Today. They are all falling led by greece. Down by over 1 . European stocks falling for the fifth day. Worst run since may. Sterling is down. We will come to that with David Blanchflower. Finalcommodities is your three columns. A quick peek at the european economy. Its on track for its best year in a decade. Headed towards a golden period. Still, the recovery is lagging behind that of the u. K. And the u. S. Growth is nowhere near levels recorded at the start of the millennium. Unemployment in the periphery still exceeds 10 . This is from 2008. Thats the starting block. Real gdp. Lets get to brent crude. Hedge fund bets on rising brent crude prices hitting a record high. Continued tensions in the middle east sending prices to their highest level in two years. Raising their net long positions by two point 4 to a record. 543,069 contracts in the weekend of november the seventh. Long surging by 2 to an alltime high. Short tumbling 2 to the lowest level in more than a month. China. Nt to move on to bond yields a surging to a threeyear high. The pressure from overseas declining. Ands adding to stresses for Chinese Market already recovering from that official after theng campaign pboc governor voiced concern about a high borrowing levels signaling that Economic Growth could be an expectation. The pboc further clouding sentiment. Thats 51 billion dollars in open Market Operations in the last two weeks. Chinese 10 year yield highest level in three years. 90 minutes into the trading day. Abigail small moves for the major averages. And the nasdaq flipping between small gains and losses. This follows weekly declines last week. The first time in nine weeks. Has beenckton at btig calling for a pullback from the major averages for about three weeks. We aretinues to think going to see more downside ahead. For the end of the year she thinks the potential pullback in the near could refresh a yearend rally and she maintains her Fourth Quarter target of 2640 for the s p 500. The big story is ge. Trading at the lowest level since 2012. Manyabout 4. 7 percent as headlines are coming out of the companys investor day including they have slashed their dividend. The second time they have done that since the great depression. Not really good news. They have also offered guidance for 2018 that is below. They are talking about divesting 20 billion in assets and perhaps the Baker Hughes Ge Company could be sold. The ceo is considering that possibility. We will be keeping everybody updated. A bit of a bearish reaction for the shares of ge suggesting more selling could be ahead. It does seem that we could be having a bit of a repricing of risk. Aking a look at bitcoin over the last week signaling that perhaps investors are moving toward the true risky end of the risk continuum. The yen is rallying against the dollar. Maybe we will in fact see stocks trade off a bit more. Julie we have broadcom to fall comes rejection of its offer saying it remains fully committed to the acquisition. It reiterates the president has offered, 70 a share in cash and stocks and also talks about the company this transaction could create your it in a statement from the president and ceo of radcom, we continue to believe our proposal represents the most attractive value enhancing alternative available to qualcomm stockholders. Many expressed a desire that qualcomm meet with us to discuss the proposal. Lets check in on the bloomberg first word news. Courtney donohoe has more. President trump has made his choice for the next secretary of health and human services. s former president of eli lillys u. S. Division. He would replace tom price who resigned following a scandal over his use of private jets. President trump and filipino haver Rodrigo Duterte t bonded over their dislike of former president obama. Trump appeared sympathetic when he discussed his deadly war on drugs. Earlier trump said he had a great relationship with him. A deadly earthquake has struck the iraniraq border region. More than 400 people were killed and more than 6000 injured. The quake had a magnitude of 7. 3. It hit a rural mountainous area. In russia the economy slowed down more than expected in the Third Quarter despite a bull market rally in oil. Gdp rose at an annual rate of of ending three quarters accelerating growth that followed russias worst recession this century. Global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. Im courtney donohoe. This is bloomberg. European stocks, sterling falling on the latest challenge to Prime Minister theresa may. Her landmark piece of brexit legislation returns to parliament. She faces fierce criticism from all sides. The u. K. Labour Party Spokesman wrote to her saying over recent weeks it has become increasingly clear you dont have the authority to deliver a transitional deal with europe and to take the necessary steps to protect jobs and the economy. Meanwhile conservative lawmakers have agreed to sign a letter of no confidence. All this after two cabinet ministers resigned in a week. Joining us now from naples, florida. David blanchflower. Dartmouth college professor. Thank you for joining us. Sitting, hasu are made got the authority to push this process through . Can she survive . It certainly doesnt look that way. The old chancellor George Osborne after the election called her a dead woman walking. I think thats really where we are. You lose two ministers. In a 10 day period. You certainly look like you have no clue what you are doing with these brexit negotiations and what has happened is the Political Uncertainty you were just talking about is moving into sort of economic uncertainty. Its affecting the exchange rate. se reality now is that may tory party are now three Percentage Points behind in the polls. It doesnt look as if she has the authority to push through a brexit plan. Is aear for the market real worry as hammond is supposed to be giving a budget in the next few days and we have seen the bank of england raise rates. This is Political Uncertainty having an impact on the markets and this doesnt look like its going to get fixed anytime soon. It may fall before christmas. Mark she could fall before christmas. Can we talk about sterling . Its the lightning rod. We aref months ago down to 131. Talk me through the scenarios. Whats the worst Case Scenario for sterling if we move towards a hard brexit . The reality is the risk to the downside its always pretty difficult to call what sterlings going to do which reminds me of going to the casino. Its a little like that. It looks like every time there is uncertainty the Market Impact sterling and the bank of englands actions the other day had an impact. It certainly looks like the Political Uncertainty looks likely to have an effect on the exchange rate. The stock markets have been doing pretty well. Uncertainty is prevailing and i really do think actually the bank of england raising rates in the midst of this uncertainty just looks foolish and has added to uncertainty. I want to go back to the political ins and outs of the situation. You think may will be gone by christmas. . What does that look like . What happens then . Obviously theres an issue about whether a vote of noconfidence takes place in the house of commons. The tory party clearly doesnt want that because the likelihood is if you actually had a vote of noconfidence you had to call a general election. Its quite feasible right now the Jeremy Corbyn would be Prime Minister and hes been pretty sensible by basically saying absolutely nothing. Hasonfidence takes placethe toy basically ditched leaders pretty quickly. The big concern is who would actually replace may and the very fact that you have no obvious people means that maybe the government will actually fall. A secret letter from Michael Golden and Boris Johnson suggesting that they were dissenting. The country call in is that johnson should resign. None of it looks good for the economics. The budget ishen supposed to come. And we know that the kobe are said itig mea culpa and was going to slash its growth forecast. You have the economy intruding. You have may with very little authority. A minister last week because that minister was off making its own foreign policy. That indicates a very weak leader. Julie you said she was doomed almost from the beginning. What does a good brexit print plan look like . [laughter] Michael Bloombergs view was this is an absolutely disastrous decision on the part of the british public. Done now that its a deal, how do you do it in a way that looks better than what we are seeing right now . I dont know that its a done deal. It was a 52 to 48 vote. Theres all kinds of options on the table. There was no blueprint the british people voted for. The question is down the road what will the british people think if the economy slows, implement rises, real wages continue to fall. What the blueprint looks like is there isnt a blueprint. We dont really know. I suspect we will see is some kind of soft brexit. This week the discussion is about, we didnt really think that if we did brexit we would have a problem in ireland. We would have to have a border. How can you possibly deal with that . I think what you are seeing is people voted for something they didnt know the outcome from. Mark if the economy is in the 2019 or in thech few months before, what happens then . Could this whole process be reversed . Politics of ite are complicated. Tony blair has been talking about the possibility of a second referendum. What youn the polls see is support for brexit very strongly is going to be correlated to peoples economic positions. Falling real wages are going to have an impact. You asked me to put this in context. I was just looking at the output data. The u. K. Is the slowest growing country in europe. In 2017. Its the six man of europe. Sick man of europe. If we see the economy slowing and Living Standards continue to fall and the government that looks in disarray, the support for brexit will start to decline further. Then i think we will see some sort of soft brexit. Perhaps no brexit. We shall see. David blanchflower is staying with us. We are going to look at the future of the fed, the ecb. This is bloomberg. Julie live from new york, im julie hyman. Mark im mark barton. Counting down to the european close. Taking a hike in december as the ways raising rates before the end of the year. Philadelphia fed president Patrick Harker expecting a rate increase. Next month. I penciled in. If we see that weakness i would be ok with waiting a little bit but i dont expect that right now. I do expect that i will be supportive of an increase in december. Mark his comments come ahead of a panel in frankfurt tomorrow where central bankers will discuss how their messaging impact their effectiveness and their reputation. Still with us, David Blanchflower of dartmouth college. Im looking at our probability function. 92 charge in the fed rate hike on the 13th of december. Can anything derail it now . Dont think so. I think it is set in stone. Always concern themselves with a surprise. If they didnt do it there would be a market reaction. I think its a mistake. I think the fact that inflation in the u. S. Is so low is actually a puzzle and they have been trying to say inflation is going to rise, wage growth is going to rise, dont worry. We have been saying that for about seven years now. We just heard someone say we will wait and see. I dont think its going to get derailed. Its probably a mistake. We will see. Theres a Downside Risk to the u. S. Economy not least because the trump tax cut has been priced in by the markets. There will be little benefit when it actually comes and a Downside Risk if it doesnt which is looking more likely with the shenanigans going on in the senate and the house. Julie why is it a Downside Risk . It sounds like more of a market Downside Risk and not an economic Downside Risk. The Growth Numbers for the u. S. Are pretty strong. If you were to believe that the u. S. Was anywhere near full employment which i dont, you would expect to see inflation rising and some evidence of wage growth which we dont see. My suspicion is that theyve got it wrong. The natural rate of itsployment, they think foreign half percent. Its probably more like 2. 5 . We went from 6. 5 to 4. 5 unemployment with no rise in wage growth. The issue is are you tightening too soon . Lots of people in the attitudes are hurting. They voted for trump to give jobs jobs jobs. It doesnt feel the country is at full employment. The risk to the country is you raise rates too soon. The tax cut doesnt come through. At least this year. And the economy eventually starts to slow because of the business cycle. You, always good to see David Blanchflower. Economics professor and former boe member. Emiratesill ahead, stuns the Airline World at the dubai air show. We will hear from ceo tim clark next. From new york, this is bloomberg. Julie live from bloomberg World Headquarters in new york, im julie hyman. Mark im mark barton. Urprise at the two up dubai air show as emirates announced it would by boeing 787 dreamliners. Its a sting for airbus which expected a critical lift. Emirates chief executive tim clark spoke about the air show about the decision. Sure its a recalibration of our fleet. Its just an aircraft that has been very late in its development. We have always asked for something along the lines of the. 8 710 its not dissimilar to the 350 900. It has perhaps a better economics. It will be an airplane that appears in our fleet post 2022 as we are retiring some of our 777s. 7779s andreceiving 7778s. It becomes a compliment to the fleet. With the new planes could you be looking at new destinations, perhaps hiring a little bit more aggressively to service which you could see as new pockets of demand . This aircraft will be an enormous asset to us. Thatlows us to open roots were a little bit compromised to the size of the aircraft we have today so we can introduce far more pairs. We see this as a growth vehicle as well as a vehicle that better suits the demand as it would be today and the way we forecasted in 2022. Youru recently celebrated 1 100th 8380. What happens to the older ones . Are you going to start phasing them out . We took the hundreds. Weve still got 42 to go. The aircraft is hugely successful for emirates. It carries our brand. We have done great things in the interiors and we will continue to innovate and put some of the firstclass cabins we revealed yesterday into that. It remains a constant for us. In my view as we go forward the airline has the capacity to take more of those on. Mark emirates chief executive tim clark at the dubai air show. David davis isy making a statement on the brexit talks in the house. He says that the eu and u. K. Teams are in continual contact on brexit. Only find ann irish solution in the context of a trade deal. We cant create a new border within the u. K. For brexit and he says the u. K. Has to pursue Voting Rights bilaterally with the eu states. You can watch his full remarks the bloomberg. Take a look at where european markets are trading. The close is four minutes away. We are down for a fifth consecutive day worst run for european stocks since may. Declines for the benchmarks in london, frankfurt and paris. This is bloomberg. Mark live from london and new is the european closed. Im mark barton with julie hyman. Down for the day. Just one Industry Group rising. Food and beverage down since september. Almosta drop followed by two percent. The second weekly decline. We will talk to our guest about this in just a second. I want to move on to bitcoin. Earlier its decline from the record through this morning was 29 percent. Things have changed a little bit. Bitcoin was down as much as 15 . Its a little bit higher now. What prompted that was the cancellation of a Technology Upgrade prompting some users to switch out of the cryptocurrency spooking some speculators who profited from that more than 800 surge this year. What a ride it has been for bitcoin investors. You can see the previous decline early summer of 29, 30 . The chart keep his moving in that direction. This is something we will also talk about with our guest in a few seconds. Britains Largest Companies are a better investment than their smaller peers according to labor and capital. Librum capital. A higher valuation based on 12 month estimated profit even though Earnings Growth will likely come under pressure next year. To librum. Ording thats a wonderful chart. This is sterling. The one day percent to two. Earlier fell as much as 1 . Now down by. 6 rate puts it in context. This is the move since early may. We discussed most of it with danny a little earlier. Theresa may facing fresh challenges to her leadership. A number of boe policy makers speak this week. Weve also got data on inflation, the labor market and retail sales. Keep an eye on sterling. Julie also saying it would be a mistake for the boe to raise rates right now. Here in the u. S. Its a very little changed story across asset classes. Keeperages but bouncing between gains and losses. About 1 5 ofar up a percent. We are seeing a change of about a basis point. An increase of the basis point. Heres how it shakes out in terms of the Industry Groups. You were looking at the rather broad based selloffs. Industrials being pulled down by ge. Thats the biggest drag. Energy shares are lower. We are seeing a bit of a rotation into defenses today. Utilities and Consumer Staples are the bestperforming groups. Lets get more insights on the markets. Where to find values. , nicolas. Now head of global equities. If this a pause . Think its a healthy pause. Think its a healthy pause. You need to have some perspective here. I heard the volatility in equity markets is the most it has been since the 1960s and the ride has been a lovely escalator up to this has been a couple of steps down. It has been a consecutive number of days. The red ink is actually relatively limited at this point in time. A correction is probably quite healthy for markets at this point because volatility is so extraordinarily low. Mark where is the value . Im a value manager. I dont get the chance to go anywhere else. I am moving deeper into value areas because i think one of the things we have noticed over the last year to date has been an extraordinary outperformance of growth overvalued particularly in the u. S. And that has opened up some really interesting value gaps. Headline markets look quite expensive. The u. S. Is the poster child for that. There are still some quite interesting pockets of value around. As an active manager thats where you need to go and look at the moment. Julie we have a chart showing what youre describing. Looking globally at value versus growth. You can see the world growth index in blue. The value index in green. As a value manager when you look at that chart and you see the chronic underperformance how do you manage for that . What decent could turn that performance so that we might see value start to outpace growth again . I think the important thing is going to be what happens with Interest Rates and in particular i think thats going to be driven by what happens to inflation which has been the big missing thing over the last 12 months. My own view is that we are going to see inflation begin to pick up over the next six to nine months in the u. S. Because the underlying data is rising. If you look at the labor market, its clearly very tight. And labor prices are beginning to move up. That will be a catalyst for because that change in direction of rates is going to be the thing. You need financials to do well for values to do well and financials dont do well when you have low Interest Rates and flat yield curves. That theem has been yield curve has flattened rather than steepened. Differentslightly situation which may be misleading people at this point in time. Yield do you think the curve flattening is a temporary situation and we will start to see it steepening once again as the fed raises rates next time . And that could be better for the financials . I think so. I think its going to be relatively gradual. Forgoldilocks scenario value equities is going to be a relatively orderly raising of rates and a modest steepening of the yield curve. We dont want Something Like the taper tantrum or 1994. That would be very bad for equities as a whole. If it is gradual i think its going to be a positive catalyst for value equities. You like japan. Europe yes, better opportunity in japan. Explain why. Theres a lot more value in japan. If youre optimistic about Global Growth and you look at 2017 this is the first year that all economies in the world have orually either been growing modestly accelerating in terms of growth. We havent really seen that since before the financial crisis. Ityou go back to 1981 happened once in the 80s, once in the 90s. About four times in the inghties and weve had it 2017. Growth is picking up and typically that is very good for japan. Mark tech has led the way forward. Tech industrials in the u. S. Are expensive. Which part of tech worries you the most when it comes to price momentum . I think there are some parts of tech where you have very strong cash generation. You have high cash balances and pretty high cash yields. That are some big stocks come to mind. Apple has done very well. Lots of excitement over the iphone x. This is an incredibly cash generous business. The same is true for microsoft. Some of the big uglies actually quite attractive cash valuations. The frothy or parts of the markets are the areas which are more thematic. Its typically the disruptors were there is an assignment a assumption that whatever they do is going to be right. Those are the areas where you need to be more careful. Julie one of the beatendown areas of the market in the u. S. Has been retail of course. There has been the specter of amazon looming over everything. Do you think there are opportunities of things that have been overly discounted . I think you read my mind. It has been remarkable over the last 12 months. Amazon has been almost hyperactive. Every week there are one or two announcements. Most recently a big question mark over what they are going to do in the health care area. The reaction to devalue all of the competitor companies. In many of these areas amazon hasnt actually proved they can come up with a business which really makes sense or is a real threat to i think actually retail is extremely interesting and the interesting thing is as a Value Investor when you can buy one of the better Specialty Properties on the street you dont have to go to the worst property because all valuations are so low. If you Look Category by category in the u. S. You find the historic leaders have built quite good Online Business models. They have been quite proactive in terms of dealing strategically with that challenge. A are on very low valuations. As a value manager those are attractive stocks to look at. Melhuish. Olas thank you. Julie lets check in with courtney donohoe. The Top Senate Republican has come out against roy moore. Believesonnell says he the women who have accused the Alabama Republican Senate candidate of inappropriate sexual conduct. He says he should step aside. Moore has said he will not withdraw from the special election. Around of nafta talks begins on wednesday in mexico city and its the first meeting since negotiators abandon President Trumps previous deadline and extent of the talks to march. For now they are expected to put up some contentious issues such as u. S. Demands on dairy, automotive content and dispute panels. The senior officials in saudi arabia rejecting speculation that the king might abdicate in favor of his son. He says monarchs havent given up power and even when they have been ill. Is believed to be behind anticorruption drive that has led to the arrest of dozens of prominent saudis. Germany, Angela Merkel is in the final stretch of culinary talks to form a new government. The christian democrats are talking with three other parties including the greens. They warned that the prospect could collapse. Global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. Im courtney donohoe. This is bloomberg. Julie coming up, a bloomberg christinewith lagarde. She rejects the idea that globalization is under threat, saying the main issue that needs to be addressed is who benefits from it. More of her comments next. From new york, this is bloomberg. Twilight shot of london. Live from london in new york, im mark barton. Inie a beautiful evening london. Im julie hyman. This is the european close on bloomberg markets. Therapeutic shares are soaring after analysts said positive data on its experimental quintal drug positioned it as an ideal us with now on the Biotech Company is taylor riggs. Biotech companies tend to be really volatile. Very volatile depending on news of the day. This comes from a presentation they made at the society of immunotherapy for cancer meeting. Their drug had some effective results done on Cancer Patients with stage four melanoma, Renal Cell Carcinoma or nonsmall cell lung cancers. What does this mean for bristolmyers because it has implications for them as well. William blair analyst said they were an ideal partner when combined with this drug. Making up almost 25 of their one and growing in influence a basis when you look at it on how it has been performing on its revenue. William blair analyst saying it was great when combined with this drug and has the sign to be potentially highly disruptive in the immune ecology field. Julie nektar is not a huge company. Effect is itripple having on the rest of the industry today . Its moving some of the other indices higher. The biggest mover is the health care sector. Biotech index as well and really and take a look at the move today. For nektar news today. Mark lets go to vietnam. Thats where Christine Lagarde sat down with bloomberg for an exclusive interview at the end of the aipac summit. She defended globalization. From my perspective leaders have focused on themes such as inclusive growth, innovation to produce more productivity, creating jobs, adjusting to the digital economy. Those are really leading initiatives which certainly we we believeted and far in good synchronization with the developments we are seeing around the world. Seeing diverging views especially when it comes to globalization and trade policy. Is globalization under threat even though the chinese president says it is a reversible . Irreversible . I dont think globalization is under threat. What is under threat and needs to be addressed is who benefits from globalization. I think thats an area where Everybody Needs to pay more attention. Globalization as well as the benefit of technologies and innovations must flow to all and they cannot be groups of people, regions of the world or regions in countries which do not benefit from globalization. Behind andt excluded. Which is why they focus on inclusive growth. The second point i would make when it comes to trade because it has been a big discussion in the last couple of days is that trade needs to be updated. Frameworkt i mean the , the rulesbased mechanism within which trade is conduct did. Technologies, new supply chain organizations, the developing of the digital economy, prevailing intellectual property protected assets. All of that is new development. Arrangements trade date back to quite a few years. Its hardly surprising that some this is notsaying fair or we need a level Playing Field or we need to restore some order. For sucha need updates. And i am really pleased to see are some trade arrangements really including the issue of labor. The issue of protection of the environment. The issue of the protection of intellectual property. And readdressing trade with those perspectives in mind is critically important. There is a perception that the u. S. Is pulling out of the asia region. We had President Trump saying yesterday that now he is only looking at bilateral trade agreements as opposed to multilateral trade agreements. Given that most of the countries singapore have trade with the u. S. How challenging will that be . First of all i would observe that there are some regional that areangements being negotiated with Great Success at the moment. If some countries prefer to have Bilateral Agreements they can certainly do so. Hopefully all of that would be rulesbased, would be within the framework of principles that have an accepted and that need to be refined and improved over the course of changes in the economy so that they are can be enough integration there can be enough integration instead of disruption in the global order. Mark imf manager Christine Lagarde speaking exclusively with bloomberg in vietnam. Time for the Bloomberg Business flash. The stage is set for what would be the Largest Technology takeover battle in history. Qualcomm has rejected broadcoms offer. The Company Called it an opportunistic move to buy the ship maker on the cheap. It might face regulatory scrutiny that could keep it from growing going through. Shares of mattel soaring. Hasbro has discussed buying the company. That would unite the two biggest touring makers toymakers in the u. S. Thats the latest Bloomberg Business flash. Coming up, can ipos take on the fang . This is bloomberg. Julie time for our global battle of the charts where we take a look at some of the most telling charts of the day and what they mean for investors. You can access these charts on the bloomberg by running the function featured at the bottom of your screen. Ticking off as a first timer today. A first timer is today. You look at ipos over the last few years theres a lot of talking these days about the ipo market being down. Im here to tell you it is not. This year. Ine is we are going into one of the biggest weeks of the year this week. Almost 2. 5 billion in new stock from u. S. Companies is scheduled for this week. Why does this matter . Because jay clayton, tom farley at the sec and New York Stock Exchange say the ipo market is broken. Shares are creeping up to the decade highs of 2013 and 2014. Their evidence is the total number of Public Companies is falling. The majority of the declines came after the tax bubble burst. About three quarters of those declines happened up until 2003. When i think into the future you have another end of the year looking to be pretty strong. Youve got uber coming out and saying theyre looking to list in the next two years. Ipos dead . I dont really think so. Julie i love the title of the chart. Got . What do you mark the glory for this chart goes to sophia. If i lose i will blame her as well. Between chinas rivaling companies, nearing a whopping 1. 7 trillion in market value this year. Bigger than canadas entire company. Thats the red line right there. Bigger than Germanys Biggest Company and they have amassed more money this year than pimco in the last 46 years. I havent got more time to elaborate but its a wonderful chart and you can read more about it from sophias story today. I hate to disappoint you and sophia. I love this chart and what it shows about the magnitude of tech gains. However, i love a chart that tells me something i didnt know chartats what alexs achieved. Thank you so much. Stephen roach, former chairman of Morgan Stanley asia is going to be on bloomberg later today. This is bloomberg. It is noon in new york, 5 00 in london, 1 00 in hong kong. Welcome to bloomberg markets. Shery from bloomberg World Headquarters in new york, here are the top stories from around the world. Toate tax writers will begin hammer out the details of its overhaul bill today while the house version is headed for a vote by the end of the week. We go to capitol hill for the latest. Ge is getting smaller. The ceo the Quarterly Dividend in half, saving 4 billion a year. Shares continue to fall as investors question whether the moves are enough. Ceo says thems Company Remains committed to the acquisition of qualcomm despite the rejection of their 105 billion offer. A look at what is next to this hour. We are halfway into the trading day. A bit of
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