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More likely afterward there was no mention. Or any visible sign after the 66yearold billion or was found on the floor of his so last week of his cell last week with neck bruises. Global news, 24 hours a day, on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am mark crumpton. This is bloomberg. Shery live from bloomberg World Headquarters in new york, im shery ahn. Live from toronto im john. We are joined by our bloomberg and vietnam audiences. Shery here the top stories we are following. Fed cut, opening act or clothing numbers . Fed terror jay powell faces investors with either an insurance cut or the start of an easing cycle. The fate could hang in the balance. Tensions in asia flare up again. China announcing it will stop issuing individual travel permits for taiwan. Ge brings a good earning report to life. The manufacturer is raising its outlook for the year. We will talk at the turn we will take a look at the turnaround strategy. Lets get a look at where markets are trading. We are seeing u. S. Stocks see song between gains and losses. We have tons of earnings to digest. Not to mention that the china and u. S. Trade talks have ended. We are minutes away from the fed decision. We are seeing the s p 500, not much changed at the moment. Moving between gains and losses after two sessions of losses. We have had consumer weakness a little bit in that part of the s p 500. We are still seeing some strength when it comes to energy. One of the big gainers today, wti, at the highest level in two weeks as we sell gasoline and crude drawdowns. We are seeing tech gaining ground. We are seeing the dow not much changing. The nasdaq up to 10th of a percent. Look at the 10 year yield. We continue to see the pressure on 10 year yields ahead of the decision. Markets pricing in at 25 basis points. The key question today will be what is next. Are we heading into the easing cycle . Will it just be an issue on cards, one and done . We will answer those questions at the top of the hour. We will be discussing that with our guest today. Jon you mentioned apple, which is the stock leading the dow higher this hour. It is the best in percentage term days for apple stock in several months time. Better than expected revenue in the latest quarter. Encouraging guidance looking to their fiscal fourthquarter as the Company Looks to transition from being driven by new iphone sales to continuing to build their services business. There is a look at the shares of apple has the Company Generated the 11 and a half billion in revenue from its services business. There is a look at the study march back towards the trillion dollar market cap. Apple has already met the milestone before pulling back. After this recent surge in shares and the continued gain today getting back toward the trillion dollar valuation. Shery we have breaking news. The family behind nordstrom is seeking to strengthen its grip on the decline that has tension on the board. Members of the family in the early stages of discussing a proposal. S would be to boost according to people who have spoken to dow jones. The report says it is not clear how the family would increase the stake. We are seeing the stock gaining 80 as the family behind nordstrom prepares to increase the stake in the retailer according to a dow jones report. We are just minutes away from the fomc decision. Markets are anticipating a fed rate cut of 25 basis points. Including economists are looking for a 25 basis today and another in september. For more on the Market Impact of possible one to terry easing, head of Investment Strategy, snyderyder shawn joins us. Are we expecting fireworks today . Shawn thank you for having me. I am not expecting huge fireworks. I think they will deliver what the market is looking for, which is a 25 point basis cut. It is possible you could see a 50 point basis cut. The strong rebound in Consumer Spending which is saw and rebound in Consumer Confidence limits the probability. A 20 chance of 50 basis points. 70 plus percent chance of 25 cut. People are going to be watching to see the language in the press conference. If he refers to as an insurance cut, that implies you get a little bit less than the market pricing. Historically, cuts have been 75 or less. People will be keyed in on the language. Jon given those expectations, how is that impacting your Investment Strategy . Shawn we are little more cautious on equities because we are at record highs. When you are at record highs, it is mark obligated to find opportunity it is mark obligated to find opportunities. Washington has moved from being a headwind at the end of 2018 and early 2019. We are now seeing tailwinds in the sense that trade tensions have died down. The fed is much easier. You are seeing that reflected in the stock market. Ofry what is the risk communicating too at the prescott . We saw what happened in the Fourth Quarter when there was all that, on the Balance Sheet. Shawn if the fed comes out and gives a dire outlook for the u. S. Economy, that could make people wonder, what are they seeing that we are not seeing . Wall street is looking at the data and thinking maybe it is not that bad. People are looking at the fed and thinking they are trying to get ahead of the curve. They are trying to move to stave off recession. In some regards, they are actually behind the curve and are reacting to what happened at 2019. D of 2018 and early Consumer Spending was not strong. It had been on the decline for three consecutive quarters. Maybe it took this long for them to change their language on the policy stance. Jon given what you are saying, how long do you think it will be before we know, before the data tells us they were behind the curve . Shawn i think we are starting to see it now. The Global Economy is still slowing. Europe is probably not entering recession. Germany might be. A lot of it depends on trade. If we stay at the stalemate situation, we can kind of stabilize. If it reescalates, there is a concern that may be growth ends up greater than we are expecting. If youre looking at the proprietary economic index, which measures whether it is feeding or worsen expectations, has been improving since july. Jon last to consider. Tonks so much lots consider. Thanks so much for your time. The head of Investment Strategy at citi. General election shares rising after Second Quarter earnings exceeded expectations. The longsuffering Power Division showed signs of improvement. Joining us now is karen over heart with more on the g story. Karen, this has been a turnaround story. What signs it we get today of the turnaround . Karen we have heard nothing but bad news out of the Power Division for almost two years. Today, we saw a modest organic growth. We saw better than expected cash flow, which we have not seen for a long time. They told us the restructuring is moving quicker than expected and costing less money. That was a 500 million swing in cash full. Looks like they are getting their arms around a power problem after almost two years of difficulty. That is very important. It is the key part of the operating story. On the cash flow story, improving the financial liability, they pay down they paid down another settlement. They raised cash by selling a small stake in lab tech. The operating and financial side are starting to budge toward the positive. Shery that is what that is why we saw the plunge and rebounding. Should we be concerned about the aviation sector given the issues not the mac 737 grounding, to mention the engine of the triple seven i . Triple seven act . Karen aviation for everyone has been good. Organic growth was not what some of the peers were, but it was up 6 . Theins were down because new engine ramps. Margins were just under 18 . They have been around 20 for a long time. Max issue ishe costing more. It is going turnaround. The plane is going to get back in the air. Ge is the sole engine on that. That is why it is important. That is a shortterm negative. Airspace has a solid outlook. I am not concerned about that. That is the anchor for ge keeping its earnings together while they fix power. Aerospace cannot deteriorate. Jon you have done a lot of analysis on whether the company will ultimately have to raise more cash. But would be some of the ways by which they would what would be some of the ways by which they would explore doing that . Karen the new ceo made a great billionannouncing a 20 sale of their life science business. That is going to solve a lot of problems. They have 15 billion in cash left if they sell the debt if they have their arms around the cash. Shery how are they doing on turning around power . Karen they have lowered fixed costs by 10 since they began the restructuring. The bleed has stopped. The problem with power is the industry shrunk by 50 . The size of the market. Mitsubishi, ge all got caught with way too much capacity. Ge caught it late. A had some bad contracts as result of trying to go after some market share. They have bigger problems. It appears they are getting their arms around it. Shery thank you so much. The latest on ge. It is time now for the Bloomberg Business flash. A look at some of the biggest business stories in the news. Chrysler rose the most in two months. Truck livered higher profits in north america. That upset weakness in europe. Is for your guidance. Carlyle group is trying to one up its rivals. It has become the first private equity giant to create one class of shares. That would make it eligible for the s p 500. A drop fuel class shares as part of a push to a corporation. Be included in stock indices could boost stock price. Earnings surged in the Second Quarter as airbus ramped up deliveries of a jet. Airbus handed over close to 300 of the a320 planes. Analysts are concerned some airlines are complaining that the a320 shipment remain behind schedule. That is your business flash update. A programming note. We have been reporting on alleged collusion in the generic drug industry. We discussed yesterday on uber tv part of the reporting decatur the Justice Department might bring new charges. They wanted to make sure there was no confusion. We do not know what charges could be brought or whom they could be brought against. We will keep reporting on the story. We will bring you more when we have it. This is bloomberg. Shery this is bloomberg markets. Im shery ahn in new york. Toronto. John in are 15 minutes away from the fed decision. If we see rates cut, it would be the First Time Since the financial crisis the bank has gone in that direction. Pretty flat performance for the s p 500. Looking at the 10 year yield for the u. S. Treasury around two and change level. We are on what is happening with the u. S. Dollar against other currencies. A little weakening their. The gold price down four books right now four bucks right now. Is upping thena pressure on taiwan. Aging announced they will ban to individual travel the mainland. The news came in unexpected announcement from the ministry of culture. It will go into effect tomorrow. Tom orlik joins us. We have not talked to much about this tourism. Linkhas been an important over the last four years. Important fors taiwans economy. Tourist spending accounts for 2 ofst over 200 gdp. Taiwans economy like others in asia is suffering from the trade war, the tariffs the u. S. Has imposed on china. Also affecting other economies are the region. This additional blow to tourism is going to come at a bad moment. They of course, the reason taiwan issue is important is we continue to see this stance from chinas foreign ministry. They have even threatened unspecified sanctions against u. S. Firms that are planning to sell arms to taiwan. Of an issue could taiwan get in u. S. China trade talks. Korea,iwan, north potentially the protests in hong kong, there are a number of hotspots in Mainland China and around the region that could potentially bubble up to the level of significance where they start impacting u. S. China relations and start becoming a factor in trade talks. So far, that has not happened. The trade talks are staying relatively overly focused on trade talks focused on tariffs and around issues on Companies Like huawei. What if one of the other issues could bubble up to that level of sniffing and. Jon you referenced hong kong. And we think and hong kong and their Economic Performance versus singapore and south korea, there was a point where they were all lumped together. We have seen a difference in Economic Performance over the last decade. Tom one commonality around the region is the way in which these companies interact with china. At one level, clearly, there is a huge benefit. Fastgrowing economy a source of revenue, a source of excitement about the region. On the other hand, we now also have a more muscular beijing Foreign Policy and a willingness to use tools like turning tourism flows on enough, turning student flows on enough, inspecting imports more closely at the border. Using these economic sanctions as a way of achieving their Foreign Policy objectives. Mongolia,ea, taiwan, other countries and in the region, we are seeing increasingly that that muscular chinese Foreign Policy and the willingness to use sanctions is a source of uncertainty. Shery thank you so much for your insight. Coming up, it is fed decision time. We count you down the feds announcement. Investors expect the first rate cut in a decade. This is bloomberg. Jon this is bloomberg markets. Shery we are counting down to the fed rate decision, what is minutes away. It will be followed by chairman conference. Ss istty much 25 basis points the moment. The key question is, what happens next and whether or not it will be sequential rate cuts. Is it a one and done . Carl former fed president dudley was saying one and done. The old pringles potato chip slogan, once you pop, you cannot stop is going to be the more pressing issue for the fed. I do not think of one cut will accomplish what they are trying to achieve in terms of on andrting the yield curve weakening the dollar marginally as the rest of global Central Banks are moving on in easing course. I think we will be seeing another rate cut. The fed is going to try to talk a tough line to manage expectations so the market does not run further in the direction of 3, 4, or more rates in reductions. Jon he started doing some Great Research on what has historically happened when the fed takes its foot off the gas. The ramifications of that. We guess we will have to Start Talking more about them. Carl they successfully execute these insurance cuts, terminal funds rate might be higher than presently. What we have seen at of the past, probably when the fed is cutting, it is before a recession and it is too little and too late. They go into an expansive cutting cycle. What could happen and what they are trying to execute is a repeat of the 1995 or 1998 scenario when a couple insurance cuts rejuvenate the economy and lengthen the economic cycle, which is already 40 one quarters long. There is a good chance given the strength we are seeing at a lot of parameters of consumer demand and Consumer Spending that in fact, a few minutes cuts from the fed will do the trick. Shery what happens to the Balance Sheet . Is in a counterintuitive . Incident counterintuitive . Carl one hand is tightening. On hand is easing. The Balance Sheet is on this glide path to determine the tightening. They could just leave well enough alone. The economy is Strong Enough that they could avoid doing that. No need to adjust that now. Certainly is a risk. They could say we are easing so we have to end that sooner. Shery thank you so much. The Bloomberg Economics chief economist. The into bloomberg tv for coverage of the fed decides. That is coming up. This is how markets are looking ahead of the decision. Within you to see pressure on the 10 year yield. This is bloomberg. We are waiting the fifth and thus far, most critical fed decision this year. Chairman jay powell will be hosting his News Conference where his every word and gesture will be scrutinized for roadmaps on how the fed will determine the next move. I call it the most critical. It really does it is the most important meeting in years and years. We have a wonderful set of guests with a real polarity of opinions of where they are right now. Where we are going to be in september. Scarlett heading into the decision, we have youre looking at bonds. Tom this is really important. Lets do a data check. We go to Michael Mckee in washington. Minerd has what mr. To say in and minute. Yield becomes a 203. Im going to go right to that. Second screen please. Yields worldwide have come in in the last hour. A two years, they have become 281. In with some dollar strength. There is a real subtlety to what we have seen in the last 60 minutes. Nobody wants to get ahead of the decision, although we know there will be a rate cut. Do we know that tom do we know that . Scarlet we have been talking about it. Here, his firm has over 265 billion under management. You are of the mindset the fed should be raising rates. But i i hate to say this, am being misrepresented. I have taken the position the fed has no basis to really cut rates based on the Economic Data today. If you say, should they cut rates . I think they have to because they have set the market up to where they did not cut rates today we would have a tantrum, so i think they are pretty well boxed in. Scarlet does the data justify a rate hike . Fed ityou would say the should be raising rates if you look at the face of the data, but obviously there is a backdrop of uncertainty around trade, which would justify the fed awaiting a little bit longer, but the bottom line is the data does not support aggressive rate cuts, which seems to be with the fed is a signaling. Scarlet what do you think Jerome Powell will be saying the most at the News Conference . Scott i think accommodation. The question i ask, will it be tom your question . Chairman powell, what would you say to him . Scott what is the criteria to determine rate actions . Tom at the new york times, i would say, what book are you reading . That is my question to chairman powell. What is your Summer Reading . Scarlet he is thinking of his daughter. Lets get a check of the markets. The s p is slightly higher. Within. 5 of a record high. The 10 year yield is going down. The dollar is a slightly weaker versus the yen. Now Michael Mckee at the fed. Benchmarkutting the Interest Rate and ending the Balance Sheet now, two months early. There were two dissenters, the most in Jerome Powells tenure. They wanted to keep the rate unchanged. The rate cut to a range of 2. 25 2 comes in light of the implications of Global Development as well as muted inflation pressures, the statement says. There is nothing explicit, but there might be a hint about future rate moves. An repetition of language

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