tv Bloomberg Markets Bloomberg September 30, 2015 11:00am-2:01pm EDT
scarlet: welcome to the bloomberg market day. we begin with the morning's headlines. the u.s. government is staying open for now. we will tell you in on the latest move in the ongoing congressional chess match. pimm: it ends at midnight. mergers and acquisitions -- a new venture with a powerful partner. will his boutique thrive at blackstone? scarlet: yesterday, betty liu got to spea take the branded tesla out for a spin. tesla out for a spin. pimm: let's get a look at what's happening in the markets. you are not in a new tesla suv. julie: very perceptive of you. . wish i was in a tesla
we are seeing this rally today on a bounce back from the session losses that preceded it. interesting action in oil. fueling gains in energy stocks today. the best performing group in the s&p 500 come up nearly 2%. oil prices fell after the inventories report and rebounded. net rebound coming at the end of a dismal quarter. the best-performing group today is the worst-performing group for the quarter. 18%, the worst on the quarter. , evense, utility stocks though they are up nearly 1%, that is the smallest gain of the 10 sectors in the s&p 500. utilities are the best-performing. we have had a bit of a switch here. groupies are the single
that have actually risen on the quarter as we have seen rates pulled back. we tend to have a decent amount of debt for infrastructure, they tend to do better when we see lower rates. those lower rates have benefited these stocks. scarlet: thank you so much. the latest of the hour is the u.s. senate has voted on a short-term spending bill that will avoid a government shutdown at midnight tonight. it is not a done deal. the house has to vote later today on the stopgap measure. phil mattingly is following all the action from washington. he joins us now. >> the house is still leads to vote in the house has always been the big question.
all democrats plus half of the republican conference voted for this bill in the senate. the numbers will be about the same when the houseboats. -- house votes. that should give john boehner plenty of votes to move forward. they she was no longer about a government shutdown tonight at midnight. it's about what happens in the months ahead. something speaker been a referenced during his press conference on friday, talking about what the person who replaces him will have to do. >> there's a way to get some things done. i will not burden my successor. i will get them finished. >> all signs pointing to kevin mccarthy as the next speaker of the house. onctions will be next week october 8. clipsis no shortage of the house will be dealing within the months ahead. at the end of october, transportation funding.
that's when the congressional budget says the debt ceiling will be reached in late november. john boehner over the course of the next month trying to take some things off of the leadership's table. no shortage of issues waiting for whoever the new speaker of the house majority leader and majority whip are. scarlet: it's like deja vu. sounds very familiar. house republicans met on tuesday evening to discuss their priorities. did we learn anything from them? what the not so much priorities are going forward as much as it was everybody have some opportunity to get their frustration out. there is a lot of lobbying about who the next leadership team will be. we will see a lot over the next couple of days. pimm: i can imagine you will be up late tonight.
to see of that shutdown happens. thank you, phil mattingly from washington. scarlet: the government should stay open past midnight tonight. the threat of another shutdown is just over two months away. it would cause major chaos and of holidays. investors could profit. hill joins us now with a look at how you can create a government shutdown -- do we assume that the house will pass a spending bill tonight? jeremy: it's highly likely a continuing resolution will get done in the next hours. i don't think we will be faced with a shutdown here. when we are talking about bringing a new leadership -- before i got here, i googled mitch mcconnell and the first thing that came up was a story
about how there is an attempt to replace mitch mcconnell. in the senate. there will be political volatility. reminded of 2013, you and i had an interview on bloomberg radio and i said the hardest thing to address as a financial market participant is forecasting politics. it is completely irrational. pimm: let's not forecast politics. let's try to help people make some money. there is a way to trade this starting with the defense contracting stocks. jeremy: put those companies together and take a look at what happened in 2013, what we've seen is those companies actually --t
pimm: short them now. >> after we went through that budgetary crisis, they've gone gangbusters. general dynamics up 70%. there is perhaps a short-term trade, but it's better for option traders. scarlet: how about the dollar? shorting the dollar here. you have other dynamics to consider, the bank of japan, ecb. >> the dollar is a bit tricky. if you use that as an analog, the dollar did lose value. recently peeled back from his earlier strength. dollar, thisut the entire conversation about fiscal policy, budgetary policy, the debt ceiling, you up wonder
whether it's going to be assumed for what happens in monetary policy. does janet yellen and crew come out to change the dynamics of the conversation? pimm: the 10 year treasury. why is that a good thing to buy going into this uncertainty? jeremy: in previous shutdowns, it has been a safe haven. purchase it to ride out the storm. that is likely to happen again here. , if weet below 2% yield have a nasty shutdown -- when you switch from boehner to mccarthy, that's a bit like drinking out of the firehose. scarlet: thank you so much. jury may help joining us this
morning -- jeremy hill joining us this morning. pimm: russia says it has begun launching airstrikes on i.s. positions in syria. russia lawmakers gave unanimous approval to use military force in the country. the attacks will use the air force, not ground troops. russia has been backing . .ssad -- backing assad government forces in afghanistan have been unable to recapture a northern city captured by the taliban. american companies added more jobs than forecast in september. this according to adp. the report is about private payroll, growing 200,000 last month. the august number was revised slightly downward. the first of three data points
this week. the government's jobs report will be released friday morning. expanding itst price matching policy to meet competition from online retailers, including amazon. target will match a longer list of rivals prices going back as far as 14 days. costco are now part of this list. fiat chrysler running into country with federal safety regulators. it underreported the number of deaths and injuries linked to possible defects in its cars. yet chrysler was recently fined $105 million. there may be a new rival to nielsen. comscore has agreed to buy -- they track activity on the web. model xs unveiled the
suv. musk says the model x sets a new bar for engineering. suv that is first five stars in every category. [applause] betty liu got to test drive the model x. we will get her review on the vehicle. pimm: i want to see her drive it forward. scarlet: i bet that happens. coming up in the next hour, a wall street rainmakers secret. will alberta's premier join us in studio to discuss the decline -- drive one of to the first model x suv's.
pimm: this is the bloomberg market day. scarlet: julie hyman is keeping and i on the markets. looks like we are positive for now. it will not be much in terms of losses for the quarter. julie: it is not. i want to look at the winners and losers of the quarter. digital.with western 15% of the company -- this is
the best-performing stock in the s&p 500. chinese companies have been making more forays into the u.s. one of the other best performers also has a big relationship with the worst performer. stephan larson who heads up the old navy brand is moving over to ralph lauren to succeed ralph lauren himself as the ceo of the company. investors seem to be happy about this. --ph lauren shares down folks are looking for a change. gap is down. old navy has been the outperform or. interesting change their for that company. we are watching advance auto parts, one of the other best performers today, up 12% after starboard said it will be continuing talks with the company.
confirming an ownership stake of the company at 3.7%. he wants to help improve the margins. this is the operating margin of advance auto parts. you are looking at a couple of its peers. autozone in orange and o'reilly in yellow. their margins are well above that of advance auto parts. ,hen starboard gets involved everything from darden to other industries, they make things happen. looks like margins is one of the things they are focusing on. paul taubman, his start up pjt partners goes public tomorrow. withs combined his firm
the restructuring business of blackstone group. creating a partnership that could be very powerful. is the timing right? will the marriage work? we have an expert with us. thank you for being with us. explain to people, who is paul to happen and why is this worth noting? >> he has spent 30 years at morgan stanley. he has worked on two of its top three deals in history. pimm: the pfizer deal? >> the verizon take over and the vodafone assets. that created aol and time warner. scarlet: that was huge. -- ae verizon take over lot of transformative deals. now, we're wondering if you can take those assets and become a
ceo. scarlet: mna has been on a record pace this year. you wonder whether that will continue. >> the thing about this firm, m&a, restructuring and fun advisory. -- fund advisory. the others have been picking up share in this market. restructuring companies go bust. this firm, they want to capitalize on the fact that you have a restructuring group. company's of the life, they want to be a part of. abouti want to ask you his phone. you start this wonderful story talking about if his phone could talk. >> when he was at morgan stanley to 20 welcome, $7
trillion worth of deals. -- 22012. 2003-2012. he has an intimate relationship with his clients. scarlet: it is not an iphone. >> samsung. scarlet: a galaxy? >> a flip phone. let's talk about your new iphone this is not a guy who makes decisions lightly. this is someone who is thoughtful. asfound out steve schwarzman a similar phone. the sound quality is really good. it sounds like you are sitting
next to them. on theare working biggest bankruptcy or biggest merger or biggest decision of your life, you will want to sound like you are sitting next to them. pimm: is it worth noting that these relationships are done over the phone? it's not e-mail or instant message or tweeting. >> is really important. firm, heting his got these top dealmakers and hired morgan stanley's former head of latin america. he will have to use that phoning a lot -- that phone a lot. battery life is another reason. who knew? pimm: it will be a status symbol. scarlet: thank you for joining us.
pimm: this is the bloomberg market day. scarlet: at a dinner for lloyd's of london on tuesday night, mark carney delivered a message about the financial impact of climate change. >> once climate change becomes a defining issue, financial and stability it may be too late. hugeet: ensures could face losses because of potential disasters and doing our mental
regulations could change the value of assets. of all the things he chose to , he fixated on climate change. pimm: we just had a meeting between president obama and xi jinping appeared on the agenda was climate change. one of the big issues is cap and trade as a tool in order to ofigate the emissions industrial enterprises to reduce co2 gases. the chinese have a pilot program in seven regions in which they are using cap and trade we don't know how effective it is. the republicans in congress want nothing to do with cap and trade. it is significant that the head of the bank of england is bringing this up as a financial risk. not only in terms of what the climate does, how it changes, but the human interaction.
-- passingate emissions loss and not meeting them can have their consequences. scarlet: four investors especially. here's something else he said. >> our concern would be a wholesale reassessment of prospects. it could potentially destabilize --kets, spark a procyclical scarlet: persistent tightening of financial conditions. sound like he was giving a speech on deflation. the bank of england has been looking into economic and financial stability risks posed by climate change for a while. the changes in policy to oil drillers and coal miners would leave them with stranded assets, they would have to write down a lot of their reserves. pimm: you've seen that in the
allue of cold companies. scarlet: he quantified how much the financial industry has underpriced risk from the current weather trends. the insurance industry's current modeling undercuts by 50%. there is a lot of room to make up. pimm: well done. scarlet: you will take a quick break. we will continue to stay focused on commodities. we was big with the premiere of alberta. -- we will speak with the premiere of alberta. ♪
warplanes attacked islamic state positions just hours after russian lawmakers gave vladimir putin unanimous approval to use military force. russia tried to prop up assad. a storm starting in the atlantic is now a hurricane. it will move up the u.s. east coast in the next few days. it is packing winds over 75 miles per hour. warnings are up in the bahamas. core will try to raise more than $1 million by selling future production of gold and silver. -- $1 billion. it has been battered by the commodities slumped. facebook's coo talking about how the social network will or add dollars away from television. this book it's a feature that lets advertisers buy online video ads.
companies can no longer rely on just television. understands have to that the days of you can do a campaign with a 32nd video at that place on tv are gone. -- 30 second video. you cannot only do that. you are missing a really unique opportunity. scarlet: tv and facebook go together. those are your top stories of the morning. it is the last trading day of the third quarter. markets closing in europe. we want to check in with mark barton in london. we have green across the screen. ended on a high, disguising the fact that the stocks 600 had its worst quarter in four years. 9 billion euros white from the value of the stoxx 600.
every industry group or one, real estate, fill in the last quarter. autos and mining the worst quarters. interesting and encouraging news on the u.k. economy. the economy grew .7%. -- a keyy net trade gauge of wealth, gdp rising above its prerecession peak. eurozone inflation dipped below zero for the first time in six months. what does that mean for the ecb when it comes to future quantitative easing? let's look at the big equity movers. none bigger than this company. the biggest ever decline on monday, falling by 29%. in the tuesday since, crawling
back thanks to a rebound in metals prices. and morgan chase agreed said the selloff is overdone. of 190nth price target the biggest one-day rise since 2007. this said profit will be estimates. the french carmaker, china -- dropping 14% because of the volkswagen affect. scarlet: thank you so much. alberta is canada's largest consumer of coal for electricity generation. now, rachel notley is making the
industry pay up. making carbon emissions more expensive. she joins us now with more on how she is shaking things up. most important industry is adjusting to a new supply and demand. what is wrong with the current model? rachel: even within the context of our tax increases, what we've done is brought alberta into line with most other provinces. we have the most competitive tax regime in the country and we continue to be the only province with a sales tax. review, of the royalty we are looking to bring in a modern, more forward-looking royalties structure that is more transparent and predictable and stable.
which reflects what's really going on in the industry. we are doing that by referring the matter to a very well-informed panel that are experts on the industry come experts and finances who are working collaboratively on this issue to make recommendations. we are hoping what that will do grand stability going forward. we expect the plan to be presented to us by the end of this fall. we've indicated to the industry that they will then get time before any recommendations are of limited -- are implemented. scarlet: there was a review in 2008 as well. there was backlash by the industry. it was a time of falling oil prices as well. we are seeing a similar reaction this time around. how will this be different? rachel: last time, the recommendations were constructed
and develop when the price was very high. when it came to looking at implementing, that's when the prices came down. this conversation is going on within the context of falling oil prices. we understand many elements are vulnerable. that is on the minds of many members. we are hopeful that it will be a model that will ensure that everybody can share in the profits as the industry recovers. that we don't have a model that hurts the industry at this time. scarlet: i want to bring up a chart from citigroup. it shows nonoil exports from canada. the orange line. nonoil experts from mexico. it is the loss of competitiveness to mexico.
even if oil prices were to come back, canada is still losing out to mexico. what should be the response from ottawa and how does alberta fit into that? things thatof the factors into alberta's we have aeness -- very stable government. we have a very predictable approach to the way in which we deal with oil and gas as a resource province and regulator. younge an exceptionally and well educated -- there's a lot of factors around -- or supply is very stable. we have the third-largest supply and very long-term supply. if you invest in the oil sands, you know you have a supply for 50 years.
if you look at the different elements of our energy province, we are quite competitive. thatwe need to do is pair with a better understanding of how we can develop that resource more responsibly in order to earn our way into more diversified markets. that is the other key thing we need to focus on. which is why i'm focused on trying to get a pipeline to tidewater. scarlet: retreating from coal power is one of the key components of climate policy. how long will the phaseout take? rachel: we are putting the cart before the horse a little bit. to come up our panel with polic -- scarlet: what would you like to see? rachel: i will wait for them to give me fact-based,
science-based, economically-based recommendations. we do need to phaseout coal in a way that does not create a price shock. we do need to move forward. we will be looking at the best way to do that within the context of ensuring stability. scarlet: thank you so much. alberta premier rachel notley. we should mention betty liu watched as elon musk unveiled the new model x. she also got to drive it. we will get the scoop from her, next. ♪
scarlet: welcome back to the bloomberg market day. time now for a check of the latest headlines. house republicans will elect their new leader next week. john boehner says the vote will be held next thursday. he has endorsed kevin mccarthy. inspired by the airlines, amtrak is adopting baggage fees. a $20 fee will be charged for each item that exceeds the baggage limit. bring two items and they carry on. -- a carry on. twitter expanding its platform in time for the holiday season. fy,ming up with shop oi making it easier for users to buy while they tweet. those are the latest headlines.
time now for our west coast wake up. introduced the model x suv after several days of anticipation. coremonstrated the car's features come including the falcon wing doors. >> the reason we created these doors, we were trying to solve a problem which is how do you access the third row if you have child seats in the second row? press the button, the seas will go forward and i can step directly in. [applause] >> you can stand right here, step into the car and put your child down in the child seat. it makes a huge difference. it also looks cool. [laughter] [applause] scarlet: for more, we will bring
in betty liu who was at the gathering in california. did you get to test out those falcon wing doors? betty: i did. going to a tesla event is a bizarre thing. i've never seen so many people get excited and holler over a car seat. this is what we are talking about. it is a cool care. lon hopes have the drivers will be you and me. x is the building mass market. i drove the premium version. from 0-60 in 3.2 seconds. that car will set you back
$142,000. he handed out six of those yesterday on stage. he went over the top design features you saw the falcon wing doors, 17 speakers. the panoramic windshield. you feel like you are driving in a convertible but you don't have to worry about the wind in your hair. some of the things he put in this car were not necessary. they were things he thought were amazing to put inside a vehicle. about 23,000 orders so far for the model x. he delivered the first six on stage to new owners. to beill continue shipping those out over the next several months. scarlet: i love the fact that you turn the volume to 11. if they are going to appeal to you and me, how safe is the vehicle?
he said this vehicle is going to get a five star rating, it is extremely safe. that is one of the big selling points to women as they are transporting their children. listen to what he said. : we've created the safest suv ever. the first suv that is five stars in every category. [applause] betty: i am no car expert, but the explanation for that is danger withrollover a lot of suvs, that is not the case in the model x. it has no engine. the battery pack is under the car. the center of gravity is lower. scarlet: interesting.
scarlet: the head of the imf spoke this morning and washington, d.c. she offered a somber forecast for the global economy next year. global growth will expand modestly next year. the fed will tighten monetary policy. these factors are contribute into uncertainty and higher market volatility. pimm fox is back with us. did she say anything we don't already know? imm: the imf has a semiannual meeting taking place in peru
next week. the thing i thought was interesting about this, when was the last time you heard the head say the economic slowdown in china, that's what economies do what they go through cycles. the targeting of the federal reserve, not raising interest rates, that is in the control of human beings. meaning janet yellen and the fomc. she is using china, saying they will be a drag. by the way, the uncertainty of those folks in washington is also a drag on growth. i'm not sure who is the intended audience. i'm wondering if she is speaking to janet yellen. scarlet: she made her stance on whether the fed should proceed. she issued a warning. .he imf has done this
a lot of academic types have come out and said -- pimm: howard marks talking to matt miller, talking about how the fed is deathly afraid of raising interest rates. talking to jeremy hill about what is the context of the government shutdown. why are interest rates at such a low level? they are waiting for more information that would give them support to raise rates. weeket: the comments this have been a different tone. pimm: one governor saying one thing. then you go to the san francisco fed and you hear something else. i guess you can pick whichever voice you want. scarlet: let's go inside the
bloomberg terminal and take a look at what traders are betting on. on probability of a move october 28. 41% in december. let's see what it was last week. 18% october, 42% in december. pimm: people are more and more skeptical. there will be a large group of people saying it will not happen until 2016. scarlet: that is christine lagarde's take on it. she would rather see the hold off. imm: you did not hear her talk about greece. problem solved. move ahead. scarlet: we will take you through the next hour. we want to get in our options insight. julie: let's take a look at what stocks are doing. we've had this game throughout the day.
-- gain a throughout the day. quarteroff the dismal we've had. , we areons perspective joined by jerry weathered -- odard. options folks are looking further out to place your next bet. >> pretty fascinating. if you look at the cost to own options, contracts expiring in a year or more, the sector level, thosef index level, sing priced at higher levels now than they were then the worst part of the selloff in late august. julie: people are perhaps pessimistic about the further future? >> more of a risk premium to those longer contracts.
there are reasons for uncertainty in the short term. you can understand why people would pay more -- economic data in the u.s. is pretty fantastic. manufacturing is weak. that is 12% of the economy. consumption is stronger than ever. julie: is it just a hedging mechanism to guard against that worst-case narrow? -- worst-case scenario? jared: it is driven a lot by positioning, mechanical and 43 bounce. that was part of the selloff in august. -- mechanical and forced rebounds. you cannot be as aggressive. julie: you are looking at a similar trade. specifically in the financials. the financial industry etf.
why did you pick that particular one? there's a lot of split research as to how the financials behave when rates start to increase. jared: i like financials as a sector for the next 3-6 months anyway. the yield in the 50's will be overstated. -- in the fed case will be overstated. potential growth for consumer and corporate lending and , it is a cyclical case for owning financials. assuming someone who is already the idea is to, give an option premiums were they were, you want to go in both directions. two january, selling the 20 aroundput with the etf 22.
time, hard to see a way to clear to new highs. selling some calls make sense. if you don't have a position, sell the puts out right. julie: right now, it is up a bit today sitting at 22 .50. jared: you would be right in the middle of that. julie: a bit of a longer-term trade. we appreciate it. stay tuned. ♪ ♪
pimm: stocks surge. shares rally for a second day. pimm: tesla ventures into the world of suvs as elon musk shows off of the new model s last night, -- model x last night. scarlet: we want to check in on the final trading day of the third quarter. end the thirdmay quarter up. remi: yes. up by 1.2%.is
the dow is up by nearly 1% at the nasdaq is the biggest gainer . but the s&p is still seeing its worst quarterly drop since 2011. around the world, more than 11 trillion equities -- 11 join dollars in equities have been lost. that ns out consumer discretionary and technology are the biggest gainers. been a laggard recently. looking at commodities, gold is down right now. it really is at a two week low, down by more than 1%. you can see we scraped the automatic around 10:00 a.m. of that, butg off investors are playing at a safe
havens as a signal that a rate highs may come sometime this year. over the past three months, it has fallen by nearly 5%. this will be its fifth quarterly loss in a row and its longest quarterly losing streak since 1999. also as investors are pushing margaret to do the grin, the vix is down by 5.7%. you can see where it is seeing the highs of the day right now in the noon hour. , itpast quarter of the vix is seeing its second quarterly gain in a row. of the see most volatility happened right here in august when it jumped 135%. this here is when the dow sites lost -- it's worst losses since 2011. thanks very much.
stocks may be gaining today, but u.s. equities are concluding their worst quarter in four years. scarlet: name your poison, right? concerns about china, interest affecting thates line. what does history tell us happens after a terrible third quarter? mike: it is not out of the realm of possibility to have a good rebound. a really huge98, rebound after a bad third quarter. 2011, we were down 13% in the third quarter. in general, the third quarter has been good in this bull market. guys like this,
the show to out there, john for some reason is the smart one and doesn't have to put out a year-end estimate. john: someone else does it for me. [laughter] you believe these guys, they cut their year-end estimates. but it has only come down 3%. so they are looking at a mean estimate of 2175, which would be a 14% gain from where we stand today. obviously, there to be more estimate cuts to come. but they are not really throwing in the towel. what drives stock prices pimm: -- pimm: what drives stock prices? john: emotions. i cannot disprove a negative story. when the market gets infected the way it gets affected, it is not right, but it will figure out it is not right for a while. play the hand
that you are dealt. bowater fundamentals? i think the fed desperate what are the fundamentals? -- but what are the fundamentals? i don't think the market is expensive at 15 times forward earnings. that is below average in the last 20 years. scarlet: what is considered expensive in this market? was. biotech pimm: it was expensive. how you bob biotech is a whole different artform and how you value the rest of the market. but really, just a superlative quarter for biotech. the worst quarter since 2002. it has really been a sector that held up pretty firmly during a lot of this sort of volatility. -- many spasms of volatility
obviously, a lot of pent-up nervousness about that sector that was waiting for a match to throw on to the kindle. scarlet: is the momentum trade dead then? john: momentum traders never did. when it comes to biotech, at least in the past, when high multiple stocks come down because of valuation only, they tend to come back. upis like falling down and escalator. things get better as you go forward. i am still getting older and i will need more health care and they will provided for me. and i would think, mrs. clinton or no mrs. clinton, at some point in time, those fundamentals get recognized again. pimm: t bills that are maturing this year, negative one basis point. if that continues, does the signal that you should be investing even more money in stocks, even with this downturn? john: it signals that people are willing to put up with the
decline because they are worried about something else worse in the equity market. there is no better place to put their money. they are going to be proved wrong. i think ultimately they are. this is the united states. things tend to get better. we do tend to fix our problems. we are not perfect but we do tend to fix our problems pretty quickly. scarlet: we've got a six-month charge that compares six-month credit with high-yield stocks. a lot of people say look at high-yield credit. it always leads. high-yield credit he and the white line, making lower highs and lower lows before sinking in early august. held their own. they made a record high in late may and then they collapsed in mid-august. if credit always leads, my, how do you use what you have seen in the credit market? we have seen the market go bonkers with what happened with volkswagen and glencore. mike: they definitely see things we don't see. that is a given.
volkswagen is a good example. for a long time, the junk-bond worries were centered on energy. blue.agon came out of the i think we have to start looking for sectors outside of energy, for companies outside of energy to released -- to really understand if it is a high-yield phenomenon or just an energy phenomenon that is infecting these indexes that contain a lot of energy junk bonds. pimm: i want to know your thoughts about investing in companies when nobody seems to want them. john: by them when they are down and sell and they are up. at the you have to look red count and be very patient. and you have to buy the right stocks in the space. the red counts come down dramatically. no one wants to drill for oil. -- frack wells tend to deplete more rapidly than beginning wells. at some point in time, the price of oil goes down and then goes up. that may take a year. it may take two years.
the way i look at it, you look at some of the other phase, the sure thing without getting too specific, they will be in the downstream operations. they have ways of making money and cash flow and raise the dividend when things are tough. scarlet: banks usually set the town. whether this time? or are we going to take early from energy companies and whatever write-downs they may have to do? john: we have to watch the banks. the energy companies, and because of exposures, banks will have to take write-downs. earnings expectations in general are very important. fromngs as precisions run 2011 to the end of last year, the client because of oil per marlee -- primarily in the last year. watch it. to still no sign it is going to happen, but i would rather they be up a little bit than down at this point time. so far, the signs are that the expectations are coming down pretty dramatically.
i'm not sure what could possibly cause and improving earnings outlook. i don't necessarily see it. scarlet: where would the upside to press come from? john: the u.s. economy gets better. that is what you have to hope for. time just passes and things to to accrete over time. but it's hard to build a strong case right now. pimm: i want to throw three companies at you, just as an illustration. petrobras.e, and scarlet: there is a theme here. pimm: three companies, several of them rated pretty high in their credit ratings. these things can turn on a dime. john: if things go wrong, they can go wrong very quickly. when our business gets bad, it can get very, very bad. that when those who are strong of heart mcmahon he? john: they do make money. you are catching a falling knife.
i don't try and sell the absolute or by at the absolute bottom. it'slooking at signs that getting better. i didn't see why the market should have been down in the last quarter anymore than i would have seen it in the last two years, but it happened. i don't see why it comes back right away because it has been a lot of technical damage done and technicians look pretty smart these days so people listen. pimm: they are looking for that 1850 level. last week, i wish i was a technician and this week i wish i had become an electrician. [laughter] i think it takes a while. i still tend to think we don't have enough evidence that the earnings have turned down enough to cause damage. scarlet: what are you hearing about retesting the august lows? mike: yesterday, we came pretty close. so there is some confidence to be had there. there is another camp that believes you cut out under tests that low before you find a bottom. for every technician, there is five different opinions.
on the one hand and on the other hand and on the other hand. [laughter] thanks so much. now let's get right to the top stories of the hour. the u.s. senate has passed a temporary spending bill just hours before the government at midnight tonight. mitch mcconnell says he is confident the measure will pass the house as well. mcconnell, john boehner, and president obama plan to meet soon about setting government spending limits the next two years. boehner stepping down a month from now, he is -- he has also made clear there are a number of things he wants to accomplish before he leaves. speaker been a: if there's a way to get things done, so i don't burden my successor, i will get them's finished. pimm: boehner says he will hold house leadership elections next week. russia today launched its first
airstrike in syria. -- theacks and began attacks began just after russian lawmakers authorized vladimir putin to use military force in area. putin is backing syrian bashar al-assad's shaky regime. scarlet: august number was revised slightly downward. you got the government jobs report due out on friday. an american high-tech company has rejected an offer from a chinese investment group that valued it at him as $4 billion. bloomberg news has learned that the group bid $110 per share for semantics. the touch screen technology is for phones, tablets and computers.
fiat-chrysler has run into trouble with federal safety regulators. it underreported the number of number oflink to the defects in automobiles. this could result in more penalties. fiat was recently fined $105 million in the way it recently handled recalls. whole foods plans to stop selling products made by prison labor. this came after protests. some whole foods outlets so to -- sell and go cheese to lobby a -- sell telapia and goat cheese made by a colorado prison. baggage fees, as we all know, have generated billions of dollars for the airline industry and help them turn back to
profitable enterprises. those are your top stories. ism: coming up next, mexico due to hold an oil auction at this hour. the results are critical. from ad blocking technology to user targeting methods, we will tell you why tv wants to be more like facebook. it's doors are up that men style for the new tesla model x. but will the possess translated in -- but will the'tis as translate into more sales?
pimm: this is the bloomberg market day. i am pimm fox. scarlet: and i am scarlet fu. let's check in with ramy. you've got a couple of notable movers. ramy: sports, second pharma up right now. we are seeing a rise in share price of a, up by nearly three and a half percent. you can see that it is coming off of its highs that we saw in the late 10:00 hour. by one is coming from stifel. it is rising from a buy to a hold and it's target is now $100 million per share. we are seeing a huge upside. this all comes as the company splits itself into two today, a sports entertainment division
and a media division. also in tech, i want to talk security firma, a out of california. you can see it is flailing. you can see the crawl at the bottom of the graph, down by 35%. the company released second-quarter results. its earnings did beat estimates by a sent -- by a penny. the clincher here is that the weight comes from a stronger dollar overseas and longer sales cycles in europe, the middle east as well as asia. so shares are at an all-time low, suffering their eggs intraday drop on record -- their biggest intraday drop on record. america reinstated its buy rating on the stock with a price target of $290. right now, we are looking at 100 $68 in change -- $168 and
change. they can still manufactured drugs and still have some explicit -- exclusivity on that. it is saying that his own 12-month price target is $300. and finally, tesla, shares right now doing not so well. .8% down. esau betty liu testing out the new model x car. you can see that online at bloomberg.com. scarlet: thank you so much. pimm: still ahead, it is auction time in mexico. time in the second decades, mexico's government is going to auction off oil blocks. scarlet: we will tell you why the results are critical for
scarlet: this is the bloomberg market day. pimm: at this hour, mexico is holding its second oil auction since 1938. the mexican government is hoping this time around there is going to be more takers. scarlet: at the july auction come only two of the 14 blocks for sale found buyers. the question is, will it be any different this time? brendan: that's right. this is a major test for mexico's oil industry. be passing,eems to maybe not with flying colors, but doing a lot better than last time. they already sold off two of three areas that they are auctioning. this follows some changes in their auction structure. they loosened the financial requirements. they cut the amount of money
that is going to the tax man. and what they've got so far is one area going to an italian oil company and another area going tonight and 10 company, both with very aggressive bids. the third area was a bit of a dud. we will see what happens with the next two. certainly a lot better than last time. pimm: i wonder if you can describe what effect the oil industry has on mexico's economy and also on the mexican peso. mexico is not as dependent on oil as a used to be. but production in mexico has been falling for 10 years in a row. reversing that slide is one of peña nieto's top goals. seen is that, if the price of oil has collapsed to the last year, it has had a big effect on the peso. it hit a record low again this month. a big week spot for
gdp growth this year. this comes in a context in which exports and manufactured goods like autos are sort of middling and peña nieto's overall economic or i should say the economic performance during peña nieto's three years in office so far have been very disappointing, much more -- much worse than expected when he first came in. scarlet: you mentioned mexico is not as dependent on oil as it was 30 years ago. mexican has done a great job in diversifying the economy. president's effort to do privatize the old company fit in with the rest? brendan: what peña nieto is trying to do is create a framework where mexico can bring in an estimated, by the government, $60 billion or more in oil investments through 2018
when peña nieto has to step down. whether he can hit that goal with a price of oil in the 40's, very much an open question. seems asrtainly though, based on today's auction, there has been a little more interest from the global oil industry. that is pretty important as mexico gets ready to auction off the deep oil fields -- the deepwater oil fields next year. pimm: thank you very much. that is it for me this hour. you are going to see on. what do you have coming up? pimm: coming up, we will talk about advertising, television, and of or's facebook. -- and of course facebook.
largest distress asset investment firm says the federal reserve is a logan shive. >> they seem deathly afraid to raise rates. -- they leading somehow through other through sign language -- they lead commentators that it will happen the next month and then they don't do it. this has been going on for two and a quarter years. pimm: howard marks says a hugely anticipated raise of a quarter of a percentage point is clearly meaningless. way a chesapeake energy, the natural gas producer. chesapeake is eliminating 740 positions, about 15% of its workforce. the company has been hurt by the falling price of natural gas. there are down about 60% since the beginning of 2014. and google has released a
high-end tablet that is aimed to compete with apple and microsoft. .t is called the pixel c google is also updating its the setupftware, television device that rivals apple, amazon, and roku. and twitter is expanding its shopping platform just in time for the holiday season. formed partnerships with shop afar, but commerce, and demand where to make it easier -- and demand ware to make it easier for members to shop. let's just stay with technology for a moment. facebook, which has almost a 1.5 billion users globally, is looking to lower advertisers from television. sheryl sandberg fired this one-shot.
>> i think the biggest message is that marketers have to understand that the days that you can do a campaign with a 32nd video ad on tv are gone. second video ad- on tv are gone. facebook has just introduced a feature that attempts to further encroach into the world of advertising on television by letting marketers purchase online video advertisements the way they buy television commercials. but the television industry is not going down without a fight. things are about to get personal. any surprise from the comments by sheryl sandberg? they are competing with the tv business. jerry: it is not a surprise. what sheryl sandberg is saying is that facebook -- she is
saying that we have the size of a super bowl audience every day on our site. pimm: because they have 1.5 billion viewers are followers. jerry: right. not only do we have the same amount of eyeballs as tv, but we can also target consumers much more efficiently than tv. so facebook is now try to take away ad dollars from the tv networks and we are strangers see that the tv networks are fighting back. we can also do the same kind of targeting that facebook does. pimm: tell people what is via media and a little bit about your background so you can inform us about the trend of television advertising versus advertising on the social networks. via media does global advertising. we have about 10,000 local advertisers and we answered about a million and a half linear ads everyday.
ago, weyear and a half started programmatic tv platform using the data to actually find where that right audiences to advertise on television. my back and for the past 10 years has been in the big data tv business. look so if we are going to forward a year or so, what can you tell us about the state of advertising? who is going to be affected and who is going to win? mark: i think ultimately, the consumer wins because the consumer is going to get more relevant advertising, both online as well as on television. and as you said, television is not going down without a fight. and television is now using data in order to do a better job of targeting and finding those right consumers that they are trying to advertise to. i think one of the biggest pieces of news that came out is the merger between, score and today and itt focuses on cross media measurement. you want to measure the effectiveness of your campaign. it is not just about what is
online. it is really television come online and mobile. pimm: will it be more personalized advertising? will there be an ad that comes up and says, mark liberman, you are interested in x, y, z, and then they will serve you an ad designed specifically for you? answer is yes. that happens every day now on digital advertising. it is called retargeting using data. television is moving in that same direction. the top box data that exists now and the fact the you can combine that with other data sets, purchasing data sets that was done by a company called tra that was bought by tivo a couple of years ago, you have the ability to actually read target into advertising relevant ads. a little bit of a spookiness factor when you're watching the big screen when it says, pimm, you should by this dog food. but it's not going to happen overnight. pimm: are the television
broadcasters offering these kind of packages that mark is describing to make sure that people don't spend all their ad money on social or digital platforms? i was looking at the numbers. a climb of 3.5% in tv ads spent, but an increase of 17% with digital. jerry: right. magna global estimates that, in about a few years, there will be more money spent on digital advertising than on tv advertising. the tv networks are under pressure. their ratings are defining. so they are having -- are declining. so they are having to make a much better offer and really respond to the fact that advertisers are saying i would rather spend my money online where it's cheaper and i connection he reach the right person at the right time during -- time. pimm: we keep talking about it as television versus digital. but are people going to get programming on television on their iphones, their android devices come other tablets and
so on? what's really the difference? much difference. it is a piece of glass. whether it is a eight screen, tablet or my smartphone, i will be watching that most engaging -- pimm: whatever you want to watch. mark: all of youtube viewing is equal to adult swim. pimm: all youtube viewing is equal to adult swim, which is the adult animated television network. mark: yeah. so television has most of the .vory -- the eyeballs the concern to the brand is whether they are advertising to the right person. discovering --pn espn, discovery and turner. data is the new creative. you need data to make sure that created and up -- and's up in front -- ends up in the right
eyeballs. pimm: someone's got to pay for the content. what about sponsorships? , the back to milton berle texaco hour, things like that. will we see more of those kinds of sponsored programs? mark: it will start to brand where you have native advertising. what is native advertising? it is advertising but it looks like content. i think it is going to be sponsorship as well. you saw viacom actually shrink their commercial carriage amount from 18 minutes to 14 minutes because people were complaining about too many ads. so it is really going to be about that relevant advertising. you're not going to put down your eyeballs and not watch tv if it is a relevant ad here if i have a dog and it's a dog food ad, i may want to add. someone else may fast-forward through it. pimm: we should talk about the ad blocking technology coming out. that can't be good for this industry. thanks very much.
now we've got some breaking news for you. m&t bank's purchase of hudson city bancorp has finally been approved by the federal reserve. the acquisition was first announced in august of 2012. it was the biggest pending u.s. rank merger. theirre is a look at how stocks are performing right now. shares of hudson city bancorp up about 5.5%. m&t bank, a gain of 22%. .2%.
far. ramy: on this last trading day we ared quarter stocks, off our session highs. in fact, we are at our session lows today. still in the green though. the s&p is seeing its worse quickly drop since 2011. this despite the 1% rise today. still not enough to get it out there. the nasdaq is the biggest gainer, of 1.2%. but in the past three months, just looking at the global economy, i this, $11 trillion has been lost around the world. let's see how it goes into the fourth quarter. also, lessee how the s&p is doing in terms of sector performing. consumer discretionary is up by 1.5%, the biggest later. terrell's not too far behind. energy up by 1.3%. you will remember that energy has been the laggard recently with oil companies, for example, as well as equipment makers feeling the pinch.
oil andking of commodities at least, let's check out what is happening with crude. crude right now had been getting a bump earlier, but right now we are seeing it a little bit in the negative. u.s. stockpiles rose by 3.9 million barrels, the slowest rise since november. today's movements not doing any left for oil. -- any lift for oil. over to gold now, that is now down to a two-week low, down by more than 1%. investors are pulling out of the safe haven as the fed has signaled a rate rise could come as soon as this year. over the past quarter, gold has fallen nearly 5%.
this will be its fifth quarterly loss in a row. copper, the metal is advancing today. this is different from the narrative we have been talking about over the last week or so, talking about the slumping price because of the china economic slowdown. american sayanglo they are willing to reduce production at a giant mine in chile on the order of 30,000 metric tons. is now up. over to the dollar, that is also up by about half of a percent. climbing to a two-week-investors are piling in as the fed has signaled the rate rise and for the same reason investors are pulling out of gold. it doesn't give interest. staying with the markets,
i want to turn to manufacturing. the data has been pretty ugly ahead of tomorrow's ice and national report. nationalow's ism report. so what does the manufacturing data tell us? numbershave two of the out this morning. we've got the chicago pmi, another one of these regional manufacturing surveys way worse than it petitions. and then another economic data point that nobody ever talks about. the milwaukee ism. it's the story we have been getting all month. regional surveys have all been bad and the call spreads, whether it is the energy slowdown, whether it is the global strong down -- pimm: a strong u.s. dollar. joe: that's the big one. tomorrow, we get the ism national report. hard to imagine that it could be
good with the sorts of numbers leading into it. pimm: 50 is the number that everyone has to watch. above 50 means things are doing pretty well. things are expanding. below 50, not so good. that is 50 were below, what does that tell you the federal reserve will do with interest rates? with theoesn't help decline in the manufacturing sector. but it is the key decider. manufacturing has shrunk as its share of the u.s. economy. services are a much more important part of the u.s. economy. and the service ism has been consistently stronger than the manufacturing line. so you don't want to see week numbers on manufacturing. on the flipside, you do not want to put too much weight on it because everyone knows it is not as significant. the federal reserve has never raised interest rates with the ism below 50.
joe: yeah, well, people have the fednting out that has never raise rates with the volatility where it is. i don't think it would preclude a rate rise. i think of all the other data points were strong. consumer were strong. i don't think a sub 50 ism would necessarily be a deal killer. but it would have to be factored in. pimm: if we take a look at the lookomorrow and we have to forward to friday for the jobs report. joe: that is the big day. the jobs report, said timber data, this comes well after the volatility started. -- september data, this comes well after the volatility started. not particularly considered a predictor month-to-month and we get the initial claims, which have been very low, no signs of an uptick. pimm: anything below 300,000?
against a bio weapons attack. anif there is ever ,pocalyptic scenario some time hypothetically -- [laughter] you just press the bio weapons defense mode button. this is a real button. [laughter] we are trying to be the leader s. apocalyptic scenario eventbetty liu was at the in fremont, california. she joins us now with another auto expert, andrew collins. is a: that's right, that
way that elon musk is a little different than the rest of us. he things a little differently and designs a little differently. you saw that in the model x, which i got to test drive as well as andrew. i know you are at the event along with me. you also got to test drive the model x. blog.your review on your you seemed to really like the suv. a lot of people did. it was a lot of excitement last night. but i am looking at the stock. it is down on a day when the rest of the markets are up. what you think gives? do think some people might have been disappointed? andrew: maybe not so much disappointment as trepidation. it is a whole new vehicle. it's got a lot of moving parts, things that you on has to work out in terms of manufacturing. he said, if you place an order today, you will not get a model x for eight to 12 months. that might make buyers an easy.
[laughter] betty: that's true. that is a long time to wait for a vehicle. it.t to floor the speed is amazing. the panoramic windshield. what did you like the most out of it? andrew: the interior was absolutely spectacular, but plenty of automakers are making a beautifully, luxurious car cabins now. what blows me away about tesla's stuff is the display. the screen in the center console, it's -- just beautiful, really chris design and really lovely to look at. they are really leaving everybody else in the dust on that. it will be interesting to see if that starts to permeate in the rest of the market. they death don't have a future for me. betty: it was a really cool feature. i do think the rest of the automakers will respond to this? theew: the rest of
automakers generally have to make things into larger quantities and they try to charge a little less generally. not sure if they will be in any huge rush to match that. it will be interesting to see. and it will be interesting to see how popular the model x really gets. betty: it will be. we only saw six delivered yesterday, even though they said there are 23,000 orders in the pipeline. musk mentioned yesterday one target market is women. many expect that there will be half and half women to men buyers of model x. whereas right now for the model s sedan, it is 70% men and 30% women. do you think it will have an appeal to the female driver? andrew: the stereotype is that the women are driving the family around more often. the model x is good for that. did a goodrs and it
job of sliding into tight spaces. as a family transport, it is an extremely practical machine. so, yeah, i would say it is extremely popular with people shuttling their youngsters around. betty: another concern about soccer moms transporting kids is safety. photos ofthose impact, side impact that were so different between the model x and other suvs. why is it so safe? how does he make them so safe? andrew: that was huge news, especially because of those doors that raise up over the top. definitely a concern about what happens when you roll over. -- engineers have assuring have been assuring us that there are enough hinges in there that you would be able to get out. but my favorite line i heard last night is you can roll it a few times or drive it off a cliff, but it is pretty much always going to land on its feet. the tesla engineers are
confident that this will be doing well avoiding accidents in the first place. that is the most enticing safety feature for your average consumer. betty: i agree. you can't undersell that point. that is a huge matter for consumers. inc. is so much. -- thanks so much. betty liu speaking with andrew collins on the new model x from tesla. we are going to hear from mario draghi. find out what he is going to do to stimulate europe's economy. details coming up next. . .
stocks rise as the and of the worst quarter in four years. we will look at what is ahead for the markets. pimm: the euro area inflation rate turns negative as the european central bank president, mario draghi, considers more stimulus measures. passes a. senate spending bill just hours before the deadline for a government shutdown. now it is up to the house of representatives to vote for the deadline at midnight. pimm: good afternoon. i'm pimm fox. mark: julie hyman is in the newsroom with a look at the markets right now. we have a market rallying, rebounding from five session losses, but nonetheless we are seeing stocks give up their gains to some extent, paring the gains we saw earlier in the session.
take a look at the dow on an intraday basis. considerablyere up more and now we are up 108 points. you can see the germanic leg downward we have taken her out the session. -- the dramatic leg downward we have seen throughout the session. certainly bouncing around between gains and losses. take a look at my bloomberg terminal to see what is working -- financials are the worst performing group with consumer staples not far behind. armore some jinx in the of the rally starting to creep in. been talkinge about biotech this week. have they finally broken the losing streak? it seems asave and though the rally is in place.
if you look at the index, it has fallen for eight straight sessions. still up 2% and its pattern follows that of the rest of the market. from the highs in midmorning and coming down to some extent. right now, it looks like the losing streak is broken but it is not set in stone until the closing bell. as watching the dollar today well as the euro. there's speculation about increased quantitative easing in europe that had been putting some pressure on the dollar versus the euro. take a look at the 10 year. adpot this morning's employment report showing a gain of 200,000 jobs in the private sector this month and we got the with aent report coming forecast showing gains of 200,000 in jobs. you can see here a similar
trajectory, a tick up in the bond yields earlier today, and now they are coming down to some extent. a similar trajectory for the bond market. earlier, people had been buying stocks strongly and selling treasuries but that seems to be moderating to some extent. pimm: we are getting a lot of information about the state of economy in europe. turn negative, putting pressure on the central bank to boost stimulus measures. christine lagarde says she sees a slowdown ahead. lagarde: global growth will likely be weaker this year than last, with only a modest acceleration expected in 2016. pimm: joining us from dartmouth college is a former member of
the tank of england monetary policy committee. what is your take on christine lagarde's comments on slower growth? danny: i think she's probably right. the boys at citibank think the world economy is going into global recession. there looks to be evidence of in the european area, inflation has gone negative again, that suggestion is worrying. but there, it was .1, were 11 european companies plus switzerland already in deflation, so that list is going to grow. it looks like maybe we are at a turning point down again. are we still seeing high debt levels from the 2008 crisis having a lingering effect on the euro area?
david: we are. we are seeing the area propped up by stimulus and tight fiscal policy. has not come full force yet. we are still seeing huge levels of unemployment, huge levels of use unemployment and these countries apart from germany are struggling to improve. europeans going into deflation but french unemployment rising and rising in some other countries. this is the remnants of 2008 and these economies have not rebalanced and come out of that desperate crisis. spain and greece particularly look like they are in a great depression. next?what happens what can mario draghi effectively do? : i think it's almost inevitable -- he said we are going to do whatever is necessary.
said they would do a round of quantitative easing. my suspicion is he's going to talk about doing more and trying to weaken the euro against the dollar. but the implications for the fed are if you are trying to weaken the euro against the dollar, that means the dollar strength we have seen today has an impact on output. i suspect that lowers even further the chance of a rate rise in 2015 that you know i don't think is going to happen. pimm: is it possible that quantitative easing doesn't work ? is there any empirical evidence that these efforts have the long-term effects that people want? david: it's hard to separate out the effect of quantitative easing from low interest rates. let's think of them as monetary stimulus. studies by central banks around the world have suggested they really have worked. if you look back, and i recall
and interview ben bernanke did on "60 minutes" and they asked what do you think unemployment would have been if the fed had not acted? he said 25% unemployment. the question is what is the counterfactual? the system propped up by stimulus. the concern is perhaps quantitative easing of the particular form it has been and has not been that effective but we might hear going forward that the central bank, the bank of england, the ecb might be thinking of different kinds of quantitative easing. mark: miss lagarde called india a bright spot for the global economy. what are they doing in india that the world might take notice of and try to emulate? david: i'm not a next bird on india. they have cut interest rates recently and they have a high-quality central bank governor who was at the imf.
i guess they have not been so tied to commodity prices and the commodity markets, but there are not many bright spots around the world. let's suppose you were to ask about brazil or other places -- there are one or two other bright spots but if you look at -- she said we are now in the new mediocre. not the new normal, the new mediocre. there will be bright spots, but it's hard to see many. there are a lot of countries that are lagging. remember, we are seven years into this great recession. ofm: you talk about the lack bright spots but hasn't it changed to the point where things that are considered luxuries are considered utilities. and as a result, the reference point keeps changing. david: i think that's right. all of these apple
devices and things have changed thethe reality is still people in the middle around the world have not done terribly well. we have seen these clinical movement against the , in the u.s. and in the u.k. with the election of a new labour party leader. i think the center is hurting thateople are concerned whatever growth they see, they have not felt it. at some point, they are going to speak up and that is what we are seeing around the world, in france, in britain, in the u.s., and around the world. pimm: thank you very much. thes take a look at some of top stories crossing the bloomberg. currently, we are looking at a live picture of the white house press secretary at a briefing saying it's no surprise russia is ramping up support for syria and bashar al-assad. russia launched its first air
strike in syria according to a senior u.s. defense official. the strikes do not appear to be targeting islamic state but groups fighting bashar al-assad. the attacks began hours after russian lawmakers authorized vladimir putin to use the lottery force in syria. a buildup of russian aircraft, troops and artillery began base.ly at a syrian the federal reserve has approved the long-delayed merger between m&t bank and hudson city bancorp. the deal was repeatedly stalled as they federal reserve reviewed anti-money laundering controls. it was first announced more than three years ago. it creates the first -- the 14th largest u.s. commercial bank with assets of about $132 billion. the: the cofounder of largest distressed reserve talked interest rates in toronto. afraid toem deathly
raise rates. they keep saying it's probably going to happen -- they lead somehow or another through sign language, they lead the commentators to believe it's going to happen month after next, whatever that may be, and then they don't do it. this has been going on for two and a quarter years. mark: he said a hugely anticipated rage -- raise of a quarter percentage point is meaningless. bloomberg is reporting a struggling commodities trader will try to raise more than a billion dollars by selling future production of gold and silver. mine core has a $30 billion debt load. coming up next half hour of the bloomberg market day, we will the u.s.odities with energy envoy ended his take on the oil glut. pimm: and one of the largest --
pimm: this is the bloomberg market day. i'm pimm fox. mark: let's go straight to julie hyman with a look at the markets. julie: looking at some specific movers. western digital has been one of the best-performing stocks on the s&p 500 after a business boughtd china university a stake in the company. we have seen various chinese companies invest in u.s.
companies. itss picking up some of rivals along with it today. western digital and seagate getting a bump up. we are also watching airline stocks after a call from goldman sachs. american airlines is trading lower, rating a neutral, basically a relative call. goldman likes the rest of the airlines and thinks their long-term earnings power is being underestimated. it just does not like american quite as much. the others are trading better. at of these are by rated goldman. mark: oil and gold are down today. how about copper? julie: it has been a rough three months. i want to look at copper and gold -- we see copper rebound
today. we saw china takes a measures overnight to improve its economy , including cutting taxes on copper's sales, so rebound is tied to that. freeport-mcmoran seems to be rising on comments from carl icahn where he said he would be involved with the company. he will be playing by his activist playbook, so to speak. when you look at freeport-mcmoran, we are talking about bouncing off from very low levels. to date the quarter look -- even though copper is down sharply, not down nearly as much as freeport-mcmoran which has fallen a whopping 49% this quarter, far outpacing the losses we have seen in copper itself. mark: julie, thank you.
staying on commodities, oil is post to see the lowest quarterly average price since the start of 2009. climb,e inventories crude has plunged more than a quarter from its peak in june amidst speculation of an oil glut. pimm: joining us from the u.s. state department is the special envoy who is here in new york meeting with these global players. rate to have you with us. on the priceughts of oil in the future? i think we are in a new reality in the energy sector. i would be sitting in a different job with a better suit if i could predict the oil sector. down about 2.5% in natural gas today. are we in a glut in natural gas? guest: we are seeing we are in
revolutionary times when it comes to the energy sector. we've moved away from the paradigms we have known in the past and we are testing where we are going in the future. if you look at natural gas, this is a great transition fuel as we look into the future and demand is going to start picking up in other markets around the world and we see more discoveries of gas and more democratization of gas sector. it's not one country or a small handful of countries that are controlling it. it's opening up and it's not only because of the supply but the technology has enabled gas to become a much more special commodity. you just used the term revolutionary. what is sparking the revolution? the reason i think it is revolutionary is it's not one thing happening in the energy sector. we see a number of things from renewables to oil to gas happening at the same time. a tremendous shift in the demand
side. instead of the ocd driving the demand, the non-ocd countries are driving demand. on the supply side, we see oilomers on both sides of and gas. it's no longer opec plus a couple. mark: are there some countries who refuse to rip up the old playbook and understand we have a new paradigm now? amos: i think that may have been true about a year ago at the beginning of the decline in oil prices. but now everyone understands we are in a different place. prices may be set on market value versus political ones, not the geopolitics is out of energy. pimm: what is the role of the special envoy at the state department? recognizedwe have over the last several years is that energy is playing a greater and greater role in foreign policy, whether we like it or not. pimm: that has been true since
winston churchill went from coal-fired boilers in navy ships to using crude oil. amos: i never said the government acts on time. we recognize that early in this administration that we need to change the paradigm and have a seat at the national security table of people who understand both the market site and what this means. look at what is happening around the world -- natural gas is used as a tool of coercion in central europe and eastern europe by russia. we have elements where energy is playing a critical role in foreign policy decision-making. our opec nations serious about investing in renewables? amos: i think so. i think it's slow. uae has been a leader but saudi arabia has a very ambitious target. whether the target is achievable is not for me to judge. the important piece is the focus is there.
countries understand if they want to continue doing what they are doing, they need to have diversification. mark: who is our number one partner in that? amos: we want to partner with everyone we can because we believe diversification into renewables for all of the opec countries is in their best interest and hours. oilike to see that as our orders. some are ahead of the curve more than others. pimm: thank you very much. the special envoy for the bureau of energy resources at the state department. coming up, he's one of the most storied mergers and acquisitions artists of all time and he's going to have a startup hoping to find success in the public markets. ♪
mark: welcome back to the bloomberg market day. i'm mark crumpton here with pimm fox. pimm: he's one of the most successful mergers and acquisition professionals of all time. tomorrow, paul taubman is set to a publiccompany into entity. mark: but it's not going to be an easy road to success. boutique m&a returns typically lag behind investment banks and some are wondering if he is too ambitious. here to break down what is at stake is our bloomberg reporter. why go public now? guest: it's almost a year now for record volumes of m&a and four blackstone. their restructuring business has blackstoneed where can be an investor.
in distressed assets. blackstone was ready to spin off this is most and they were looking for the right boss. paul had left morgan stanley in a year later, he got on this $130 billion verizon vodafone deal. he was shown to be the perfect leader for this company, so it was as much about lack stone as it was about paul. -- blackstone as it was about paul. pimm: what is it about him and his client and the people with whom he works? guest: he has a very deep relationship with his clients and that's how he got on this verizon deals -- by himself and without the backing of the number one or two dealmaker in the world. bench say he has a deep and a deep relationship with his clients, so -- pimm: and he has hired a lot of
people. guest: he has hired a lot of people from his former firm. has wrought on dealmakers from jpmorgan, from ubs, from credit suisse, from all over the place in less than a year. a pretty deep rolodex there. thank you so much. pimm: i'm going to leave it in your capable hands. news justng up, coming in about speaker john filler and who's next to his position? we will have that story when we return. ♪
streaming service is now available in china, offering a library of content, including movies and electronic looks to its most important market outside the u.s. it is their answer to streaming services like spotify and pandora. it is kicking off with a three month trial before charging about $1.57 a month. it is just a fraction of what apple charges in the united states. twitter is expanding its shopping platform as the holiday season nears. the social network formed partnerships with several companies making it easy for users to buy while they tweet. users engagekeep while creating a new revenue stream. tesla has delivered its first model x suv. elon musk presided over a ceremony at its factory, saying the model x sets a new bar for engineering. x is the the model
safest u.s. three -- suv ever. it has five star safety ratings in every category. mark: tesla design the model x to appeal to female drivers and families with children. fiat chrysler has run into regulators, safety having underreported number of deaths linked to default in its -- to defect in its cars. a were fined $105 million over the way they handled recalls. a storm is stirring in the atlantic is now a hurricane. forecasters say it will move up the east coast in the next few days. it is packing winds over 75 miles an hour. warnings are already up in the bahamas. feesk is adopting baggage -- a $20 fee will be charged for each item exceeding the baggage limit. baggagebring on to
items and carry-ons totaling 75 pounds. half hour,n the next madison square garden will separate its live sports and entertainment business today. will to publicly traded companies be better than one? its first conducted airstrike against isis in syria. we will talk to a harvard professor who was the under secretary of state for political affairs in -- and the forme u.s. ambassador to nato. the u.s. senate has passed a spending bill that would prevent a shutdown. next is the house and it is expected to reach president time to spare.th phil mattingly joins us with the latest news and big news from the outgoing speaker of the house, john boehner. the: what we do know is senate by a vote of 78 to 20 past it and send it over to the house. the house is working to the
process to get it to the house floor. heaker john boehner has said is assured the bill will pass and the government will not shut down at midnight tonight. the biggest issue has turned into house leadership elections. john boehner announced october 8 will be the day leadership elections are held. it is everyone's expectation that kevin mccarthy, the current number two will rise and take the speaker's role. that means his position will be open as well as the number three position. the lobbying is going fast and strong and we will have about another week before anyone knows who will be the next leadership team for the house republican conference. mark: thank you so much. joining me now from the rotunda on the hill is congresswoman mimi walters. thank you for your time. i must begin with what is going on with the developments in
attempting to avoid a government shutdown. you were among a group of freshmen lawmakers on the republican side urged their colleagues not to shut down the federal government. why? : shutting down the federal government cost us a lot of money. now is not the time to take a stand to shut down the government and i don't think we will. mark: there was a closed door meetings -- closed her meeting with republicans yesterday and one of the words used to describe the meeting was cathartic. can you describe what went on in that meeting? ms. walters: i was sitting in on the meeting and our conferences facing some challenges. togave everyone a chance tell us what is on their mind and how we want to move forward. there wasn't excellent meeting and a lot of voices were heard. i think was very positive and a step in the right direction as we move forward. mark: if we might circle back to
what appears to be for now a vote that would prevent a government shutdown, when the conversation was beginning about this tactic to shut down the government, one of the things the gop leadership insisted upon was that there be some way to defund planned parenthood. what were your thoughts on that and what were the your constituents telling you about that? walters: we need to look at planned parenthood, especially in light of the videos that have been released. there has been concern in our conference that we don't continue to fund planned parenthood. while i support that, the bigger question is biased shutting down the government on this particular issue, it would end up costing us a lot more money to shut the government down and many in the pro-life movement believe taking a stand on the funding planned parenthood right
now, costing the government to shut down would take the pro-life movement a couple of steps backward. we were trying to be in line with the pro-life movement and say we want to move forward on this issue, but this is not the way to do it. you and some of the lawmakers, especially on the republican side that. shutting down the government was not a good idea, that the republican majority in the house and senate might take a hit in the polls and the electorate if this happened -- and most polls indicate the last time this happened that is what the electorate did. youyou give us a sense that believe your views are being heard -- are you getting enough respect from the republican conference even if you disagree with the majority? ms. walters: absolutely we are. we want to advance the cause of the pro-life movement, but there
has to be a certain strategy put in place. when you shut down the government, you are costing taxpayers a lot of money. you are costing the creation of carefuld we have to be and strategic as we move this forward. kevin mccarthy, your colleague from california, he is the number one person in line by all accounts to succeed john boehner. he was on fox news last night and he said one of the best functions of the benghazi select committee is that it led to a significant drop in hillary clinton's poll numbers. do you agree with that assessment and is that what the taxpayers are paying for? miss walters: yes. there's a lot that happened in benghazi. the reason we have these hearings is so we can uncover the truth. we need the american people to know exactly what happened in benghazi. mark: it seems to be implied in
a congressman mccarthy's statement that one of the reasons for the committee was not to get to the truth, that it was possibly to affect mrs. clinton and hurt her politically. : i believe we have these hearings for a reason and the reason is to get to the truth. policy and politics go hand in hand. when you are going to have these hearings and they are being uncovered, if someone is running for office, it might hurt them if they are involved in it. mark: i have to ask because i mentioned at the beginning that you are a freshman lawmaker. can you tell us what the most frustrating part of your job has been? i assume all freshmen go to washington because they want to be part of some positive change, given the partisan atmosphere, is that the most disappointing part of this for you? the --lters: i came from
i come from california and have been in the minority party for years. being at the table has been one of the best things about being a member of congress. mark: congresswoman, thank you for your time. we appreciate it. still ahead on the bloomberg market day, what is glencore's next move? that story when we return. ♪
but i want to talk about how the quarter has been, not only for stocks but other asset classes. -- at thek at the s s&p 500, we're having the worst quarter since 2011. what has led us there is pretty obvious -- energy and materials are the worst to performing groups, both of them down nearly 20%. health care also lower with the big decline we've seen in biotech stocks. utilities are the best performers as we've seen a pullback in rates. mark: energy and material stocks were pushed down by commodity prices. how bad was the commodity performance question mark julie: we have some superlatives to mention when it comes to commodities. gold having its longest run of quarterly losses since 98-99. oil having its worst order with that 21% drop and copper also very weak, its worst quarter in
about four years. i was curious to look at the dollar. if you look at the dollar versus a basket of currencies, you have a gain of about .8%. not huge movement but holding up relatively well. even as we saw yields fall during the month. the 10 year had its biggest advance in price and its biggest pullback in yield. points in theasis yield during the quarter. all of this as we were still hearing from federal reserve officials that they see a rate rise likely before the end of the year. this trade shows that market participants do not it. mark: julie, thank you. glencore is looking to raise more than a billion dollars by selling its future production of gold and silver. the beleaguered mining company is hoping to have a criticism over its $30 billion debt load.
will this precious metal steel help them withstand the continuing slide in commodities? let's bring in alix steel. you are like me and sometimes you need some kind members of the public -- somebody asked me what is going on and i said acts -- i said ask alix steel. why is this such a mess that you mark -- why is this such a mess? alix: let's talk about what glencore is trying to do. it's trying to get money to pay off a debt. to $50about $30 billion billion worth of debt. let's call it $30 billion. they have a lot of that they have to pay off in a have to do that to avoid any kind of risk to their credit rating. here are their options. the first one is they can go in and sell equities. the stock is down 32%, so why
would you want to issue more stocks? they have to turn to these alternative measures like try to sell part of their agriculture business and shutting some minds. this is just another aspect of that. mark: even with the debt load, glencore is insisting we don't have any solvency issues. how can this be? alix: i don't know how many ceos who are going to come out and say our stock got hit that and i'm going to tell you how bad it is. there are options they can do and let's take this royalty example. youer you do two things -- get a huge chunk of change from the royalty company and then you give them a percentage of their production going forward or you get money up front and sell production at a fixed rice going forward.
that could be something that comes across but how bad could it get? may bee citigroup say glencore should consider going private because it is getting so ugly in the public market. mark: even if it plays out the way they think it is going to play out, they are still going to have a mountain of debt. they if you look at how credit default swaps are trading, it is ugly. there's a 50% chance they will default over the next five years. that is pretty ugly. some of the debt a have issued is aso falling, so this problem in general with commodity companies. they over levered because rates were so low and the commodity super cycle was in full bloom, so why not are a cheap cost? when prices burst, that is when it comes home to roost. that is what we see with small
amt players when it comes to oil. mark: and it got so bad this month that they suspended it in payments. alix: for these kind of companies, i'm thinking about digg oil. you own glencore for something different, but a dividend is a big deal. if exxon cut their dividend, that would be awful. you want to own that for their dividend. but you are going to own for their actual cash flow. the idea is where are they going to earn their money and what are they going to use it for? basically you are going to use all your money to pay off your debt. that is the concern glencore find health and because they are so over levered and those service payments are coming due. still ahead on the bloomberg market day, madison set to spin off
mark: welcome back to the bloomberg market day. i'm mark crumpton. my colleague mark barton has a look at the european record -- european closed. mark: disguising the fact that they stoxx 600 had its worst 900ter in years, almost billion euros was wiped from the value of the stoxx 600 in the third quarter. during the last three months, germany's dax 11% lower, spain down 11%, the ftse and cac both down 7%. every industry group bar real estate fell in the last quarter. autos and mining were the worst performers come having their worst quarter in four years.
encouraging news on the u.k. economy -- the economy grew .7% in the second quarter, saying and line with the estimates. that's the 10th straight quarter of growth and a key gauge of wealth. rose above its pre-recession peak and inflation dipped below zero for the first time in six months. what does that mean for the ecb would it comes to future quantitative easing? let's have a look at the big equity movers -- there were none -- thethan this company biggest ever decline on monday, falling by 29%. in the tuesday since comets pulled back all those losses thanks to a rebounded metals prices and comments made by the company yesterday that it is financially robust. a list by bloomberg has a 12 month price target of 190 pence.
that's the biggest one-day rise since 2007. it said profits will beat estimates. the french carmaker -- china cutting its tax on passenger vehicle purchases. it for me. back to you. madison square garden in new york city is expected to split into two separate companies today. when will consist of madison square garden's sports and entertainment properties in the other will be sports networks. joining us to talk about the significance of the split is bloomberg's david gorin. david: a lot of people have said this company is too big, there's too much going on and there have been investors pushing for this to happen. the smaller one will have regional sports networks, msg network and the other having
madison square garden. the forum in california -- tons of properties they have. the idea is that it's better for shareholders and they can do more now that they are two separate energies. mark: what does it mean for the dolan family? controlhey will still both and have a majority share of the boards. the way this is going to shake out is if you have three shares of medicine share -- of garden, you get one share of each in the new companies, but the dolan family is very much in control. mark: can you talk to us about the timing of this? why did they decide to do this now? there was an activist investor pushing for this. look at the dolan family -- the founders of cablevision. we heard all tease was going to buy that company out. ltice was going to buy
that company. they are trying to get all their ducks in a row. go towill the folks who the garden notice any difference because of this? will this effect attendance? course, cablevision spun off madison square garden in 2010. but there will still be a relationship between these companies. they were very clear in their prospectus to say they will still carry the next and the rangers. if you are watching games on tv, you will probably we not know the difference. mark: why didn't this happen to her three years ago? david: the timing seems more right now than for them to back down. mark: let's go to the breaking news desk. julie, it is on twitter. julie: it is being reported that jack dorsey will be named the prominent ceo. this is just a report we have not confirmed.
i want to point it out because we are seeing the stock reaction. up in the shares, still gaining about 4%. there are differing opinions about whether dorsey is the best ceo of what her but this has been overhanging the stock. there in thegain stocks. i want to call it the year to date -- the decline we saw in the shares after it reported poor earnings and that was exacerbated after the departure of the prior ceo, dick costolo. we have seen a decline in the shares but it makes sense we would see this relief rally if there is a permanent replacement. we will keep on the story and let you know if we get confirmation. the announcement could be made as soon as tomorrow. mark: twitter did not have the
luxury of a long and drawn out process. they did not have a succession plan in place when dick costolo announced his resignation. one of the questions outstanding is that jack dorsey is also the ceo of square. the question would be can he be ceo of both companies? he had made comments to the effect that he would remain ceo of square. that throws into question his position at twitter. still some questions about how the mechanics of all of this will work but we are definitely seeing stock reaction. mark: stay with bloomberg market day. we will have more on this twitter story. also, russia launching an airstrike against syria. we will have former ambassador douglas burns. ♪
commodities, investors breezing sim relief for the end of one of the most volatile orders and financial markets. ofk: was glencore the victim its own flash crash? do investors see a bargain by after the mining company's selloff? scarlet: russia launches airstrikes in syria on what moscow says were islamic state targets. there are doubts on whether vladimir putin really intended to fight isis. mark: good day from bloomberg world headquarters. scarlet: we have breaking news. sayscap it again, recode twitter is going to name jack dorsey ceo. he was internal ceo after dick costolo stepped down, but now jack dorsey will