tv Bloomberg Markets Bloomberg June 5, 2015 10:00am-11:01am EDT
the year. we will look at what it means for consumer spending in the retail sector. million u.s. government workers how to information stolen. authorities say the corporate is the chinese government. matt: it was a record year on broadway. this year, the industry celebrates the best of the best with the tony awards. we are going to talk to the organizer. ♪ matt: good morning. i am matt miller. erik: i'm erik schatzker. matt: let us get to the market check because we had a big number. you want to look at how it has affected markets. equity markets have not moved much at all. the numbers came out an hour before the market opened. erik: there is an equity market storyd the equity market
is that there are way more stocks declining. it was only about 180. the reason is that pretty much thing but financials are dropping. matt: that is interesting because we saw a lot more stocks declining. that was not a huge move obviously, but you saw the same trend with financials balancing out everything else. take a look at treasuries as well. erik: that's where the action is. look at the 2-year note. that does not really reflect the scale of the movement in the 2-year note which was up 74 basis points, right after that job report came out. the 10 year note also moving well. and resumes after taking a bit of a breather yesterday. matt: you always want to look at treasuries on the first move. the dollar is the
one that caught my eye today as far as any asset class. i was looking at that because this chart does not tell you much. erik: the long-term look at the end. a 13 year high against the end. there are another things that want to buy in japan, but today is the day. erik: what do you want to buy? exhaust fromium ida gotti. erik: you don't know how to ask for that in japanese? matt: no, i do not. let us look at what is making news on the bloomberg terminals. added 280,000 jobs. i was much better than economists expected. it shows that companies are upbeat about the economy after that slump in the first quarter gdp. the jobless rate ticked upward. more people have entered the workforce and wages grew as well
by eight cents across the board. breaking news in the retail sector -- walmart's board elected greg tennant as the companies next chairman. walton,succeed rob sam's son. he is taking on the board of the world largest retailer in 2008. not a bad marriage there. erik: china says it did not have anything to do with the massive hack attack on the files of u.s. federal employees. officials say the hackers broke into the office of personnel management and stole as million million- as many as 4 records of current and former federal employees. mediahave seen many remarks about this, but are they scientific? many hacker attacks are committed anonymously. it is irresponsible to make
these trump up assumptions without an investigation. erik: among the targets of the hack attack are workers who applied for security glances. a motive may be to obtain personal information that could be used for blackmail purposes to turn some of those u.s. employees to spies perhaps. in greece, the prime minister will adjust parliament an hour from now. yesterday, he would suspend a scheduled loan repayment to the imf and reject the latest a lot offer. elliott is an athens. lliott: greece's decision last night -- this announcement that was not widely touted. we had to get it from sources that the bank of greece is well within the imf rules. it is deferring payment and bundling up on greases dues into one whopping $1.8 billion repayment due at the end of this month. this is the third time something like this is happened since
zambia. wonder house ambience feel about being put in the same basket as greece. why did greece actually do this? it is because greece is under extreme liquidity pressure. it is running out of cash. there are two other reasons. essentially greece is just playing regression and it's a negotiating ploy. the other is that it ultimately will have to default that it might have cash in the bank when that eventually happens. the prime minister is due to speak in parliament in just one hour. he will come out fighting, saying he is coming out for the best deal for greece. erik: that is elliott in athens from a rooftop location. matt: opec is staying the course, meeting indiana. cartel is-- oil sticking with its production. opec cape the ceiling at $30
opec keptday a few -- the ceiling of 30 million barrels a day. the overproduction is likely to continue. those are the top stories is margaret and discredited -- those of the top stories this morning. it is friday. erik: many federal workers wonder if they were victims of the attack. plus what the government is doing about it. and how the economy would be if the right now at th congress want with more stimulation? and too much austerity in the u.s.. he will address the greek parliament an hour from now. first, a big economic story of the morning is the jobs report. u.s. economy added 200 80,000 positions in may. as we mentioned, that is the biggest increase in five months. the best jobs report of the year by any measure it is something
that we have been paying close attention to. that rose from a year earlier. speaking of hourly earnings, how is wage inflation impacting the american consumer? with that, we are joined the jack, formerly with the federal reserve bank of cleveland. jack, thanks for joining us. let me get your initial take on what we saw with this jobs number. it was the best that we have seen all year. wages were up eight cents. is it all positive? jack: yes. i think that today's report negates any fear that the economy is softer and probably points to the direction that the first quarter was definitely slow due to transitory factors. this is a great report and as i think that we look at it overall
that it is setting the stage for a stronger second quarter and the remaining part of the year. matt: does this mean consumers will go out and spend more money? we already saw a boost in the consumer's wallet from lower gas prices, but they ended up saving that were deleveraging a little bit. is it going to change that picture? jack: first of all, on that question of oil and lower gas prices, and takes time for that to work its way through the consumer psyche. people in their budgets really look at things on the longer-term. i think it is a matter of taking time for them to understand if gasoline prices are going to stay low. then they will decide if they want to spend more. you look atgh, when today's numbers, you saw gains in employment which is a good signal because retailers have to staff up per standing -- first spending. an appliance,
electronics, building materials, furniture. all this are related in people's homes and home improvement. gainso sought employment in the clothing specter. -- sector. we are also on the verge and ofng in the smack dab vacation time. people are getting their homes in position from a home sale standpoint or home improvement. erik: to what degree does the improvement in hourly earnings reflect what we have seen from some retailers raising the minimum wage that they are paying their workers? that is aainly factor. we have seen several key retailers increase their wages. is aboutber -- retail 1/10 of the size or less of total employment in the united states. you cannot necessarily say that the average hourly earnings for
the overall economy was precipitated by the increases. overall, we have got to look at that average hourly earnings increase. that was the largest we have seen on a year-over-year basis since august of 2013, which basically puts fuel in people's hands for spending. i think that is a good indication going forward are 2015. erik: when you say it sets the stage for a stronger second quarter and a stronger third quarter, how many jobs in the u.s. reasonably create over the next several months, month on month because if we are creating jobs on a pace of 200 80,000, it will not be long before we are under 5% unemployment? jack: you make a good point. the 280,000 maybe longer than we long-term trend that expect of economy, given the growth in the population and the overall outlook or population and employment growth. i think this number is a strong number. i would not be surprised that we
see may be some modification going forward in the next few months. i do not think we will be able to keep up at 280000 and month. i looked more closely to the based on the economy and the growth of population and the overall growth of expected employment. for: jack, thank you joining us. i appreciate your time to coming up on "bloomberg market day," this time the u.s. government is the target of a major hack attack itself. nearly every federal employee has his personal information stolen. ♪
welcome back. i'm matt miller. erik: i'm and schatzker. matt: we want to go to julie hyman with a look at the movers this morning. julie: i want to go to under armour who has a deal to buy a choice price target. arecally that analysts saying that use of id shares after the pullbacks that follow the first quarter results. also, highlighting the compound annual growth rate of 30% since 2010. even though this company is still dwarfed are nike, its annual sales are $3 billion. nikes are about 10 times that. it's growth is much more rapid being a much more smaller company. if you look at that from the way the stocks have done, the gross is reflected in the share price as well. up 19% to nikes 5.5%. speaking of retailers, we want to look at zumies. is falling short of estimates
and having his worst day since 2011. the shares are down 18% today. a quick check of diamond foods, then that producer. the company says it is selling fewer types of high-margin nuts. and that hurt its sales. i don't know which are high margin and which are low-margin. matt: i love those nuts. i would guess the pistachios are the high-margin nuts. know? erik, do you he has no opinion on not origins. matt: i think cashews are the highest margin not. let us look at the top stories of the morning. isk: deutsche bank launching an investigation into billions of dollars in transactions over four years. they are analyzing data from 2011 to 2015. goldman sachs will face a
penalty for mortgaging securities after the housing crisis. pay as much as $3 billion in this probe. it is tried to hold wall street firms accountable for the crisis. testimony is over and the closing arguments are set in the federal trial of a former bp executive. david rainey is charged with lying to investigators about oil spill calculations he made in the 2010 deepwater horizon oil explosion. attorneys said that rainey did the best he could with little information and he had no reason to live. jurors could be delivered in a single count against rainey by monday. those are some of your top stories right now. matt: a major breach of u.s. government personnel files, as many as 4 million idle workers may have had information stolen. to put that in perspective, there are currently 4.2 million employees on government payroll. so almost all of them. erik: authorities believe the hackers have links to the
chinese government, a charge that beijing has deadline -- denied. joining us now is brian finch at the pillsbury law firm. brian, we had to go beyond the fact that happen. we know that these computers were infiltrated and that personal information was taken. what should the government do now? brian: the government needs to do is implement advanced defenses. the outcome of this attack is not going to be the financial fraud on federal employees. when the federal government talks about free credit monitoring for federal employees, that is a joke frankly. we are not talking about stealing credit card information from your grocery. what the purpose of this hack specifics to conduct socially engineered cyberattacks on federal employees in order to get very specific information that is classified or sensitive, etc. from the u.s. government. is going to have to implement
specific defenses very quickly. something that it has not been if you in the past, but want to use the technical term, and has to get off its tuckus and move. erik: how much will it cost? brian: in the hundreds of millions of dollars. a is this in a committed -- significant investment that the government was planning on doing anyway. to bek the time will have advanced. you will cut through the bureaucratic red tape. it will be winners and losers. for disclosure -- i represent a company you know well called fireeye. the have a product called detonation chamber which allows incoming e-mail to be scanned along with the attachments to determine whether or not there are viruses and malware, including malware that has ever been seen before, which is exactly what happened in the case of the opium attack to understand whether it there's
something malicious attached to it. and is the kind of software hardware an equivalent types of company. the federal government does not have a choice at this point. matt: what information was taken? brian: all sorts of information was taken. there is now talks of records including security clearance records and their information about work histories and personnel records and some of their social security information, etc. what it really means at the end of the day is that whatever information was taken, it was taken for the purpose of what was known as a social engineering attack. by that, what i mean is that it was taken so that chinese agents or russian agents or whoever it is. it was clearly an intelligence agency. clearly a foreign government. if they can make an e-mail to john smith, federal and, that looks like an old friend or a retired federal employee. sorry.
i want to get a question and before we run out of time. how much can we blame on the confidence, on the one hand, and on underfunding? i spoke to tom cole from oklahoma who said, i reluctantly admitted that we are probably going to have spend more money on this. brian: there's a difference between funding and spending money wisely and timely fashion. people always get the two confused. i do think that more needs to be spent on cyber security within the federal government. bully people also have a problem understanding is that just because he throw dollars of the program -- problem, it does not mean that money is spent in a timely fashion. as a huge problem when it comes to this. it could take years because of big protests and red tape, etc. to get the big defenses in place. when you live in a world where there are 300 or 400,000 pieces of mail where -- malware coming
erik: tomorrow is the belmont stakes. the third and final event of the triple crown of their bread racing. matt: the favorite is the american pharaoh. it has one the kentucky derby is in the preakness. erik: that is a good shot of getting the tribal -- triple crown. as we report, the odds are not an american pharaoh's favor. >> belmont park on long island, 110 years old. it is home of the belmont stakes , known as the test of a champion. the last triple crown champion was a horse called a firms in
1978. there were 10 others before him, including secretariat, gallant fox, and seattle slew. find out why horse has not won the triple crown since the late 1970's, we turn to the in-house expert. david papadopoulos, bloomberg managing editor and resident horseracing expert. since following racing 1990. waynd enthusiast is one people were deferred to me. i'm a handicapper and gambler. >> the first reason is what papadopoulos calls the pack. inthe field is much bigger the belmont stakes in the east of years ago. only raced affirmed against four other horses. american pharaoh is actually against al seven. that sexy pretty small when other fields had 12. the second reason is ambushed. if the horse loses the kentucky
derby, an owner may not raise him in the preakness. >> that have never happened where a horse rained in the derb, skip the preakness, and one the belmont stakes. >> five of american pharaoh's competitors ran the derby but skipped the preakness. number 3 -- the distance. this is much longer. >> biggest race track in north america. a mile and a half around. they will be able to do one big lot. these horses from americans are on down have never raced this distance and the life and never will again. >> the last reason there has been such a drought -- the calendar. horses used to run all the time on two or three weeks rest. now that pace only happens during triple crown season. >> it is a very compressed racing schedule for the triple
crown contender. a lot of times, it will not come with the game race given the circumstances. >> given all that, how does american pharaoh look? freak and stand out in this race. i will try to beat him with a horse name materiality. if you can run a big race, he can threaten american pharaoh. erik: full props to papadopoulos. matt: that is fascinating. i've never gotten into horseracing given by the fact that i didn't know where belmont was yesterday. but i will pay attention. it has been a pleasure. i will be back with more "bloomberg market day" after the break. ♪
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like this since the holidays. payroll climbed the most in may that in months. that is well above the median forecast of employers -- of analyst, economist surveyed by bloomberg. companies are more optimistic about the economy. the jobless rate is up 1/10 of a percentage rate to 5.5%. more people started looking for jobs, over 300,000 people entering the jobs market. magnitude 9.9e, a earthquake has injured climbers in malaysia. about 130 people are stranded on southeast asia's highest peak. two of the climbers have been brought down. rescue efforts are being
hampered by aftershocks, and rocks and boulders have been loosened, making it more dangerous. workers in china are draining water from the cruiseship that capsized, killing hundreds of people. butas turned upright again it is still mostly submerged in the yangtze river. 97 bodies have been found. those are your top stories at this hour. coming up on the bloomberg market day, and art arbitrage story. a rare opportunity for argentinians to turn their pesos into art. celebrates a record-breaking year at the tony awards this weekend. we will speak with the organizers of that big event. greece raisesur, the stakes by delaying imf payment due today. we will speak to a fund manager who bought greek bonds. is he standing firm on his investment?
the economy added 280,000 jobs in may, the strongest payroll reports of the year. president obama says it is more -- of anof any economy economic recovery. republicans say it is still not enough. democrats have long advocated or government spending to keep job growth going but republicans have long black it. -- long blocked it. welcome to the program. tom, let me start with you. weren't you impressed with this job number? it is much higher than the average over the last 12 months. tim: it was a good report. matt: brad, do you find it to be a good report as well? brad: it is but when you combine it with the last two reports, we are where we were three months
ago. has not quarter or so been one in which there has been a great deal of news to allow anyone to change their mind. tim, are you more optimistic than brad? tim: i think lower tax prices has created a tax cut for some people but there is still a lot of uncertainty. there are international factors that no one can control. i think we give the government to beg much credit when things go wrong. what is the republican prescription? brad: higher taxes and needless regulation. you need to be looking at those to the business can operate more efficiently. when of the biggest problems is we have a political system that
is not operating very efficiently. long-term transportation bill, has been on life support for six years, to just getting the appropriation bills out on time so there is certainty on a lot of things. we have a political system that is not functioning very effectively. matt: i think many democrats and even president obama what agree with that. -- president obama would agree with that. they probably want to see more spending, right? tom: i do not think it is just democrats. back in the 1970's when milton friedman was looking back at the great depression and talking about what his teachers had advocated as policies in the great depression, and saying what he would have advocated, he would have called for in situations like that, and i think in situations like this, for coordinated monetary and fiscal expansion. with interest rates at such
extraordinarily low levels now as in the 1930's is a once in a century opportunity to pull all the infrastructure spending we are going to be doing over the next generation forward into the next five years, and do it over the next five years when interest rates are extremely low and when the government can thus finance it at such extraordinarily good terms. matt: we have a national infrastructure crisis here, bridges,ads and airports are at levels that are critical and certainly not worthy of a first world country. tom, do you agree we need to fix that up? tom: i think with the stimulus 2009 they blew the opportunity to do more in terms of infrastructure. the other money you may have gotten in short-term did not add
to long-term. brad: they had to get it through with only democratic votes. why were there any republicans actually willing to deal? we could have got a larger and much better crafted program. matt: there was a lot of money there, brad. not much of it when towards infrastructure. --: let me just interject you act like it was the republicans' fault. the president's inclination was to go to republicans but democratic leaders said no, we are in charge, and i think that hampered their ability. if you give them a bad deal, do not expect them to take it. brad: it does not change the fact that we still have crumbling infrastructure in this country and it needs to be somehow brought up to snuff here it how would you do that? i think you need a massive
transportation bill at this point and you need continuity. long-term projects are not moving through. states are taking some initiative in some cases but this is the time to do it. brad: larry summers was in the white house. he spent two years trying to assemble a bipartisan coalition for an infrastructure bank and got no republican bites at all. tom: the democrats controlled both houses. they could have done it. that is all we are saying. i think they blew it with the opportunity with that bill when they controlled everything. i think bipartisan government right now has just crumbled, turned onto almost a parliamentary system in our country. matt: we are all in agreement that something needs to be done. maybe the two of you can get together after this program. brad delong, and congressman tom
♪ matt: welcome back. we are one hour into the market day. time to get you caught up on all the market action around the globe. nara is in london. >> of course here in europe is all about greece. take a look at the equity markets. you are seeing red across the board. greece, the first country since the 1980's to defer a repayment
to the imf and still we have no agreement on its bailout so that is a big concern here in europe. and weuld switch over could take a look at some of the main overs, the worst performing athens stockark is exchange in greece. the onlythat, it is equity benchmark that has posted losses so far this year. the ftse 100 not doing well either, headed for its first monthly drop of 2015. look at some of the movers on the stoxx 600 today, vodafone was in talks with are notnational but discussing a merger. hit, banks taking a big
both alpha bank and national bank of greece among others. the euro has actually been fairly resilient among concerns about greek. it had its biggest two day gain since 2009 in a little rally earlier this week but guess what we have seen today? it is down and here's where everything changed. what do you think that was? u.s. jobs. julie: i am taking a look at what is going on with u.s. stocks. we are now seeing stocks gain. earlier there had been some indecisiveness expressed in the market as reported by the job report but the group who is doing the best in s&p 500 is energy. it is interesting the divergence we are seeing between oil prices and energy stocks. energy stocks remain higher even has oil has turned lower. remember the opec meeting this morning they held the
expectation study. spiked, then it came down, but oil stocks are holding onto their gains. the second-best performing group, the banking group. --t may be as we are ceiling we are seeing the yield curve widen to some extent here it we are studying -- we are starting to see rates go higher. bank of america at its highest in six months. let's take a more detailed look at rates. if you look at the 10 year for year to date, we are seen yields pretty much at the highest of the year, 2.38%. those higher rates seem to be putting pressure on the high dividend payers in the s&p 500. utility stocks are falling, telecoms are falling, and consumer staples. that is the balancing act we
have on hand. aremore defensive groups dropping. matt: we have something going on , the nikkei and hang seng both ending the session lower. a different story from the shanghai deposit, closing above 5000 six the first time in 2008. the company is set for a billion-dollar ipo in hong kong, adding to the more than $20 billion raised. david ingles explains why it is worth paying attention to. david: another ipo may be coming to the market. it holds one third of the world's pc models. it got approval for a $2 million listing in hong kong so it is --
it has raised $26 million. traffic has been very, very busy. davidthat was bloomberg's and goal from hong kong. here are the top stories crossing our bloomberg terminal, two of europe's biggest cable and wire providers are in negotiations. bloomberg news is reporting a deal in the european businesses is one of the assets being discussed. lunchice of a private with warren buffett is already near $1.6 million, and likely to grow before the auction wraps up tonight, but it is well below of $3.5 million. you have heard of craft here. pepsi once you did drink craft
soda. it will use real sugar rather than corn syrup used in regular pepsi and coke. the flavors will include lack cherry, tarragon, and orange hibiscus. those are your top stories for this hour. argentina continues to be plagued by inflation and a weakening currency. consumer prices have risen 29% annually while the peso has tumbled 55% against the dollar. one solution for those who can afford it has been to buy art. festivalend's art provides argentinians a rare opportunity to turn their pesos into assets. here is pimm fox. if you are in a situation that is germane to what is being discussed in greece, you have two different market rates for your currency. you have a black market rate,
which in argentina costs 40% more than official rate to buy u.s. dollars. how do you liquefy your pesos? matt: it costs more to buy them on this street then to buy them officially? pimm: yes, because you cannot buy them on the official rate. no one is trading on the official rate except for this weekend art sale. we're talking 100,000 visitors and because it is sanctioned by the government, and because the galleries and importers are given a temporary import license, you are able to purchase art at this art sale at the official peso-dollar rate. you are saving yourself about 40%, you are turning it into a hard asset, and then you can do whatever you want with that asset. it becomes a stored now you. it is a way to transfer your pesos, which have not been doing well. the peso has lost 55% of its
value against the u.s. dollar over the last -- there it is . why doesn't everybody fled into this auction and bring the prices to what they normally would be? a lot of these pieces are going $60,000, not all people can afford to. pimm: in argentina, most large purchases -- if you are buying a piece of real estate -- many people do them in cash in dollars. they literally shrink wrap bricks of dollars that are delivered when the purchase is being made. here is a way for people to turn their pesos, it you have seen declining, how to turn it into a hard asset in a legal way. hopefully the art will hold its value a lot more than the argentine peso. matt: even better than a shrink wrapped brick of dollars. still ahead, the tony awards are
♪ matt: welcome back to the bloomberg market day. i am matt miller. thank you for joining us on this friday. since it is friday, we are bringing you the best of the good life. will host music call the 69th annual tony awards, celebrating the end of a record-regular season on holiday -- on broadway. something wrong helped bring in sales. with me is the president of the broadway you league,.
steel,ining me is alix because she is a former director herself for 10 years directing theater and a playhouse. alix: right. matt: let's talk about the tony's. the visibility has really been boosted the last couple of years because you had hugh jackman and neil patrick harris. this year you have alan cummings. what to expect as far as a ratings draw? >> we have had great posts but it is really the work on broadway that is attracting visitors. we have an exciting show and we are expecting lots of two nations.
what is the importance of a broadway win and being nominated? how does that drive ticket sales makeoadway #how does that that more attractive to viewers in china? >> having to excellence award of the tony awards as something you can claim you have one certainly helps the show a great deal. many shows will say that if they had not won the tony award, they might not have continued to run. if you look at the long-running shows, you do tend to see the long-running tony award winners. there are always exceptions that for the most part, it is the tony. matt: what are the criteria? i know from so many friends and theater that there are so many different kinds of houses here it are they only for plays on broadway? >> they are only for plays on
broadway. matt: i did not know that. something off-broadway could be pretty darn good but could not win a tony. i think you should reconsider that here i. alix: a trend that we have seen over the past few years as movie stars and tv stars coming in to do a broadway show. in some cases, it is hard to even launch show without a superstar. does that put the little guys on off runway question mark is broadway the new tv question ?ar >> i think we can attract the "aie stars but you saw gentleman's guide to love and murder" win last year with no big stars. the relationship with off-broadway and regional leader
is that it is one big ecology that supports each other. it is something, most of the shows get developed off-broadway were in the region. it is supportive. matt: an article in the u.s. that chinese out have been very important. they're playing a big part in the business this year. >> i think we have investors from all over the world. as heather just said, broadway is a big ecology and the fact that it is, our broadway shows are shown not only in the 200 cities across the united states, they are also shown around the world. it is no supplies. broadway is a big brand. it is the pinnacle for live theater. alix: to your point, we have seen movies want to dominate an appeal to china.
my husband says he has seen a big uptick in south korea demand, leisure, china. the idea is that they are trying to draw over the big broadway shows and try to expand that. they want to learn how to do the business. they want to find a way to tune into the oscars. alix: tony's. matt: tony's, sorry. how can people around the world see this? >> the tony awards is being broadcast in several places across the world in china and we are in japan for the first time this year. matt: excellent. the tony's, i will tune in for the 69th annual. ♪
prime minister will explain the actions to this parliament in just a few moments. matt: hack attacks. 4 million government workers allegedly had their personal information stolen. officials say the culprit is the chinese government. 10 years after katrina. pimm: new orleans is back and better than ever. the mayor is here to tell us why lower oil prices are not holding the city back. ♪ matt: good morning. i am matt miller. pimm: i am pimm fox. let's take a look at the markets right now. let's look at stocks. the dowcks falling even jones industrial average down about 17 points. nasmo