tv Bloomberg Markets Bloomberg August 31, 2015 2:00pm-3:01pm EDT
market day. mark: stocks are at their worst month since 2012. scarlet: and competing for her second major title. ♪ mark: good day from bloomberg world headquarters here in new york. i'm mark crumpton here with scarlet fu. scarlet: we are united -- reunited. mark: yes, reunited. scarlet: we are looking at declined, but modest income bears and with what we thought the start of last week. the s&p losing 6/10 of 1%. if you look at the sector breakdown, nine factors are down
. let's move on to currency prices because as with all month long, you a stronger euro and stronger dollar. the euro yen at 13604, unchanged. -- when 36.04, unchanged. this is the 10 year right now. a two-year is higher for a fifth the 10 year is up marginally at 2.19%. oil is a big mover this afternoon. it staged a dramatic turnaround at about 11 a.m. or so. after opec said it was ready to talk to other producers to achieve "fair prices," whatever that means. alex will be a long later to
talk about it. news we have some breaking at this hour from cisco about a new partnership with apple. cory johnson is here with details. cory: this is a major partnership between cisco and apple. ceo rightthe apple there with john chambers. it's a really close partnership and very interesting. they've been working together quietly for the last 10 minutes -- 10 months, with engineers working on cutting edge cisco network technologies with apple devices like the iphone and ipad. for example, users would be able to respond to a call showing up with their iphone and then respond by conference using cisco to gear. -- cisco gear. they are getting involved on a hardware and software level, and
on the sales level. we are actually going to have an exclusive interview in this hour with the senior vice president and general manner sure -- manager of cisco's division working on this. it is a big deal for both companies. has given ibm something else to sell in the enterprise as well. it looks like this is a deeply woven partnership. scarlet: cory johnson, thank you for that update. tuned for more on this announcement later in the hour. u.s. prosecutors have expanded the investigation of the currency market manipulation by some of the world's largest banks to include the russian ruble and the brazilian royale will stop bloomberg news -- brazilian royale. bloomberg news has just learned with bankswere deals in may to get more information
on rigging. among the financial institutions under scrutiny, deutsche bank. scarlet: and analysts who predicted the chinese stock selloff said the route there is not quite over. whetherthe wildcard is the chinese government will be heavy-handed in propping up the economy. the economy is slowing and for the first time we are seeing government in china outside the market. right now after trying to influence the bottom. that does not happen. scarlet: they are trying to develop indicators to predict market turning point. mark: walmart is investing more money in training.
scarlet: pepco has said they will go ahead with their deal to create the largest utility in the u.s. lastly, the public service commission rejected a takeover. regulators and other states have approved the deal. the d.c. commission gave pepco 30 days to reconsider. mark: puerto rico is recovering from a tropical storm. tropical storm erika brought heavy wind and rains on friday. the governor is giving them until september 8 to finish a week construction -- a reconstruction proposal. puerto rico is facing a debt of $72 billion. scarlet: as president obama becomes the first sitting arctic,t to visit the he is backing a decision to rename mount mckinley. it will now be known by its
traditional native name, denali. there for ael special edition of the show running wild with bear drills. mark: and he is expecting support for the iranian nuclear deal. oregon democratic senator jeff hekley is the latest to say will support the agreement. the president needs just three bye votes to sustain a veto republicans aimed at killing that deal. coming up in the next hour, there is one stock that aging fundsnds -- asian hedge want to now own command it is not alibaba. scarlet: and we will look at trading dog fences for drones. mark: all of that and much more
is coming up. as we've heard, are paring their losses. of the s&p 500 is still on the verge of posting its worst month in three years. demarco recently predicted this selloff in chinese stocks. iswarned that a selloff susceptible. us, our guests. kevin, let me start with you. are actingke we modest declines. is that it for volatility? kevin: i don't think it is for the volatility. from the longer-term perspective, we have been through four or five years where in part because the economy is getting better and in part because the -- the fed has been very accommodative, volatility overall has been well below average, in and i'm talking in the last five years or so.
as the fed begins to normalize policy, not that one quarter of a point increase is a big deal in the big scheme of things, but i think we would expect to see some more volatility and somewhat lower returns in equities ahead, so i don't think it is entirely over, no. mark: how much worse can it get? this was an awful month. of one of the close the worst month in global equities in over three years. >> volatility has been really stuck in a bottle for so long and no one is very confident that it will go back into the bottle anytime soon. some of the moose at least make sense. obviously, energy companies are the strongest set -- some of the moves at least make sense. obviously, energy companies are
the strongest today. most came away from the meeting in jackson hole over the weekend with the ascension of the volatility might not push off a rate increase. things are starting to make sense to some degree, but i don't think anyone is expecting the volatility to go away. scarlet: kevin, how would you best measure volatility? is it the vicks question mark -- the vix? is that the best way to gauge the swing in prices? kevin: we have a couple of different ways we do it here. ultimately, with volatility, once you introduce volatility into the equation, it is like throwing a walk in the water. there are ripples in the water for a while, but eventually volatility will come down to a normal level. we have been making the argument that volatility was below where
it should have been for a long time coming into this, and what was the last week was certainly too high. the truth is somewhere in between the two extremes. mike: kevin, do you hear from a lot of clients during a week like last week? i'm assuming so. our people die -- are people buying visit or are they staying out of the market until the market comes down? kevin: i thought we would have a lot of phone calls and activity in that kind of thing. it was actually kind of quiet. we have had an interesting rally in the last few years, because people are still somewhat skeptical. when the market pulled into my number of people who had been out of the market, maybe looking to be -- to put money to work, they actually saw it as a buying opportunity. 20% cash into equities last monday. there is the sense that volatility is with us, but with
a sense that there is a price. we do see the economy moving ahead, and that's a good the. 3.7% growth is not that. i don't want to create a bearish picture, but we also don't see the complicity -- complacency of the last few years holding with us much longer. when you have the wild gyrations that you had last week and you do have clients calling you, what do you say to them to tell them it's going to be all right? kevin: you have to put it into perspective historically. we put out aps last week that went back and simply looked at how difficult it is to tie markets. we talked about what kind of markets are normal, what kind of , andility is normal ultimately what is most important is that your time horizon when things get tough
and prices move down if you are long equities, what happens is you are -- you tend to get very shortsighted. to step back and take a longer-term point of view and ask all the same questions you about -- questions about value in quality that you other was what. andthen accepted as normal it is part of the game. -- except it as normal and it is part of the game -- accept it as normal and it is part of the game. scarlet: thank you both so much. coming up so much that coming up on the bloomberg market day, -- coming up on the bloomberg market a, we will talk about a new company stealing the spotlight from alibaba. ♪
in new york city is not going away without a fight. it is pretty humid out your today. scarlet: it is going to be 90 degrees all week long. mark: the dog days of summer are working their way out as we have labor day next week. to matt let's head over miller with a look at how equities are trading right now. we have to start with equities, given that they are the big story last week. they were caring their losses. is that correct? i will talk about only equities every time i come on. only equities. it looked like we were coming back to almost an unchanged day, but we are seeing the dow down about 132 points.
it has been a very volatile day, but we are in for some very volatile trading. vixvicks is at 20 --the is at 26, 27 right now. there are a lot of semiconductors right now. you can look at the s&p index, that aggregates all of the semiconductors. we are kind of in the red right here, but we have been up over withay with all the news semiconductors, starting obviously with intel. upgrading intel to an outperform. the reason is, the analyst over at northland said pc sales may be up for the holidays. why, you ask, because windows 10 may spur people to buy more pcs.
at growth is still the story intel. look at sandisk. there is a lot in the takeover story today. to be readrumored about on twitter. there is a possibility of a takeover here. that is losing shares of sandisk. probably more significant are chinois. on there had been concerns that regulars would put the collage on the bid. flew over here to talk to the people at micron to see what could be done about it, and now he is saying that even if there is not a takeover on the table, he would still be open to a partnership with micron. and as a result, micron shares gain as shareholders are more
excited about a takeover. but as with anything in a down market, you see things rising. micron at 16 per share. bloomberg.com mark: let's take a look -- mark: let's take a look the stories we're following this hour. fiat has increased sales for 64 months in a row. the court is -- the streak is now in jeopardy because they calendar quirk that comes over the holiday weekend. last year, the weekend made up of -- the holiday weekend made up 20% of their sales. vw will sell its 20% stake in suzuki. mark: warren buffett is betting americans are still thirsty for gasoline. berkshire hathaway has made it most advocate energy investment years.
berkshire has amassed a $4.5 billion stake in the largest oil refiner in the u.s., phillips the six. the s&p energy -- phillips 66. the s&p energy index is up. turned 85 buffett yesterday. chinese a new e-commerce site that is winning over investors. the hedge funds have boosted their ownership in the site by 18% in june versus 1.2% in the third quarter last year. meanwhile, they cut alibaba by more than one third in the same timeframe. toy have a similar business amazon and are predicted to grow at a rapid pace. joining us is gilbert, a tech analyst with web push securities. this is about growth projections as well as business model, isn't it?
gilbert: that is right, alibaba is now growing at half the rate of jd. njd is traded on the business exchange -- and jd is straight on the business exchange. the is interesting about business model is comparing it aw to 10 years ago, it had marketplace business. it did not sell directly to consumers. and amazon was a lot smaller and sold directly to consumers and built that direct relationship. amazon used that you also get into the marketplace business. what we have seen in the last 10 years is that has made amazon much bigger and investors are thinking that is going to happen in china as well where jd has the opportunity to take over alibaba just like amazon overtook here. mark: is there a sense that alibaba is so big that it only has one place to go down -- one place to go, which is down, and
jd is small and can only go up? once you have 55% ebitda projections, the market will become more competitive. the market has slowed 53% to 28% in the most recent quarter. growth of e-commerce slows, but also emerging companies are taking off. scarlet: with all the volatility happening in chinese equity markets overall, how vulnerable ?re j.d..com and alibaba gil: they are vulnerable. if the chinese economy starts heading south in a major way,
everybody is honorable. focus has beene on infrastructure spending. the chinese government is hoping there will be a handoff to consumption. if there is, and that works, then jd and alibaba will do better than most. scarlet: as we have seen in the last couple of weeks -- alibaba will do better than most. but there could be a selloff as well. scarlet: as we have seen in the past couple of weeks. mark: bloomberg continues just a moment. ♪
allen: i suspect many in the industry are cringing at our use of dog fencing. essentially, manufacturers have set up no-fly zones around the country, chiefly around airports, but also the white house and security sites like that. the gps knows where it is an automatically keeps them outside those areas. mark: what are the challenges with geo-fencing? alan: if everybody uses it, it's great. but we have hundreds of thousands, perhaps as many as a million drones already out there just in the u.s. some of those people won't update their software, or are incompatible with the system so it won't work for them. if they are going to mandate it, --t would take writing with
writing new regulations and that could take two or three years. the road, we also know that these things are potentially volatile -- vulnerable to hacking and other sorts of patches that allowed people to fly in areas where they are not allowed to. not a perfect solution at all. scarlet: not a perfect solution, but a possible way to heaven things in for now. thankve-in l --evin, you. we will continue to cover the markets and look at how oil is .n a one--- a one-to-one high ♪
i'm scarlet fu. disputeategate continues. tom brady was back in court today, but failed to make an agreement. brady is fighting a four-game suspension. an nfl representatives said they did try. to reachy to our best a settlement, which we did not reach, but i think for us it reinforces the desire and need for an independent arbitrator in these metals of personal conduct. scarlet: the judge that he could announce a decision as early as tomorrow, but no later than friday stop hillary clinton says the big reason or the erosion of american trust in government is the so-called revolving door between government and the private sector. of as calling for passage bill that would increase the time that former employees -- that members of congress have to from workinglves
for an employer. democraticsored by senator tammy baldwin. a new gas field in the mediterranean is being described as a supergiant. the field lies just off the egyptian coast and the company offset could help prices. upgles -- google is teaming sanofi tonch giant battle diabetes. it cost about $245 billion a year in the u.s. alone in health care resources as well as lost productivity. a streaming site will now offer 400 channels on facebook for free. not the most popular, but you will be able to watch popular
ones like the best of john stewart. it costs $10 per year. commodities close in just a moment. cisco teams up with apple in a strategic partnership. we will be hearing from a top executive on the announcement. open is underway. serena williams will compete for her 22nd title. let's get back to commodities now. who better to bring in that alix steel? and of course, big news out of that moved really quickly. as we take stock of the month of august and you look at all the big red numbers when it comes to equities, gold of 3.6%. -- up 3.6%. it did get a bit of a
boost, but not as much a she would think. part of that is the turmoil over the fed hike -- the fed rate hike. you want to buy gold when they are negative and when they are positive, you don't. here in the u.s. they are slightly negative, but not much inflation. 5% and the rates were zero, then you would have a big rush to buy gold. scarlet: got it. let's move on to oil. if you look at the intraday chart, there was a big spike about 11:30 a.m. what did they mean when they said "fair price is quote for oil? alix: in there monthly newsletter they said opec is willing to talk about fair prices, which you think and the market interpreted that they would cut their prices. however they went on to say that nonmember nations would have to
share the burden, which means areas like u.s. and canada would also have to cut, and they also said there has to be a level playing field and they will still protect their own interests. at the end of the day they will only if the world follows suit. why will you make less money when other countries cannot? day,et: at the end of the opec nations are open to discussing this. alix: you make a good point because who would actually cut is opec did? iran has come out and just wants the sanctions lifted. saudi arabia has pared back it production by about 5000 barrels per day. it is really up to them.
why would they want to pair back whyuction to support rivals would they want to do that -- to support rivals? why would they want to do that. warren buffett took a 20% stake of full 66. talk about how low the prices have become an saudi arabia being willing -- unwilling to cut production. the way that smart money has been able to capitalize on falling oil practice -- falling oil prices is through the refining sector. >> that is right, when oil prices fall, there is a huge demand in gasoline stop there are a lot more people getting on the road, driving, community -- habitsng and changing
from when oil was higher. profits in gasoline are up 12%. scarlet: a quick interruption here. you just spotted a headline that we should mention about wti. we talked about how the prices settled today, and they settled higher. 24% from the august 24 low. alix: bam, bull market. it went from a bull market to a bear market to another bull market to now another bear market. this points to how short investors are in the futures contract. news, anyf positive kind of headline and you automatically see prices jumped so much higher because the sentiment has been so negative. and there you go, able market. scarlet: a miniature bull market for oil in a week. week, been a crazy admittedly. bradley, back to you with conical pillows and phillips 66 year. do we have -- phillips 66.
warrene an idea how long buffett had been building up his stake in the company? bradley: we know it had been over a course of months, but we don't know how long it took to build up that position or what price they got for the shares. all we know is that he was originally very inanimate -- enamored with this company when it was spun out in 2012. he bought shares and then his vision was reduced when he bought a segment of the phillips 66 business. obviously he sees a bright future for this company. obviously part of this is the lower oil prices, because it oil -- it lowers the prices for refiners. juicyhas been a nice refining margin. what happens when those shrink
bradley: -- what happens when those shrink? bradley: that would be a big problem. if you run out of refining profits, then you run out of a place where you can go in this downward trend. that would be a big problem for oil, and basically all of energy, because the only good prices you can find are at the fuel processing plants all over the states. some they do have transportation in midstream well, conical phillips. what makes sense? bradley: phillips 66 is probably the most diversified in terms of its investment. probably said, i want to go somewhere where the returns are stable, little bit
more than they might be otherwise. that could have been some of the rationale behind why you look at phillips 66 as opposed to other refiners that were up throughout the year. scarlet: as we take a look at mn m&a throughout the sector, there has been fewer takeovers -- there have been fewer takeovers than expected. been 300 million dollars in takeovers versus 900 million in the non-technicals. bradley: at the beginning of the year, there was this unexpected fusion of capital. anybody expected they would be hurting when the year started. but these companies were able to sell shares and issue debt. as far as i understand it, more than 44 billion in the first
half of the year. that was a huge lifeline that i think operated what a lot of people are calling the bid-ask spread. a company may have said, we have plenty of liquidity and we will not sell at that price because we think prices will rebound. that is all changing right now. those numbers mean outlook rate, but everything we are hearing -- may not look great, but everything where hearing is that everyone should be preparing for a six to 12 month cycle in energy. scarlet: thank you so much, bradley olson, joining us from houston. as you were looking at oil prices you noticed a bull market from a bear market. alix: unreal, a huge rally. and i want to give props to bml because they came out today and said the bear market in crude is complete. they were looking at technical levels and saying that last week's new bear levels was -- were not confirmed by volume, but sentiment.
the end of the trading month, don't forget. the dow was down this morning. it has been worse because china 8/10 of 1%. it looks like the party doesn't really have control over it people and that bothers people around the world. -- bothers traders around the world. if we close your comment will be the worst month for the dow jones industrial average. not just the worst august, but the worst month for the dow and the s&p in three years. there was kind of a midday recovery in equity markets and the reason was the decline in crude. continues. that opec put out an announcement saying we will be doing collusion with all the other producers which will fix the price higher, which would be illegal in this country, but drove up oil prices. act and take a look at the last three days of gains and oil, you will see something amazing. i pulled up my chart sins if you
bloomberg. it is the best oil has done in 15 years, which is amazing for the oil space. it is one of the reasons you see the explorers and producers rising today, but also the service and equipment, the gear people are doing well today. and then phillips d6 is -- phillips 66 is a separate story. warren buffett came in and said berkshire hathaway would take a $4 billion stake in the company. refiners are already doing pretty well compared to oil companies and doing even better now that warren buffett likes them. back to you. scarlet: we are counting down. an hour and 15 minutes ago. the obama administration is drafting potential corrective
measures aimed at china and hacking networks. hulu has reached an extensive multiyear deal with the cable channel ethics. shows fromng new paramount. and it hasn't been a good year for endowments at the nation's public universities. they are reporting fiscal 2016 -- 2015 returns that failed to meet industry standards. ae university of texas had 3.3 percent return. ohio state, indiana, and the university of florida were all below 5%. as we mentioned at the top of the hour, cisco announcing it is network devices in
partnership with apple. cory johnson joins us. a big announcement coming out of the cisco and will sales conference. what does it mean effectively for the cisco sales team? we will be making apple devices, iphones, ipads, even in awork together at cisco way that has never been done before. you think about the average user. they come in with their telephone and sit at the desk. the phone on the desk is a disconnected system. whether it is that or the speakerphone in the conference room, we will natively make work together for what we think is going to be an incredible. . that is just how -- an
incredible experience. that is just how we are going to get started. we will link our devices such that when you come in with your device, you will be able to get an incredible connection through the network. that is something we are able to because we have the network and we have the partnership with apple together jointly developing the program. have the system router, the person downloading you will not slow down your ?ystem's performance rowa and you need the network to work seamlesslyn: with the infrastructure. it is a joint development project to really change the way people work. we think we can uniquely do that together and no one else in the world can do that.
can see where apple wants to expand into the enterprise, not the least of down in computer systems and the like. have you worked on things like the apple watch in the enterprise? yes, we have. i have webex on my watch. all of this works really well on the watch and we are working on the next generation as we speak. the watch will be a big part of it. the entire apple portfolio and the cisco portfolio coming together to deliver an experience in the workplace like we been able to see in the home. we want to drive that same transformation in the workplace. cory: did you say you are already working on the next generation watch as well, hardware wise? rowan: no, that is apple's job. we are working on the -- on our
apps for the watch. quarter, sparkt was growing as fast as anything cisco is doing right now. would you expect that this partnership would lead to even greater increases in the pace of growth of the collaboration business at cisco? rowan: absolutely, yes. i do believe this will have a profound impact on our collaboration business and to drive that kind of experience that only we can do is something users really want. we can really change that. there are no more hours in the day for people to be more productive. it is a big problem right now. so we need to deliver better tools. webex and cisco spark are leading the growth here and we will see that more in the collaboration business coming forward. cory: just about 20 seconds left.
a group that includes apple, microsoft and others, i wonder if apple gives you some kind of relief now that you guys are buddy buddy. or does the lawsuit continue? that is above my pay grade. i focus on making great products, so i'm not sure what is going on there. cory: thank you so much. bloombergs cory johnson with rowan trollope, joining us from las vegas. much more coming up on the bloomberg market day. serena williams could chalk up a major win already for the u.s. open, because tickets for the women's u.s. open sold out before the men's. ♪
underway in new york city and is the first time in history that women's sold out before the men's. huge focus on serena williams. she is competing for 22nd major title. spoke with a guest earlier today talk about what it means. best player in the world, second to steffi graf. i was thereto say when. while it looks like not the easiest path through the finals for serena, who would bet against her? people want to be there to see her compete. betty: how is she playing right now? she is playing really well. she does get those matches where she will perhaps lose that first set. and she yells at herself
then she's out 021. -- 0-1. betty: how powerful is she off the court businesswise? compete withnot maria sharapova. thehas had some issues on court with her temper, including at the u.s. open. however this career slam him and where she is now as a spokeswoman of women's tennis, i would not be surprised to see companies coming to or not only to do strictly athletic things, like nike, but she is a role model as well. betty: what happens to serena williams if she gets the grand slam? what really changes after that? scott: there is a halo effect. this puts her in a different
category. she's already got the casual fan recognition. do you want to utilize her? how do you want to utilize her? serena thehave to be athlete. it is serena the person. she came off the practice court a couple years ago in her sweatsuit. 10 said, can you give me minutes? i'm dressed for espn. i would like to dress for bloomberg stop she has an understanding of her audience at that particular time and how to best reach them. look for her to capitalize on those things. she is represented by william morris. lots of opportunities ahead for her. scarlet: coming up, watching through the numbers as we head into the close. ♪
-- brutal month for equities. >> oil getting a boost from opec. we will drill down on where prices are headed next. scarlet: a new poll shows hillary clinton's lead-ish ranking at the current democratic competitor. scarlet: good afternoon. i am scarlet fu here with alex deal. i cannot miss i last week. alix: so good to have you back. one of the longest weeks i have known it quite some time. i even had a baby. scarlet: if you look at how stocks are doing today, it is like ignoring what happened last week in the previous prided. we are only down 147 points. -- like ignoring what happened in the previous week. alix: