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tv   Bloomberg Markets  Bloomberg  June 18, 2015 10:00am-11:01am EDT

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-- scarlet: tidbit is minutes away from its first trade. we will have a live interview with the ceo. matt: janet yellen signals a september rate hike remains likely. using the principles of mathematics to interpret everything from politicians promises to student loan debt. scarlet: good morning, i'm scarlet fu. matt: i matt miller. mike mckee is in the newsroom with the headlines.
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mike: imagine being a traitor today. today.ine being a trader the philadelphia fed measure of manufacturing and business comes in at 15.2. seven points better than what had been forecast. index jumpsrs during the month as does the business activity index. stronger outcome in philadelphia. the new york fed index was lower than forecast but philadelphia, higher. leading indicators from the conference board up 7/10 of a percent, almost double what had been forecast. it looks like we are seeing the economy moving along at its own clip. this is the data janet yellen and company will evaluate going forward. matt: important to see how they
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react to this. rallyingeen equities after the open. we see about the same gain on the dow jones industrial average as we saw before this data came out. 136 points. the s&p 500, you can see the game, not 6/10 of 1%. scarlet: you say the fed is data dependent. many would argue they are asset price dependent. a different kind of data. matt: those are data too. scarlet: not inflation, not job numbers. selling of treasuries have picked up in the long and in the yield on the tenure of into a session high. the two yield, still lower. the yield moving down to 64 basis point.
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another sign inflation may take time to reach the fed's target. the cost of living rose 1/10 of the percent in may. the consumer price index rose 4/10 of a percent thanks to higher fuel costs. pure americans filed for unemployment benefits last week, indicating employments are holding on to their workers. we are minutes away from the first trade in fit bit. julie hyman is watching from out in our newsroom. julie: and looks like we have some indications. , an indicationt of $30 a share on 6 million shares. the traders gather on the floor of the stock exchange and there is someone who tries to measure or eyeball the buy and sell volume and figure out where the price should be. it does take a while but we could get the opening price at any moment. priced the ipo raised
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above the intended range at $20 a piece. in other words, there is a lot of demand for these fit pictures. we will see how they -- these fit it shares. joined thebi has hunt for the man who went on a shooting rampage and trust in, south carolina. nine people were killed in last night's attack. one of the victims was the church's pastor who was also a south carolina state senator. the suspect is identified as a white male in his 20's. you are looking at surveillance photos. he attended a prayer meeting at church and state for almost an hour before opening fire.
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act.is is an unspeakable hate andfilled with with a deranged mind. matt: authorities say they thought they tracked the suspect with police dogs that he then got away. greece is in across worlds. finance ministers meet in luxembourg to reach a deal on debt.ountry's alexis tsipras says he will not give in to demands are more .ension cuts and tax hikes without a new deal, greece may not be able to pay its bills. angela merkel said a deal on greece is possible if greece follows through on its promises. convinced where there is a will there is a way. if leaders in greece show this will, an agreement is still possible. matt: the imf, the ecb and the
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european commission. repay byeds to the end of the month and christine lagarde says there will be no grace period. a vote is expected in the house that could salvage president obama's trade plan. around 11:45ected a.m. eastern time. members of the president's own party leading the defeat. republican leaders in the house and senate are reworking the proposal to get some democrats on their side to try and pass it. thel continue to follow stories through the day. scarlet: jimmy lee died suddenly yesterday morning at the age of 62. we will hear from one of his mentors, jack walsh. fit bit starts trading this
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morning. park will be with us live. edtt: a dovish f confounding markets. in rich let's bring clarida. what you learn from the fomc meeting and chair yellen's news conference? folksi think a lot of thought she would tip the hand at a september hike. she wants all options next year. she indicated they would hike sometime this year but gave no indication it would be september. matt: is her plea for us to believe they are data dependent at odds with the implicit
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promise that they will raise rates at some point this year? . rich: it appears they want to guide the bond market to avoid a big selloff. i think we need to get used to this. this is fed communication away from chapter day guidance and it will be messy. will the language become more or less explicit? axel: if they knew what they wanted to do. i think the reason they talk about data dependency is because they are reading the tea leaves as much as all of us. if you think about it typically when you look at the fed, you look at inflation expectations. this fed is so focused on employment. you could argue that as long as unemployment is low, they do not have to do anything.
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we're just not used to that way of thinking. what they are not giving is a better idea of the trajectory. they say there will be slow but what is it that they are looking at? the central bank is supposed to give forward guidance. that is why we are sitting here trying to read the tea leaves and they are doing the same thing and everybody is frustrated. scarlet: i'm going to interrupt because fit bit has begun trading. ande: the opening was $30 $.40 -- $30.40. the stock is up 56%. all about demand we saw before the company began his being reflected in what is going on with the price now that it has begun trading. in terms of what this implies for the market value of the company, with the stock doing what it is doing now, it is about a $6.5 billion valuation as the stock goes higher and
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higher. $31.50 at on its first day of trading. matt: back to the days of, get a little bit, by it and flip it. botch thate facebook stop that. typically, a big pop and then they flip it. bloomberg news's simon kennedy published an article about how markets are turning less friendly. in june, mario draghi warned markets to get used to more art -- more volatility. --bucha of the bank of japan bank off the joe baca japan.
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axel: they all want to achieve different things. to --ody is trying everybody wants currency to be raker. -- currency to be weaker. janet yellen has not seen a true market tantrum. it is usually the market that teaches these central bankers to be more cautious. what is going to happen is if a time comes for them to raise rates. we will see aet selloff and they will scramble to backpedal. and say, try to ignore we do not care what the financial markets do. when they see the markets spill over effects into the real economy they will have to backpedal. it will be a dialogue between the markets and the central bank. matt: let's listen to what chair yellen had to say about the
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crisis in greece. >> the united states has limited direct exposure to greece either through trade or financial channels. to the extent that there are economyon the euro area or global financial markets, there would undoubtedly be spillovers to the united states that would affect our outlook. we willwonder how much see spill over to the u.s. but how much of an effect on the eu. it seems everyone is confident they have ring fenced this issue. i think we are in a better position than three or four years ago. my view is greece stays in the euro but the odds of that have diminished. the exposure of european banks -- most ofaper is
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the greek paper is held by the ecb or the imf. there's a bit of an unknown. no exit mechanism in the euro zone. we don't know how it would work out in that event. i think they have done as much as they can. scarlet: europe has had years to prepare for a greek exit. what is your confidence in the analysis that has been done of what a default means now versus in 2012? richard: i think the challenge for the eurozone is it was designed not to have an exit mechanism. i think officials want to avoid a case study of what it takes to exit. disaster.robably be a no good choices in terms of grace. matt: i'm going to e-mail axel for his take on this. richard clarida, the giver joining us. axel merk, a procedure time as
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well. -- appreciate your time as well. ♪
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scarlet: good morning. i'm scarlet fu. matt: i matt miller. we are following the fit it ipo. scarlet: a look at how early trade is going. julie: it is going well for the it.ks at fit b the shares are surging in the first day of trading after they priced at $20 a piece. we saw in opening trade of $30.40. 51% from the-- up
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ipo price. the company raised over $700 million. at $16 back on april 15. the stock was of 88% in its first day but since then it has come down amid concerns of possible counterfeits on its site. go daddy became public at the end of march. the stock went up 31% on the first day and kept going up, rising 20% since. there is an index bloomberg keeps of ipos. that compares with 8% with the s&p 500. the ipo function. a graph of ipos over the past two years.
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blue is the deal volume. green is the number of deals we have seen. the drop-off in ipos in the past couple of years as many companies have decided to raise money in the private market. uptickar we have seen an but not really anything substantial. maybe the few big ipos we are seeing are getting more attention. matt: today we are talking about this for billion-dollar ipo, meanwhile airbnb raises its valuation to $24 billion and they are not going public. scarlet: you want to move on to the fight over free trade, issue pitting president obama against most house democrats. he may have found a way to pass a trade bill despite opposition from the left. peter cook joins us now. strange bedfellows. this will require legislative maneuvering. peter: some trust involved as well.
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here is what is going to happen. today around noon, the house of representatives will vote to give the president fast-track trade authority. we assume this vote wills court -- will pass with the majority of republicans and a handful of democrats. it will go back to the senate where the senate will have to vote and the same thing will happen. the president is counting on a handful of democrats to back it. he is banking on the republican leadership agreeing to bring the woulda separate bill that give aid to american workers displaced by trade deals. he is trusting them to bring that deal to the floor and counting on democrats to stand coons.m, including chris spoke with him a short time ago. he's not sure about the strategy. sen. coons:without some guaranty
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, some path forward for all of those to get done, it is difficult for me to take another vote on tpa. peter: senator coons acknowledges he has faced heat in his home state form has first -- his first vote on fast track trade. the best chance for the president to get his trading can do -- trade agenda back on track. matt: he seemed pessimistic. has the president got some other way to deal with this? peter: he is working with john boehner and mitch mcconnell and right now there does not appear to be a plan c. this may be his best opportunity to do this. there are a lot of republicans who want to see these trade deals and they know the only way that is going to happen is if the president gets fast-track authority. they may have to suffer through both they do not like that -- votes they do not like that much in order to get that across the
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finish line. this is plan b and right now it is a dicey bet for the president. scarlet: peter cook, thank you. matt: still ahead, the fcc wants you to have a more peaceful dinner by cutting down on robo calls. i get them on my cell phone all day long. scarlet: i only get them on my home phone. i never pick up as a result. matt: i never answer the phone either. ♪
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scarlet: those often annoying automated calls are in the spotlight at today's house meeting of the fcc and washington, d.c.. how to close loopholes. one of the biggest actions it's a do not call registry was created. matt: i need the do not call registry.
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from a robo call for a survey or worse, one that tries to get our personal info. texts are the and number one consumer plate to the fcc, says the federal communications commission. i spoke with the fcc and the ftc. the fcc told me it is billions of calls each year. the biggest case was against caribbean cruise lines in florida, not to be confused with more reviewable companies out there. this one made up to 15 million illegal sales calls between 2011 in 2012. 1.5 billion calls in nine months. if that does not sound like a lot, it turns out it is not.
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since 2003, nearly half $1 billion has been awarded to customers but only about 29 million has been collected. money ons spend their other rich things when the get that money. robo calls are cheap. it costs less than one penny a minute to make a voice over internet call. .he return on investment the fcc has okayed locking technology phone companies can provide and the ftc has launched humanity strikes back, a challenge for developers to make a tool to do just that. one thing you can do now is at your number to the national do not call registry. 2 hundred 73 million members were registered.
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-- 273 million numbers were registered. matt: i am going to go over and my to hook me up with that blocked call registry. i guess you can put multiple numbers on it. matt: i cannot believe matt miller did not know about the i cannot-- scarlet: believe matt miller did not know about the registry. you're going to take off now but i will see you tomorrow. much more coming up, including remembering jimmy lee. ♪
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scarlet: welcome back to the bloomberg market day. bit gainingh fit
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as much as 59.5% after heavy demands for the company's ipo lead it to boost the price. it raise $732 million. its market cap is more than $6 billion. 's fails discrimination lawsuit. kleiner perkins had asked for newly $1 million to cover the cost. a jury ruled against pao. john doerr called the case regrettable and says it is time to move forward from it. his book about it with emily chang. >> i'm sorry this happened to ellen.- to the jury found we are not liable after 5.5 weeks of testimony. scarlet: to see the entire
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interview, join us tonight at 7:30 eastern time on bloomberg television. berkshire hathaway's warren buffett is increasing his stake in h.j. heinz to 52.5%. a 5.4% was able to add stake in hinds for one cent a share under terms of a 2013 deal . putburger chain that supersize into the american lingo is slimming down. for the first time in more than 40 years, mcdonald's says the number of u.s. restaurants it has is shrinking. those are your top stories at this hour. it beganp, fit b trading today.
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its ipo was $20 per share. a strong debut. how will it sustain these gains? we will hear from james park shortly. one professor says all of us should use math to solve life's daily problems. the death of jimmy lee yesterday shocked wall street. one of the greatest dealmakers in history. a formidable golf partner as well. for many he was much more. this morning, matt miller and olivia andns spoke to jack walsh bill cohan. they started by asking bill what it was like to work with jimmy. bill cohan when he had a deal in his sights, there was no one else you wanted more on your side. he could get deals done by snapping his fingers. people on wall street talk about
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bringing the whole organization to you. i think jimmy lee, he was the only person who could actually deliver the firm just by the force of his nature or if it was not like he had done credit analysis or anything. if steve schwarzman said i want to do this big deal, jimmy lee said, you're done and somehow, he bends the organization around his will until it got done. matt: we have heard he was monumental in the birth of lbos. we know he was a force behind j.p. morgan chase. what about jimmy lee as a person? you described him as old-school. give us an anecdote. is such a personal thing. matt: that is the most
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interesting thing right now. bill: i saw him in april. last year, he is a big williams college alum. my sons go to williams. i was playing golf with my sons last year and jimmy was there with his family. we ran into each other at the end and my parents were there too. .y father was playing with us we ran into jimmy and his family and it was this incredibly warm s andce. i've had up downs with jimmy. he was a tough boss when he wanted to be. i was all years ago. we have actually become good friends. a great person to talk to about wall street people and events. seeing him at the end of that and introducing him to my parents, it was great. matt: i want to bring in another
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great person to talk to about wall street events and someone who knew jimmy lee closely. former ge ceo jack walsh joins us on the phone. jimmy cited u.s. giving him the best career advice he has ever gotten. talk to us -- cited u.s. giving him the best career advice he is ever gotten. jack: you knew when you had a handshake with him he would deliver the bank. likes gossy that ip. a regular guy. a real guy. i enjoyed hanging out with him, going to the gym with him, playing golf with them. , so much moret than an investment banker. he loved williams college like nothing i have ever seen.
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my grandson is now a freshman at williams and i finally made it with jimmy when my grandson became a freshman at williams. bill: i had the same experience. , finally made it with jimmy even though i worked for him for like five or six years and know him for 20, until my kids were williams college enrolled, had not made it with him. scarlet: that was bill cohan and jack walsh on market makers this morning. making its, fit bit debut. we will be speaking with james park, next. ♪
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scarlet: welcome back. it is time to get you caught up on all the action around the world the day after the fomc meeting. london -- ne is in ara is in london. >> the stock 600 trading weaker on the day. if you look at the three month, you can see this benchmark hit this peak back in april and since then we have seen it drop. that loss in market value from the april peak is more than the benchmark indices of spain, portugal and ireland combined. what that means for the stock 600 is that it is heading for its worst quarter in three years. this after rallying the most since 2009 in the first three months of the year.
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greece has weighed on that benchmark. if i show you the picture of national equity benchmarks. the state of play sees them rebounding. the athens stock exchange, up by more than 3/10 of a percent. we have this meeting of finance investors in luxembourg, seen as -- seen by many as a last chance for a deal with greece. yet i'm a we are seeing a rally. also seeing the euro rally against the dollar. down of this, most likely to dollar weakness. euro/dollar volatility suggests it was the fed, not greece spooking currency traders. julie: that in the u.s. is helping boost stocks. three-day rally for the s&p 500 since march.
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up about three quarters of a percent. the perception that the fed is not going to be that aggressive but there is debate about the statement and the press conference yesterday. if you take a look at the map on my terminal, this is a map of the s&p 500. it is a broad-based rally today. utilities in consumer staples are doing the best. energy and information technology are gaining. the index of small caps is at a record high. a 10 year chart of the russell and the gains it has seen as it rises along with the market today. treasuries as well. we are seeing the highest yield in over a week. this confusion over the fed yesterday. citigroup and goldman going in opposite directions in terms of the perception of what is going to happen. citigroup is saying september,
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not september. that encapsulates that even with the fed trying to provide clarity, the market is not taking clarity. scarlet: the fed thinks two rate increases this year on top of that. i can forgiveness the latest. and hang seng, both lower. one big story out of the region is demand returning to china's residential property market. stephen engle's reports from hong kong. relaxation is's seating into a home price recovery as new unit prices fell in fewer cities for a third month in a row. 40 one out of 70 cities tracked saw prices decline and 20 cities saw higher prices. an improvement over march and april.
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buyers are getting back into the market thanks to mortgage and the down payment rules and incentives like free porsches. scarlet: stephen engle in hong kong. there are reports that lester holt will become the permanent anchor of nbc's nightly news. hold replaced brian williams four months ago. williams was suspended for exaggerating his role in a helicopter attack in iraq. the new york times says he will move to msnbc. the streets of downtown chicago will be lined with hockey fan today as the city celebrates the blackhawks' third stanley cup in five years. tens of thousands of fans are expected to greet the team when the buses arrive for a rally.
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engulfed, the u.s. open is underway at chambers bay in washington state. rory mcilroy has 13 times this year but michael -- rory mcilroy has won three times this year. shares of fit that -- shares of , a good day for the company and ceo james park who is standing by with leslie picker. leslie: i'm here with james park, ceo of fitbit. a lot of analysts i spoke to said the key for fitbit costs access is the company's innovation. leslie: where is your key focus? james: this year, we are increasing r&d spending.
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we continue to innovate and hardware. leslie: competition is coming at you on all sides. the apple watch, who wins this market? is it price, style, folks now eddie? -- functionality? james: it is a huge market and there is no one-size-fits-all. we have different price points, platforms. sizes, we want to give people a way to enter our ecosystem. leslie: is it going to be something -- is a going to be the best technology that wins? james: it is about creating simple to use products that people love to use. leslie: another important thing for fitness trackers is keeping users active. a study shows that a third of activity tracker users abandon
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the device after six months. have you make your product sticky for users? james: the inspiration for the company came from the wii. we are investing a lot in software r&d to make fitness fun and engaging. leslie: you have two vacancies on your all-male board. would you consider adding a woman to that? james: we are looking for the best possible people and we will not leave any stone unturned. leslie: in terms of the jawbone lawsuits, would you consider a countersuit against jawbone after this ipo is over? james: we're going to defend ourselves. leslie: i know another key part of your strategy is corporate wellness and making more partnerships. you have about 10% of your revenue coming from those partnerships. how do you plan to grow the partnership side of your business?
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james: we are already and 50 of fortuneover 50 of the 500. we will be invested heavily in growing their business. we're going to use ipo proceeds across the board. leslie: you have garnered a lot of proceeds. what was the process like for you? as your fitbit tracked the process you saw little sleep and heart rates spiking. how would you reflect on the process? james: my first roadshow. very intense. up to nine meetings per day. very little sleep during the weekdays by to the weekends to try to recover. after this ip is over. how happy are you with today's trade? james: i am filled with gratitude for everyone on the journey with us. employees, investors, customers.
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leslie: james park, thank you so much. fitbit.it it -- ceo of scarlet, back to you. scarlet: leslie picker with james park. fitbit trading just under $30 a share. still ahead, the power of nonlinear thinking. how mathematical reasoning can unlock solutions to everyday problems. ♪
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scarlet: welcome back to the bloomberg market day. the fed reaffirmed it is data dependent which means the cost of borrowing money will rest on how the central bank interprets numbers of jobs and inflation. forecasts for two interest rates this year.
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there are pitfalls because numbers can be manipulated and in turn they can mislead. jordan ellenberg is a professor of mathematics at the university of wisconsin madison. is pimm fox.me you're a mathematician so let's talk about. plot charts. i love this chart we saw. it looks like a robot taking flight and turning into a spaceship. it tells a story. the story this tells, each one of those dots on the screen represents one economist's forecast. each person's forecast individually. the long-term forecast, everyone agrees on what is going to happen. how we get there, many different stories. you can see where the
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disagreement is among economists. scarlet: that is pretty much what we talk about all day long. i tried to use percentages to offer context for viewers. that is often misleading, especially when there are negative numbers involved. jordan: the percentage is a useful tool. we talk a lot about income inequality and we say something like 93% of the growth and income in the recovery has gone to the top 1%. that is true but the way that makes it sound is there are only .- there is only 7% left there is negative income growth for everybody else. way,way, saying it that 92% for the top 1%, it puts everyone off the hook that is not accurate. pimm: one of the things you do
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in your book is you illuminate. if you could describe how you were able to connect al gore, george bush and their battle in florida with fly mold. i think that illustrates a lot of what the book rings out. jordan: what i talk about in the book -- one thing mathematical analysis is so good at is connecting things that look different -- rings that look different on the surface. a slime mold is a collective organism. it has to make decisions but it does not have a unified consciousness that makes choices. a lot of parts that has to make a decision collectively. people are working very actively on the frontier of math. it applies to biological questions but also questions of how we as a nation aggregate decisions when we have deep
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disagreements among individuals. pimm: it has to do with the choice between voting for al gore, george bush or rough ralphe? -- or rough nader. jordan: the presence of a third party candidate can change which of the two candidate we decide between. scarlet: the student loan debt has exploded, leading people to fear it is the next subprime bubble. talk to us about how this chart failed to tell the whole story. jordan: these charts are always correct but there is always more to the story than that. the student loan is going up and up. why that is is kind of a mistry. -- kind of a mystery. there is an interesting distribution.
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an average of about $25,000 of debt per college graduate. smaller,n is much about half that amount. there is a few people who have a lot of debt. if you see a story or someone says, how to someone and hundred $50,000 on an early christian philosophy degree, that is a narrow slice. about 1% of people have $200,000 or more of debt. in some sense, as part of the story. that is not the typical case. scarlet: it can lead to policy in some cases. our audience is made up of a lot of math jockeys. they are always trying to price risk on securities. what can they do better to price things? jordan: i would love for people to think more about the notion of a probability distribution.
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we do not just ask about the average, how much uncertainty. we asked what is the likelihood it is here. it is like what nate silver brought to elections when he did . i would like to see that kind of thinking in economics too. scarlet: thank you so much. offer of "how not to be wrong." pimm fox will be back in the next hour. we have more coming up including another bump in the road for uber. how a legal victory for one driver challenge the company's business model. ♪
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. . .
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in new york,0 a.m. it :00 a.m. in san francisco. this is "bloomberg market day."
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pimm: and janet yellen of the feds talks about how they are not to raise the rates. and there could be billions of extra cost. pimm: and there is a horrible, no good, very bad day. of award-winning biographer talks aboutmilton how he is going to be getting the bomb's roche -- bum's rush. ♪ scarlet: good morning everyone, i am scarlet fu. pimm: and i am pimm fox. let's look at how the markets are faring right now. the dow has an increase of more than 1%, the s&p 500 is up

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