Is your function appetite for risk diminishing for a second day . Equities major equities are declining with mixed sessions for currencies and bond yields, especially in the core commodities, and the earnings season continues. Quarterly sales of shampoo dropped in europe amid the intensifying battle of the consumer goods market, putting pressure on prices. Becausey profit prices of demands from adhesives. Proctor and gamble and Companies Like henkel, down by 3. 8 percent today, facing a rapidly changing market without long share of established band brands to retailers being nibbled away. Matters of a german nature, the biggest steel maker in germany said that debts soared in the Third Quarter after increased Raw Materials prices. They helped to drive a quarterly profit increase because of the recovery in prices, steelmakers have seen profits rebound as part of the broader industry recovery as chinese demand strengthens and the asian nation closes plants to ease a global glut. Euro, againste the dollar this year it was the bestperforming major currency against greenback, a darling amongst investors. In the euro poses headaches because of the stronger currency that suppresses the cost of import, holding down inflation already running down the targets just below 2 . The strength of the euro may weigh on sentiment for the the blueflation and line there, thats ford. The white line is the Deutsche Bank euro trade weighted index. 90 minutes into the trading day, whats it looking like over there . Julie the nasdaq is off by 1 , and i should mention as well, the headline crossing is that the nasdaq is reporting an issue with reporting trades in the ticker symbols a through pass. A through f it doesnt look serious yet, but we will keep monitoring it. As we have seen this downturn over the past three sessions, the advanced decline line on traded stocks year is deteriorating. The declining language had already started to roll over a bit, even before the latest downturn, which we had pointed out, but continues to deteriorate here. A sign of underlying weakness that market is more to the negative than the positive. One of the worst performing groups today is the financials. Some of the regional banks are the worst reformers within the financials. America, bny mellon, citizens, one of the worst performers. It appears to have to do with what is going on with rates today as we saw that correlation between banks and the treasury market. If you look at the 10 year yield in todays session and what we are seeing on that front, we are after a fourine basis point declined yesterday, something thats definitely hitting financials. Whats going to happen from here with stocks versus bonds . Take a look at the bloomberg here, this is something that the folks at, are pointing to. They say that the turn from owning stocks versus bonds has fallen too far for them. Last month we saw the inflationadjusted risk premium with the lowest going back to 2008 in terms of how much you are getting back from your investment in stocks versus bonds. They dont like those odds. We are indeed seen that rotation over the past couple of days. Vonnie thank you for keeping an eye on that. Much appreciated. We will keep an eye on the nasdaq issue as well. Lets get to the latest on north korea. Japan and south korea warning the north that they would face a strong response if they carried out the threat to launch missiles towards go towards guam. Taking a look at the options that they have right now, the Senior Analyst for bloomberg government, previously a Lieutenant Colonel in the u. S. Air force having served in korea. An update, what does the u. S. Have in south korea and guam right now . What could it lose their . There . The air force base that we havent guam normally basis bombers. About 28,000 troops, mostly couple of Big Air Force bases. A regularctice on basis, with Additional Forces to the region. To theions escalated point where we thought a general , we couldbreak out move more stuff in there. Ink in the past vonnie the past the freeze option has not worked for diplomats looking for a solution. Having served there, do you feel like that could still be an option in some way . It can be explored, but the bottom line to me is that it appears the north is very committed to developing and having these weapons. We have had some agreements in the past that fell apart. The regime sees these is necessary for its survival. I just dont know that there is much that we can really offer them that can get them to back off the course they are on. Which companies, both in the u. S. , and closer to north korea, south korea, japan, which companies are set to gain and some sort of standoff between the two countries . I supposed to gain, and its terrible to think of these kinds of things, but the military companies, companies that support the u. S. Military, like lockheed, northrop grumman, they are always going to benefit in militaryvestment things and as tensions rise that works for them. If a general war were to even break out, a lot of companies that provide support services to kbr, they are the ones that stand to benefit. The ones that would lose other most obvious, those big south Korean Companies. They could have their facilities damaged by some sort of conflict. Their workforces likely to be mobilized, many of the men, at least, mobilized to actually fight in a war. That would hurt them. South Korean Companies are part of the supply chain globally, particularly in technology. Lots of companies around the world depend on supplies from south korea and could see them severely disrupted. Mark seems as a President Trump compounded the issue of by following his criticism with the warning that in the first seven months he has built up this stronger, more powerful nuclear arsenal. Its not exactly the case, is it . This is a 30 year program instigated by president obama. Right. There hasnt been much of it change since trump has been in office. He signed an order to take a look at the arsenal and look at upgrading it, but as you mentioned, this is a long process. Suchdent obama already had a process underway. It takes a lot of money and time. There hasnt and much change in the arsenal. Itis a formidable arsenal as is, certainly formidable enough to take care of any scenario in korea. Rob,e our thanks to joining us there from washington, d. C. , mark. Lets get to the markets. Gold continuing to rise, investors favor assets, with the markets reporter for bloomberg news. Highyield, starting with this chaff. Chart. We will focus around three charts. There has been a real rush to high yields. The question which this chart needs answering is is it justified. Has the push downward in yield justified or not . We are living in a world of risk. The prospects of tighter monetary policies as an investor , they are happy to hold soundseld paper and it slightly counterintuitive, but in general when Interest Rates rise it coincided with a rally in the highyield bonds. It highlights the fact that Economic Growth is pretty decent, companies with stronger earnings and strong risk appetites. The counter is that this risk cycle couldnt be any different. It has proceeded the improvement in Economic Growth and Center Central banks have automatically depressed ceo in the highyield markets. Wenie another charge that have been looking at, that you and i did as well, 9322 in the library, its called investors and Investment Grade credit according to hsbc. A lot of people are saying that, but is the point here that investment raid credit is extraordinarily safe and maybe this is enough compensation . Saferaybe companies are and we are back in that part of the world. Indexthe euro highyield traded u. S. Treasuries with astonishing sign posters. , we are hold paper talking about extraordinarily low yields that barely provide any return for income seeking investors. Whether you are an Insurance Company or a retail fund, it points with15 basis yields this low. Argument eating advanced this week in fixed income. Its interesting, the local and sovereign debt, how far this is a wonderful chart how far can that rally go . Vonnie sid if you talk to the bulls, it could go much further. Theres a big rally in local currency with inflationadjusted yields still providing investors in the u. S. And europe with a big pickup. At the same time emerging markets rally relatively early in the cycle related to the credit rally that we seen in the markets. If we want yields, if we want a cycle that is slightly earlier in the cycle in the developed markets and emerging markets, seems to be a good position. Mark if it turns sour, how bad could it get . Sid it could go mark talking about the entire credit space. Sid we have left very little margin for ever error. Its incredibly tight. As you pointed out, if you are an investor in euro credit and banking on capital gains, you have got your banking on a big dream, because its basically 50 basis points access in euro credit right now. Weakening, whether it is a trump tweet, a north korea rumble, that could really wipe out all returns for investors. Mark thanks for the chat. Sid verma, markets reporter for bloomberg news. Vonnie his columns are always fascinating. Courtney donohoe is here with first word news. Courtney trump uses twitter to rip Mitch Mcconnell again for failure to repeal obamacare. Tweeting courtney that came after theynell suggested that could not expect the action that could be delivered. In kenya, sparking an election theis he a data shows that president was actually beaten in the vote and there was a serious attempt to alter the final vote tally. Seymour gave an exclusive interview to bloomberg. James seymour gave an exclusive interview to bloomberg. My memo was about google and its culture. And punishme me and shamed me for doing it. Google denied claims that employees who expressed support for him have been, contacted by the poor will be coming up later in the hour area more than 120 countries, im courtney donohoe. This is bloomberg market. Mark thanks a lot. Copy property prices stagnating in july, with neighboring areas. That story, plus the threeway split to the cabinet over its brexit plan. This is bloomberg. Vonnie live from new york, im vonnie quinn. Mark and im mark artan. The u. K. Brexit secretary davis is describing the second round of negotiations with the eu, difficult and productive with a late letter published yesterday, the Sticking Point on whether a future trade deal should be discussed in tandem with those talks. He said that the second round of negotiations only reinforced his not do itthey could properly without looking at what the future relationship looks like. Joining us in right now, our London Bureau chief, m a ross thomas. Aying that they took significant step forward, but that talks were tricky. They were. They agreed on quite a lot. The European Court of joint court of justice was a major Sticking Point. To a certain extent, theresa may has made it a bit of a red line for reasons that she will understand. So, there will have to be some sort of third way, some sort of solution that creates a body that can do the arbitration on both sides. Mark in the meantime, transition. The cabinet, we hear, is divided into three. Who is in which faction and what do they believe in . Emma the probusiness was talking about smooth transition and it was extraordinary, actually. Plus one, nothing will change. Some in the cabinet have forced voice support for that. They have said that yes, the transition is necessary. Has beennson conspicuously quiet over this what theresaknow may thinks. She hasnt said anything publicly that contradicts the notion that every thinker be wrapped up in two years. The key thing is, what the she think about the transition . She hasnt even used the word transition. So, she hasnt chosen aside and might be the third camp. Emma presumably. She comes back from holiday next week. Interesting to see where she stands and how her position has evolved. Publicly at least it seems it has. Being felt in the streets, house prices. Its not just in america that people love to look love to own homes, its everywhere. Theres been a bit of a stagnation if not a slump in house prices. Mma thats right obviously there is a brexit component, but it is also about affordability. In london to buy a house its Something Like 14 times your gross salary for the average person. There is sort of the affordability, its reaching a limit, if you like, in terms of whether people can buy a house or not. The next round of talks, begsiations, it basically the question, how close are we to discussing trade rather than the irish border. Emma it depends on the progress they make on those issues area around in august, a round in september, and the first opportunity the leaders have to decide whether any progress has been made in order to go ahead and talk about trade. Last month in private they set according to our wording that it was unlikely that enough progress would have been made by october. They are running out of time. Good morning. Vonnie still ahead, our exclusive interview with mike wells. Coming up on the half hour. This is bloomberg. Live from bloomberg World Headquarters in new york, im vonnie quinn. Mark and live from london, im mark artan with the european close, six minutes away. Time to look at the business flash in the biggest stories in the news right now. A takeover today creating the single largest landlord in the united states. Blackstone has agreed to buy star ward. The company will earn about 82,000 properties in several areas, including atlanta, miami, and southern california. America hasnt been this optimistic in 16 years according to Bloomberg Consumer comfort data. Last week stocks again reached an alltime high. Figures indicating the labor market remains strong. Road, itodels off the may lead to a rush in trading deals. Cities bans, offering rebates of as much as 11,700. As many as 1. 3 million germans are expected to take the deal. Bloomberg latest business flash for this hour. We are five minutes away from the end of the thursday session. Check out whats happening to european stocks, the dow is down for its second consecutive day on principle concerns. 1. 2 decline for the stoxx 600. This is the currency force, lets ruffle through this, as you can see, the euro is marginally lower against the dollar. As we approach the close, this is bloomberg. Got you outnumbered. The dinosaurs extinction. Dont listen to them. Not appropriate. Now im mashing these potatoes with my stick of butter. Why dont you sit over here. Find your awesome with the Xfinity Stream app. Included with xfinity tv. More to stream to every screen. Mark this is the european clothes. Im mark barton with vonnie quinn. All 19 Industry Groups down. Biggest twoday drop since november. That puts into perspective the , 48 hours. He last 24 trump and north korea. Down live by basic resources. Glencore building this war chest. The worlds biggest commodities trader preparing to ramp up acquisitions. Glencore keeping its dividend will unchanged. Using the extra cash to pay down borrowings. Less then half the level in early 2014. This is a company that emerged from the crisis as metal prices recover. Shares in the last 12 months up by 74 today. Down by 2. 7 . The worlds biggest provider of temporary workers reporting secondquarter revenues that missed estimates. Its been hit by a downturn in hiring and some of the worlds biggest economies. Italy remaining its strongest market with a 25 increase in revenue. Sales in north america, u. K. And europes german speaking region fell as much as 4 . Revenue from france rising 9 . Confidence in the economy rising to a sixyear high. Macron vowing to overhaul labor laws and tighten government spending. We dipped into the property. Arket with Emma Ross Thomas a slump in london spreading to neighboring areas. Nationwide prices falling to the lowest levels in 14 years despite increases in northern ireland, the West Midlands and the southeast. Prices expected to rise. Optimistic. E least the latest to show the market has slowed considerably in the last year while Price Inflation cooling and mortgage demands flipping. That does remain a shortage of homes for sale. Of tax last year also big factors behind the slowing market. Have been saying, a third day of declines in the united states. Down. 4 . The s p 500 is being led lower by retailers today. We heard about macys. Signet jewelers one leading the s p down. 19 points. The nasdaq is generalized to selloff for tech stocks. Isnt getting too concerned. We are seeing a bit of an august decline. The fix is higher. The vix is higher. I thought we would take a look at the south korean won which is weaker today versus the u. S. Dollar. O surprise, gold futures up another 1 gain. Lets look at emerging markets. G20 i have picked today. The i mentioned as well. The South African rand is interesting. We are couple days past the noconfidence motion in the assembly which zuma defeated. He remains the leader until the end of the year. We are seeing that brand weekend. You can see commodities. A mixed day for commodities. The uks largest insurer focusing on its retirement products. A move that would allow it to set aside less capital. The chief executive spoke to francine about shedding its small capital products. Were looking at both internal and external ways to the risk that business. We would consider selling some of it. Certainly not any reason to do that. Is not to lens for that shortterm cash. We are not in any hurry to do any transactions in that space. We have exited on a retail basis. We wouldnt do anything that affected consumers or diminish total shareholder return. Runningery efficient at it and its producing very good cash flow. Its very capital intensive. The whole book is worth 45 billion. Would you look at selling 10 billion and take stepbystep . I would not get into the specifics because part of what we initially do is just price discovery. I dont want to build the expectation that there will be a huge relief of surplus. We generate a lot of organic capital. 10 this year so far. We are capital generative without doing anything in the back book. Were going to look at whats out there. Theres a number of firms that are quite interested in sharing some of that risk and we will see if any of their pricing meets our total shareholder return objectives and if so we will do so. House brexit going . For m and g it is some cost. I think on domestic consumers and retail flows into mmg were up over seven billionths and our proof fund which is a smooth Product Sales are up 29 first half of the year. You are seeing consumers look for is nonmarket correlated solutions right now. Temperamentisk appearing in u. K. Consumers and i think that is brexit related. Also the level of returns in the banks. With the combination of our u. K. Businesses part of what we are noncorrelatede equity and debt in total return markets. 7 trillion plus an opportunity. Socially this is an issue for us in the u. K. 255 billion in cash and 45 to 50 billion a year chasing a few more basis points in yield. Thats just not an appropriate place for longterm retirement savings. We have very Good Solutions for that. Its investing in real property, real equities. Debt. Those solutions do to be broadened by firms like us and competitors. Better job toa get some of those clients more fully invested in the economy. Mark also had a chance to speak to the chief executive on the quarterly earnings. Growth initially in france failing to make up for the downturn in hiring in germany. The chief executive spoke with bloomberg about the outlook for the u. S. Labor market. Increasing. E wages for the moment inflation in the u. S. Is around 2 to 4 depending on the area. Depending on the skills. The perspectives are good. This inflation should somehow come to you. And that kind of level for the moment. He sees a lot of companies in a Holding Pattern as we wait to see the outcome of brexit talks. For sure. Ats lets check in on the bloomberg first word news. Courtney donohoe is here. Japan areorea and warning north korea not to fire missiles towards the u. S. Territory of qualm. Guam. It would be legal for it to intercept the missiles. With three a has warned it may fire four missiles that could land 19 miles from mom qualm. Guam than 80 of the decline was due to a drop in the cost of services. All of this indicates that Pricing Power remains modest. For has boosted estimates the demand of crude oil this year and next. The cartel projects in use to supply an additional 200,000 barrels a day because of strongerthanexpected fuel consumption and a weaker outlook for rival suppliers. In London Police looking for a jogger who pushed a woman into. He path of the bus video shows a jogger bumping into the pedestrian. The bus stopped just before hitting her. Global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. Im courtney donohoe. This is bloomberg. Up, the man at the center of googles diversity firestorm. Our exclusive interview with the engineer fired for his controversial memo. This is bloomberg. Mark im mark barton. Vonnie im vonnie quinn. This is the european close on bloomberg markets. Shares of Invitation Homes and starwood waypoint are rising today as they announce what they are calling a combination of equals. Julie hyman has the details. Theyre not really familiar names. They are really standing out today. Julie yes they are. This has to do with singlefamily realist they. Rental homes in particular. Really interesting market. Ae companies are combining in 4. 3 billion all stock deal. Invitation shareholders will own about 59 . Combined 82,000 properties in 17 metropolitan areas including atlanta, miami, other tell on you. A pretty big reach. I was just emailing with colin quinn wrote who covers this industry. He says this will represent the 19th largest Real Estate Investment trust in the united states. It is supposed to be a taxfree deal and they are targeting toergies annually about 45 50 million. The Invitation Homes names will be the name of the new company. The starwood ceo be the ceo and the invitation chairman will remain chairman of the company. Thats just kind of how its going to be laid out. Given how much real estate is involved its probably not surprising that so many luminaries of the real estate world are involved. the financial crisis when so many homes went into foreclosure you had private equity and other investors snapping up those homes. Thats where the industry was born and really flourish. Its really expanded quite a lot. Invitation homes is actually controlled by blackstone. Spinoff ofd was a starwood. Went public in january of this year and shares have gone up. Starwood waypoint spun off from starwood itself in february 2014. When youre talking about whos going to be on the boardstarwooe former executive. Blackstones global head of real estate Jonathan Gray and Starwood Capital chairman. These are people who are big within the commercial Real Estate Community who are getting involved here. Have some of these companies coming public earlier. Its interesting that invitation waited and now is making the state deal. Also interesting that both companies stocks are going up in todays session. Thank you. That was fascinating. , firedGoogle Engineer Google Engineer defended his views in an exclusive bloomberg interview wednesday. Has triggeredmemo a nationwide debate on gender differences in technology. He told emily chang the Company Executives are smearing him in the wake of all of this. Its hard to regret it just because i do believe that im trying to make google and the world in general a better place by not confining us to our ideological echoed chambers where only one side of the story its totallyand intolerant to other viewpoints and even Scientific Evidence. What Scientific Evidence are you talking about . Because in the followup to your piece, there have been plenty of there has been plenty of andussion about this discussion of the fact there is no research to support this idea that there are biological causes for the lack of women in tech or the lack of women in leadership positions. I spoke to megan smith who worked at google who was a former cto and she says this is a. Among psychologists there is a consensus that prenatal testosterone does affect a lot of personality terry traits interest incular people versus thinks. Im not saying that all men are different than all women. Just that theres a distribution of these personality traits and that distribution differs between men and women. So there are very many capable women at google. And im not trying to say that any of them are any worse than average male engineer at google. Just i was trying to address why we dont have equal representation from the population. Of thes largely because different interests in people versus things which is linked to prenatal testosterone. Susan wrote a very impassioned response and she said had your memo been about thek people or latinos or engine be community that he wouldnt have anyone defending you. How do you respond to that t . H thats a false analogy and shes trying to lump me in with racists and other bigots, which im not. Im not a sexist. And im not a racist. I think thats just trying to smear my image rather than actually looking at the evidence. Very little of the responses have been actually looking at the science. Names oren calling me nitpicks of, the formatting was a little wrong, or the original linked document that somebody else linked to didnt have any citations when my original document it. You are urging for ideological diversity and ideological inclusion. Dont you think that extends to win in and minorities and all kinds of people . Google is making products for the world you dont you need to have a kinds of people making those products . Yes. I support diversity and inclusion. Our lack of idea logical diversity has actually hurt our product. And it makes me think of the stereotype that all conservatives are stupid for example. That is widely held within very leftleaning circles. And that has hurt us. It makes us alienate large portions of the population. Susan was talking about whether her daughter was asking if there is biological causes for the lack of women in tech. The things you set of being conveyed to the next generation and we have talked a lot about the importance of getting more women into technology. Do you have a concern that your views could discourage young women and young girls from entering technology . No, because a lot of what i was just saying was there are simply fewer women that want to get into these fields. If you are a girl and you are interested in technology, then thats great. There arent that many people in general that are interested in technology. If 50 percent of the male population is in tech. Its still a very small percent of the population. Is interested in technology, they should just pursue it. Its a great field. Googles chief executive has also issued a statement saying our job is to build great products for users that make a difference in their lives. Suggest to users or colleagues that work is offensive and not ok. Time for the Bloomberg Business flash. A disappointing end to the second quarter. Manufactured stagnation to an almost 7 drop in the production of vehicles. The British Trade deficit to a ninemonth high. You can get up to a 20,000 discount on an electric bmw. There is a catch. You have to buy it in the san diego area. The automakers are combining their discount. Thats the latest Bloomberg Business flash. What we can learn from a bond yield from a decade ago. Plus sometimes at macys. For our global battle of the charts where we take a look at the most telling terms of the day and what they mean for investors. You can access these charts on the bloomberg by running the function that will be featured at the bottom of your screen. Im going to be lethal today. Kicking things off is emma chandra. I am slightly concerned now. I want to talk about macys. That the him off that the him things looked a little bit better. Samestore sales declining less than expected. ,f you take a look at my chart it shows the macys stock price over the past year against the s p 500 and you can see there is a huge divergence in performance. These little red flags and the green flags when macys may have missed or beat etf estimates. It almost doesnt matter. The stock is almost unabashedly down. Macys is fighting the consumer onft to digital and spending experiences. I have actually been really aggressive in trying to fight net battle. They have cut jobs. They have even been looking for ways to try and unlock value in their real estate. They really have quite little to show for it. Next intion is what is that turnaround and can whatever that may be also turnaround that stock. Mark, beta that. Mark you know what happened 10 years ago. Mark gilbert wrote this wonderful piece. This is in dedication to him. As we passed the anniversary of the start of the credit crisis its important to look at where we came from. Central banks pump loads of money into the market. Its a consequence investors have been chasing yields higher. Justds of highyield debt falling below the 10 year treasury yield. The last time that happened for any length of time didnt end so well. Im talking about 10 years ago. Look what happened to highyield. 20 in the space of two years. From the credit crisis we are talking about normalization. Central banks should be ever so gentle and unhooking the worlds Financial System from life support. You just dismissed my lethal outlook. That chart, i have to say. Thats the last time im going to try and be a hardass on battle of the charts. M as was wonderful. Look it up. We will be hearing from wall streets biggest bull on facebook. This is bloomberg. Vonnie it is noon in new york, 00 p. M. In london. P. M. Inie 5 00 london. Im vonnie quinn. Is is Bloomber Bloomberg mars vonnie from bloomberg World Headquarters in new york, here are the top stories on the bloomberg and around the world we are following this hour. Speaking out. Before Google Engineer fired for his views on diversity talks to bloomberg exclusively. What he says executives are smearing him. This as googles ceo is set to hold a town hall today on the controversy. Then, is the u. S. Ready for inflation . Why many customers are saying rising prices, a weakening dollar, and a tighter job market will mean tighter pressures for the economy any day now. The new mission and challenges facing facebook in another bloomberg exclusive. The coo will talk on the was with possibility to do good
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