This week, the repo rates, the liquidity crunch, so here is the overnight repo rate that we saw on monday really going skyhigh. But since then, it is lower. The fed has entered the market, 278 billion dollars injected by the fed in the repo operations, trying to stabilize this system. Luke, it was on the set with the, he brought is a good chart the other day, this is the volume on the s p 500 going back to late last year. We can see at the time of the volatility, huge volume, whether it was outright or protection against greater downturn. Then stabilizing for much of the year, august going higher. Earlier in the year it was low, suggesting investors were not worried about the repo rates going hi, but since then volume has come up a little bit. But it is still relatively muted. Taylor roku is getting crushed, down 20 . We saw the starting last tuesday when apple announced their streaming service. Shares fell 10 that day. Earlier this week my paying spoke announcing this week my face but a streaming service. It seems like analysts are agreeing that roku will be facing some stiff competition with shares down 19 just today. This is interesting because sentiment has really changed for the company. We thought that roku could benefit from the structural shift to the streaming services, that they basically could not launch a streaming Service Without launching it on roku. But that sentiment has changed. One thing that has not changed. Take a look at this chart on my uber terminal. It is all about the short positions. Roku is still crushing the shorts. As you can see, they declined earlier this year from 20 , now at 11 . During that time you have seen the stock rise from 40 a share to 170 a share. Although the price action today, which takes the stock down to 108 a share, is certainly something that has the shorts applauding a little bit today. I think the key takeaway, look out for facebook, comcast and apple tv. How will roku benefit or withstand that competition, if at all . Renita renita i am looking at crude oil. It had a very volatile week with swings, wild swings in both directions. Take a look at the intraday action. It is actually rising right now. And, well, it is lower. But this was following the attack over last weekend on the saudi oil supply, which started the swings in the first place. Today, the u. S. Tightened sanctions on iran, and donald trump signaling a possible thaw between the u. S. And china. So that sent oil into a higher direction during the day, but actually as you can see, it is heading for its best week in about three months. Attack drovesaudi crude options to the most bullish position since 2011. Joe thank you. Bitterly, headn of capital markets. And luke, our reporter. Taylor mentioning roku. Some other wellknown tech names getting hit, like netflix getting hit hard. We saw the nasdaq the worstperforming. Talk about how there is this rotation into health care that was unloved, finally getting a lift. Is the tech story not that great right now . Kristen i think what happened with tech is wheelies look at the percentage conservation to earnings, as well as market cap. That is one thing that was starting to get displaced, that now tech is showing a good deal of market cap, but not contributing that from an earnings perspective. Anytime you see that, right now we are actually neutral in tech, so we are not adding to our position at this point. When you see the increased volatility, one thing i have to say is this market does create those opportunities, so people who have been sitting on the sidelines waiting to get into these names, it creates nice opportunities to actually take in some premium and build those positions at lower levels. Romaine we have had a lot of Economic Data out, and the index is at times level in 11 months. We have also seen it go in a reversal for japan and asia, as well as europe. We seem to be at a crescendo a few months ago, was that premature . It is interesting that we do not want to feel good about things. Like it is wrong to feel good. Romaine the 10 year is into it. Kristen but we need to look at data. We have access to so much data. The other day i saw something about google searches on recessions and yield curve inversions, and we saw a big spike in august fall off the cliff. It tells you what consumers are looking at. And we actually maintain a bear market checklist at citi, so we look at 18 different factors from Consumer Sentiment to leverage on Balance Sheets. Right come out of the 18, only four of them are flashing red. To put that into context, in 2000 it was 17 out of 18. In 2007, it was 14 out of 18. So do not look at one single thing, because at there are two things people are concerned about right now, manufacturing numbers antitrade. And i guess the yield curve inversions, but there is reason for that as well. Luke if you look at sector levels, you go back to july 31, everything essentially was in negative territory except for retail wholesale. Now everything is in positive territory with a huge rebound, especially in housing, the only two in negative, business surveys, still showing some confidence, and that the industrial sector, which is the manufacturing side of the economy. So even despite the data seriously surprising to the upside across the board, since july 31 what did Jerome Powell say the economy performed roughly as expected. Was ad expectations different thing and that period. Scarlet it is a divided bed. That is pretty much what we have. A divided fed, is it good for u. S. Stocks . Kristen i think one thing that is good right now is the market, beforehand we had what felt like a marketdriven fd. We started to see in the market 100 probability of a rate cut. Now they can be more data driven as opposed to marketdriven. Can that lead to healthier u. S. Stocks . If the data is there, absolutely. Romaine you look at those funds luke that had a big move upwards of this month. So stocks are near alltime highs. So the idea that we are able to transition from may be a completely fed reliant market, to lets get through the Growth Market with less support and still do well on risk assets, we seem able to make that transition a lot less messier than people wouldve thought. Joe it feels like a few weeks ago there was so much pressure on the fed meeting, people talking about 50 basis points. And then right around that time, we got that Sharp Movement from the growth to value stocks, and then suddenly it was like kristen and there was a lot of news about trade. That will be the big overhang, revolution on trade. It feels like we are constantly talking about that, but that is all of the negative. If you want to make it case for why stocks will selloff, it has to do with trade, foreign investment, business decisions, and has to do with manufacturing. So if trade comes back into the picture, of course you will see a selloff. That is the balance we are in. Things are good in the u. S. , but trade has the ability to derail that. Romaine we follow volatility a lot. Luke, you spend a lot of day on the vix. We got a little bit of a spike on the montana farmers. But you have had people you have interviewed, traders have been making the case is that you should essentially may going long vol now on the possibility that we could get a spike. What is your take and what is the rationale for the making that argument . Luke there have been a couple to point to, like bonds, that is an easy turn to follow. You look at stocks and volatility, it has been a trade. So people who are making that argument are just very simply there. A relative value you have to be careful how you do it, because a low vix does not mean you want to go along with the exchanged products because there could be betw een the one and two months. This is something that was recommended the other day. Just out of the money, delta neutral calls, because that is something also the institutions like to sell. You might be getting a deal and a way to get long bald that is not a bearish way. Romaine i love the shirt. Scarlet it does read nicely on camera. Romaine i think i want a jacket out of that material. Scarlet before we go, we did get a headline earlier that spain was upgraded to a by s p with a stable outlook, so it was upgraded to a by s p. How should we think about Global Equities . It is not time to give up on it yet, so where do you go . Kristen this is another big conversation. The bull market, it has been a u. S. Equities bull market, it has not been a global one. So when you look, one thing we looked at again, going back to information, what has driven the u. S. Equity bull market has been growth in earnings and dividends, and also some the acquisition. So we have seen Earnings Growth on average over the past several years around 6 antigrowth and dividends at 10 , then back to negative one. But we are looking globally at companies that exhibit the same types of characteristics, so growing earnings at the same rate, growing dividends at the same rate into trading at a multiple much lower than the 1717. 5 that we see in the u. S. Markets. So that creates a lot of opportunity. Scarlet sounds like quality companies. Kristen and a lot of emerging markets. If you are looking at those conditions that people are not taking advantage of. Scarlet ok, thank you so much to kristen and luke. That does it for the closing bell. We will be live in washington, next, to get you the latest on the trade tensions and find out what is going on with those montana farmers. This is bloomberg. Scarlet from bloomberg world headquarters, im lisa abramowicz. Romaine im romaine bostick. Joe im joe weisenthal. Applico lisa there was a breakdown in talks with china pulling out of a visit with montanas farm bureau. And President Trump saying he will not take an easy deal. Joe the question is, whatd you miss . Romaine President Trump says he will not settle for a partial deal with beijing. Andtaking a dive, stocks yields fall on news that the chinese delegation has canceled a trip to montana. And rising tensions in the gulf. President trump orders tougher sanctions on iran as crude logs one of its best weeks since june. Joe the new york fed completes another 75 billion repo operation. And it is extending through the beginning of next month. In a Bloomberg Opinion piece, the former new york fed president wrote, the incident is not a harbinger of deeper problems or a larger crisis, rather it provides a useful signal for the fed, which has been seeking the right level of reserves for the smooth functioning of financial markets. For more we will bring in our opinion columnist, brian, and catherine. I will start with brian. We have hot all week to learn more, maybe the fog of war has passed a little bit, so how do you feel in terms of the view that this is kind of mostly just a technical thing that the fed has within its tools the ability to resolve and not indicative of something problematic in the banking system. Fed hast seems like the the ability to come in and to stop this, it is just a matter of when. I think we saw earlier this week, the issue was that they took so long to do something. Now they are being more proactive, saying we will keep coming into the market through october 10, plenty of time. And Going Forward they will have a more permanent solution. Maybe by october 10, may they will announce it at the Rate Decision on october 31, we will have to see. Lisa nobody i have spoken to understands what exactly was the cause of this instruction. This destruction. How far along are we in understanding what transpired to make this happen . Haverine i think alike we a pretty good i think we have a pretty good understanding. We had all these treasury options, we had this Corporate Tax settlement. I think the question now is what comes next. So we know the new york fed is going to inject liquidity until october 10, but what happens at year end. People have been expressing concern that, ok, we will be ok through the end of the third quarter, but these issues may come up again. Lisa i was speaking with somebody who said, on the one hand, yes it is all those issues, but on the other hand it is unclear if expanding the Balance Sheet will necessarily be the answer, which is what a lot of people have said, including bill dudley. I am wondering, do we have a sense that if they did expanded their holdings of liquid assets, that that would be enough . Brian it feels like a lot of the wall Street Research is saying it is a liabilities problem, the fed has not been matching the fact that there has been an increased demand for other liabilities for a while. That is something that they used to do. They have done it since basically the creation of the Federal Reserve bank. So that is where you hear organic growth from Jerome Powell, saying we may need to resume that. They have been trying to find this level into has been uncertain for so long, so there is a feeling that perhaps they overshot and they need to get back into buying assets, but not qe, which i think people are straining to make clear. Romaine tell me something good happened out of this. I am assuming somebody found a way to exploit this, make some money. Traders live for this type of volatility. If you are a day trader and you know the fed will step in to correct this, you are having a great time. I spoke to nick at Janice Henderson this morning, and he actually entered 35 million worth of dollaryen forward contracts this week. The logic is the repo rate have really created a for a da sh for cash. So if you have dollars to lend you are in a good spot. That is what he is trying to do. If you are holding one week of yen cash right now you are holding about 3. 5 . Joe i do not think that the qelike. Operations are and i immediately got blowback. So how would you explain to people why this is not an delegates to qe . Brian we already know that the reserves are too tight. So it is not qe, because you would need to get control of shortterm rates, that is a fundamental reason for having a central bank. You need to expand assets to meet that basic need. They are doing their job and it they do not have enough reserves, so they need to get more. Youlet lisa, ok, both of thank you. On monday, we will speak with bill dudley on his take and what is happening in the repo market and much more. That will be at 10 00 a. M. In new york, 3 00 p. M. In london. Romaine coming up, oil grabbing up one of its best weeks in a while. The president announcing the highest sanctions ever imposed on iran. With the u. S. Treasury is targeting, next. This is bloomberg. Lisa President Trump announcing further sanctions on iran in retaliation for the attack on Oil Facilities in saudi arabia. The president called them the highest sanctions ever imposed on the islamic republic, and a said they would benefit the u. S. As well as allies. Iran could be a great country, a rich country. But they are choosing to go a different way. There will be a point they will be sorry for that choice, but i think i am showing great restraint. A lot of people respected, some people do not. Some people are so thrilled at what i am doing. And i do not do it for anybody, i do it for what is good for the United States and what is good for our allies. Lisa our White House Reporter joins us now from washington with the latest. Showing a great deal of restraint, is that the take away from a lot of people in washington, that this is the end of the potential consequences for iran and it is pretty tame, all Things Considered . I think there was a collective strike here in washington on the moves, but that is not the end of it. The nationals agree to counsel is still considering military options. The defense secretary meeting with top officials, and the president did not rule out military action, but as he indicated in those comments you played, he is not leaning in that direction. It does not seem like something will happen, but we know that the president has surprised us before. Romaine when we talk about these diplomatic channels and i guess the sanctions come obviously the hope is that we can avoid military conflict. We just had a change over in National Security advisors at the white house, and i am wondering if there will be some sort of difference in the approach on how they are advising the president on what to do than what we might have seen under john bolton . Jordan absolutely, john bolton was a hawkish voice on iran and obrien is seen as a somebody who will be more differential in his approach. He is somebody closely aligned with mike pompeo, who is also a hawkish voice on iran but has not been pushing for armed conflict. I think it can expect the president to be operating more freely here, a little more without constraint. He will go with his gut instinct on how to respond. Do theything . Sanctions do anything . Jordan that is the 1 million question. 80 of their economy is already sanctioned, so you are arguing that this will cut off additional trade with europe and asia, in essence isolate them even further from the Global Economy well, as you point out they are already isolated, so the president s allies in congress, especially some republicans, are pushing him to do something more to punish iran for their alleged attack on that saudi oil facility. Romaine ok, jordan fabienne, thank you for joining us. Lets get a check of the latest business headlines. Walmart says it will stop selling ecigarettes in its u. S. Locations. This decision comes after the 540said that this week people have fallen ill into seven people have died from vaping related diseases. Earlier this year, walmart stopped selling cigarettes to buyers under the age of 21. Amazon has contribute a more Greenhouse Gas emissions than other big competitors. But it was less than walmart. Amazon released details of its omissions yesterday. That is when they also committed to powering all of their Business Operations by Renewable Energy by 2030. The plan to be fully Carbon Neutral is by 2040. Google will spend 3. 3 billion in the next two years to expand its farms in europe. They will have spent over 16 billion on its European Data centers since 2007. Yesterday, google announced it is making the Biggest Energy purchased by a company to buy 1. 6 gigawatts from a wind and solar farm on three continents. Itsthe apple ceo reopened iconic storm fifth avenue. It was closed for three years for renovations. It will let shoppers sidestep their own tours, with the genius bars twice the original size. That is your business flash update. Joe i need to go. I have a shattered iphone screen. Coming up, President Trump says no partial deal with china. More on the renewed concerns. This is bloomberg. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. President trump today dismissed an Intelligence Community whistleblower even as democrats accuse the administration of withholding details about the complaint. The president made his comments as he held talks in the oval office with visiting primary visiting australian Prime Minister scott morrison. I shouldnt even have information. Conversations with leaders are always appropriate. At the highest level always appropriate. I fight for this country. Its another political hack job. A whistleblower who hasnt been publicly identified raised concerns about the president s interactions with a foreign leader. The Washington Post reports the complaint replayed complaint relates to ukraine. A third person has died because of the tropical storm. A body of a man found in a ditch today north of houston. Two other mantra two other men drowned the other day. More than three feet of rain has drenched the region. From sydney to paris, protesters are rallying to save the planet today. Swedish climate activists, 16yearold Greta Thunberg sparked a Global Climate strike movement. Its the same everywhere. The arguments and the empty words of promises and lies are the same. The German Government today announced the 60 billion package of measures for tackling climate change. Global news 24 hours per day and global news, 24 hours a day, onair and tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. Im mark crumpton. This is bloomberg. My 10yearold son is among those who have walked out today. , here isical headlines trump earlier about the prospects of a china trade deal. President trump we are looking for a complete deal, im not looking for a partial deal. China is starting to buy our agricultural product. Some very big purchases. We are looking for the big deal. A tradeng us is reporter with bloomberg news. The president says he doesnt want a partial deal. Withdrawinglegation from their visit to montana. How do we read this russian mark , as it has been through the trade wars throughout, weve had ups and downs and cycles and escalation. We are in one of these curious periods. They are trying to find their way forward. Trying to get some meaningful that make any meaningful progress. Forget about montana for a moment. The fact of the matter is they are great it is great there talking. He also said he expected that big deal that he wants would likely happen after the 2020 election. Collect snow partial deal, but we are still buying, but if we want to china to buy soybeans and other Agricultural Products, is that not part of a partial deal . That is exactly the point. The partial deal we may see is one that never gets signed by the leaders of the partial deal. The chinese side buying Agricultural Products of the u. S. Doesnt go ahead with further tariffs. There may be some other commitments for the chinese we see. The whole idea is about managing the markets, managing the economic fallout, and further political fallout. Into ant want to go political election next year with more economic damage. Anymore tariffs is not the right route to go down. You are always all over this. Turn to the u. S. Economy. We came into this year expect in the worst. The u. S. Economy outperforming expectation for most of the year. Our next guest believes this could lead to a spike in activity in the Real Estate Market. He joins us right now. I understand why the Real Estate Market should be healthier. There is no sense of urgency in the marketplace. You alluded to two major factors. From a fundamental perspective, Guest Services are lower in liquidity is higher. There are two main reasons. In most major markets in the country, it is a higher end market. Withe having a supply democrats that actually needs it. We are entering into an election year. 20 20 is going to be an election year. Whatsrs want to see going to happen. From a complete bipartisan perspective do people want to live in a house if the wrong person becomes president . Cooks reducing the deductions you have on your tax returns with respect to housing. If you have a democrat that comes into office, they may impose additional restrictions or regulations on the bank, which may reduce the amount of lending to the Real Estate Market. He has done a very good job in terms of pressuring which i believe rates are 100 basis points lower than they were 30 years ago. Might which markets should be doing better than they are now . New york for one. It has been interesting. The prices are more negotiable. Buying great opportunity. There have been a fair amount of people. Florida markets arent doing well. They have the construction boom. There has been hard to data, anecdotal data about a shift in where people are buying, the big urban centers. Those are going to middle american or suburban areas. Be seeing a trend . Definitely seeing a trend. Given the fact there is no state or city income tax there. Young families, millennial generations are realizing we dont have to live in new york city or the surrounding areas. We can go to other areas that are up and coming. You are seeing demographics go to places like that. There is a lot of new supply coming into the market in major cities, but it tends to be at the highend. Something you see frequently debated is whether this eventually filters down. The prices, maybe it causes people to live in causes people to move into places that cant afford it. Other people say no, they cut the price and it doesnt sell. Is there an effect on the Broader Market . Or do the Developers Feel comfortable not cutting the price, sitting on it, and it benefits no one . I think it is the latter. New development that comes on the market since 2013 are still on the market. 35 of all inventory. Developers in new york city are obviously extremely affluent and have the ability to withstand the difference and changes in the markets. Urgency. Not a sense of even if you went back 10 years to the recession, we didnt see a direct didnt see a drastic reduction in prices. How much of the decline in interest are we seeing in the ultra highend being in foreign money coming into the United States . Amounte is a substantial to be attributed. When you take the highend market and all of the supply and that market, a lot of that is targeted to overseas investors. Now it is everything going on in the Global Economy. We have seen a tremendous slowdown. I would say our foreign clients declined by 75 . That has been a special practice area of ours. Thank you so much for that. Former divorce managing partner, thank you for being with us. Wall streets changing landscape. How trading is evolving and banks are keeping up. This is bloomberg. Time for a look at what stories are turning across the bloomberg universe. Bloomberg has a surround the Canadian Campaign that is turning nasty. Those pictures of Justin Trudeau and blackface more common to the hyperpartisan context south of the border in the u. S. And tictoc on twitters reporting on Virtual Realities that could possibly save coral reef area scientists are same video the games used for mapping coral beds and areas that are difficult to access for precise and methodical work. And terminals are reading about citigroup, which has dismissed a large number of its recent of its Research Analysts in recent weeks. Ofigroup is in the midst dismissing for honey people from a trading division, which includes Equities Research and strategy. You can follow stories under terminal on bloomer. Com and at tictoc on twitter. Technology changing the sector, and Goldman Sachs leading the effort to keep up creator he prepares to leave the Companies Lead the companys, he sits down to discuss how he is seeing Technology Impact trading. Collect there are so many drivers. I wouldnt presume to know what is the principal driver of what you described as the secular decline. There are a lot of things going on in the world. I would say regulatory changes a part of it. Quantitative easing for long periods of time. Of cleanup, the aftermath the financial crisis. Data tolability of everybody and the right data, analytics on the data. Trading is still more than a third of the revenue at goldman. What do you think goldman becomes moving forward . How are they going trading is sa third of the to pivot into Something Else . Predictionng, in my in my prediction trading will bigin a core business and a business and a major substantive business. It is in our dna. Trading itself is changing in is string in interesting ways. If you look at the generalization of trading, the products and services we build, and you ask yourself how do we make them available in a digital format in a digital age to a broader universe, that is an exciting evolution i would love to talk about. The firm is clearly diversifying. We have new leadership. Does it look like in the latest era . The new leadership is making changes. The changes are remarkable and decisive. I by an with wild enthusiasm to all of them. At the same time there is continuity. David is about a year in. A the way i think of david, ive known him since ive rejoined the firm back in 2005. Its the same people working with david, harvey schwartz, predecessor of cfo, we were all working in this little group. There a lot of continuity. Do you think the firm has a new beating heart to it . What is the heart of it . There is certainly a variety of messages that david, john and stephen have disseminated consistently in a way that everybody could hear them. That is exciting. Certainly the drive towards more recurring revenues three revenue streams. Putting diversity at the center we willwe do and saying become more diverse and this is how we are going to do it and over this time frame, and it isnt a question. All of those things were exciting. I would say there are investments that we have been discussing and planning for for some. Of time that for some period of time. Way the business has been destructed. Disrupted. Talk about how technology will change the industry in the next five to 10 years. I want to be careful about extrapolating from the past. Few of the drivers of technological change in our world in no particular order. Software,ices, open api, Machine Learning. I will observe because of the platform where we put all of the data and risk and tools and models and reports in one place, doing things like applying Machine Learning everywhere is hard but relatively straightforward because we had the underlying platform. Extrapolating that out, here is market dataon consumer, infrastructure provider, infrastructure user, all of those engineer is two completely different things. Speaking exclusively with bloomberg. Lets get a quick check of the latest business flash headlines. The bank wants to repair damage done from the huawei matters, the agency seeks the u. S. Investigation of the chinese equipment maker against 75 of its pretax profit in greater china. For the first time a woman will had one of the biggest banks in the united kingdom. Chief executive officer by the royal bank of scotland to deputy ceo of natwest holdings. Announced in april that he would be leading leaving rbs within the year. And more cuts on the way at commerce bank. The german lender plans to eliminate 4300 jobs. Expected to sell its stake in a polish bank. Thats the business flash update. Coming up, demanding change. Protesters around the world are demanding action from the government to combat climate change. We are going to discuss activism from these people that is changing the conversation. This is bloomberg. Tens of thousands of people around the world demanding action on climate change. The students skip school and workers walked off jobs to participate. Bloomberg is part of the covering climate project, which includes 100 news outlets. Here with maurice bloombergs will wade. These of i think its millions of people. Protest on of climate action, is this thought to be the biggest mass thing we have seen . Especially with huge hearings in new york. What i think is notable today, how much is centered on young people . To bees are more likely old then young. There is less rejection of the idea among young people. A lot of kids im wondering, what are they actually know, what are they hoping to accomplish . Think young people dont have a huge sense of what they can accomplish. The idea is that they might be hurt . Are going to clarify that. This is obviously grabbing a lot of attention when you have young activists. Only 16 years old. What is the impact they are going to have in terms of facilitating some sort of change . You have the Worlds Largest economy. Thats a fair question. The political leaders in the world today are not moving particularly fast. The key ideas millions of young people now will be millions of donors within the few years millions of voters within a few years. U. S. , in new york i think one mention when he was here today. Hes not using this as a platform to say this is our platform. Thats interesting. The political leaders are not as active as the young people. Thank you so much for being with us. Bloomberg is part of the covering climate project, which includes more than 100 news outlets. And we have been getting pictures all day. Next week the heads of state gather at the u. N. General assembly. I will be watching Economic Data. This, expecting to price ipos as soon as next week. Bloomberg technology is coming up next in the u. S. Have a great weekend. I am taylor riggs in san francisco, this is bloomberg technology. Ing up, facebook and ceo Facebook Ceo Mark Zuckerberg assures lawmakers he will cooperate with the antitrust probe. Sachsthe code, goldman says trailers says traders who cant code will become extinct. And
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