tv Whatd You Miss Bloomberg July 25, 2016 4:00pm-5:01pm EDT
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closing bell ringing] scarlet: u.s. stocks closing lower, falling from record highs last week. oil slides below $44 a barrel. joe: the question is "what'd you miss?" amanda: janet yellen waiting for overwhelming evidence before another rate increase. joe: the democratic national convention kicks off in philadelphia amid a unity problem. we get a live up eight in minutes. and nintendo falls the most after dashed pokemon go hopes. amanda: we begin with the market minutes. the dow and s&p retreating as oil prices tumble. if you look at volume, it is below average. there is not a lot of momentum with the s&p 500, they have not had back to back gains or losses since july 14, so not much to go
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on. joe: 20 out of 30 dow stocks falling. if you look at the s&p, energy is the culprit. consumer discretionary in the green today. amanda: commodity prices across the board suffering today. oil falling below its 100 a moving average for the first time since april and that really did take the energy sectors down. torlet: are we moving on bonds? amanda: i think i'm going to start with the stock of the day and that is yahoo! monday -- one of the most leaked transactions we have seen. a 4.58 ilion dollar transaction. the question going forward for yahoo! is this simply an arbitrage play and does it settle in and stay here? we were looking at the market
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value of this company once you strip out some pretty big assets, including its stake and alibaba and its market cap is around x billion dollars. scarlet: let's talk about another company active in active hours. pandora looking to advise on strategic options as it looks to placate investors, shares down about .6%. andhedge fund had disclosed almost 10% stake in pandora and were pushing pandora to look into a sale. joe: let's take a look at u.s. government bonds because amid this selloff in stocks, we did not see a decline in yields. yield, we had the fomc decision later this week, so a lot of hesitancy to buy
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government bonds ahead of that decision. pandora shares actually higher right now in after-hours trading. i'm taking a look at currencies because the dollar is firmer against many commodity currencies. , policyilian real makers are intervening to weaken the currency. lots of ups -- lots of uncertainty. a turkish currency strengthening for a third day, strengthening its recovery. the catalyst for this was the prime minister with the governor planning to set up a multimillion dollar fund to support the economy. joe: the big commodities story today has to be oil tumbling over 2%. breaking $43 a barrel. if we look at the longer-term
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chart, very close to breaking through its 100 day moving average. the cult rate right now, rising supply up four straight weeks. higher prices, maybe more that's the theme playing out right now in the market. let's take a deep dive into the bloomberg. i'm taking a look at the chinese currency's drop. race.s. residential stealing the headlines and all of this time, you can see the rmb against the dollar. shows it against a basket of currency including the dollar euro and yen.
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the blue line shows a weaker buyout. is, it's still a source of uncertainty in this market and you had the japanese finance minister telling g-20 to pay attention to the future direction of the yuan. a year --e are just just a day away from the one-year anniversary of -- interesting to see strength ahead of that current see. joe: i'm looking at the work function to prepare us for the fed decision. right now, we are at a 48% hike before the end of the year. just to put that into context, if you go a month ago after the
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brexit vote, the odds were 15 point 3% of any hike this year. jump up. been a huge nobody expects the hike this definitely are is chance of a hike on the table. amanda: i'm looking at the ftse 100. one month is the brexit and prior to that vote, there were dire predictions about what happened to the market but it has not come to pass. but it depends how you invested. in pound sterling, this is one of the best-performing euro market. foreign investors who might have dip, investing in u.s. dollars has seen a loss because of the pound sterling weakness. we see a 6% klein.
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joe: it really shows how much you have to look at the dollar term. let's get more insight into the market with the head of short range strategy at bank of america merrill lynch. the fed decision coming up, the data has been good, stocks are close to record highs. do they have to start signaling a rate hike is back on the table? think they are going to signal anything in the statement this week. we think they will adjust some of the language to acknowledge some of the improvement certainly on the labor side and the continued positive second-quarter growth, we think the fed will make note of those. morewe think will be important is looking out one line in the statement talking about how they are monitoring inflation indications and global economic development.
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we think if they were to downplay that in any way, say they were no longer closely monitoring it, we think that would be seen as a hawkish sign. it's certainly something to keep an eye on. amanda: one reason is the data has been positive. give me your impression on the fundamentals and whether the fed should he moving sooner than analysts expect. guest: certainly not before. that said, there's some chance they might consider a set number hike. we don't think that's likely but it seems generally fair in my mind. the recent data flow has kept the narrative alive for the fed. very positive recent employment report and strong retail sales
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data and inflation data that keeps the narrative going. the data has been getting better for a while. is there a linkage between that and the treasury auction that did not do all that well today? guest: potentially. it seems that investors are coming around to the view that the fed could be tightening later this year. little interested in shorting securities up front and. that implies greater demand to short them. it does seem like investors are positioning for that potential are reluctant to find the odds and we don't know how did
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they do will come in over the next few months. joe: if you look at two year yields, they have picked up that they are well below where they were last december when the hiking cycle started. the expectations are for a slower pace of hiking than anyone thought a little while back. is there anything that could change that? guest: there's potential that could happen but it's not likely in our view. we don't think the inflation outlook will pressure the fed to look for times year or even once a meeting. while growth has been good, it has not then stellar. should the data change, the fed would adjust accordingly. seenet: we have emerging-market debt become attractive.
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the u.s. will remain the safe haven along with a couple of other markets. does that protect because shorting treasuries has been the smartest bet that could bankrupt you. does it protect you from what the fed might do? , potentially.d we have seen global financial tensions ease somewhat since the brexit vote. rates have moved higher in the immediate aftermath in the dollar has not strengthened all that much. em do quite well. this was encouraged by the easing of financial conditions and that's proper way one additional consideration that might make them more confident. thank you, bank of america merrill lynch head of short-term rates. scarlet: coming up, we are headed to philadelphia. the event already starting with some drama with the fbi
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scarlet: the democratic convention is off to an interesting start -- debbie wasserman schultz think she will resign after e-mails were leaked hillaryshe favored clinton over bernie sanders. joining us is mark halperin. rate to see you. about and i were talking her resignation and how it will take place until later this week. why is it being pushed off to later this week? why not resign right away? she has effectively
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resigned. she gave up the last role she was going to play at this convention. she might be chair in name, but i'm not even sure that will be true that much longer. it is extraordinary for the chair of a party on the eve of their quadrennial convention to give up the gavel but she has been forced to do that because of the increasing pressure of democrats, including those loyal to bernie sanders. joe: we have seen she got booed. henie sanders got booed when vigorously stated that clinton and tim kaine had to win. how comfortable are officials at something like that won't be repeated on the floor when the big event happens? it's an unpredictable thing. they can be sure and conventions thrive on order, pretty ability and the managers want things to go their way for top democrats tend to be less orderly and they
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have plowed their way through disorder. debbie wasserman schultz may be gone and bernie sanders may be speaking in support of hillary clinton but the revolution he has unleashed is not so easily put down when these e-mails confirmed what all he sanders porter stott, which is that the dnc did not play fair and favored hillary clinton. bernie it seems clear sanders is not going to take an overly fractious town. but do you think he is using ons to get more concessions policies and tried to leave it at all or what is done done? mark: i don't think so. he has a delicate balance because his supporters can turn on him at this event if they decide he's accommodating. campaign ishis
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right that in the platform negotiations in the speaking slot, he got a fair amount for what he believes and and a chance to drive his message even though he won't be the party nominee. his supporters remain volatile. you can't go anywhere in this convention hall or in this be without seeing evidence of the sanders supporters unhappy. bernie sanders be speaking at tonight's event. what does hillary clinton's pick of tim kaine tell you about how she is positioned? is he a pick aimed at the general election or aimed at governing? much more the latter and aimed at achieving what she knows is the first, second, third, fourth and this -- picking someone seen as ready to be president. look at the selection of mike pence -- both men were attacked by the opposition. qualifications were not brought up.
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accepted him as ready to be president and that is what hillary clinton was picking for. amonghat is the mood like top democrats? it looks like according to a handful of polls that trump got a nice balance that you have the dnc e-mail leaks. feel generally? do they feel is is a bad moment that will pass? are anxious to get under way and take the advantages that they have in the electoral college and their believe donald trump will not be seen as an exceptional alternative -- an acceptable alternative. amanda: what are you looking for
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to measure the success of this event. what would make it a successful event? mark: making the case that why hillary clinton should the resident instead of donald trump. scarlet: michelle obama will be speaking tonight as part of the day one convention. what can she do or say to assist hillary clinton? of supportas a lot among grassroots obama voters but i think she can do something to rev up support from the obama coalition for hillary clinton. joe: mark halperin, thank you very much. bloomberg'ss get to first word news with matt miller. matt: a new poll indicates donald trump is holding on to his postconvention bounce. the survey has trump leading clinton 44% to 39%. libertarian gary johnson is at 9%. big gaintrump saw
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among independents going from 31% before the convention to 46% just after. killed or of children hurt in afghanistan's conflict surged in the first six months this year. the new report finds nearly 400 children died in 1200 were and 18% increase compared to the same time the year before. giving $127 million in aid to african countries were the worst doubt in decades as a acting millions. it's also a growing health crisis. the united nations says people cannot take their treatments on an empty stomach. news 24 hours a day powered by over 2600 journalists and analysts in more than 120
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what is going on? one explanation is that these are long positions and people are coming in. what is more likely is that this is demand from investors who are lending out that shares. if you want to short them, you have to borrow them from someone. etf flows are not always so near. amanda: and when you look at that chart and see negatives for the past seven months, it did not improve, nor did it reach a breaking point where you would say it turned a corner. we do know there's a lot of action right now. one another indication if it is people going long, this thise of those things --
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risk on atmosphere which gets me to enb -- inflows into etf's. look -- we have not seen this level of activity in a couple of years and we haven't seen this kind of sustained activity. it's obvious from this chart that there is a turn here. when you see that kind of sustained pickup come in that suggest and the analyst say people are looking into emerging markets as having had a rough time. now the stimulus is coming and it may be a fundamental scarlet: shift in some of these markets. scarlet:although you wonder if the dollar continues to strengthen, if the federal reserve is likely to move sooner or later? joe: as the pool of assets that pay any yield all continue to shrink, people are looking for anything with a meaningful amount of yield.
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blackrock was out today saying emerging-market bonds are the one area where you could still get excess return. those are not necessarily traditional shape -- traditional safe havens. some emerging markets pay a high yield because they have to. as your mother told you, it means there is risk there. joe: i'm looking at data out of texas, which seems to be doing better lately. this white line is the dallas fed manufacturing index. it technically means contraction, but it is at its highest level since 24 team, so there has been a comeback. change,ear-over-year that has been diving lately and is down 6% year over year.
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claims have really been elevated amid the oil crash. with oil having come back and rigged counts taking up, we see manufacturing and a connection between what a manufacturer in with and then the claims the employment picture getting better. it looks like rings are better in texas and some concerns about a recession in texas but it looks like that's not happening. scarlet: dallas fed manufacturing is not one we look to. joe: it is localized. it is, but they have a lot of good data. coming up, the fomc begins its two day meeting to decide whether the economy can absorb an increase in the near term. will investors be looking out for? this is bloomberg. ♪
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matt: i am matt miller. stephanie rawlings-blake has been chosen to step in for outgoing dnc chair debbie wasserman schultz, who was booed and heckled after it was themled that some of favored hillary clinton over bernie sanders in the primary, and this is what happened when he addressed delegates in philadelphia a short time ago. mr. sanders: we have got to defeat donald trump.
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applause]d mr. sanders: and we have got to elect hillary clinton and tim kaine. matt: he says that the departure of wasserman schultz should open up the doors to people who want "real change." election were today, donald trump would have a 57.5% chance of winning, according to the website 538.com. moreso gives donald trump electoral votes, and donald trump would win the popular vote. nba legend michael jordan, who has long of oil sharing his political views is discussing the reading shootings -- recent shootings in a letter published in espn's "undefeated."
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i am angered by the cowardly and hateful targeting and killing of police officers. who owns the charlotte hornets, is donating $2 million to help police in the communities they serve. the australian prime minister malcolm turned bill wants to laws, calling for terrorists to be held indefinitely, even after their prison terms expire, and he also wants to introduce laws that would prevent so-called preventable detention, essentially asking for harsher suspensions, and in rio de janeiro, they have flunked a so-called stress test. australian officials say they found blocked toilets, leaking types, and exposed wiring. officials say repairs will be completed this week. global news 24 hours a day powered by more than 2600 in morests and analysts
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than 120 countries. i am matt miller. this is bloomberg. scarlet? ok, the big mover was crude oil prices, tombola, and that sent energy stocks lower by 2%, their biggest decline in a month. in terms of economic data, there was not a whole lot to go off of. this game is better than anticipated, so really it was a situation of consolidation. we also saw yields on u.s. government securities rise, so a selloff of stocks and bonds before that said decision coming out. amanda: and there is speculation about whether the language would change for you i thought we were watching the first paragraph, but the second paragraph. right, what'd you
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miss? at's dig a little deeper with chief economist at jeffrey. , you say it will be a nonevent, in that they will not do anything. having alen is not press conference. what will happen this week? little, and most of this will be in the first paragraph, and the economy is looking better now than it was, certainly earlier than the year, and i think it will be somewhat more optimistic about the labor market, although the recent data has been so volatile, that they will see more data on the labor market before they again are comfortable that it is in good shape, and i think they will be pretty happy about housing, because housing has done quite well for itself. ward, it doesn't look
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like there are any big risks hitting the market right now. is there any reason for the fed not to continue its hiking cycle? ward: well, in my opinion, the fed should be continuing its they have to but display greater caution them, frankly, i think they expected to have earlier in the year. certainly what i expected earlier in the year. good forbeen really the u.s. the economy seems to be doing fine. the financial markets are responding really well. but also being realistic, we probably have not seen all of the ramifications yet, so the fed, before they make a commitment to a second rate hike, i think they will want to see more time passed. they will want to see how the financial markets continue to behave, and they want to have more data under their belts
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before they decide that it has been a problem. scarlet: at in the context of what is happening, then turkey staging a coup, if you are the fed, how much are you weighing the sort of global responsibility to keep stimulating? you need to normalized mystically? ward: that is a consideration, and they have made a lot of progress. closetill have not come to their installation target for over four years now, so they can simply point to the dual mandate for not raising rates. whichen a third mandate, is global economic and financial conditions, and conditions overseas have tended to be so volatile. right now, they are probably very happy that it is relatively
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quiet. but as we have seen on at least two nomura occasions in the past year, that can change on a dime. : that can change on a don, and when it is so data is its highest in a halfwo years, two and years, and what does that tell us? euroeconomists are far to bearish on fundamentals, or that things are getting better and that the market has not picked up on that? -- that economists are far too bearish? is welcome, but frankie, i did not think it was particularly unexpected. before.seen this with the exception of one year, we have had bad first orders of that pretty good second and
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third quarters throughout this whole cycle, so we are just repeating that once again, and what is really important here is best is the doing housing sector, and this goes right to the core of the u.s. economy, so if they are doing well, the u.s. economy is going to be doing well. amanda: making decisions based on expectations. we have been hearing about worry in shorting it. what is the advice question of what about belong hand and when they should be taking some kind of action? d: i think it is something to get particular worried about the front end of the curve. we are seeing some things at the isnt end of the curve which probably due to a common nation of some anxieties about financial stress in europe as well as some regulatory changes,
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and as far as issues about the curve, i think for the most part what we have been seeing is the effects of qe, and the u.s. is is not the primary beneficiary, a close second, as far as being e,e beneficiary from the ecb q because u.s. rates are still positive, and european rates are extremely low, so that just means that investors have to go where the yield is, and to a significant degree, that means the u.s. joe: it has been an interesting month for world markets. te, thethe brexit vo attempted coup in turkey, which, from what i can tell, nobody saw coming, and that these are highs, and this is despite the act that the author of a rate hike have gone up, and the boe has not cut as much as expected, and we do not know what the boj
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is going to do. what do you make about this dive act into assets despite the central banks and the turmoil in geopolitics? well, i think there are two things. first of all, brexit has very little ramifications for the u.s. economy, and they are a service-dominated economy, and therefore overwhelmingly, we rely on domestic considerations for growth, so regardless of the do not think it had much of an effect on the u.s. economy, and against the backdrop of all of this, we continue to see central-bank qe. and they continue to look at investable bonds. and looking for securities they can buy that has some yield. and that is the attraction of
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and exploring a sale after receiving interest from a potential suitor from two nomura months ago, a bank working with -- from two months ago. a bank working with ups, everbank. of reduiring the owner's box, a deal valued in the billions. investors will get $52 in cash work each of the shares. and that is your bloomberg business flash. joe: what did you miss? libor has risen to the high level since 2009. arlier today, i asked bloomberg reporter from abu dhabi what is up. report: libor, which is the
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interbank rate, which you pointed out, has been ticking of , but last week, we saw a relatively big jump of reaching hight run and shoot crisis of 72 basis points high. now, that is not much compared to where it was in 2008, early 2009. it was something like 4%, but it is still rather significant that we are seeing this rise, given that interest rates are so low. joe: obvious and, when the rates rise, that makes people nervous, but you wrote that there may be a more benign explanation? tracy: i am not sure we can call it completely benign at this point, but it is not similar to 2000 eight. when people hear stories about rising libor rates, they tend to trouble,t banks are in and investors are requiring higher rates to lend to eggs,
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and that signifies something. this time, that is not really what is happening. big time, it is still a deal, something called money market reform, and it still has with thetill has to do crisis, but we have a situation where a money market fund did something called break the buck, its net asset value dipping below one dollar per share, and that is something that was never supposed to happen because money market funds are used by investors in deposit like places where they can safely place cash while generating a little bit of yield, so this money market reform is aimed at making the money market funds safer and a and --of the primera repeat of the failure. : let's talk specifically
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about the new rules. do they prevent a money market funds from lending to banks and the short-term markets? cy: they do not prevent them, but they make it more difficult. part of the rules are things like imposing the community fees, introducing loading net asset values for prime money market funds. member, prime money market funds invest in these short turn debt and commercial paper that is issued by companies and tanks, and so if there is a lot of nervousness over how investors are going to treat these once the new rules come into effect, and what other things they have to avoid is investing in commercial paper and investing in short-term debt, or they are asking for yields to compensate risk, and thatty ends up hitting the unsecured borrowing costs for banks, that is one reason why we see libor moving higher.
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: so as we go into the middle october deadline for regulations, any expectation for how high the borrowing costs can go? we have seen from barclays and deutsche bank, they are looking at about the 40 basis point and 45 basis points bread. an in recentally years, it is still at incredibly important thing for money markets or the world economy for itself, so if libor kicks up higher, that ends up increasing short term borrowing costs for companies, and it certainly borrowing costs, and it ends up to equating to a tightening of financial conditions, when it might not be completely clear that that is
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what the u.s. needs right now. and really quickly, who do they expect to come in to this area? : is a really good question. i am not sure i have dna alternatives. who are the buyers for the options question market does not seem there are any. we have seen the paper market shrink, and it seems to be accelerating in recent months. joe: that with bloomberg's tracy alloway from abu dhabi. let: pokemon go. we will discuss that next. this is bloomberg. ♪
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scarlet: i am scarlet fu. the excitement for nintendo may have been short-lived. joining us is betty liu. i am not sure why this is a surprise. we knew that nintendo was a .hareholder in the company betty: they have about a 13% stake in this, but you are right. as if this was public knowledge that they were not the whole owners of this game, and this went on.
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still, shares more than doubled based on the popularity and this is after the markets closed in asia. and a lot of it has been priced in. scarlet: i pulled up nintendo, and 5% of its revenue comes from gaming. so even if this was 100% of its own product, 1000% of an increase, it is a tiny, little portion of it business. betty: it is a tiny portion, and some of you are too jan. enter: i am not. i remember pong. surprise. is a
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thele are buying into future, hoping this is the revival of nintendo, and it does not so. i know, scarlet, you have got on your bloomberg terminal, this chart. as the stock chart has risen, if -i" --n hit "s scarlet: the short interest. interest hasort gone up just as high as the stock price, and many people felt the same way, which is that it is a lot of hype, and if it is a time to short the stock, it is now. just smart money shorting? betty: possibly. joe: they have this big games,ise, the "mario"
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and there may be more opportunities, and yes, pokémon got a lot of money for it, but to replicate it? : there is, but, guys, haven't we seen this movie before, with angry birds? and i feel if we have seen this movie played out before, and it never ends well for anyone who is in this. joe: sometimes you make incredible amounts of money, and sometimes you do not. all right, bloomberg's betty liu, thank you very much. anchor: for tomorrow's trading day, next. this is bloomberg. ♪
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ancho what did you miss? i will be looking for home prices tomorrow at 9:00 a.m., and we will see how much prices rose. we are watching us home sales tomorrow, and this is north of 2.4% of an increase. 3: and this is ahead of the release, downgrading apple downgrading apple to a sell, saying it has peaked.
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