tv Bloomberg Markets Bloomberg July 20, 2015 11:00am-12:01pm EDT
materials and x. finally, it does appear to be summer on the equity markets. the real story in the commodities market, look what happened to gold. this is the s&p 500. there is not a lot of action. the real story is the commodities market. there you go. this is what is happening to the price of gold. it dropped below $1100 an ounce. everybody is expecting the fed to hike rates this year. that means a stronger dollar. let's look at the top headlines. iran nuclear deal when up for a vote at the u.n. security counsel. they unanimously approved. now the shift is to the united states congress.
in bremmer was on "surveillance" this morning. he talked about how the vote is shaping up. deal have tothis get support. the americans are the sole country not to support it, everybody else that signed, all that means is the americans aren't dealing with this and everyone else is. that's a horrible situation for the united states to be in. benjamin netanyahu has condemned the security council's approval. he says he will make his case against the deal to the u.s. congress. in washington.e the cuban flag was raised as the country reopened its embassy for the first time in 54 years. its embassy ined havana. john kerry will travel to cuba sometime later on of the summer. scarlet: shares of paypal are
rising. the payment system spun off from ebay has been gaining 11%. potential shulman spoke with emily chang. dan: one of the things we have that no other player has is an agnostic platform. merchants anyor payment type for them. not just the paypal digital watt -- wallet which has 169 million customers, we integrate apple pay into that. the market value was 1.4 times that of ebay. the financial times may be sold. are exploring a sale after getting interest from potential buyers. it could bring $1.6 billion. the financial times has a circulation of 720,000. the subscriptions are digital.
online dating site specializing in adultery has been hacked. a group has the database of 37 million members. it has financial information. it will publish the data online unless the company agrees to shut down. those are your top stories. olivia: is it wrong to say they deserve that? is that prejudiced? scarlet: that's just sharing your opinion with everyone. olivia: less opinion and more deals. lockheed martin will buy a helicopter unit four $9 billion. how the sack -- selloff in china is being felt in markets across the globe. paypal begins trading on the nasdaq this morning. we will bring you more of our exclusive interview with ceo dan shulman coming up on the
bloomberg market day. scarlet: olivia told you about gold. there is little appetite for the metal. prices are at a five-year low. gold took a sudden plunge after the government of china river -- revised the size of its reserves. indexrag of the commodity to the lowest level since 2002. with us is the chief strategist at the fortune gold group. he was the director of the u.s. mint. he joins us from washington. also with us is alix steel. at it, let me start with you. favor at a out of time when uncertainty reigns? china, why ise in this not a safe haven? ed: the institutional side, the sentiment has been negative for a while. gold hardly data.
budged. when you look at individual investors, they have been buying up gold like crazy. i used to be head of the u.s. mint. from 20,000y went ounces to 100,000 ounces. the little guy is buying up gold. scarlet: we know institutional he that there hasn't been a lot of -- been a lot of love for it. the smart money just isn't by nana. alix steel: that's not what i am hearing in asia. there was a big block seller. there were margin calls. you can point that out in the chinese stock market. you need to get your cash. gold is going to be a way where you can do that. there have not a lot of ways to invest a side from golden that
accelerated that huge dip that we saw. we did rise above that. that is where the marginal costs will wind up coming in. if it's below that for long time, they will help maintain production. could that institution be the government? the story is that the chinese government is reducing their gold reserves. alix steel: they are adding to it. the issue is they did not by as much as analysts thought. that's what happened on friday. that was the residual chatter over the weekend. they expected a lot more buying. therefore exchange reserves are down. the actual gold reserves have been added. investors isr some you have to buy more if you want
to keep up with the big guys. how reliable of a gold higher will china be? ed: china has been focused on getting their currency a part of the reserve status with the imf. they are doing a lot of things by making it more easily tradable. they are making it more accessible. gold is going to be part of that. gold reserves increase 65% over the last six years, moving it to number five behind the united states and germany. had a multiple strategy to improve their currency and bring up to reserve status. olivia: we are talking so much about the demand side of the story. what about the supply side?
alix steel: it's a level to watch. if they stay below, they will have to cut some marginal production. let's take a look at barrett gold. goldone of the largest miners in the world. their stock is the lowest level since 1991. these are the big guys. these are the big guns in the market. are we looking at some sort of supply crunch down the road? when you measure supply and demand for gold, you can't base it on anything. it's not oil. we don't eat it like corn. how much interest there is in gold coins. scarlet: last question, i know that for the long-term you believe that fundamentals for for the strong, short-term, what is the disillusionment versus previous cycles? ed: sentiment among the
institutional investors has been very negative. that's going to weigh heavy on gold. the supply that is going to make a difference. every time we have seen in the last five years, the dip is because of the miners breakeven cost. demand for both india and china, that is strong. it gives support for gold around this range. scarlet: it's about the larger story from the west to the east. thank you so much for joining us today. steel, are commodities expert. thank you so much. ahead, the biggest deal in aerospace in three years. lockheed martin is expanding its helicopter business. ♪
olivia: welcome back to the bloomberg market day. scarlet: let's go to julie hyman watching the markets. : a big solar deal. sun edison is acquiring a rooftop panel installer. it's a unit and it will buy the rooftop asset. it's a complex deal. it is surging quite a bit this morning. it's can cold -- controlled by blackstone. terraform is down a little bit. it's unit of sun edison. ceo has been on an
acquisition spree. he said they plan to become the largest renewable energy company. let's take a look at my bloomberg terminal. let's see what he is talking about. look at sun edison, you can see the company has not done a lot of acquisitions for the last couple of years. you see a surge in the number of deals, 15 this year, and the amount that the company has been a pain. in terms of deal volume and the deal count, sun edison has been very active. they have been buying wind and hydro electric assets. billion on this latest deal. today as we see, stocks are floundering. there are some records dimension. amazon, after closing on a record friday, there is another record. there were two upgrades.
reallye analyst that caught my eye. he says that they will be the number one u.s. apparel retailer by 2017. they have been pushing into the apparel business. it will be interesting to see if they can make that milestone. it would be overtaking macy's to reach that. in facebook, that stock is gaining. it is up 2.4%. the stock market is up from $80. he sees the video advertising opportunity as a reason for that increase. that amazon call, that's provocative. you buy closing on amazon? scarlet: i do think of ever bought clothing on amazon. julie: that's really interesting. quoting --es
clothing qualify? do you get free shipping with prime? i will have to look at that. thank you so much. let's look at some of the stop tories -- stories. grocery store change a and p is filing for chapter 11 bank of c projection. they have been hurt by walmart's entry into the grocery business. storesl sell 120 of its for $600 million. major job cuts on the way at barclays. bank may eliminate one out of every four jobs in the coming years. john mcfarlane ousted the ceo this month. he pledged to tackle what he calls a commerce and and bureaucratic company. japanese cups, a and he gave an apology for using american uw's as slave labor in world war ii. james murphy accepted the apology from executives of
mitsubishi. 12,000 american prisoners were forced to work. those are your top stories. will buyockheed martin the maker of the black hawk helicopter for $9 billion. scarlet: this is the biggest purchase since a failed bid for a company back in 1997. let's bring in george ferguson. he joins us from princeton, new jersey. lockheed is the top buyer of ellen terry aircraft. -- does this george: they have a strong sales force at the pentagon. this allows them to use those same channels to sell this helicopter. it's a very important helicopter to u.s. fleets with a lot of revenue areas there is a lot of
capability to be sold olivia:ionally as well is this a growing business? it's a low margin, low growth business. george: the great part about the helicopter business is they last 30 years. then they have to be replaced. there is a base level of demand at the defense department. i think you can build on that and silly helicopter internationally. there is a global demand it has to be refreshed. we just came out of wars in iraq and afghanistan. the equipment is well use. the average age the fleet is 15 years. on top of that, we are getting on vertical flight programs.
it is the joint strike fighter of helicopters. that could be a $100 billion program. it could be a lot of revenue. scarlet: they won the contract for marine one, the president's helicopter. they beat out lockheed martin for that. george: they did. lockheed martin was going to put a lot of components on that helicopter anyway. this gets more to the manufacturing of helicopters been building some of the networks that they use and systems. are going to try to send out a portfolio. could anything else go up on the block? they own it jet carrier engines. they own carrier air-conditioning it.
george: they own otis elevators. it's hard to say. is portfolio is challenged. the china slowdown is hurting. the elevator business, it's a hard time to be selling something like that. they're are going to use this money to buy back shares. management is looking for another way to bolster eps. this is something to work through in the portfolio. what kind of cost cutting will result from this purchase by lockheed martin? george: i don't think there is lot of cost cutting capability. this is some expertise on how to build helicopters. they don't have much overlap and that now. will go on it.s i don't think there's a lot of redundancy there. the sales force may be an area to cut.
the strategist at credit suisse highlighted some obvious , capitalre capital , china is an industrial heavyweight. what interest me is the luxury goods companies. he singled out burberry. the number is on luxury spending from china are pretty amazing, 30% of european luxury goods comes from china. that's double what it is from europe and the u.s.. scarlet: asian tourists shopping in china? mike: just the brand sales. the amount of wealth that the chinese are willing to spend on luxury goods is 14 times europeans and three times japanese.
that's a very exposed sector. another interesting point is it's not so much the stock arc it route that he's worried about, it's these other bubbles. mostly, it's housing. that's where the most concern is. chinese home prices are down 6%. concerned if that decline spreads to 15%. -- theyhen you're loans would become underwater. they would all more than what the property is worth. that's 50% of chinese wealth. scarlet: it's an interesting way of measuring the slowdown in china. people are so enamored of the gdp number. interestinges an point. the chinese economy has grown so much that the rest of the world doesn't need that double digit growth anymore.
it's good. whatousing issue is worries the most. growth could slow to 3%. about: we are talking u.s. equity performance correlated to chinese gdp. mike: part of the thing with the chinese stock market is it was so fast and furious. people didn't have the time to really change there's ending habits. that's an adjusting point. scarlet: mike regan, thank you so much for highlighting that. will be back with more bloomberg market day.
biggest maker of military helicopters. the price tag, $9 billion. lockheed is the biggest defense contractor. it will focus on making jet engines, air conditioners, and elevators. there wasn't any drama in the vote at the united nations security council. it voted unanimously in favor of the nuclear deal with iran. attention will be shifting to congress which has 60 degree -- days to do the deal. after three weeks, banks in greece reopened this morning. there areed up, but limits as to how much money depositors can withdraw. money cannot be transferred abroad. greece made $7 billion in debt payments. angela merkel suggests that the greeks could get some debt relief down the road. , there was a debt cut
and we extended credit terms and lowered interest rates. we consider measures again as they are part of the mandate. we will discuss that very question. one thing is of the question, there will be no 40% haircut on greek debt. ate in new york, workers fast food restaurants may be in line for a raise. recognize willel be raced to $15 an hour. new york's current minimum wage will rise to nine dollars at the end of the year. those are your stories of the morning. the markets are closing in europe. we go to london. of course, it's been a big day for greece and it made that ayment to the european
central bank. they repaid other creditors. the deadline to the ecb was one they could not afford to miss. they could have cut off funding to greek banks and that could have led to default. that's why we see this optimism in european markets. you can see gains across the board. the athens stock exchange is still closing today. it's going to stay close through wednesday. the banks of reopened. merkel has held that the prospect of limited debt relief for greece. the picture to moment is looking hopeful for europe's most indebted country. the benchmark rallied for a night day. that is longest winning streak since april, 2014. it's not all good news. we have seen declines with
commodity producers. this is not a surprise considering the stronger dollar has been weighing on commodities. users on thegest 600, oilcks hundred -- is at the lowest in three weeks. old dropped to a five-year low. scarlet: thank you so much. debut.makes its big it began trading on the nasdaq under the pyp l ticker. it's more than -- worth more than ebay. chairs are moving higher. -- shares are moving higher. emily chang spoke with dan shulman about the plans. dan: we have shareholders across the world right now as you can see from our early trading. there's a lot of interest in
paypal. i think what we want to focus on is just creating a great company going forward. we want to focus on customers and what they need. if we can do that, we will be a great investment for shareholders. emily chang: have you talked? dan: i have been out on a roadshow speaking to different investors. and getting their feedback learning what they expect from us. what growth opportunities they have for us. it's been tremendously value for both parties. emily: are you worried about agitation? dan: i'm not. value to beeat delivered for investors and great value is delivered for customers. as long as we stay focused on that, that's the right thing for us to do. emily: now that it's separate
from ebay, what do you think is going to happen? dan: we wanted to create two great companies. devon is going to lead a fantastic company. we were set up to really on the changing chessboard that is going on in digital payments right now. we think we have tremendous opportunity. our market now could be as large as $25 trillion. focusing on that and delivering value to customers and deliver value as a company to shareholders, we are very focused on that. i see paypal staying an independent company. scarlet: that was dan shulman speaking with emily chang. joining us now is eric jackson. he is a former marketing executive and author of the book.
he is the cofounder and ceo of a company focused on linking companies and investors. thank you for joining us today from l.a.. eric: thanks for having me. scarlet: how would you market paypal today in this era of apple pay and bitcoin? eric: that's an interesting question. paypal is a hard company to define. it's almost a holding company. manage secure workflow for sharing information. what paypal is is a conglomeration now of zuma, , there's a lot of payment technology put together under a holding company banner. i think that's what's been unleashed here. it,let: people still know
they know it has their own company rather than part of paypal. is that an intentional strategy the paypalunder umbrella? eric: i think that's for good reason. paypal is not a product company anymore. i don't want to come across as one of those grumpy old timers. thiel and david sachs were running the company, it was very different. all we had was the product to launch the company and get us to a point where it was successful. and gottens matured older, i don't think it's focus is on innovation. all these acquisitions we have seen, the recent acquisition of zuma, which was almost $1 billion, it's part of the strategy now. ceo --n dan shulman and
as ceo confirms that. he is very successful with virgin mobile. think he's they stereo typical tech guy. it would be different if ebay brought on somebody like david sachs to run the company. it would be more product focus. scarlet: dan shulman is not part of that paypal mafia. is paypal a finance company or a tech company? eric: i think it's a finance company. they are going to acquire other good payment technologies. the market sizes trillions of dollars. you can't capture the entire world like that without having an acquisition strategy. i think that's indicating what he's thinking of what the board is thinking.
you can't boil the ocean that way. when you look at the universe they are serving, they are going to go after mobile apps. remittances.bal you start piling all the sink together, they are going to do other acquisitions and use their stock is currency and be free from being held back by ebay to make these purchases. scarlet: what is the fallout for ebay? -- it's so essential to itself. the split leaves ebay naked on its own. what are its prospects? eric: that's a tough question. i think we just don't know yet. two points i will make on that. this is an interesting analysis.
they look at the revenue growth for ebay. almost every year, paypal was 60% of all the growth. in the last four or five quarters, it was 90%. , it doesn't seem like ebay is -- has a driver for its growth engine. extent's that paypal is it'sssful, i think cannibalizing ebay. ebay is a centralized marketplace. if you can do commerce throughout the web, there's less need for centralized market players. i think it puts more pressure on ebay. scarlet: we will see how they turn the corner. thank you so much for joining us. he is the author of the paypal wars book.
record. they sold more than 1.1 million copies of "go set a watchman." it's the fastest selling book in the company's history. it was never published. a russian billionaire says he wants to find life e.on letters. he's putting his money where his mouth is. he's pledging $100 million to fund a hunt for alien civilizations. his project will be the biggest so far for search for intelligent life. he made his billions betting on internet companies. he was an early investor in a facebook and twitter. those are your top stories. the un security council voted in favor of the iran nuclear deal, incurbs their program exchange for lifting sanctions. the focus is the u.s. congress. today, in bremmer weight
in. is really bad. i think a lot of people have talked about that. they don't recognize the geopolitics of the deal are very good. to discussion trying legitimize the plan is focusing on the things it's weakest that. were going to stop these guys from developing nuclear weapons or we will have a war. it's going to be eight years before they can have a ballistics missiles program. the implementation has to be driven not why the americans but by the iaea. tom: are they on our side? n: no. they have to be driven by all of the signatories that were pushed to get this deal together. the iranians will cheat.
they will have to make the decision whether they are cheating. the russians who want to sell arms to the iranians and the chinese who want to buy oil from them, -- tom: should senator schumer support this post veto? ian: he should. hillary came out immediately in favor. the democrats understand this deal have to get support. if the americans don't support the deal, whether or not it's a bad deal, it means the americans aren't dealing with iran and everybody else is. balance,till say on the geopolitics with the americans long-term are so strong. the supreme leader says
this doesn't change his stance. will there be change after this? ian: he has to sell his deal domestically the same way obama does. he has to sell it in terms that are easy and comprehensive. he's doing that. of course they are going to have a different attitude. the rest of the world is going to start investing in iran. the iranians opening up and diversifying their economy and doing things long-term debt theocrat's are not going to like, -- our greatd to let middle eastern allies in the side door or back door of the white house? we did not want that? we didn't want to overtly say we were meeting with the saudi's? the relationship is
more challenged today. i would bet that within 10 years time, the relationship with iran will be closer than saudi arabia. scarlet: that's quite a statement. that was ian bremmer on "surveillance" this morning still ahead, developers waging war in washington. what piece of legislation could kill the biggest real estate project in new york city. ♪
one reason for this sharp uptake is real estate developers. they are fighting against an expiration of this program. betty liu joins us to discuss. this is extremely popular. pieces areof these giving to chinese families who million and half $1 that is supposed to go toward the creation of jobs in the united states. it does if you look at the way they've been funneled through. to some extent, it does work it doesn't work the way the legislators thought it was going to. they did this because they want to create jobs in rural areas. thisork developers found loophole.
they were able to fund some projects. no one is hiding anything. you can get a green card if you invest $500,000 and you get a green card. again, congress says we didn't say we are were going to find wealthy chinese families and allow them to fund these projects. they would been funded anyway. they wanted the money to go to small towns that need money and investment and jobs. september, when they are back in session, they will reassess the program. they might put some stricter limits on them. this could hamper developers. they have been using this so much.
lots of sources of financing dried up during the crisis. they needed to find millions and millions of dollars. they were saying in 2009, nobody was going to find anything in vermont. scarlet: they were willing to. olivia: we will see what happens. betty liu will be back at the top of the hour with me. let's head over to options insight. julie: let's take a look at stocks. we have seen a little bit more of a rally right now. there is very little change. let's bring in jim. now i am blanking on the firm you're with.
mk partners. i only talk to you every week. thanks for coming in. we talked about the spike in volatility. now that that's happened, when we go from here? cycles and wey have been defensive for the last couple of months. we hadn't seen any semblance of volatility since january. this volatility came and went. it's more benign than we expected. the second-largest in the back to 1990. fix it was a very sharp decline. the -- volatility is low and stable into the fall. it should be a relatively quiet several weeks.
julie: i want to get to your trade. in talking to some of the other said people are still anticipating an uptick in volatility going forward. for that reason, options are expensive. jim: they've come in sharply. decade,y over the last equity volatility bottoms for the year this week and trends to a peak around october. everyone expects the fed to begin hiking rates in a september or are over. there is reason to expect volatility to pick up in september or october. julie: it's earning season. you're looking at a company, optical telecom. out july 22,s which is wednesday.
what are you looking at today? google was a good example of earnings as catalyst. two weeks ago, it made 100 times. it's an investment. there are earnings catalysts to be had. there is a nice track record with earnings. it's usually up sharply. when it's down it, it's pretty benign. they have a history of beating and raising. we will see something similar. forant to go out right $.75. julie: thank you so much. stay with us. ♪