all your caution, whether optimistic or pessimistic. sticking with trade, for me u.s. chief economic advisor says
getting a phase i trade deal done with china is in everyone's best interest. he caught up with bloomberg at the new economy forum in beijing. are having a trade skirmish. the two sides have some disagreements but if you look at what's going on, the countries are functioning. there is a lot of trade going back and forth. the united states is receiving the goods that we need to have a functioning economy and our economy is functioning well. i hope we get a phase i deal and it is in everyone's best interest to get it done. >> supply chains have moved from china. they are going elsewhere. >> that is a natural business cycle and it makes sense. supply chains have moved. maybe companies got too concentrated in one market and we are seeing more global diversification. in the end, that will probably lead to countries being more diversified. >> what is the federal reserve
do in all of this? they are getting attacked by the president, they have a policy that seems to be holding up but it could turn. >> the federal reserve is independent. i think protecting the independence of the federal reserve is important. where the governors and vice chairman have done a very good job of trying to walk the line of independence. they are making policy decisions based on the data they are seeing. they're always trying to figure out what is going to go on in the economy. it is a very difficult thing, especially in a globalized world and jerome powell and other voting members have been making the right decisions based on the data they have at the time they make the decision. >> is the fed now central banker for the world and not just america? >> the fed is the central banker to the dollar. the dollar is a key trade currency. global economic us -- the fed does what
has an impact on the rest of the world. joe: that was former u.s. chief economic advisor gary cohn speaking with bloomberg. coming up, mixed signals on trade as stocks under pressure and investors mean concern about global growth. important global data coming out tomorrow. will that offer reassurance? this is bloomberg. ♪
bloomberg.com has a story on the current and former mcdonald's workers suing for failing to protect employees from customers who became violent. mcdonald's says it takes seriously its responsibility to provide a safe working environment. the company and franchisees continue to make investments in trading programs -- training programs. twitter is reporting that china ininverting a crisis response to a swine for epidemic. afteruspended imports discovering a forged health certificate. . you can follow all of our stories on the terminal. investors will get fresh economic data to digest with the release of u.s.,
european, global pmi data for november. our next guest says that if you look to new orders in the inventory ratio, services and manufacturers might be to the upside. for more insight, let's bring in a macro strategist at eia alpha partners. great to have you back. you have been arguing this line for a while that whatever the bigger picture is, we would see some sort of q4, early 2020 rebound and some of the data suggests it. what are you looking for in the short-term? obviously, market pmi tomorrow will be important. as i discussed before, diversions between the market on the way up and down seem to be driven by the large cap sentiments. optimistically first then pessimistically now. do we see a reversion between the market in which case, we
would get the signal that maybe people got to pessimistic? romaine: sentiment is on the upswing. is there really this synchronized global growth? i don't think it is like 2015. the primary reason is china. we don't see the same impulse in credit growth on economic activity. one third of auto purchases in china were funded by peer to peer loans. that has been obliterated by shadow banking. i don't expect the same type of synchronized recovery, but in some assets, we are priced for deterioration. even stabilization would have market implications. caroline: it feels like the narrative in the last week or so in switched to u.s. going
2020 now it is time for the rest of the world to outperform. is that something you are getting ready for when we look at the european pmi? tailwinds.there are the extent to which auto sales and industrial production in europe declined was pretty strong, driven by china. i'm not entirely sure the extent to which we will see outperformance, because just yesterday, we saw housing data in the u.s.. it is one of the leading indicators of the united states. we are seeing that impulse from lower rates to activities in the u.s.. it remains to be seen what is a broad, but there is something to be said about if we do see a sentiment shipped, especially on production, if there is a resolution. china, when you talk about seeing this reflationary
impulse. how much is a policy choice, they just don't want to open up the credit space again like they have in the past, versus pushing on a string. even if they wanted to, they can't get much juice. >> i don't think they are at the stage where they are pushing on a string but they are getting close and china's authorities have been pretty cognizant that we don't want to continue to increase leverage this late in the cycle. ofan extent, there is a bit diversion from the policymakers side. even to the extent they have loosened, distribution of credit is not as resilient and robust. a big part is because of the way shadow banking has collapsed. romaine: when you look at push back into risk assets and the idea of reflation globally, particularly in the u.s., i am concerned that you have a multiple expansion in the u.s..
and in europe as well. into next year, you don't have the fiscal spending. you don't have the corporate earnings growth that some people would look for. my question is, what is going to keep those risk assets afloat if the fed does not have room to maneuver? think one ofll, i the biggest reasons we have had deceleration is because of the hangover affect from fiscal stimulus. we have digested a law of that rolling off, but there are going not beectors -- i would surprised to see yields back up. the biggest impulse is going to be just because if we do see resolution from the trade war, we will see the beginning of exuberance among corporate sector. type of exuberance that may create the excess that leads to that cycle. joe: you have mentioned a few
times and and to the trade war but a lot of people are extremely skeptical. ofis becoming a point mockery or humor. do you think we look at a phase one? >> i think so. one of the biggest reasons is the political pressures that president trump has. one interesting aspect that is under discussed is south korea. what can the u.s. offer china to have a substantive deal? the biggest thing we could offer withdrawtential of from presence from the korean peninsula. suspended its. annual drills with south korea that it usually does to presumably appease kim jong-il, otherwise he may go down the missile launch route. the second thing is we just raised our price tag for troops in south korea from $1 billion to $5 billion per year and in
negotiations, we walked away. i think we are seeing signs of a potential withdraw from the peninsula, which president trump could hit before the first meeting with kim jong-un. that would be a massive concession to the chinese. caroline: thank you. .rom eia alpha partners from new york, this is bloomberg. ♪
pressure on economic activity. you can expect to see more impact from here. >> so far, we have not seen any outflows or major movements. >> i don't see a change in the behavior of clients that are significant financial players in hong kong. hong kong future and whether this will remain a global financial hub has been a major topic of discussion at the new economy forum. let's bring in bloombergs shery ahn, live from the event. from your perspective, what has been the key takeaway when it comes to beijing's view? you just heard the comments there. as they like to say, cautiously optimistic. we have heard some other comments as well. being a little bit more downbeat about what is happening in concorde. the ceo of dbs bank now saying that he has seen his clients moving money to other parts,
like singapore and the u.k. we also have standard ceo bill winters talking about some of his clients setting up accounts outside of hong kong, just in case. we have had several participants in the new economy forum saying that the u.s. legislation backing the protesters will not really be helpful for this when we are in the middle of china u.s. trade negotiations. china's foreign ministry saying that if the u.s. insists on going down this wrong path, china will take strong countermeasures. we had china's vice president giving the opening speech in beijing and he warned us that cold warm mentality, we had the former u.s. secretary henry kissinger saying we are at the foothills of the cold war. ceo, when i the 3m spoke to him about the situation on the ground, he was more
optimistic about supply chains. been a lot of discussion. it do supply chains move as trade tariff negotiations government? will you see customers move production? we haven't seen that. >> we have seen a lot to different perspectives when it comes to the new economy forum but suffice it to say that the global economy, trade as well as hong kong were top of mind. is already a good forum set up so far. who are you going to interview up next? of guests today as well. the second day of this new economy forum, we are talking to the vice chairman coming up on "bloomberg daybreak: asia." we have seen differing views about where the global economy is headed. talkingormer pboc chief here at the new economy forum,
saying china has room to deal with monetary policy expansion. we will have the mastercard vice-chairman as well as indonesia's unicorn travel app ceo. joe: real quickly, what is the vibe in terms of the overnight cautiously optimistic about a trade deal? do people share that cautious optimism? >> i think that sums it up. it is cautiously optimistic. everybody is concerned, but they are hoping for the best. caroline: we thank you. good luck today. enjoy it all. more on this story, don't miss daybreak asia. meanwhile, the numbers for germany. pmi comes out tomorrow. joe: and i will be looking at economic data, preliminary numbers in the u.s. out at 9:45. romaine: don't miss this.
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