WEBVTT - Global Market Selloff Intensifies; Buffett Trims Apple Stake

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, Radio News.

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<v Speaker 2>Good morning.

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<v Speaker 1>I'm Nathan Hager and I'm Karen Moscow. Here are the

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<v Speaker 1>stories we're following today.

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<v Speaker 3>Karen, let's get more on this global market route. We

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<v Speaker 3>are joined by Bloomberg's Kritty, Goopta and Kritty. We saw

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<v Speaker 3>a historic sell off in Asia overnight.

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<v Speaker 4>We certainly did, and the selloff is one of historic proportions.

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<v Speaker 4>The topics down twelve percent, the Nike also down another

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<v Speaker 4>twelve percent. But it's not just Japan. You're also seeing

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<v Speaker 4>the stock really spread off. Stock self spread off in

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<v Speaker 4>the chip sector across Asia. COSPI, the KAUSDAK, basically the

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<v Speaker 4>South Korean indexes that have that major Samsung havevyweight, both

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<v Speaker 4>down somewhere between eight and nine percent. You even have

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<v Speaker 4>the KOSAK in particular, which is of course at the

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<v Speaker 4>South Korean version of the Nasdaq, basically down a whopping

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<v Speaker 4>eleven percent. That's just in the equity space, Nathan, you

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<v Speaker 4>also have a similar story over in the currency space,

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<v Speaker 4>where dollar yen now at a one forty two handle,

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<v Speaker 4>really shaking things up in the effect space.

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<v Speaker 3>Yeah, we're seeing this sell off spread into Europe where

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<v Speaker 3>you are, though it doesn't look quite as bad there, Critty.

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<v Speaker 4>It doesn't, but it is still read on the screen

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<v Speaker 4>in line with the moves that you are seeing globally.

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<v Speaker 4>About a two percent decline in the eurostocks fifty. The

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<v Speaker 4>Footy one hundred is your underperformer as well, down about

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<v Speaker 4>two point two percent. Ironically, France isn't selling off as much.

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<v Speaker 4>It's only down one point eight percent. But the reason

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<v Speaker 4>for that is simply that these markets aren't as deep

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<v Speaker 4>as the ones in Asia. They're not as liquid as

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<v Speaker 4>the ones in the States either.

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<v Speaker 1>All right, Creatie goopto will be checking in with you

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<v Speaker 1>all morning. Thank you. Treasuries do continue to rally this morning.

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<v Speaker 1>Bets increasing there will be an emergency FED rate cut.

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<v Speaker 1>In fact, traders now see roughly sixty percent chance of

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<v Speaker 1>an emergency quarter point cut within one week. JP Morgan

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<v Speaker 1>and Citigroup are revamping their forecast to predict a half

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<v Speaker 1>point cut in the US in September. It all follows

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<v Speaker 1>Friday's weaker than expected JOMPS report and believes that the

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<v Speaker 1>Fed is too slow to support a slowing economy. Former

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<v Speaker 1>Offen economist Claudia sum to a Bloomberg Radio that data

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<v Speaker 1>triggers her famous recession indicator.

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<v Speaker 5>This summ rule way too much momentum in the unemployment

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<v Speaker 5>rate in recent months, I mean four point three percent.

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<v Speaker 5>So whether we are at that moment of a recession

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<v Speaker 5>or not, this is your build into substantial weakening in

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<v Speaker 5>the labor market.

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<v Speaker 1>Claudia sam with some consulting, made the comments Friday on

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<v Speaker 1>Bloomberg Surveillance right after the job's report, And.

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<v Speaker 3>Karen, as you mentioned, we're seeing Nasdaq futures plunge now

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<v Speaker 3>nearly four percent this morning. Several big names are in

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<v Speaker 3>the red. Let's get the latest from Bloomberg's Lisa Matteo.

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<v Speaker 6>Lisa, good morning. Yeah, we're seeing the tech sell off extending.

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<v Speaker 6>We have Nvidia down more than eight percent. We have

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<v Speaker 6>Microsoft metap plunging more than four percent, Alphabet down more

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<v Speaker 6>than four percent, Amazon falling more than two percent. We

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<v Speaker 6>have in Tesla taking a hit, down more than five percent.

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<v Speaker 6>But this comes after the Naszac entered into that technical

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<v Speaker 6>correction on Friday, and this was amid that drawback from

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<v Speaker 6>the overheated artificial intelligence rally. Now that gate page actually

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<v Speaker 6>touched a record high less than a month ago, but

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<v Speaker 6>it's not just AI. Investors also concerned about over elevated

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<v Speaker 6>valuations on the impact of also the presidential election on

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<v Speaker 6>geopolitical tensions in New York. Lisa Mateo, Bloomberg Radio.

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<v Speaker 1>Right, Lisa, thank you. Apple shares they're down about eight

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<v Speaker 1>percent over the weekend. Berkshire Hathaway revealed it's still nearly

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<v Speaker 1>half of its position in Apple during the second quarter,

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<v Speaker 1>and we get more from Bloomberg's Doug Prisner.

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<v Speaker 7>The move could be interpreted as a lack of conviction

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<v Speaker 7>in the Apple growth story. At the end of March,

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<v Speaker 7>Berkshire's position was worth roughly one hundred and forty billion dollars. Then,

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<v Speaker 7>as of the end of June, it was worth eighty

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<v Speaker 7>four billion. Since twenty sixteen, when Berkshire first has closed

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<v Speaker 7>its stake, Apple shares have sored nearly nine hundred percent.

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<v Speaker 7>Even with the sale, Apple does remain Berkshire's largest single position.

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<v Speaker 7>If you're wondering about valuation, Apple's multiple is thirty three

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<v Speaker 7>times future profits. That's eleven points higher than the s

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<v Speaker 7>and P five hundred our Cime, Derek Prisoner, Bloomberg Radio.

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<v Speaker 3>Thanks Doug. Tech stocks aren't the only assets selling off

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<v Speaker 3>this morning. We're also watching cryptocurrencies. Bitcoin is down nearly

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<v Speaker 3>eleven percent, adding to a thirteen point one percent drop

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<v Speaker 3>last week, the worst then since the period when the

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<v Speaker 3>FTX exchange imploded. US exchange traded funds for bitcoin suffer

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<v Speaker 3>their largest outflows in about three months last Friday.

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<v Speaker 1>Well, Nathan, we'll have much more on the market selloff

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<v Speaker 1>in five minutes when we speak with RBC Capital Markets

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<v Speaker 1>Head of US equity Strategy, Lori Calvesina. But now we

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<v Speaker 1>want to get the latest on the Middle East tensions

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<v Speaker 1>there maybe piling on to negative market sentiment. Israel is

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<v Speaker 1>racing for possible attacks from Iran and regional militias after

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<v Speaker 1>the high profile assassinations of Hamas and hes Beila leaders

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<v Speaker 1>last week. Prime Minister Benjamin Ettnyah, who says his country

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<v Speaker 1>is in a quote multi front war against Iran's Axis

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<v Speaker 1>of Evil. But the White House is urging NETANYAHUO to

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<v Speaker 1>redouble ceasefire negotiations with Hamas, even as the US moves

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<v Speaker 1>in a fighter jets Squander and keeps an aircraft carrier

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<v Speaker 1>in the area. Here's Deputy National Security Advisor Jonathan Finer.

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<v Speaker 8>What we're trying to do is prepare for any eventuality,

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<v Speaker 8>any possibility that's only responsible for the United States. Obviously,

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<v Speaker 8>we've been quite clear that we'll work with our ally, Israel,

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<v Speaker 8>to defend itself against any threats that it faces, and

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<v Speaker 8>we are in a moment that appears to be of

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<v Speaker 8>heightened threat.

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<v Speaker 1>White House Deputy National Security Advisor John Finer made those

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<v Speaker 1>comments on CBS's Face the Nation heard Sundays on Bloomberg Radio.

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<v Speaker 3>Think Karen Well, the White House focuses on geopolitical tensions.

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<v Speaker 3>Vice President Kamala Harris is reportedly focusing on the final

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<v Speaker 3>stretch of choosing a running mate in her presidential campaign.

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<v Speaker 3>We get that story from Bloomberg's Ed Baxter.

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<v Speaker 9>Three people on our shortlist met with her over the weekend.

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<v Speaker 9>Arizona Senator Mark Kelly, Pennsylvania Governor Josh Shapiro, and Minnesota

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<v Speaker 9>Governor Tim Walls. Kentucky Governor Andy Basher, Transportation Secretary Pete Buddhachic,

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<v Speaker 9>and Illinois Governor JB. Pritzker also names that are still

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<v Speaker 9>being floated now. The Democratic Party is planning a virtually

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<v Speaker 9>nominated ticket by August seventh, and Harris has said the

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<v Speaker 9>shop plans day at the campaign trail weather running mate tomorrow,

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<v Speaker 9>Ed Baxter Bloomberg Radio.

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<v Speaker 10>All right, ed, thanks.

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<v Speaker 1>Time now for a look at some of the other

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<v Speaker 1>stories making news in New York and around the world.

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<v Speaker 1>For that, we're joined by Bloomberg's John Tucker.

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<v Speaker 11>John, Good Morning, Good morning, Karen. Debbie strengthened into a hurricane.

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<v Speaker 11>Has the system neared landflow in Florida's Big Bend region,

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<v Speaker 11>where residents have fled ahead of a potential week long

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<v Speaker 11>disaster across the South. Bloomberg mediorologist Rob Carolyn is tracking

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<v Speaker 11>the storm now.

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<v Speaker 10>The very big concern with Debbie is as it moves

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<v Speaker 10>inlet over in North Florida over the next day or so,

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<v Speaker 10>the steering currents are going to collapse, and that means

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<v Speaker 10>there's going to be nothing pushing the storm along, So

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<v Speaker 10>it's just going to conder meander over portions of southeastern Georgia,

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<v Speaker 10>maybe eventually off the coast of southeastern South Carolina. This

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<v Speaker 10>means some very heavy localized rain are going to fall

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<v Speaker 10>over North Florida, Eastern Georgia, and South Carolina.

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<v Speaker 11>Through the first part of the workweek, top wins intensified

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<v Speaker 11>to eighty miles per hour, making Debbie a Category one.

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<v Speaker 11>System Defense Secretary Lloyd Austin has revoked a plea agreement

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<v Speaker 11>reached last week with the accused mastermind of the September

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<v Speaker 11>eleventh terror attacks and two alleged accomplices. That story this

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<v Speaker 11>morning from Bloomberg's Denise Penegreni Secretary.

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<v Speaker 12>Austin has now assumed direct oversight of the case and

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<v Speaker 12>canceled the plea agreement with Khaleage Sheik Mohammed and his

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<v Speaker 12>lodged accomplices for the attacks that killed nearly three thousand

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<v Speaker 12>people in New York City, at the Pentagon and in

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<v Speaker 12>a Pennsylvania field. This effectively reinstates it as a death

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<v Speaker 12>penalty case. Austin also relieved the senior Defense Department official

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<v Speaker 12>responsible for oversight of this case. His decision brought relief

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<v Speaker 12>to some family members of victims who had expressed anger

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<v Speaker 12>over the deal, but it also left uncertain the next

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<v Speaker 12>steps of the prosecution. Denise Pelgrinny Bloomberg Radio, and.

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<v Speaker 11>After ten days in theaters, Deadpool and Wolverine ready the

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<v Speaker 11>highest grossing R rated movie ever. In a second weekend,

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<v Speaker 11>the Marvel Studios Blockboster, starring Ryan Reynolds and Hugh Jackman,

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<v Speaker 11>continued to steamroll through movie theaters collecting ninety seven million

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<v Speaker 11>dollars according to Studio estimates. Global News twenty four hours

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<v Speaker 11>a day and whatever you wanted with Bloomberg News Now.

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<v Speaker 11>I'm John Tucker. This is Bloomberg Nathan and Karen.

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<v Speaker 1>John, thank you time now for the Bloomberg Sports Update

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<v Speaker 1>with John stash Hour.

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<v Speaker 7>John, Good morning, Good morning.

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<v Speaker 13>Care of the Yankees and Blue Jays. Rubbert game at

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<v Speaker 13>the stadium and won Soto Homemwerd seventh, thenning Yanks had

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<v Speaker 13>their first lead, Toronto tie the game. Then there was

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<v Speaker 13>a rain delay, and then there was a DJ Lemy

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<v Speaker 13>who walk off hit the tenth innning. The Yanks won

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<v Speaker 13>four to three. They've won seven of their last eight.

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<v Speaker 13>Mets held the five Hits lost three to two. They

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<v Speaker 13>lost two of three to the Angels in Anaheim. The

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<v Speaker 13>Chicago White Sox swept by the Twins. The White Sox

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<v Speaker 13>have lost twenty games in a row. They have been

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<v Speaker 13>only two longer losing streaks since nineteen hundred. The sixty

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<v Speaker 13>one Phillies dropped twenty three straight. The nineteen eighty eight

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<v Speaker 13>Orioles began their season oh and twenty one. The White

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<v Speaker 13>Sox will try again tonight in Oakland Noah Isles one

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<v Speaker 13>to one hundred meters in Paris by five one thousands

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<v Speaker 13>of a second. There's a belief that it was the

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<v Speaker 13>closest race in Olympic history, not official because they didn't

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<v Speaker 13>used to carry the times out that many decimal points.

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<v Speaker 13>With Lyles can now be called the fastest man in

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<v Speaker 13>the world. He is the first American to win one

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<v Speaker 13>hundred meters in twenty years. Novak Djokovic can now be

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<v Speaker 13>called an Olympic gold medal winner. He beat Carlos Alcareza

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<v Speaker 13>and the thirty seven year old winner of twenty four

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<v Speaker 13>Grand Slams.

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<v Speaker 14>Was asked where this ranks twenty twelve opening ceremony in London,

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<v Speaker 14>carrying the flag for my country the opening ceremony opening

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<v Speaker 14>in the Olympic Games is the best feeling that an

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<v Speaker 14>athlete could have until today. This kind of supersedes everything

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<v Speaker 14>that I imagined, that hoped that I could experience, and that

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<v Speaker 14>I could feel.

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<v Speaker 13>Scotti Schefler on Olympic go then golf for the furious

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<v Speaker 13>finish final round sixty two. Had Bobby Finke not won

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<v Speaker 13>the fifteen hundred meters in the last individual event of

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<v Speaker 13>the Games, would have been the only time in Olympic

0:10:08.960 --> 0:10:12.360
<v Speaker 13>history no US goals and individual men's swimming, but Fink one.

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<v Speaker 13>He broke the world record. The US men did not

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<v Speaker 13>win the medley. Really, they had won each of the

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<v Speaker 13>fifteen previous ones. They were in Johns Dashedward Bloomberg Sports

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<v Speaker 13>Karen daven.

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<v Speaker 9>Coast to Coast on Bloomberg Radio, nationwide on Sirius XM,

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<v Speaker 9>and around the world on Bloomberg dot Com and the

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<v Speaker 9>Bloomberg Business app.

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<v Speaker 3>This is Bloomberg Daybreak. Good morning, I'm Nathan Hager. The

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<v Speaker 3>global stock route that began last week is intensifying this morning,

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<v Speaker 3>growing concerns about a weakening economy and a FED that

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<v Speaker 3>may have been too late to act to stop it.

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<v Speaker 3>To get some perspective on this market reaction, we are

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<v Speaker 3>joined now by Lori Calvacina, head of US Equity Strategy

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<v Speaker 3>at RBC Capital Markets. Luri, good morning. It is very

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<v Speaker 3>tough to find some green on the screen this morning.

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<v Speaker 3>Is it a pivot point for the market or our

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<v Speaker 3>investors reacting?

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<v Speaker 15>Hi, Nathan, Well, thanks for having me. Look. I think

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<v Speaker 15>there was a lot of confusion on Friday with the

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<v Speaker 15>jobs report. I think we also had some negative data

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<v Speaker 15>points from ism last week, and to be honest, it

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<v Speaker 15>really stands in contrast on both those reports with the

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<v Speaker 15>tone we've been hearing from companies throughout this reporting season.

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<v Speaker 15>So I think that there is a lot of sorting

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<v Speaker 15>out to do right here. I do think that one

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<v Speaker 15>of the reasons we've seen such a big reaction in

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<v Speaker 15>markets has been sort of the sharp detour that we've seen.

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<v Speaker 15>But I do think we need a little bit more

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<v Speaker 15>information at this point as.

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<v Speaker 3>That sorting out period continues. Lorie, We're seeing markets already

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<v Speaker 3>pricing in something like sixty percent odds that the Fed's

0:11:39.200 --> 0:11:42.360
<v Speaker 3>going to cut rates this week. I mean, how would

0:11:42.400 --> 0:11:46.079
<v Speaker 3>stocks react if the Fed essentially makes up for last

0:11:46.080 --> 0:11:47.000
<v Speaker 3>week's lost time.

0:11:48.400 --> 0:11:50.480
<v Speaker 15>So I think that we always have to ask about

0:11:50.480 --> 0:11:53.320
<v Speaker 15>the reason that these sorts of things happen. I remember,

0:11:53.320 --> 0:11:56.480
<v Speaker 15>this is market pricing, this is an official action. We

0:11:56.520 --> 0:11:59.080
<v Speaker 15>did sort of look at this phenomenon last year during

0:11:59.080 --> 0:12:02.840
<v Speaker 15>the Regional Banking CIS, and what we found was that

0:12:03.000 --> 0:12:05.800
<v Speaker 15>really you have to be careful what you wish for,

0:12:05.920 --> 0:12:07.600
<v Speaker 15>you know, in this kind of regards. And I know

0:12:07.600 --> 0:12:09.280
<v Speaker 15>there's been a lot of talk about, you know, sort

0:12:09.320 --> 0:12:12.480
<v Speaker 15>of fifty basis point cuts that have come out. We

0:12:12.520 --> 0:12:15.760
<v Speaker 15>did actually publish something on that this morning, looking at

0:12:15.760 --> 0:12:19.400
<v Speaker 15>when we've seen fifty basis point cuts in just recent decades,

0:12:19.440 --> 0:12:22.040
<v Speaker 15>and it's tended to be associated with periods like the GFC,

0:12:22.320 --> 0:12:25.360
<v Speaker 15>periods like COVID. You know, at the moment, that doesn't

0:12:25.400 --> 0:12:27.640
<v Speaker 15>seem to be the sort of environment that we are in.

0:12:27.840 --> 0:12:30.040
<v Speaker 15>So again, I think we need to wait and see

0:12:30.400 --> 0:12:32.280
<v Speaker 15>what we're going to get from the FED. But if

0:12:32.280 --> 0:12:35.319
<v Speaker 15>you look at the history, the fifty basis point cuts,

0:12:35.360 --> 0:12:37.960
<v Speaker 15>you know, just in recent decades have been associated with

0:12:38.040 --> 0:12:40.600
<v Speaker 15>sort of major periods of distress and markets. You can

0:12:40.640 --> 0:12:42.760
<v Speaker 15>go back farther and look at the nineties and earlier

0:12:43.320 --> 0:12:45.680
<v Speaker 15>to find other examples where that was not the case.

0:12:45.679 --> 0:12:47.160
<v Speaker 15>But I do think that's the kind of playbook a

0:12:47.160 --> 0:12:48.640
<v Speaker 15>live investors have in their heads.

0:12:49.040 --> 0:12:50.960
<v Speaker 3>So while we wait for the FED, and while we

0:12:51.040 --> 0:12:55.160
<v Speaker 3>wait for further data, do you see this route going

0:12:55.320 --> 0:12:58.640
<v Speaker 3>further or could this be a by opportunity.

0:13:00.000 --> 0:13:01.560
<v Speaker 15>I think we're going to have to watch the data

0:13:01.600 --> 0:13:03.480
<v Speaker 15>this week that comes in. But what I will tell

0:13:03.520 --> 0:13:06.160
<v Speaker 15>you is that we came into the third quarter thinking

0:13:06.200 --> 0:13:08.080
<v Speaker 15>that we were at risk of a pullback. Now, we

0:13:08.160 --> 0:13:12.760
<v Speaker 15>did not have sudden concerns about a recession on our

0:13:12.760 --> 0:13:14.920
<v Speaker 15>BINGO card. But the reality is that if you look

0:13:14.960 --> 0:13:18.480
<v Speaker 15>at the CFTC data, and we looked at US equity

0:13:18.520 --> 0:13:21.679
<v Speaker 15>futures positioning, this is something we track every week. If

0:13:21.760 --> 0:13:24.560
<v Speaker 15>you look at where we've been throughout most of this year, frankly,

0:13:24.679 --> 0:13:27.720
<v Speaker 15>it's been on US equity future positioning broadly, and S

0:13:27.760 --> 0:13:31.080
<v Speaker 15>and P five hundred future positioning in particular above the

0:13:31.160 --> 0:13:36.040
<v Speaker 15>January twenty eighteen highs and above the February twenty twenty highs,

0:13:36.120 --> 0:13:38.000
<v Speaker 15>and so we had, you know, obviously a tough year

0:13:38.040 --> 0:13:39.880
<v Speaker 15>in twenty eighteen, but we did have you know, sort

0:13:39.880 --> 0:13:41.640
<v Speaker 15>of a milder draw down on the low ball and

0:13:41.720 --> 0:13:44.960
<v Speaker 15>wined early that year twenty twenty. Obviously we all know

0:13:45.000 --> 0:13:48.160
<v Speaker 15>what happened there. But from a positioning perspective, whether you're

0:13:48.160 --> 0:13:51.520
<v Speaker 15>looking S and P naddak futures positioning as well, has

0:13:51.559 --> 0:13:54.800
<v Speaker 15>looked extremely extended and we have looked vulnerable to bad

0:13:54.840 --> 0:13:55.959
<v Speaker 15>news from that perspective.

0:13:56.679 --> 0:13:59.280
<v Speaker 3>You know, I think this is just maybe the last

0:13:59.320 --> 0:14:02.680
<v Speaker 3>time or two we spoke, you had cautiously raised your

0:14:02.720 --> 0:14:05.600
<v Speaker 3>S and P five hundred price target for the end

0:14:05.600 --> 0:14:09.480
<v Speaker 3>of this year. Now that we've seen this pretty significant

0:14:09.520 --> 0:14:13.040
<v Speaker 3>dive this morning and the potential for more. Are you

0:14:13.120 --> 0:14:13.760
<v Speaker 3>rethinking that?

0:14:15.200 --> 0:14:17.719
<v Speaker 15>So what we had baked into our outlook was the

0:14:17.760 --> 0:14:19.920
<v Speaker 15>idea that we would see a five to ten percent

0:14:20.000 --> 0:14:22.680
<v Speaker 15>type draw down, and that's a garden variety type drawdown.

0:14:22.720 --> 0:14:25.480
<v Speaker 15>But if you go beyond ten percent, what the history

0:14:25.520 --> 0:14:27.480
<v Speaker 15>tends to tell us is that it's associated with a

0:14:27.480 --> 0:14:31.400
<v Speaker 15>pretty intense growth scare. So obviously those risks have risen

0:14:31.440 --> 0:14:33.720
<v Speaker 15>in here. We don't know that it's certain we're going

0:14:33.760 --> 0:14:36.200
<v Speaker 15>to get that time of twenty percent draw down, but

0:14:36.240 --> 0:14:39.520
<v Speaker 15>if you look at those periods, especially in recent history,

0:14:39.560 --> 0:14:42.160
<v Speaker 15>we've seen those kinds of draw downs fifteen percent back

0:14:42.160 --> 0:14:46.200
<v Speaker 15>in twenty ten, twenty percent, and twenty eleven. Obviously, if

0:14:46.240 --> 0:14:48.520
<v Speaker 15>you go back to the twenty fifteen twenty sixteen growth scare,

0:14:48.560 --> 0:14:51.560
<v Speaker 15>I think we fell about fourteen percent. So those are

0:14:51.560 --> 0:14:53.440
<v Speaker 15>the kinds of periods. We have not baked in that

0:14:53.560 --> 0:14:55.360
<v Speaker 15>kind of scenario into our modeling.

0:14:55.400 --> 0:14:58.520
<v Speaker 3>As of now, about thirty seconds left, Laurie, what's it

0:14:58.560 --> 0:15:00.920
<v Speaker 3>going to take to bring confidence back into this market?

0:15:01.960 --> 0:15:05.000
<v Speaker 15>So I think let's watch the sentiment positioning indicators. Remember

0:15:05.040 --> 0:15:08.160
<v Speaker 15>AAII has also looked stretch. When we get down to

0:15:08.200 --> 0:15:10.800
<v Speaker 15>the one standard deviation mark below the long term average

0:15:10.800 --> 0:15:13.600
<v Speaker 15>that has typically, you know, in recent years, given us

0:15:13.600 --> 0:15:17.000
<v Speaker 15>a buy signal. Also, watch valuations. They've been very extended

0:15:17.040 --> 0:15:19.280
<v Speaker 15>for the broad market. They've been very extended for the

0:15:19.320 --> 0:15:22.240
<v Speaker 15>top ten megacat names. Let's watch what happens when those

0:15:22.280 --> 0:15:25.160
<v Speaker 15>numbers get back down to average. We can often see

0:15:25.440 --> 0:15:27.520
<v Speaker 15>markets try to make a stand around those kinds of

0:15:27.560 --> 0:15:28.960
<v Speaker 15>levels and the source of environment.

0:15:29.200 --> 0:15:32.080
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