Listen: John, Chris And United States discussed on Bloomberg Surveillance
"Of German recession cloud in the outlook in a markets this morning. Good morning live from the Bloomberg interactive brokers studio with futures positive eight tenths of one percent. After a couple of days of really decent gains on the S and P five hundred in the FX market, three days of dollar weakness. Just they touch of dollar strength eurodollar just a little bit weaker off the back of some pretty dreadful data on the continent. We'll talk about a little bit more a little bit later in the bond market treasury yields climbing for the last two sessions today we settle down and settle in around two point seven percent yield this morning. Two point six nine seven seven pretty much unchanged on the session likewise on a two year. Now, you'll yield there around about two fifty five. So the mood music between China and the United States a whole lot better data to of negotiations trade talks in Beijing, both sides, signaling progress and Chinese authorities planning to give a statement following the latest round of trade talks Christopher round dropping by the studio here in New York should take his partner and head of technical strategy could monitor cr-. This morning. John can that good news that trade truce extend to some kind of lasting peace. I think real at the markets be the judge of that we care about price action the market's interpretation of these events. And I just think it's important to emphasize were about eight percent off lows from last week. If you look at historical rallies in downtrends up about fifteen is your typical rally. So maybe we're halfway there. I think that twenty six fifty maybe twenty seven hundred level is going to be the first real test for this market in terms of how Doraville this advance is. Now the question I have. And I think what we're struggling with if a month from now or two months from now we've had some positive resolution to the China News yet the market's back on the lows, what will the excuse be that time or next time. That's the tricky question. So how do you characterize the price action in the last couple of days because for me, there's a big difference between pricing count netter recession risk and pricing in the all clear. Yeah. And I think if you look at some of the internals there have certainly been some impressive days. His namely Friday. The internals were the best we've seen since about seven or eight years. But more importantly, I think our big test is what are the leadership characteristics around this move. Look like, do we get the important groups like industrials and semi's involved semi decent. So far industrials not so much. So there is I think a jury is still out type attitude in terms of how we evaluate this move. And quite clearly China with the epicenter of this. And I don't mean the trade talks. I just made the general slowdown in the economy. We had apple last week Samsung overnight, it doesn't look right now for tech. Does it not that specific sector? I think it depends on where you look EM tech is so concentrated in names like Samsung, Taiwan, semi Alibaba. Ten cent those of clearly bit among the more weaker names, not just recently. But for the better part of the last six or twelve months when you look domestically small and mid cap software has actually been quite good. So there's this dichotomy. Global tech and US Centric domestic tech. And I think it's important. We highlight vet Bill wanted media question. My dog everyone out there, including vet Bill owns Amazon owns apple etc. Etc. What do you do with these big trophy, stocks of another time and place? I think if we consider the big ones, the Facebooks, the Amazon percents decrease, of course, summers respect for you. The question. I have is these corrective phases. These drawdowns are typically complete when the best stocks have gone down. I finally gone down. Microsoft has been the best of the best of the best for the better part of the last four or five years. Ultimately that one need to get hit harder before this is all said and done. I think that is the key bellwether as we move through the first couple months of this year. Why did they hedge funds go down so badly? Do they the hedge fund guys got hammered? Do they talk to people like you? I wish they see your fault. Listen, I think at the end of the day the underperformed from the hedge fund community has been consistent with the radical activists central Bank policies we've seen over the last. A more macro view. I do I think it's difficult for active managers to outperform when you go to some fancy pants too and twenty hedge fund and you say Apple's broken down the setups terrible bla-bla-bla Christopher on trend talk. What do they do throw you out of the office? I think one of the ironies about the hedge fund community, particularly kind of the legendary hedge fund investors that we know they are very very price sensitive, very very trend sensitive, very technical sensitive. So they're very they use technical. And what I've always found is our work the reception of it is often best in those places. If you look at some of the legendary hedge fund investors, they are have been price watchers first before they shave him fundamental. You were you just heard there, folks? There's nothing else you need to hear in two thousand nineteen if you're part of global Wall Street, there's all this media talk about guys in cosmic vision. And all that and Chris they're following the same price charts. I learned some guy named g. Peruggia a million years ago? Everybody ends up following the Exxon owes appointing figure or the trend base stuff that you do. We think it very simple price is simply a check on your fundamental view price. You there confirms your view of the world or a dozen John's visceral you do it with pencil and paper. So what's your fundamental view right now, Chris I I don't care for the fundamental view. I care for the market's perception of other people's fundamental. Yeah. I think this is where the rubber meets the road. We've seen a pretty good rally off the lows what I've been a little less convinced by as some of the macro divergences that still exist. You'll curve really hasn't steepen bond. Yields are up only modestly copper hasn't done much to impress us. So I think there are still some big question marks out there before we really embrace this. I think when volatility is high this disinclination to explore the extremes and the extremes that we were exploring the last couple of weeks was the prospect of a recession the base case for most economists it just a return to trend growth if I could push. Back on one on one point. Volatility feels extreme relative to maybe the last year or two, but if you look at the spread of markets in two thousand eighteen the high versus the low we were basically at the hundred year average. Emphasizes was extreme relative to. Seventeen. So I think we, you know, there's this term that was used the new normal over the last ten plus years, right? I think we have transitioned into the old normal and the old normal simply an environment where the range of outcomes is probably wider. It's an environment where cyclical stocks correct from time to time. I think people forget even the nineteen nineties the greatest bull market in tech ever. Semiconductors had eleven twenty percent drawdowns over that ten year period. Cyclical stocks. Correct. We need to remember that Chris Ron quite can't tell you want a good morning and happy new year to you just partners. The technical strategy. When do we stop saying happy new year when does that start? What did they say halfway Friday next week? I hate happy for happy Friday. That's good entree. I don't like it. I like happy Monday. Embattled exists we will come John Tucker for the first time in studios in two thousand he was with me. Thanks for catching up, and we're Tom. Meteorology group. Yeah. I must tell you. I took the tree out of the decoration. So did you mind is still over? No, more happy. Mrs keen said you're taking the tree down today because Bill things Bush. Spat Bill paying in the corner of no not yet. But we're ready to. Chris become a bit of a fire has yes, we would say that as well. John. What are you looking into the presidency? I thought mardi Schenker was absolutely brilliant on the mixture of things that we're supposed to see an eight-minute speech. I love what my gallon set an ex ios with Jonathan swan today about the tension in the White House about let's pick it up and go after the holidays really interested in coming later. Get a lot of attention something. I'm paying a lot of attention to is just the slowdown in Europe just to get back to the Mark. Thank you in the German data. Reduction was terrible. And there was this hope that in the third quarter. The slowdown in Germany and in Europe was temporary. The spillover into four q does not look good industrial. Production was really self euro-zone economic sentiment is really not great. We've been sliding. I think for ten straight months. It doesn't look right on the continent. Quickly you ever, euro belief? I think what's interesting here is this is how fair market develop it starts with price. First, and then the fundamental data begins to confirm and a lot of these European markets peaked in the first quarter of two thousand eighteen months ago. And now, the fundamental data has confirming what I can't reconcile is why the euro isn't weaker and something we always about is price action. How it responds to news? What's it gonna take to break down? The fact that that John what have you seen the I guess we've seen it? Chris tilling to a great extent. I mean, if you think about what we pay to the star twenty eighteen we were in and around one twenty five we can't forget the old way towards one ten I think the market to your point. Actually, did a really really good job of getting ahead of the slowdown in Europe price moved. I than the fundamentals are sort of back in this up and relative to positioning coming into nineteen very short, and very pessimistic euro and euro-denominated assets seems to be the story. Great to catch up with you Chris coming up on the program so much more about this market. Really fascinating start at twenty nine. This is Bloomberg. Now, the news in New York City. Here's Michael Barr. I'm Jonathan thank you very much. Donald Trump is set to make his first Oval Office speech as president to make his case during prime time that a crisis at the US Mexico border. Requires wall tonight speech comes as the partial government shutdown enters its eighteenth day, Bloomberg will carry the speech live starting at nine PM Wall Street time on Thursday. President Trump will visit the southern border bash. No security adviser John Bolton is set to depart Turkey. But not meeting with president. Bertillon and in an apparent snob over disagreements about Kurdish fighters in Syria. Criticize the US position that the Kurds must be protected reiterating his government's position that they are a terrorist group. Global news twenty four hours a day on air and at tick tock on Twitter, powered by more than twenty seven hundred journalists and analysts in more than one hundred twenty countries. I'm Michael Barr. This is Bloomberg Jonathan Tom America. Thanks, Clemson are Alabama. Had alabama.."