From the end of the tuesday session. Stocks are rising today. Greece, luxembourg, norway, germany, all gaining. His are the currencies gaining against the dollar. We are seeing bond yields declining. Today. Shares jumping 6 easyjet predicting a gain in prices this winter after earlier forecasting had drops to the collapse arrivals as it moved some of its capacity in its biggest market. Pretax profit the year ending september 30, back in line with the guidance given in october. The glut of seating in european markets, easyjet shares rising. Itss recommending shareholders not to accept an offer from finish utility fordham. Its is the price just over 8 billion euros does not reflect the german utilitys true value. It would be the biggest acquisition in five years, and fordhams biggest acquisition ever. It would trickle triple their adding one of europes biggest trading applications to their own activities and expanding assets into the u. K. Unit per up 7 10 of 1 . Moving on to turkey, which we chatted about a little bit earlier our man in constantinople. Dismissing the Central Banks latest measures to support the currency, investors are calling for higher borrowing costs. The currency has depreciated 11 against the dollar this year, 20 against the euro. The president said the central bank was on the wrong hat path. The bank began auctioning nondeliverable foreign contracts to give some protection to the lira without eating into its official reserves, the move failing to curb losses. This is the today lira move. The dollarlira is the white line. The msci emerging market currency index is the blue line, unchanged in two days while the lira falls to fresh lows. 90 minutes into the u. S. Session, julie, do we have more records . Just therlier it was nasdaq and now the s p 500 and the dow have joined the party. Just seconds ago going above 2500 for the first 2600 for the first time ever. Volume is running a little light compared with the last 20 day average, or 30 day average. What is driving the rally today . Technology is a big part of it today. Apple and microsoft are certainly contributing to the gains in the nasdaq, and technology is the best performing group in the s p 500. Health care is bouncing back as well. Paypal users can send invoices via facebook messenger, so just a little increased way that paypal is getting into the Facebook Service and disseminating its own service. For a look at the bloomberg the scope of the gains that we have seen in technology. Tencent has had the biggest market value gain of the year. This is an adjusted chart of the gains we have seen in market cap. Tencent up about 290 billion market cap thus far this year, outpacing even apple, but overall the tech giants have added 2 trillion in market cap this year. We have microsoft, amazon, google, and facebook on that list. Outside of stocks we have mention what is going on with the u. S. Dollar as these nafta negotiations continue. The bloomberg dollar index taking a leg down. The movement in the mexican peso and Canadian Dollar particularly notable as we hear from the head of mexicos Business Chamber that mexico sees some agreement , andps on specific issues is willing to close out negotiations on the specific technical issues surrounding telecom, energy, and ecommerce so we will see what happens overall. Even as we see the action in the dollar as well as the buying in stocks, we continue to see this flattening of the yield curve. We have talked about this before, when we see in versions of the yield curve in the past, the yield curve going below this zero line, they have prestaged the last seven recessions. The latest to predict we will see in version of the yield curve, bmo Capital Strategists are saying we could see an inverted yield curve next year. It is becoming a real possibility. We will see if we get a recession following that. Mark love that chart. Political turmoil in germany, chancellor merkel says she would rather hold new elections then lead a minority government as Coalition Talks collapse. Plans for a minority government at the moment, so we have to wait. A new election is one way, a minority government is another. In a country that has so much to do, that would be thought a very carefully. I do not want to say never, but i am very skeptical and i think new elections would be better. Mark joining us from berlin, urgent jenin. Burgett janet. Does this mean elections are inevitable or not . Birgit we cannot say they are inevitable. We are probably leaning towards it but we have to look at the possibility that some parties might return back to the negotiation table, as the president is currently in talks with the liberals who have pulled out, but also the social democrats are also being asked to return back to the negotiation table. There is a slight possibility maybe that they might change their minds. Steinmeyerresident and even mr. Scheidler himself is calling on parties to resume discussions. At thee are looking past, arent they . In the next election, they do nothing to do so well. Birgit exactly. This is exactly the problem. Both parties have had bad experiences with merkel. The social democrats have implemented their program, but they did really bad in the polls. The liberals actually fell out of parliament after governing merkel, so there are incentives to enter again into an election, into a government with merkel as we have seen. Vonnie at what point do we know for sure there is going to be an election . Do candidates genuinely start campaigning all of a sudden . Birgit the process is going to take a while, because there is a constitution that for sees a longer process. We are in the phase where the president is talking to parties to see whether there is a chance of forming a government, and then there are really elections in parliament where the chancellor will be elected. And then after a process of a few weeks, the president will decide whether a minority government should be installed, or whether there should be new elections. Jennen, bloombergs government reporter in berlin. Vonnie how many times have we seen this and reminded about italy, how similar. Lets check in on the bloomberg first word news. Courtney an era has come to an end in zimbabwe. The president has resigned after 37 years in power. He was facing impeachment and the military took control last week. A member of his own party said he was senile. The Trump Administration plans to announce new sanctions on north korea today, a day after he added the regime two countries the regime of the list of countries that sponsor terrorism. Vladimir putin plans to call President Trump today about the situation in syria. He had a surprise meeting with syrias president yesterday. Russias intervention into the Syrian Civil War has given the regime the upper hand. There is a report that john conyers settled a Sexual Harassment case a few years ago. Complained she was fired after rejecting his sexual advances. He said he has not settle any house complaint any complaints, and reforms to the system are being considered. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am courtney donohoe. This is bloomberg. Ofnie just a little bit breaking news in the time warner at t story. A different judge has been assigned to the case than the judge we let you know about just about a half hour ago. Coming out now, district judge appointed in 2002, a george w. Bush appointee has been reassigned to the at t time warner trial after earlier judge Christopher Cooper was to preside over the case. We do not know what happened in the last hour. Perhaps the judge reach used himself, reach used himself, recused himself. Mark a bump for the big banks. , and credit, bnp suisse are seen as less risky now. Vonnie live from new york, i am vonnie quinn. Mark live from london, i am mark barton. 16 minutes to the european close, lets get to the latest. Be, jpmorganthe fs is the most systemically important bank. Bnp, Credit Suisse all dropping one level in the rankings which means they will face lower capital requirements. Do we care about these rankings . Reflect think they International Consensus after the crisis of how risky banks are. The rankings are an International Match trick metric that gets imposed by regulators around the world, some of which have already higher levels than what the International Numbers came out today, so you have to look down another couple levels. Mark what does it actually mean for the banks and their operations and finances . Silla these rules willfully take effect in january 20 19th, and what i think we have seen is banks as they prepare for this eventual date, they sort of changed their business a little bit. They reduced assets, they get rid of certain operations around the world, and they are sort of managing their capital accordingly. This process is going to continue. Mark it comes back to the question, what is risk . Consider risksb and do other bodies look at it in a different way . Silla it is made up of regulators from around the world and they look at a banks size, interconnectedness, the international reach, and many kind of indicators. A punch data and come up with this ranking. Mark is there disagreement regarding these risky regulations . Silla i think, different regulators around the world have imposed levels that are in line with what the fsb indicates, and others have gone higher. ,he u. S. Is probably exhibit a that they have gone higher and required more capital from their banks in excess of what the fsb said today. Startthe surcharges january 2019. It is the year after. Silla exactly. Mark we will be chatting about that next year. Silla brush covers Financial Regulation for bloomberg, great story. Vonnie you are licking your chops already. Unfazed eventors after a hack at a cryptocurrency competitor. Why they face more security challenges ahead. This is bloomberg. Vonnie the sec has asked the agency to abandon the Net Neutrality rules. The chair has asked the sec to abandon Net Neutrality rules. They will vote on the proposal december 14. The obama era that new prominent neutrality role guaranteed open internet, the same rate of speed for everybody to access the internet. It was seen as being more of something that was good for everybody, for the population at large in the sense that those who could afford to buy the faster speeds would also have the same access as those who could not afford to buy it. Some companies did not like the idea because they would have been able to spend on the higherspeed. Mark netflix, cogent, those are the companies who of course preserved, or were behind preserving current fcc oversight. Isps wills that those demand fees for equal treatment of internet traffic. Even if some of those rules survive in some form, the likes of at t, verizon, comcast, charter will find their main concern. Easeds Net Neutrality has because of todays news. Vonnie i want to mention pai says the federal government will stop micromanaging the internet. Google is up 1 in the last hour. Later on in this hour, we will get later on more on Net Neutrality, speaking with matthew schettenhelm. Mark lets move it on and talk about the cryptocurrency space. Tether sold off 1 million after a hack. It is raising concern about the safety of cryptocurrencies, but bitcoin investors are not fazed. Mike novogratz thinks it will hit 10,000 by the end of the year. It came out of the 2008 peopleal crisis where say, we no longer trust Financial Institutions or governments. Today if you are in venezuela, it is very hard to trust the central bank, or in zimbabwe. The decentralized revolution, which bitcoin is a poster child of, is a response to the breakdown of trust. Here, whoobinson is covers fintech for bloomberg news. Our digital core and secure enough to enter the mainstream of finance . Ed that is a big question today. When you look at the underbelly of cryptocurrencies where you see the soft spots with some wallets that keep the coins, exchanges which exchange the coins. It is important to note that the actual blockchain in the case of bitcoin has in remained immutable and has not been taken down in any way, shape, or form, so that is what investors are looking at. A wallet went sideways or maybe an exchange gets hacked, but there is still this integrity in the overall system. Is the public now skeptical over tethers liability . There had been growing concern since april. Ed it raises a really interesting question, a concern because tether is designed to basically match socalled fiat currencies, so the dollar or sterling, to make it easier for changes to swap crypto for traditional currency. Heather was kind of a stopgap that allow them to do that. If that has started going sideways and people do not trust it, that could hinder liquidity inside the space because it is still hard. It is a clunky process for spaces to trade recto for currency. Crypto for currency. Vonnie who are the demographics buying this . It is so hard to know because unlike the stock market, we cannot look at any kind of sec filings. You are just looking into the. Ther to try and determine this the only thing that we can see in terms of a force that is really moving the market is the mining companies. These are the companies that process the transactions. China plays a big role so you have to think there is a lot of butng coming from there, that is just one of the mysteries about this cryptocurrency, who are the players . Vonnie is it even possible to know about somebody who might corner the market or might be ables just able to support it if the bottom drops out . Will be ak that fascinating story over 2018 as you see more wall street, brokerages, more people on the buy side to come in. You need people to build infrastructure and guaranteed liquidity. The market will not work without liquidity, and without that fiat to crypto conversion process being as smooth as possible, there is a play to be seen in moving in making the market work, adding elements of infrastructure we have seen in commodities, etc. Mark we should play a game, how many days can ed go without being on bloomberg . It is a daily occurrence. Ed as long as it keeps going up, i think this will keep going on. Mark time for the Bloomberg Business flash, look at some of the biggest business stories in the news. There bayer is looking to sell off more vegetables in an approval of its acquisition of monsanto. Bayer is trying to figure out unit. Ch of its nonm;s they already agreed to send a seed and Agro Chemical business. Workers in its kentucky factory face anosts or uncertain future, the automaker says it can build a camry in japan, ship it to kentucky, and make more money selling that car than one built in a toyota factory. According to a video, toyota is not planning to close a plant. That is the latest Bloomberg Business flash. Have a peek at what is happening with european equities, we are four minutes away from the end of the tuesday session. This is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Mark live from london and new york, this is the european close. Stocks finishing up for the third day, led by technologies, auditors, and insurers as well as basic resources. Run,ing is on a bit of a since a six day, the best june 20 and the highest since october 31. Offered the e. U. More money. The number being touted is 40 billion, more than double the current amount. They want to guarantee the rights of e. U. Citizens in the u. K. After brexit. The government will not put the offer to brexit to the justnment until december 8 before the crunch summit on the 14th and 15th. Conclusions of such summits are usually drawn in advance. Sterling is up for the six continuous day against the dollar. We are talking about turkey, the top of risking this is what this chart tells us. The currency tumbling yesterday, tumbling today, erdogan criticizing the central bank and its policy, worsening their outlook. It is being impaired by wsplomatic diplomatic ro between the u. S. And turkey. The risk spread for the u. S. Over treasuries is the blue line and turkey is the red line. The spread relative to em is the line on the lower chart. Bitcoins buzz is starting to impinge on golds role as a store of value, since there is a finite supply of bitcoin which proponents say give it antiinflation qualities. Sale of gold coins from the u. S. Mint slipped to a decade low in the last three months of 2017. One bitcoin right now buys six ounces of gold. We had a survey which i read about, a survey of executives at the lease and recent london bullion market conference. One in 10 said they would rather own bitcoin then gold following a nuclear war. Everyone is looking into all sorts of scenarios when it comes to bitcoin, but that is a wonderful chart to end the day. Vonnie i guess gold could be destroyed in the war whereas bitcoin could not . I am not sure i follow that logic. I have taken the lira as well, we are seeing it weakening again. 3. 95. This is the number that i want people to focus on, we are below 60 basis points for the 210 spread, a curve going ever flatter. There was a great article on the bloomberg, one taking one side of the story on whether this portends slowdown of the u. S. Economy or whether it is a good thing. Check them out, and the dollar index, 93. 94. Client Investment Strategy at j. P. Morgan private bank. Germany, it is fascinating, isnt it, the stable economy maybe not so stable within the eurozone. What happens next . David i give you a list of a few risks and you make it sound like i am super pessimistic. That seems to be the most likely course of action. I think most people are hoping that cooler heads will prevail. , they areof investors waiting for the next election to be called before this gets real. What are the effects on investors . We do not see a huge amount in the shortterm. The German Economy powering on, gdp figures released in recent data. The Economic News keeps Getting Better for europe, and a bigger focus for investors is how is the ecb going to manage the messaging of its exit next year, or is there a risk of another bund shock in yields . Certainly one of the most challenging messaging. Mark we have the news today, of makee the ecb is likely to multiple small adjustments to its guidance on Monetary Policy next year, rather than any major change in its language. It is using Forward Guidance to guide us every step of the way. David following the success of look,ds playbook, if you it initially appeared in footnotes of minor speeches almost 18 months before it happened. Then you have the jackson hole meeting last year where janet yellen had a paragraph in the speech saying, we would love to Start Talking about this but we are terrified what will happen. In the coming months, it became normal and nobody cared. I think the European Central bank would love to have such an orderly exit from its policies. I am not surprised they are going to do a drip, drip. If things go really well, maybe september will be the end. Vonnie what might happen with the p . David they are struggling to stay within their selfimposed guidelines. I am really surprised that part of this messaging involves little tweaks to some of the criteria to allow them to get around things, but ultimately, if they do not push on deep, i think most of the restrictions they have placed will be breached and they will find a way to stay within their selfimposed rules. Vonnie talking about the u. S. Yield curve, we are flattening as we speak. It is like the air going out of a well, something. The 210 spread, what does that portend to the u. S. Economy . David the action is really at the short end, the two year yield is up 50 basis points since the first week in september, a very strong move. The market is pricing in the Federal Reserve hiking at least three times next year. Four. Ment bank says if you consider december a done deal, we are talking up about talking about five rate hikes next year and that would lead to a flat curve, if not inverted. Right now we do not think it portends much to markets. We have gone through these levels of flatness in the yield curve before, and often it is multiple years before the end of the cycle of bull market and equities. 720,we get down to sub 30, closer to zero, this will be a signal we are nearing the end of the cycle. Mark are we nearing the end of the bull run . Give me the signs. David i am worried about how optimistic my view of the world is when i look at everything. If you look at the data, you get another round of positive data. Look at the leading indicators, the National Activity index and the chicago fed released 85 different indicators that pointed to an acceleration of u. S. Gdp growth. You see stability in em currencies, europe with great momentum. It is understandable we are overweight equities in our portfolio. We are nervous about how good world looks. Ark it pays to be contrarian where would you be a contrarian . David this is a dark secret of investing. For the vast majority of the. Ycle, it pays to be consensus it pays to be contrarian at turning points only. Mark we are not there yet . David we do not think so yet. We do not see one in the economy. When i look at risks, you see your china out there in the next six months. If you are in power for 10 years, dont you take the tough decisions now . Maybe markets will be worried about it when it happens. Low volatility trades, a lot of leverage building up there, and how positioning and sentiment has shifted in the last 12 months. 12 months ago, people were not as positive as now. If they keep on building like this, the risk of a turning point will build. Ofk david stubbs, head client Investment Strategy at j. P. Morgan private bank. Vonnie lets check in on the bloomberg first word news with courtney donohoe. Courtney russias president spoke to president spoke to President Trump today about the situation in syria. The white house said north korea, iran, and ukraine are on the agenda. Putin had a surprise meeting with Bashar Alassad yesterday. Russian intervention into the Syrian Civil War has given russia the upper hand. Zimbabwes president Robert Mugabe quit after 37 years in office. Lawmakers were planning to vote on an impeachment, and last week the military took over. Expects taxes to rise after it leaves the european union, according to a poll. 69 ca tax hike after brexit. The government unveils its new plan tomorrow and there is spending. O reduce wealthy families and saudi arabia are looking to protect their assets from the anticorruption crackdown. Rich saudis who have not been implicated are talking to lawyers, which will make it harder for authorities to seize their assets. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am courtney donohoe. Proposeshe fccs chair rolling back Net Neutrality rules. This is bloomberg. Mark live from london and new york, i am mark barton. Vonnie i am vonnie quinn, and this is the european close. Volkswagen is higher for a second straight day, the biggest gainer among european automakers. Why . Abigail this is pretty impressive, the stock higher for a second day in a row. Maybe the company is getting away from the whole dieselgate scandal. Yesterday they raised outlook in a pretty big way, and they are looking for revenue and profit growing through 2020. Apparently the tone of the call was very constructive, so today shares are popping higher. We have evercore isi saying they expect volkswagen to outperform, and they have raised their price target 210 euros per share, suggesting it could pop in more than 20 from current levels, and goldman saying autos look like a value play. As a if goldman sees it value play despite that today jump higher. Stock has been pretty beaten down from that dieselgate scandal, so we are seeing a bit of recovery on the year, but the shares are still trading at a significant discount. This is the eqrv function in the bloomberg, trading at a 64 discount on an ebitda basis. Showe these blue dots volkswagen is trading at a historical discount. If we were to put volkswagen 25. 61 per share in 2018, that is really astounding onto the is a of 10. 6 times, that pretty big upside. Hopped backy, if we into the bloomberg and take a look at this longerterm chart on volkswagen it is a twoyear chart this was the peak, and in the dieselgate scandal, and trying to find a base breaking out of that, suggesting the stock will climb above 200 and maybe well above. Perhaps dieselgate is behind the company. Vonnie Abigail Doolittle with our stock of the hours. The fcc chairman has announced a plan to overturn that a trolley rules. It will go to a vote on the december Net Neutrality rules. It will go for a vote in the december meeting. Joining us with more from washington is Bloomberg Intelligence government litigation analyst matthew schettenhelm. This is something we were anticipating. Talk to us about what it means, both from a consumer perspective and from a broadband provider perspective. Matthew to take it first from the broadband provider perspective, they have been fiercely opposed to the obama era that neutrality regulations because, not necessarily because they are opposed to Net Neutrality in principle, but they do not like the way the sec when about imposing it by fcc went about imposing it. The isps are concerned that that power could lead to a whole slew ,f future fcc regulation potentially even how much they are charging for the service. Their Broadband Service one from an unregulated regime to a regime where the fcc had aggressive oversight. Vonnie you were going to say from a consumer perspective . Matthew what Public Interest groups would say the big concern here is, are we going to lose something that makes the internet different from cable tv . That the, the idea internet should be an open highway for all traffic. If you want to invent the next netflix in your garage, and open internet allows you to do that and you do not have to go get at ts permission or comcasts permission to make sure you can reach subscribers in the same way that comcast will let its own traffic reached its customers. Mark who is at risk if the fcc kills its rules next month . Matthew at risk are companies that depend on writing on the on the pipes of others. If you are the next netflix or a with a Service Planning on rolling over at t or comcast, you might be concerned longterm that this is disadvantaging you because the isp might move toward arrangements that make it easier for its customers to get its own traffic, and not your traffic. Vonnie so what happens with the vote . , and along political lines if so, what is the makeup of the sec . Matthew fcc. Matthew it is almost certainly along political lines and it is 32. Will be supported by the two other republicans on the commission, and the two democrats on the commission will almost certainly dissent to the decision. The next step will certainly be litigation on the point. Mark what happens usually with litigation in these matters . Matthew this is a long saga of litigation. Thisll be the fourth time that net a trolley going to return to the courts. The fcc lost the first two times and adopted Net Neutrality rules. It finally won this time and succeeded in getting these rules in place. Now we see a challenge from the other direction, as the republican sec tears down the scheme of broadband regulation. Areic Interest Groups likely to challenge the fcc and say, you cannot do this. Court, you should overturn it. It will be a tough fight but the kind of fight that favors the agency. More likely than not, the sec wins this battle fcc wins this battle. Mark time for the Bloomberg Business flash, a look at some of the biggest Business News and stories in the news. Global banks in london will start their postbrexit moves soon. Theirwill implement relocation plans early next year to make sure they have offices inside the e. U. By the time they u. K. Pulls out the u. K. Pulls out. There is little theresa may can concerns. The banks sales of electric vehicles rose to a record. More than half the sales were in china, where the government has been pushing electric cars. Fish of the eastern atlantic and mediterranean for the prized bluefin tuna have agreed to expand their annual quota. The limit is being raised to 28,000 times next year, reflecting and tons next year, reflecting the population. That is your latest Bloomberg Business flash. Coming up, battle of the charts. And earnings confidence take on the retail apocalypse . This is bloomberg. Mark time for our global battle of the charts, where we take a look at some of the most telling and compelling charts of the day and what they mean for investors. You can access the charts on the bloomberg by running the function featured at the bottom of your screen. Kicking things off as dani burger. Are ending earnings season, and this is the ratio of Companies Giving upward guidance , seeing a sunny future, versus Companies Giving a downward guidance. The higher the ratio, the Better Companies are feeling. The highest, most positive companies are feeling over here 2010, 1. 2 companies are issuing guidances higher for their future. So you are questioning why stocks are moving up . When Companies Feel good of how their shares will do, investors are seeing that as well. Btv 2676. T g vonnie dont you just love how her dress matches the chart . I do not know if that was planned. Mark you get an extra mark for that. Vonnie i have lost already, but you have to listen. I am talking about retailers. Black friday coming up. If you were to believe that amazon was taking over the world , you might see a different result here. This is the bond market, retailers bonds are not doing to bring bad. The retail apocalypse is not reaching into the bond market. This is Investment Grade retail bonds like coals and macys. Macys. S and even the highyield retailers are eking out a return. You can see that on the bloomberg. Ni;s dresste da matching her chart, i like the idea of retail apocalypse so you get the victory today. Two fantastic charts. Vonnie sorry, dani. I am going to share it with her anyway. Mark well done. Coming up tomorrow, chancellor of the exchequer Philip Hammond unveils the budget and we have complete coverage on bloomberg. A big day for the u. K. Economy. This is bloomberg. Shery here are the top stories on the bloomberg and from around the world. U. S. Stocks hit a new high, pass the 2600 high, reaching its highest level on record. Will investors remain optimistic . Plus, we will talk to maya macguineas, from the committee for a responsible federal budget , and why she thinks the gop tax plan is not good for fiscal health. Nestle is exploring a purchase of the hanes Celestial Group hain Celestial Group. We did into this in the deals report. Lets get a check of the markets, julie hyman is joining us. I do not know how many times i said, mark our recgh
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