tv Bloomberg Markets Bloomberg September 1, 2016 3:00pm-4:01pm EDT
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vonnie: we are live from bloomberg world headquarters for the next hour, covering stories of detroit, washington and the united kingdom. an hour left in the u.s. trading session, stocks have recovered from losses earlier in the session following isn data. david: we get data on auto sales, figures down across the board for the industry. we sort out the winners and the losers. vonnie: and the u.s. jobs report out in sooner than 24 hours. we discussed how this will be for the fed. david: here we are one hour from the close of trading. looking at the major indexes first. we get up the boards on the bloomberg, you see doubt is down 0.6%. 0.1%.p down the nasdaq up 0.6%.
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for a session without up or down by 1% or more. vonnie: pretty amazing. wtie to unite going down -- going down. $43, $.27 for crude oil. that is -- $43.27 for crude oil. schlumberger1%, down 0.75%. there were comments from the russian energy minister saying no need to impose output cap's accurate prices. clearly with that job -- we were looking at automakers as well. bad, nothing that from automakers. looking at ford, gm, fiat
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chrysler, all missing estimates. ford is down 1.4 pre--- 43%. -- 1.43%. reportswe have earnings of one of the biggest losers, campbell posting a disappointing forecast today, hurt by this policy recall and the organic food. this was acquired by campbell four years ago. so far sales have benefited from the fresh food push, but at the wrong time. david: we will look for the caret function on the bloomberg, i am sure it is there. check thet's headlines on bloomberg first word news. mark crumpton is in the newsroom. says an anomaly occurred during the loading of a rocket today, and that led to the explosion at cape canaveral. the company is reviewing data to identify the cause.
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mark: nasa says spacex was theucting a test firing in blast occurred. it was considered routine in advance of a planned saturday launch from cape canaveral air force station. the rocket was supposed to hoist an israeli satellite rocket. it was also a part of facebook's plan to use a satellite to bring internet service to areas of sub-saharan africa. the u.s. geological survey says a 7.2 earthquake 100 miles off the eastern coast of new zealand north island struck today. there are no immediate reports of damage or injuries. a tsunami warning has not been issued. chicago has concluded his deadliest month and about two decades. inpeople there murdered
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august. this is the third-largest city in the united states. it already has had more murders 471, then new york and los angeles combined. that is 50% more than a year ago. the man who shot president ronald reagan 30 years ago will leave a psychiatric hospital to live full-time in virginia september 10. he was deemed no longer danger to himself or others and will leave saint elizabeth hospital in washington to live full-time with his mother. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am mark crumpton, this is bloomberg. david: looking at tomorrow's jobs report, estimates are 180,000 jobs in august, which were be a drop from 255,000 in july. joining us now from your -- more insight is the chief economist at bloomberg intelligence. always good to have you. when you look at the importance of tomorrow's numbers, the
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speech from jackson hole, largely centered on inflation. policymakers indicating they are happy enough with employment. what are the threshold they are looking for tomorrow? carl: it depends on threshold or what. the threshold to hike by year end, which is what they are trying to signal here, is something 125 or 150 would be good enough as long as we hold that pays through year-end to december.ptember -- in september, there is little evidence we have shrugged off the sluggishness from the first half of the year. motor vehicle sales you are highlighting that. all of these telling us it is a gradual re-acceleration in the economy, but there is an extremely high hurdle for the confidence to take the plunge in september.
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vonnie: we had a building member of the foc speak today. what does he have to say about tomorrow's number. >> if you look at employment growth, we should not expect that the employment rowing 200,000 jobs per month every month. now labor participation has come down, it means employment growth probably will be somewhere, and it depends on the model and graphics going forward between 75 and 150 is enough to keep the employment rate constant. they are content with the unemployment right now. is this the right kind of employment or inflation? we did see unit labor costs rising more than forecast for the second quarter. he wasn't in manufacturing though. carl: i agree with the president because she is not giving an exclusive forecast for tomorrow. she is talking about steady state employment in the economy,
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which would hold this constant and arguably hold a result in the inflation and vicinity of 2% as well. miami calculations show that is somewhere around 100,000 mark. i am in agreement with that assessment. we will see faster job gains than that over the next couple of months because the economy is in fact accelerating. she is talking about a medium-term view and productivity. i don't see that necessarily in the august numbers, but we still have slow growth albeit in alchemy -- economy is accelerating in the back half of the year. we have low relativity numbers as we saw in the revision you are highlighting. so slow growth but week productivity means -- weak productivity means we see the first number. david: we focus on the headline number when we get the profit
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payroll tomorrow. when you dig deeper, what are you looking for? carl: well i am looking for an policymakers are looking for is evidence the economy is at full employment. signs of wage pressure emerging, the average earnings number. even more pressing is the near-term performance of the economy. you look at aggregate hours worked or more importantly aggregate income growth, a big jobs earnings, and which helps a proxy for growth in the economy. that will show how these continue to drive spending, which is the sole engine of economic growth right now in the economy. vonnie: how concerned should we be about auto sales numbers? carl: there is significant changes in the auto sector with the onset of uber and ridesharing, so the question is how much pent-up demand is in the economy. if we use the old rule, looking
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at auto sales on the demographic basis, that would suggest there is further upside potential for auto sales. if you look at the freed -- fleet age, that would suggest this as well. but talking with auto analysts, they suggest maybe the old rules have not been bent by significant changes taking place. one month i would not hit the panic button. vonnie: we will watch this closely tomorrow. looking at whis on the bloomberg, this gives you an idea of the whisper number on the street. we will see what will happen this month. thank you. up, major automakers missing estimates for vehicle sales in august in the u.s.. good annual sales change? we will explore this. mixed the u.k. has seen
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the smokey manhattan. david: it has been gray. vonnie: time for a look at the business flash. this drug company -- drug takeda isch data -- developing a zika vaccine. they will take $20 million for research and manufacturing. human trials begin in the second half of next year. a newa preparing for search with truvada go. -- trivago. the ipo will take lace later this year or early 17. and a lower court has thrown out a claim from access lindsay lohan. they say she had her like this use without permission. there was a look-alike model as a character in the game,
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complete with voice impersonation, shoulder length blonde hair and her signature peace sign. they said it was a game of fiction and satire. that is your bloomberg business flash update. david: now we dig into the auto sales numbers. this may be hitting the end of the road, the growth. the numbers don't lie. every major automaker missed estimates for august. , toyota.early 9% fiat chrysler the only one with 3.1%, trailing estimates as well. consumers are not responding, it seems to him -- to them. see $17.2 million, that is the bloomberg survey number. that is the orange line. in the case of auto sales, white line. u.s. automakers have underperformed since the start of the year.
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fee at chrysler down 26%. ford shares fallen 10% even with the redesigned f-150. it has been indicative of the truck over cars brand. you can see trucks in orange taking up cars -- taking up -- ticking up, cars are going down. the oranges trucks, the white is cars. the current trend sales were down. g.m. silver lake -- chevrolet -- brought there is concern in the market that is overheated including blue diamond. they point out a chart of intensity of sales at the highest point in the current economic expansion. consumers are paying for increase in auto purchases with borrowed money. this has been a big driver of consumer spending. some economists are worried. vonnie: thanks. now to the u.k..
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they reached a 10 month high last month as the pound boosted exports. u.k.nce is mounting the economy is resilient in the wake of the brexit vote. the founder at cumberland advisors is still cautious. he spoke with the verb -- "bloomberg surveillance team. >> the u.k. is headed for trouble. there is firm after firm looking at elsewhere. tom: can currency adjustment, deutsche bank at 120, hsbc a stunning 110, if you get currency adjustment, you will have a rolls-royce among others. david: if you can have currency adjustment without secondary, yes. but how you do that, you just put up a wonderful chart showing the history of 1992. what happened in the next two years? we had the crisis of worldwide currency crisis. we had banking stocks -- you
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can't do it. herewe had stanley fischer a few days ago. when you look at what bankers are doing right now on the september 1, are you like focusedat deutsche bank on future financial and stability. ? david: i think the gap between riskless and risk, the why bore isead thing going on now restating the price of risk. there are now two categories of things. you have riskless under percent level one assets. you get paid no matter what, and you have the rest. then you have the divide bill. tom: -- jonathan: people maybe not want to live in frankfurt. they are try to persuade people to live in poland.
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people don't want to move along. so there is a kind of embedded infrastructure it will take a long time to unwind. and who is to say the decent deal cannot be done, david? why does it have to be doom and gloom? david: we don't know. uncertainty rises. i agree with what you have said about the current situation. but if you had the u.k. in one position, what will the new one look like? norway, switzerland, iceland? whatever it looks like, it will be different than where it was before the vote. and we have seen deferrals of capital investment in the city in finance, and many open questions now from brexit. the fence is buying. i think it is a different question. we don't have a clue how this is going to play out. : we don't know how the whole of europe is going to play out.
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bund's bank now with ubs, the chairman talking this morning. they have a policy environment in front of them. we see week pmi out of italy, france. and negative rates are working, take a listen. the ratese are now, pact has been lost. rates are at zero. they see a little more negative, but i was always skeptical about negative rates. they do more harm than good. actual -- actually had those doubts since you left bundesbank. .- he left bundesbank the concern now grows and grows. that is where we are in this crazy world of negative rates. tom: do you believe in the first quarter -- fourth quarter and even next year bankers of different nations will transmit negative rates more than little
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people, or will they state in institutional vehicles -- stay in institutional vehicles? david: you see marginal transition -- tom: but where will they go? will they expand to german people, if you will? david: there will be political uproar if they try and do it. we saw political uproar in the impact every time there is a mini shock. the italian bank, whatever happens to be. people don't want to deal with negative rates. david: the chairman and founder at cumberland advisors on "bloomberg surveillance" earlier today. we have trading with netflix, streaming under pressure, down 14%. ♪
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insight. we have a person from delta derivatives. we thank you for joining us. we are seeing the first day of trading, and once again a tight, tight range. what is going on? tim: it will remain tight until tomorrow's job numbers. we have been in this trading since the middle of july when the brexit rally stalled out. really 2%, 2.5% trading range. we will see what it takes to break out. unless tomorrow's job number is red hot, well north of 200, maybe 180, the fed will continue to sit on their hands, given the economic convention. a lot of position squaring and wait and see on the trading floor. vonnie: how are you playing tomorrow, when there is such little movement in the overall agencies? tim: i think they are
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positioning for what comes next. at some point we know, mark is going to break out. given the vix is at 114 now, positioning with long-term option strategies is awfully for breakout in the long-term. the longer we go, the bigger the loan will be. we will see if it does move. option prices are very cheap. a lot of positions to either protect or present an upside breakout. vonnie: you guys, you are speaking for a group of guys now. tim: it is a red-hot number like we talked about or a real dismal number. two or really have to be three standard deviation move to get things going. is market with low-volume trying for a lot of wiggle room. unless things are really alarming either upside or downside, we will clean up away
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from next week. vonnie: this has been the quietest stock in the last year. 3% volatility. you are taking advantage of that, tell us how. tim: on historic volatility, this is the quietest it has been all year. implied volatility, fast approaching as well. and a similar market, we get a 98k -- a big movement, a inflection movement. september where it is straddling september. in different about a move up or down. paying six dollars for that. last quarter it was mixed -- netflix at the same price, north of eight dollars, so it dropped 25%. i like the fact it is cheap, and netflix is due for a pop or a drop. vonnie: all right, thank you.
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from delta derivatives, and thank you from everyone down there. david: an important programming note. tomorrow, don't miss a very rare exclusive interview with president vladimir putin speaking to our chief editor. we will watch that with the russian president. on monday, you don't want to miss a special hour-long report revealing with vladimir putin monday. that is told :00 eastern. ♪
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crumpton. tsunami warning for the north island. a foot highway was generated at east cape and extends to auckland, the most populous city. this 7.1 magnitude earthquake struck off the east coast 4:40 a.m. local time, followed by several aftershocks. residents and businesses along florida's gulf coast are bracing for hermine, upgraded to a hurricane. gov. rick scott calls the storm potentially life-threatening. residents have been asked to evacuate, and government offices in 51 counties closed at noon. the last time was wilma in 2005. that entered the state along the southwest gulf coast as a category three storm, leaving five people dead and causing billions of damages. hillary clinton leads donald trump by seven points in the latest nationwide poll.
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the suffolk university showed clinton has 48%, trump with 41%. in the four-way race, clinton is 42% to 35%. gary johnson has 9%, and gilles simon is at 4% -- jill stein is at 4%. the french spiderman's field this 600 foot high skyscraper outside of paris -- spiderman foot highs 600 skyscraper outside of paris. he has also done the empire state building and the towers in malaysia. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. back to you. nejra: markets close in under 30 minutes. let's go to the nasdaq with abigail doolittle. the nasdaqoking at falling off.
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it opened higher, then dropped lower on disappointing i.s. am report, and that it is trading at slightly higher again. the nasdaq right now is basically unchanged. we see very small gains and losses. it looks like it will be right down to the wire. if the nasdaq have to close down today, it will be the first three-day decline since the middle of june. that will have the biggest drags on the nasdaq, all day tesla shares are down sharply as a recent solar city merger filing exposed cash. not only is this tesla cash but also suggesting perhaps the merger, the proposed merger be green -- between tesla and solar city may not go through. they need shareholder approval. with these issues between the ceo,nies linked by the
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some wonder of it will go through. as for tesla its self, lots of turbulence. this is a year to date term. shares at tesla have fallen into bear markets -- in two bear markets. right now tesla is back in correction territory. this does not have to do with the solar city merger but investors wondering whether or not they can meet is whether -- the rather ambitious target for this year and ahead. nejra: what about bright spots? abigail: the biggest boost all day and helping the nasdaq to be up 0.1%, charter communications. shares are higher. that is their best day in quite some time on news the company's stock has been added to the s&p 500 and will be replacing the storage company pnc. and the reason this is reacting
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in this way, according to bloomberg intelligence paul sweeney, not just on this but in general where are added to the s&p 500, it forces the influence .anager to buy shares others say it is a status symbol or a coming of age. good stuff for charter communications helping the nasdaq today. nejra: abigail doolittle, thank you. matt: tomorrow -- joe: we get the most important jobs report of the year after the hawkish tone in recent weeks. this could seal the deal of a race this month. next guest says that will happen only if we get a payroll of above 200,000. joining us is conrad, from our dq economics. -- rdq economics. what is it going to take to seal the deal on the september rate report? could we get a
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>> i say absolutely. substantivefed is -- sensitive to the jobs report. tape thing.elayed and the fed set us up for a rate hike in june. we had a week rate hike -- table rate hike in that went away -- weak rate hike. earlierura was saying it does not have to be 2000 every month. this could be 275,000 and still keep us in the same rate range. is she urging for a hike, even if there is a miss? if the fed is not into it, they should be. there is no way the labor market was as weak as the labor report.
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something are showing very steady, around 190,000 jobs, well above the type of creation we need for new entrants in the labor market. so what she was talking about was the type of creation we need to see, which is at the level the fed thinks is consistent with low employment. that is significantly below what people are expecting. .f we were to see a jobs report here, if we take a look .ou see that isn manufacturing if you look at china, there is expansion territory. is this concern at all the recovery have to focus on consumers? conrad: one thing we have to be careful about, we may see more
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readings in the manufacturing , you have tolevels about 9% of employment. the rest of the economy is falling quite strongly. you mentioned the consumer spending process has been solid. but other things more manufacturing declines. we should have two hikes as early as march. our economists ready for that? conrad: it is two different things. the economy could easily withstand rate hikes. and we are obviously very low range.for the fed we had inflation in underlying terms pretty close to where the ,ed would like to see inflation but they were depressed by oil prices. regardless of if this gives back
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to laura's comments -- gets it back to laura's comments, we --'t need to see $200,000 200,000 or more to be consistent with the fed to normalize policy. joe: speaking at jackson hole, janet yellen said, in light of the continued solid performance of the labor market and outlook for economic activity, i believe the case for increase in the federal funds rate has strengthened. our decision depends on which this continues to confirm the outlook. this is somewhat interpreted saying it is not need to be good, just a continuation of the trend since the jobs report. conrad: the problem is the conditionality is important and a hawkish talk from a number of fed speeches on the data. it is unclear what they mean by
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strong and not. , even the disappointing numbers for may should be strong enough. a pace ofwas still at job creation to keep on implement rate where it is or back over time, result in it falling further. we had subsequent job reports much stronger. i don't know what she means by continuation of the trend, because in may, we had that continuation. but the latest job report was enough to throw them off to rate hikes they had strongly signaled. matt: making them dovish. that is her nature. cofounder areour kicking the hacky sack around have the barbecue, do you ever talk about fiscal stimulus as a real issue to happen in the next congress? i think when bill rhodes was talking about to rate cuts, he
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was -- two rate cuts was also talking about the stimulus. and they could hand the torch over or whatever you call it to congress and get help their rather than only through monetary policy. conrad: in a lot of developed countries there is this softening that there is not a lot more they can do. think it is i unclear. obviously we have had data miss function for quite some time. i think the fed would like to see help. it is still a question whether or not they will get at. that is a problem for the fed to acknowledge monetary policy is not a tendency. and yet they continue to try to push the envelope and consider what other policy tools they can bring out to try to address the weakness in the economy. joe: all right, senior
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they have had limited discussions with intel about a deal of about $3 million. talks are at an early stage, and intel a not -- may not sell the business. a pilot program using block chains to send payments between lenders. they are reaching out to a small number of european banks. we will see if this can cut costs, settlement times and credit risks of transfers. campbell soup, nearly 150-year-old company known for canned food especially to consume, is struggling to get fresh. shares fell 6% after they posted a disappointing forecast. the fresh division products were hampered by the drought in the main growing region in california and the protein recall. that is the bloomberg business
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flash update. the s&p 500 has room to run. that assessment from deutsche bank chief global strategist inchada. i asked him why he is so bullish along with my coanchor and what is behind the rally. >> at the most basic level, what i would argue the u.s. economy is going through is the very, very severe u.s. dollar. the way we think about it is also oil price shock. as that comes out, growth rebounds. high rates are very positive for growth, equities, defensive performance. matt: dollar for dollar strength.
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you were saying you want the fed to raise twice. not sure that will happen. that would attract more investors to the u.s. dollar. binky: do think back over the last few years, the volume of the dollar is back in 2011, when the u.s. was downgraded, from peak, thehe january dollar is already up 40%. i would argue it has overly priced in. what we saw recently up until yesterday with the pmi has to do with position squaring as rate hikes get more likely. nejra: what about the bond market? we talked about correlation between stocks and bonds recently. how do you see that shaken up? binky: this correlation between bonds and equity underwent a very basic regime change
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starting in 1996. i would argue if you look at bond yield and change in equity or the equity returns, as the u.s. went through enormous inflation cycles from the 1960's down to 1995, inflation from 2% to 10% and then back down to 2%, the correlation is what people think intuitively that it should be. bond yields go up, discount rate on equity goes up, equity should come down. because80 six, inflation has been in a range, it has not moved much. strong, very very positive relationship between equities and bond deals. it is a good fundamental reason to remain so often until inflation become the dominant force. going from 1.6%, that is not
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really in the grand scheme of things a big deal. nejra: just so i can get your thinking straight on the rally from here, which you are quite above consensus as well, using the drivers -- you think the drivers are good. good news is good news. where more stimulus means equities go higher. binky: i think more stimulus is bad for equities. we have not had new stimulus for a while. this discussion becomes a little difficult. if you look at europe and japan, more stimulus is clearly very bad for equities. six lasthe ecb five or easing actions since the middle of 2014 when they first rims -- moved rates to negative, this has been associated with european equities underperforming five percentage points on average.
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you are seeing financial stocks go down on average 15%. the one time they did go up was temporary. that is monetary stimulus. what about fiscal stimulus? we are seeing that in the election. donald trump had been talking about how much he would borrow to build infrastructure. hillary clinton was to fix infrastructure, invest in that as well. is that good for the u.s. economy, is it going to happen? binky: some kind of public-private partnership, not more fiscal spending given the rise in the debt of gdp we already see clearly would be timbere, but in said 2016, it is still early to start factoring that in in the outlook especially for 2017. nejra: are you more positive on the u.s. than elsewhere in the
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world? binky: in overweight, the u.s. we are overweight in emerging markets. we are underweight in europe and japan. the reason is if you live in japan, the view that there is a monetary easing negative for growth, negative for the entry markets. -- equity markets. and the bank of japan is bent on continuing to ease. until they take this hypocritical pose, walking away from additional monetary easing, we remain underweight. joe: that was the deutsche bank chief global strategist. nejra: a very important programming reminder, tomorrow on bloomberg television and radio, do not miss of rare and exclusive interview with russia's president vladimir putin speaking with our editor-in-chief. all day friday to watch that exclusive conversation and on monday, the current --
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moving average of the jobs numbers. that is in white. gdp in yellow. you can see the trend. every time gdp breaks away and gets below the jobs numbers, we headed into a recession, the red shaded areas. important to watch. this is a chart i was talking with nejra about. we are looking for another red shaded area. other data does not point that an economists -- and economists say don't worry. nejra: we are heading to the close, talking about the high trading range the s&p 500 has been in, the type of trading range in four to five decades. now eight declines in 10 days, threatening to knock the s&p out of that tight trading range. if you look at my chart, you see the s&p 500 is on the edge of
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range. out of that 1.5% basically it is for actually 257.03 from august 2013. that has held since mid-july. we had something like a five day period where it had this very tight range. we have not seen that since 1964, but are we going to drop out of that by the close? joe: i will be watching that. here is some negative news that fits with the slowing theme. take a look at the number of real estate condo deals at the high end new york city better for million-dollar deals were more. it is not like a complete fall off the shelves, but we are seeing decline in the number of condo deals. use really check out this great story on the bloomberg.
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really showing how the developers do with luxury stuff and decline, giving out $5,000 gift cards in order to incentivize buyers. high endorting on the we will see of that portends anything or if we just get back in balance. matt: it is exciting even though i could never afford -- $40,000, i could talk to my banker about it. that is it for bloomberg markets. "what'd you miss?" and the market" coming up. four minutes to go before we definitely do not break that trading range. ♪ ♪
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>> "what'd you miss?" i am matt miller three at >> scarlet fu is off today. ♪ joe: i am sorry if i confused you, it is indeed the close of equity trading in new york, the u.s. stocks are mixed. not a lot of action on that front, because everyone is waiting for the u.s. jobs report. but the question is, "what'd you miss?" report is outbs tomorrow morning, we have the three charts you cannot miss before the numbers. plus, the u.s. auto industry's growth may be headed to the end of the road. >> a former member of japan's ministry of finance joins us
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