Skip to main content

tv   Bloomberg Markets  Bloomberg  October 6, 2015 10:00am-12:01pm EDT

10:00 am
for now. limerick has earned that sap miller has turned down the anheuser-busch takeover for $100 million, or 40 pounds per share. a.b. miller says it is not enough money. how much does anheuser-busch want a.b. miller? that $6.5 says billion will not come close to covering the cost of its omission cheating scandal. they are suspending all non-at -- nonessential investment. detail from germany. deja vu all over again. shreveport mack brown is reconsidering its business plan. he told shareholders that the company might spin off natural gas and oil businesses because of a slump in commodity prices. what are the options and how much money could fcx actually raise? ♪
10:01 am
pimm: welcome to bloomberg television, i'm pimm fox. let's go to vonnie quinn for bloomberg first world headlines. power: we start with because it is returning for thousands of residents. they are drawing out tonight after torrential rain and flooding and south carolina. duke energy says only a handful of customers are waiting for electricity to come back on. the state is grappling with new concern. billions of dollars in damages and rivers that still have not crested. defense secretary ash carter is saying that russia should contact the pentagon about its flights over syria. syria and skies are becoming increasingly crowded since russia started airstrikes there. u.s. officials want to talk with russian executives and leaders to prevent accidents in the air.
10:02 am
wants toe committee know how many american troops should stay in afghanistan. today, u.s. lawmakers will ask the commander there whether president obama should change his plan to have the number of u.s. troops from 10,000 to 1000? the hearing comes days after a u.s. gunship at a hospital in afghanistan. the taliban overruns and afghan city. hillary clinton is going on the attack. she will testify later this month before a house panel investigating benghazi. yesterday at new hampshire, she lashed out at republicans, accusing them of politicizing the investigations. works this committee was set up or the purpose of making a partisan political issue out of the deaths of four americans. i would have never done that. if i were president, and there were republicans or democrats who were thinking about that, i would have done everything to shut it down. vonnie: last week, kevin mccarthy boasted how much
10:03 am
critical damage the investigation has done to hillary clinton's campaign. something you rarely see for a new york yankee playoff game. cheap tickets. resell ticket prices are the least expensive since a wild-card games begin in 2012. the average price was $180, 40% less than what you pay for a national league game in chicago and pittsburgh. that is a look at our first world headlines. you can always find the latest on pimm: thank you very much, vonnie quinn. i want to go to julie hyman right now for breaking headlines from the international monetary fund. what is the latest? julie: we are seeing the imf cut is global growth forecast. the imf is saying it anticipates a 2013 what economic growth of -- 2013 world economic growth of 3.1%. they are cutting it because of the global commodity slump and the effect it is having on emerging markets in particular.
10:04 am
again, that ripple effect from the commodity prices calling -- causing the downgrade and prices to three by 1% gdp for the globe in 2015. -- 3.1%. the imf does not seem to be having that much affect. mixed too little change picture before the headlines came out, and it is similar now. the s&p 500 only a .1%. the dow is the leader, and the nasdaq is the laggards. bloomberg at the terminal to see exactly where the strength and weakness lies. materials and energy, it is ironic that we are getting all of these downgrades of global growth forecasts, stock forecast, based on commodities at a time when commodities are actually rebounding by and large. cereals and energy stocks are higher today. utilities is dragging things down, health care, also in the red today, at least at the moment. pimm: it is health care, right?
10:05 am
once again. the biggest drag on the market? utilities are down most in percentage terms, but because health care is more heavily weighted, it is providing a drag again. health care as we know, has been a better group during i want to turn your attention to valeant, one of the flashpoints in the debate about increased road pricing. it is a company that has been questioned about it. you can see the stock is rebounding at the moment. it was lower in premarket trading. interesting that it looks like we have had a turnaround. the company says that media reports on drug pricing is misleading. it made these comments on an 8k filing and talks about various analysts and that their talk about drug pricing is misleading. also, after the close yesterday, the company got antitrust clearance to make an acquisition of a company called synergetic. large biotech,er
10:06 am
the stocks have been battered so much i wanted to check on those. by and large, we are seeing weakness across that group. vertek, for tech, some o celogene. willompany said that sales rise at least 10% and its 2016 fiscal year, excluding the effects of the currency. at least one drug maker is seeing -- is saying business will be ok. chuck price concerns not list any. ifm: will also have to see there are investors that go in and say there is value in the health care sector because of the selloff. thank you very much, julie hyman. the bloomberg markets most influential summit is taking place right now. this forum brings together business leaders making decision about the future of finance and money. left wall street to become the executive of digital assets, i've financial technology startup.
10:07 am
she is talking with bloomberg's sheelah. let's listen in. >> b loan market is a unique market, quite different than public securities markets, for example. havingt characterized by , for example, a centralized exchange, a centralized clearing and settlement body, a central securities depositary. lead togs that actually complacency in the loan market is relatively unique and includes things like our consent. nasa to change hands. it includes things like the fact that when you are transacting a loan, instead of buying and selling an instrument, you are creating a new bilateral contract between yourself and the borrower. the agent or arranging bank needs to approve that. new documentation has to be created for every transaction.
10:08 am
some of the things that lead to latency and that particular market is not just about technology, it is about the design of the product. a distributed ledger, gathering signatures of the buyer, the seller, the agent bank, the borrower, and allowing each of those parties through that approval process to parallel processes and their respective roles, rather than sequentially process them. it can lead to significant reductions in government agency. sheelah: my understanding is that this does not have anything to do with bitcoin, but uses some of the same technologies going do things. that could be a huge efficiency. for you, this is a huge change. you are one of the most prominent women on wall street. you one from the executive suite at j.p. morgan to a tech startup, basically. what has that change been like for you?
10:09 am
jpmorgan is a great and venerable institution. i spent the better part of 30 years there. i enjoyed my career with the firm. it was time to do something different. i wanted to do something that involved innovating for a living. you don't very often come across ideas that you think are so significant that they could really, materially, profoundly annge the way that ecosystem, a big, collocated ecosystem that you know well and have spent 30 years studying actually could function. to me, that is what occurred when i came to appreciate the that this technology actually are presented. i come from a different background than many enthusiasts in this space. i never became enamored with the caseworker procurement -- could
10:10 am
the currency -- crypto currency as having value or a medium for exchange. i spent the better part of 30 years thinking about systemic risk, regulation, infrastructure, complex markets. the things that have been --ormed in the aftermarket aftermath of the financial crisis and have been improved, as well as the things that have not been improved and the things that have deteriorated. when you come across an idea that has the ability to tackle capital pressures, cost pressures, efficiency and systemic risk, make it easier to allow the kind of transparency that regulators need to regulate ,arkets in today's environment and render an entire system less vulnerable to cyber attack, that toa egg list of checkmarks
10:11 am
be able to tackle simultaneously. for me, that was not -- that was an ah ha moments, a moment where benefit was big enough to take a career risk. it is fun, interesting, and i am the oldest person in my company by a significant margin. sheelah i am sure they are happy to have a grown up around. blythe: not always. the dress code we have had to negotiate. no midriff visible. [laughter] haven't made them wear suits. it could be worse. sheelah: you did a lot of amazing, innovative things on wall street. you work for trade as someone who contributed to the financial crisis, or at least allowed some of what happened to happen.
10:12 am
blythe: not by you. not by me specifically, but by others who will remain famous. people said you helped create weapons of financial mass destruction. what was it like to be in the center of that for you? well, i think some of those characterizations are obviously not that well put. let's take a step back and talk about what it was like to experience the financial crisis. for me, at least, i learned an external area amount. going into that period and coming through it. i saw a number of features of the world's financial marketplace that clearly contributed the pandemonium that ensued. too much interconnectivity, not enough transparency, generally
10:13 am
too high levels of leverage. insufficient capital in the system, and a number of products that had grown so quickly and have been applied to such novel and complex underlying circumstances including highly leveraged pools of not well underwritten subprime mortgages and other loans. to aesults of which led mechanism for risk contagion that was deeply concerning. obviously, seeing that unfold and then working for many years afterward to contribute to financial regulatory reform was something that was a responsibility. if you are part of an ecosystem that fails its economy, you need
10:14 am
to be part of the work that is done to improve that ecosystem. ar me, that was actually pretty interesting experience. with cessna and went on to chair the gf na, the global equivalent of that first for the subsequent two years. i had the opportunity to watch firsthand some of the great reformers that came out of the process, as well as those who aren't necessarily achieving their stated objectives or having unintended consequent is. i think if you have a true understanding of the way that financial markets work, you have a responsibility to invest in ,nsuring those tasks
10:15 am
supervising those markets, understanding how they work and make sure they work better. it was a difficult time for all of us, but it was a time that i learned from and had the opportunity to contribute to. in short, the majority of the reforms that have occurred since 2008 have produced a stable system, principally because there is dramatically less leverage any system today than there was in 2008. pimm: listening to blythe masters, the chief executive with bloomberg's sheila call have power -- sheila call half lah, this afternoon, we have much more on bloomberg television. you can catch us on ♪
10:16 am
10:17 am
10:18 am
pimm: good morning, and welcome to "work market day. " julie hyman has a look on the company movers. at thewe are looking deals going on today. the first we are looking at is sc miller potentially rejecting the offer from anheuser-busch. way, $100, by the billion was considered too low, 40 pounds a share. familiar,to people some shareholders are looking to a deal closer to 45 pounds a share. at 45 pounds a share, this deal would be worth $110 billion. very interesting. if, indeed, there is this deal between sab miller and anheuser-busch, molson coors may end up buying the balance of their u.s. operations that it does not already own.
10:19 am
if it doesn't happen, it would not get that business. those shares are trading lower. looking at a deal in the chip industry that has been so busy in terms of consolidation. skyward is buying pmc sierra, the maker of chips that powers various kinds of devices. a $2 billion deal, $10.50 a share, 30% higher than monday's close. with that field activity, it prompted me to look at how yields had done this -- how field -- how deals had done this year. this is going all the way back to 2007. are on pacee we because the year is not over yet. we may surpass 2007. this may be the highest number of deals since 2007 both in terms of volume of deals and number of deals. the third quarter was very busy, the busiest quarter since 2007 in terms of deals, as well.
10:20 am
because stocks are down in this quarter. you saw companies trying to step up deals of relative value. pimm: you also had the rise of megadeals. beersturn to the issue of and beverages. ruth david joins us from london. thank you for being with us. explain the timetable and what is going on behind the scenes between sab miller and anheuser-busch. ruth: anheuser-busch has till october 14, next week, to make a former -- formal offer or step away. they went in with an informal push -- offer of 40 pounds a share, translating to $100 billion.
10:21 am
, andiller rejected that now they are going back and trying to see what they can come up with. at this point, we are being told we should take every option into consideration. whether that is then walking away from the deal, or the discussions not being us from the as they used to be. another interesting thing to miller's fourth largest shareholder cannot today saying they are not in support of video. it is starting to get really interesting. cooler is coming out and voicing their concerns. pimm: the pension fund you mentioned, it is state owned, from south africa, do they want more money? i imagine other investors want more money, as well. right now, they are not talking so much about money as they are about this will create a monopoly. what does that mean for other companies in this market? they are also concerned about whether this would mean sab
10:22 am
getting off and delisting from that market? some concerns they raise say they -- make them reluctant. the pricingn what finally is at. they are saying they are not happy with it. pimm: i want to thank you very much, ruth david, joining us from london. we have much more coming up on "bloomberg market day." ♪
10:23 am
10:24 am
pimm: welcome to "bloomberg market day," i'm pimm fox. let's get you are bloomberg at first world headlines of the morning. i want to begin with goldman sachs. goldman sachs says the fed might not raise interest rate until 2016 or later. chief economist says the firm is still forecasting a december rate increase.
10:25 am
he says a slowdown in output and employment may prompt the federal reserve to hold off. factory orders in the united states are down and unemployment is rising in germany. new reports show that factory orders in august dropped 1.8%. to 2.7 million in september. analysts say that germany is being hurt by a slowdown in china. beginning today, you can get breakfast around the clock at any mcdonald's in the united states. mcdonald's is already america's fast food breakfast champion. it is roughly accounting for 18% of totally -- total mcdonald's sales. two scientists solve a mystery involving a subatomic particle are sharing a nobel prize in physics. the pair from japan and canada prove that neutrinos had mass. they will split a prize of $1 million.
10:26 am
a court defeat for facebook could have far-reaching implications. the european union's highest court decided today that a dealar-old datasharing between the united states and the european union is invalid. they rolled that the deal does not adequately protect the privacy of eu citizens. that is a look at our first word headlines. you can always find the latest on coming up and the next 20 minutes of the bloomberg market day, volkswagen's chief executive ones of more pain to come as they plan to cancel billions of euros worth of investments. that is next. ♪
10:27 am
10:28 am
10:29 am
pimm: live from bloomberg world headquarters in midtown manhattan, you're watching bloomberg market day. i am pimm fox. let's begin with bloomberg first
10:30 am
word headlines. vonnie quinn has more from our news desk. vonnie: we start with the american trade deficit. it has soared. it rose 16% to more than $40 billion. slowdowns in china and other export mountains -- markets are hurting demand. u.s. deportation of immigrants in the last 12 months dropped to a nine-year low. government figures indicate that total deportations are down 42% since 2012. just over half of the to under 31,000 immigrants deported in the last 12 months were convicted -- convicted criminals. authorities are not revealing why an american airlines pilot died after becoming held during a flight. they were heading to boston when the copilot called in an emergency. >> medical emergency, captain is incapacitated. request handling for runway. vonnie: the copilot that landed
10:31 am
syracuse,safely in the 57-year-old pilot was hospitalized and later died. a replacement crew take -- took the plane and its 147 passengers to boston. u.s.aa says that seven airline pilots and died during flight since 1994. let's look at the first word headlines right now. you can find the latest news on pimm: think you very much, vonnie quinn. under the top story of this morning is more fallout from the volkswagen diesel omission scandal. the automobile maker says it will cancel all nonessential investments to to the scandal. the cofounder of the advanced energy institute told bloomberg this morning how that he thinks the scandal is. >> i think this was a shocking of a company not being honest, not just with the governments, but with their customers. the idea that you have a
10:32 am
relationship of transparency and integrity with your customers, it seems to me, is the critical part of the 21st century. joining me now for the other look at the critical part of this investment the company might not make because of the money set aside for the scandal. hans nichols is in berlin. give us the lowdown, what details are we know? hans: what we know is that the new ceo addressed 20,000 employees later today. he laid it out for them. he said this would be a painful process. here is something that he said. we have statements they later concern -- confirmed. he said i will be completed clear. this won't be painless. that is why we are putting all planned investments under review. what isn't essential will be scrapped or postpone. they will be looking at everything. you look at the volkswagen group fromwhole, 12 grants
10:33 am
bugatti, porsche, lamborghini. one thing is clear. they spend a lot more on research and development and their peers. dollars is their annual r&d budget. far surpassing their peers. you take a look at what they spend on personnel, employee compensation, a r 16.7% of their total sales goes to employee compensation. the union side has been hinting they don't want to see any executive bonuses. i think that is clear. i would be surprised if they saw executive bonuses. they are also wanting to say we want to stem the job losses, especially where volkswagen is headquartered. pimm: have they given and the indication as far as the investigation? they let anyone go? will they find anyone responsible? hans: three executives have already resigned. two of them we know.
10:34 am
they were both in charge of building false wagon at the time. r&d, they were in charge of the unit -- volkswagen at the time. they have gone out of their way to say that the former ceo was not necessarily culpable. of course, there are criminal charges against him. the courts will get involved in clear that up. that is in germany alone. you look at what is happening in the states, west virginia, where there are 2400 volkswagens on the road, they may be the first u.s. state to sue. on top of that, theire andor 29 -- there are two 29 class action suits from the united states. this is a company for paying for big pr costs and a technical fix. pimm: thank you very much, hans nichols reporting on the woes of bw. tensions are running high in the canadian energy market. suncor, one of the countries are just energy businesses,
10:35 am
announced a hostile takeover for $3.3 billion. if this deal goes through, it will give suncor control the largest oil operation. to more about what is at stake, joining us from houston, david, i'm wondering if you can describe first of all, what exactly are the assets involved? are basically looking at making a pure play on the , andct called syncrude upgrader plant that is used to get this date, heavy oil called andchairman -- bitchumen turn it into lighter crude. what they are having a play on is to have a stake in this joint venture project that suncor is a part of. that would make it asked stake.
10:36 am
a 50% stake in this venture project. pimm: through you agree with the description of why this is important or the industry? >> the description of the process was a good one. crudees bitumen and makes , a high quality product. it is a compelling deal for canadian oil shareholders. it is 40% plus premium, 45% increase in dividend, it gives them a stake in the oil industry going forward in a good company. pimm: have you been waiting to make a deal because of the decline in the price of crude? approach toirst canadian oil sands was in march of this year. it got rejected. back again in april, it got rejected. i thought at that point, the offer was so compelling i should take it to the canadian oilsands shareholders, which is what we had done. my preference would have been to have a negotiated, cooperative
10:37 am
deal, but that wasn't to be. pimm: can you expand why it was not to be? the people running canadian oilsands, or price? steve: from our perspective, the author is a fair offer by any measure. you have to talk to canadian oilsands about why they did not want to cooperate. pimm: tell me about your plans if the deal goes through. steve cohen the immediate :enefits are that -- steve the immediate benefits are that oil sand has a similar operation. similar sales staff, similar marketing staff for the products. there is a meeting there that we can work on by integrating two companies. that benefit improves immediately. there are other benefits around the governance of syncrude, right through to the reliability and operating costs of the plant. those take longer, but we think we can accelerate the process because this is the heart of what we do as a company. pimm: i want to ask david wesley, can you explain a little
10:38 am
bit about the dynamics of the canadian energy business given the collapse in the price of oil -- david wethe? david: that is one thing that bp has pointed to is that the cost of the oil sand production will get help. partiallys lowering because of the devaluing of the loony. that is helping. overall, with the oil sand industry, it is mainly in canada , that is the largest area of developing for the oilsands. it is an expensive process. it produces a lot of oil once it gets going. there is a lot of upfront cost. a lot of us are familiar with u.s. show in texas and elsewhere in the u.s.. -- u.s. shale. that is an inexpensive process, 5.7 -- $5 million-$7 million per well versus oilsands where it is
10:39 am
much more. you are get going, looking at as much as 180,000 barrels a day production in oilsands versus something like 425 barrels a day in shale, and shale drops off quickly. a much more steady process for oilsands if you can stomach the upfront costs. pimm: i want to mention to the chief executive of suncor that there has been a response from of canadiannt oilsands asking their shareholders to not do anything, to not make any decision right now. let's talk a little bit about what your strategy is next. you are going to leave it up to the shareholders and leave it or take it? we think it is a compelling offer. i'm try to get a hold of as many canadian oilsands shareholders as we can. i have a team doing a two or at the moment to take them through our case of why we think it is
10:40 am
so attractive to them. we are getting a very good reception from that so far. pimm: it is an ongoing roadshow, in a sense? david: we are trying to get -- steve: we are trained to get out of the gate relatively weakly because it is a complex business and offer. we want to be able to explain it. i think that dialogue will continue over the next 60 days. this dialogue will be open for 60 days. pimm: open for 60 days. they know where to reach you, i would imagine. thank you very much, stephen williams, the executive of suncor, and david wethe joining us from houston. for anis joins us all-star lineup on surveillance tomorrow. he will be joined by his colleagues. that is tomorrow, starting at six a clock a.m. eastern on bloomberg television, bloomberg radio, and
10:41 am
first, here is what is coming up in the next 20 minutes of work -- "bloomberg market a." buying thefter natural gas business, why the change of heart and how much will it cost them? don't call them loan sharks. these enterprising businessmen advancementt cash with an interest rate of 250% a year. that story is coming up. the s&p 500 is posting a gain and the vix is falling for the sixth consecutive trading session. a sign that the summers involved till he is behind us. we will investigate that. ♪
10:42 am
10:43 am
pimm: this is bloomberg market
10:44 am
day, i am pimm fox. we are an hour into the trading day. let's figure out what is going on in your. we have bloomberg's mark barton, and he has the latest. mark: the biggest increase since the end of august, investors are latching onto the narrative that monetary policy globally will stay lower. there is an even chance that the hikeill delay its rate into next year or even later. ligety bond market. germany is worth looking at. we had an unexpected drop in german factory orders showing the impact of a slowing china, the impact of a slowing emerging market. orienteds an export economy. it is a volatile index. don't forget that domestic industry is driven by rising
10:45 am
wages and low inflation. have a look at the euro against the dollar. it is rising by .5%. it has been stuck in a $.10 u.s. trading range for much of the year. if you drill down, it has been stuck in a 5% trading range. escape its bounds without a clear interest rate trajectory from the fed. as you know, pimm, according to fed funds futures, it does not look like they will do a hike until late march. pimm: freeport-mcmoran is considering a spinoff of its oil and gas business things to slumping oil and gas prices. naming nine members, rather than 16. the company has been facing strong challenges as the price of copper and oil have declined.
10:46 am
take a look right there. with some insight, ken hoffman, or bloomberg intelligence analyst who joins us from princeton, new jersey. this seems like a roundtripper freeport. how much of this is associated with capital investment? the cyclical nature of the mining business, and how much of this is associated with freeport-mcmoran? ken: remember this deal that put together copper and gold with was $100 a when oil barrel, there was a fear of consolidation and a fear that freeport would be taken over. what could go wrong? oil would always be $100 a barrel, right? they have all sorts of problems. a negative free cash flow for a couple of years. it has been lower than any of these other mining companies and oil and gas companies would have thought. a lot of analysts are talking it could be lower for longer for years. there are a lot of moving parts.
10:47 am
they tried to selloff part of the oil and gas business to raise some cash so that they could have some money to put into their own oil and gas business. unfortunately, it is knowledge that they will get the price they want to. today, they came out and said we are rethinking all options, restructuring the board, we will come back to you with what the plan is going to be going forward. i'm sure that carl icahn has a big say in what they are going to do. pimm: i was just going to add that one of the big moving parts is carl icahn. tell me about the gentleman that run the company. james moffat and richard acord's the company together, and now they are going to pull it apart. ken: i think it is interesting. you are seeing this in a lot of companies. the mining space, the commodity space is being flooded by these activists, glencore andy harris associates, even dupont with the
10:48 am
ceo suddenly retiring, activist shareholders there in dow, etc.. intoave activist coming the board and demanding big changes and telling the board that you have been promising us be china growth rate, commodity pricing is not working, we don't like the plans you have. they are promising the changes to the companies. these activists are having a strong say in what is going on with commodity companies and what -- how they are structured. pimm: very interesting. thank you very much for joining me. now for a look at u.s. markets. to my right, matt miller is at the nasdaq in midtown, manhattan. a couple interesting movers, one of them is the mc sierra, you can see right here, up 33% after skywards came out and announced they would pay $2 billion for the company. both of them are chipmakers.
10:49 am
they will get together in this $2 billion chip maker merger. the other one is tesla, i have to get used to this near image, tesla is down today after adam jonas, an analyst with morgan stanley, one of the most closely followed analysts on the streets, says he will lower his from to 450 it is trading right now at 280. let me my shoulder over. way to goill quite a from there. jonas is worried that the model ask is priced so expensively that it will be hard for tesla to meet its volume goals in 2016. that is why he is cutting his price target just a little bit at 3%. pimm: thank you very much. matt miller reporting from the nasdaq in midtown, manhattan. you look very good. matt: i like it here. pimm: still ahead on "bloomberg market day," two gentlemen who
10:50 am
lost their religion but found $40 million by pulling off some finance deals that have raised eyebrows. we will have details coming up herp. ♪
10:51 am
10:52 am
pimm: this is "bloomberg market day," i am pimm fox. looking at two sons from an altra religious jewish neighborhood in brooklyn. this is a story you will only find in this edition of bloomberg businessweek. it focuses on the lives and times of these two men who found a legal way to lend money to men of small as mrs. dash of small businesses with an interest rate of 2050% per year. this is were -- these are rates
10:53 am
higher than some mafia loan sharks. but start of, who are these two people and what happened? steve: these two guys grew up in brooklyn in isolated, altra religious communities. odd jobs, some successes, but their business got started when they were recruited to work in a boiler themfull of teenagers like in downtown manhattan. these guys were working the phones all day, making lots of money selling what is called merchant cash advances. pimm: what is a merchant cash advance, how does that work? zeke: basically, they call up a bodega, a contractor, and say do you need any money for your business? i will give you $10,000. a lot of people will say yes. the offer that they give them is that they would have to -- if
10:54 am
you borrow 10 grand, you have to pay back say, $15,000 in three months. exorbitant are numbers of interest. this is unregulated and legal? in new york, it is illegal to charge more than 25% per year interest. this is legal because the way they present is that it is not a loan. they are buying that the business will make in a -- in the future, but at a discount. pimm: hence the cash advance concept. zeke: it may sound like sophistry, but this works in court, it is legal, and these guys discovered to the potential of it 10 years ago in this boiler room. pimm: in this land of potential, they did actually very well, right? they make decent money, right? how much should they make and what did they do with it? zeke: the craziest part is that these guys one from the first
10:55 am
job to start their own country -- company. it took off. they decided to sell. when it did, it's a big funds on wall street were interested. they met with goldman sachs, they ended up selling to private 48tial znds called z total price of $60 million with some of the deferred. pimm: these two gentlemen start a cash advance business and get something like $60 million for the business, right? then what happens? what kind of lifestyle are they leaving? zeke: i went down to visit them in puerto rico. they live on a mansion on top of a hill that they treat like their frat house. the two guys are best friends, business partners, and housemates. while i was there, they had three girlfriends visiting them. they are tricking all day. pimm: i understand they even
10:56 am
have an actual thrown to sit on? a life-sized model of a lion, for example. zeke: that was in the boiler room of their office. it did not make it onto puerto rico. pimm: what is the upshot of all of this? zeke: they seem like they are a little board of living in puerto rico, and that they are looking for their next thing. even though they are living a hedonistic lifestyle, they are very thrifty. i do not think they have wasted nearly any of the money. it would be interesting to see what they do next. pimm: that might be part two of the story. zeke fox joining us -- zeke faux joining us from business week. much more coming up on "bloomberg market day." ♪
10:57 am
10:58 am
10:59 am
pimm: it is 11:00 p.m. in hong kong, looking to the bloomberg market day.
11:00 am
welcome to the bloomberg market day from the bloomberg world headquarters in new york, i am pimm fox. sab miller has a message for the maker of budweiser, this did is not for us. the brewer has rejected the official offer of $110 billion. what next? will talks continue? the conclusion of the transpacific partnership deal after years of negotiation is just the first step. inma faces a difficult step his last year in office, securing approval from congress. and vanity fair's annual power list of the top 50 list of innovators. it is out. we go to emily chang who will
11:01 am
speak with bill gurley. all coming up in this hour. minutes into the trading day, let's find out where markets are trading. we will go to julie hyman. julie: thank you. , weets are bouncing around are seeing a mixed picture. the dow is the only index in the green. be driving down the s&p 500 and the nasdaq, we do see a lot of biotech stock changes. i wanted to point out that lazily, we have seen the s&p 500 bumping up against the almost 2000 level. i will tell you what i am talking about. a three-month chart of the s&p 500. this is the big decline in august, and here is the 2000
11:02 am
level, as we've had rebounds from the deep declines, several times, we have had stocks approach the 2000 line, yesterday was the third time in the past month or that has happened. each time we have seen it fall just shy of that particular level. maybe stocks were undervalued where they were, maybe they were getting too high after yesterday's rally. let's take a look at the imap. the poll that i was referring to, utilities are lower, health care is lower. energy and materials continue to support what gains we are seeing at this point and time, at least preventing stocks from falling more. pimm: the reason the dow may be higher is because of the shares moving up because of the resignation -- commodity stocks,
11:03 am
,eaving -- leading the gains but there has been a lot of negative commentary. been a lot ofas doom and gloom after the rebound. let's look at the day's movement, oil is moving higher sharply, up i 3.5%. -- up by 3.5%. we going to start to see supply come into more of an equilibrium? gold is moving higher as we see expectations on the fed rate go further out. copper is getting a bit of a bounce, it turned around, all of that said, we have seen more of a selloff in the commodities. be bloomberg commodity index fell sharply in the third quarter, the worst slump since the financial crisis.
11:04 am
we have analysts saying the slump will continue. goldman sachs, citigroup, their prices could stay lower for years. and then the imf headlines today, they say the commodity prices and the effect on emerging markets are the primary reason that the imf is cutting the global growth outlook to 3.1% for the year. there are still a lot of negative sentiments. an old adage,ere prices can stay aloft lower then you think? julie: that is what we're seeing in action. let's take a check on the bloomberg first word headlines. vonnie: we start on capitol hill, the top commander in afghanistan, he is there. he talked to john campbell about the attack on the hospital. >> on saturday morning, our forces provided support to
11:05 am
afghan forces at their request. the decision to provide aerial fires was a u.s. decision made within the u.s. chain of command area a hospital was mistakingly struck -- mistakenly struck. we would never target a facility. wondering ife are obama should change his plan for cutting back troops. it is scheduled to go down to about 1000. to avoid any misunderstandings in the skies in syria, russia's leaders said they should contact the u.s. immediately for more talks. it has been called a once in a thousand years brainstorm -- year rainstorm. the water levels are still rising in south carolina. donateare being asked to water to residents of columbia
11:06 am
where residents have no water service. -- 48 billion dollars. exports have been hurt this year by the stronger dollar. and -- from canada and japan have been honored for their work in physics. award.ll split the cash let is a look at the first word headlines. pimm: thank you very much. let's turn the attention to markets. we are in a five-day search, it has restored nearly $700 billion worth of equity, but analysts are warning that we are not out of the woods. earlier, -- sat down with the
11:07 am
editor in chief to discuss the issue. indicative ofbly a broader theme in markets. we are poised for much higher volatility. >> what is behind that? >> three factors. , the single most important thing for everyone in this audience. forget everything else. slower, it will be is all about interest rates. it has been for the past many years. that has produced a very rapid increase in the price. decomposewe should who owns these capitals. i think you will find, a domestic shift in ownership post crisis. fewer for the big banks of
11:08 am
the world. out ofhas been pushed deposits and savings, and that manifests itself in a dramatic jump in etf, three times. closed and bond funds, a big jump. and of course, the banking sector has grown by 25%. that shift means that the way information hits markets at the way it is processed, inevitably, it will be different. >> you setup the beginning that it is good that banks don't own as much as they did. i can see that is true from the point of leverage. banks are leveraged. but banks also associate risk. doesn't that worry you? this is a different group of people owning risky assets. >> there is quite a debate are twonow, there
11:09 am
strong camps of opinion on this. let's break it down. first and foremost, banks owned way too many assets circa 2007. no debate about that, that is what led to the financial crisis into an eventing that was paralyzing for the entire system. it is appropriate that banks have raised a time of equity and have cut the balance sheet and assets dramatically. even the mostthat skeptical analysts are now willing to concede that if we do get a large tail event, the odds that we will again get a large deposit systemic bank in the same kind of trouble that the banks got into, it has receded. weigh the fact that regulated banks in terms of
11:10 am
managing risk will approach things differently than some segments of the new owners. that was the former deutsche bank chief executive. i want to date a little bit deeper into this rally. 5.5%,p 500 has jumped take a look. this is the longest rally this year. i will bring in all of her renick. he spoke about in terms of different audiences processing similar information different way. do you see that in terms of earlier, a we saw lot of momentum. what about now? all of her: you have -- : you had seen --
11:11 am
contribute to the downside. you have seen apple, facebook, netflix, google -- a lot of names has gotten so pushed up that it pre-staged the did a little bit. people see the volatility rising and the seat concern on the horizon. that was definitely part of it. then as we got deeper into the rally, we saw some of the hedge funds, you saw those play out a little bit in a way that was driving the market on the long side and the short side. so a shift in leadership and a shift in momentum, it has contributed to volatility. pimm: can you say the same thing when it comes to health care? say you are an investor in that your, you won't -- all of holdings, you will be sober about your analysis. he said? mirror what
11:12 am
different investors have different agendas? her: it is true. you have an industry that has gained to so much, beyond a benchmark, that you had nonprofessional investors saying that this is not typically a sector -- this is higher risk -- saying i want to be exposed to this. the sector continues to rally, if i can get a lecture there, it seems like a good place to be. then you have these tweets and things that come up, where maybe they don't have the knowledge of the investor who is a health care portfolio. they know that hillary clinton could say something one day -- pimm: or the example of the drug that was increased and
11:13 am
astronomical event -- amount in price. exactly. so if you are an investor that doesn't have the long-term view, you would say this is not it is i feel comfortable, i don't understand the dynamics here. i want to move out of this. and then when you saw the selling, we talked to the investors who manage health care ,ortfolios and biotech funds and they say, there is it is the here, but nonprofessionals who are selling. people who shouldn't have been there to begin with. changes, we know this doesn't happen overnight. they are still there and those are the guys who are still holding on for the ride. pimm: maybe there is some value in having experience. thank you. we will have more from the most
11:14 am
influential summit. and he will be joined by barry dillard. that is coming up on bloomberg television and bloomberg radio and ♪
11:15 am
11:16 am
pimm: good morning, welcome to the bloomberg market day. let's go to julie hyman who is having a look at the companies who are making big moves. she is going to talk about dupont. is such a, it fascinating story, the ceo is stepping down and edward green, a board member, he is stepping in. why is this so fascinating?
11:17 am
fight, and a proxy this is one of the rare situations that we have seen in recent years, especially with where theanies leadership has prevailed in a proxy fight against an investor. try on wanted to break up the that to they did resist some degree. it has been an interesting saga. so after winning that victory and then stepping down, it has been a fascinating turn of events. i want to look at my bloomberg terminal. you are looking at the dupont shares since they won the proxy fight. if lines are the various news fightings -- news items that have happened. the shares are down more than 20% since winning the fight. downis moore's, it is since the spinoff, so that will show you why with coleman
11:18 am
leaving, the green is taking over and try on has another opportunity to affect more changes given the stock performance. dupont also cut the forecast, that coming with the news of her departure. we are watching lions gate and starz this morning. the l.a. times are saying that the media companies are in advanced merger talks at this time. a deal might not materialize. doesn't appear to be trading like it will, lions gate is up 2%. to --, it makes sequencingt has dna machines, but they did not sell as well as the company had anticipated in the third quarter
11:19 am
. it was week in europe. and then some other medical technology companies are also taking a hit. pimm: thank you very much. what would be one of the largest on heiser this year, bush taking over sab miller, but it is off the table. we are joined now from london. is this an issue having to do with, how much? or does sab bill -- miller not want to be owned? it is probably a little bit of both. sab miller has wanted to plow miller furrow, and smb owns its own share, but some about thee forgotten
11:20 am
brazilians and he built in scott they own just over 50% of that business. so if they have to issue shares, it will be diluted. need does anheuser busch sab miller? >> i think it could very easily do some excellent growth with it. there is no doubt. sab miller would take every box that they need. would get them leadership in africa, an area they are not in. it would strengthen them considerably in asia. it would give them global dominance. but they would like to have that in the long term, and they would do it quickly. but certainly they could do other deals and get their overtime. pimm: thank you so much, that was duncan fox. still ahead on the bloomberg market day, as president obama gets ready to sell the big
11:21 am
pacific trade deal, what does this mean for the business? we will go to washington, d.c. to discuss what is at stake, next. ♪
11:22 am
11:23 am
this is the bloomberg market day, i am pimm fox. in just a few moments, president obama will begin the public push for the foreign legacy. a historic 12 country trade deal was sealed yesterday, but the work is far from concluded. phil mattingly joins us now from washington with more details about the roadblocks that this deal faces. give us the lowdown. how likely is it to pass? there are members who still get a say in this before it is officially sealed. there are three major hurdles. the negotiators have finalized
11:24 am
the top points of this deal. first is public reception. this was an unpopular issue in the united states, not just with democrats but also with republicans. in july, only 36% thought this was a good idea for the country. will see public comments from the department of and you will see a blitz of radio and tv interviews. to even start the process of this, they needed to clear the way to have this bill considered on an up-and-down basis in the months ahead. so they have a group of allies who are set. that is the key component. the other thing, campaign politics. this is coming in the heart of a campaign season, and while there will be rhetoric tossed around, it needs to not seek into into capitoleek hill. pimm: tell us about the process
11:25 am
involved when the details of the deal aren't one of the things that is an obstacle. are there things that the president can look to to say that it will help american business? phil: it should open some doors in the agricultural sector in automobileanada for sectors, there are specific areas here, but one of the things about the deal, before anything was released, i already statements ofn opposition. no matter what the deal look like, there were already entrenched issues that would take one side or the other. it is up to the administration to make supporters comfortable. company, one of the big supporters of this deal, because of currency
11:26 am
manipulation, they were already out in opposition of the deal. they need to make sure that big companies stay behind them on this. pimm: 15 seconds. who is the point person for making the pitch to congress? phil: it is the president himself. if obama wants this to be the legacy ceiling deal, he will have to seal this himself. pimm: thank you very much, that was phil mattingly. still ahead, we will go to the west coast for the vanity fair new establishment summit, emily chang is talking with an early investor in uber and snapchat. find out what bill gurley has to say next. ♪ the only way to get better is to challenge yourself,
11:27 am
11:28 am
and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20.
11:29 am
it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. pimm: life from bloomberg world headquarters in manhattan, you are watching bloomberg market day. i want to go straight to the
11:30 am
first world headlines with vonnie quinn. yes, in philadelphia, police are searching a community college after a report that a person with a gun was on campus. police say there is no report of a shooting at the college in philadelphia. this comes just days after the shooting in oregon. next to the flooding in south carolina, authorities say another dam has failed. residents have fled to higher ground. officials warn that floodwaters will keep rising, some towns are cut off like islands after the record rainfall washed out roads and bridges. the ntsb has opened an investigation into the cargo ship in the bahamas. all they have found is one body,
11:31 am
a life preserver and a heavily damaged lifeboat. 33 people on with board, 28 were americans. to -- oncent wants to avoid any misunderstandings -- saidkies over syria. russia possibly to her's should come back to america immediately for more talks. u.s. deported the fewest number of immigrants over the last year since 2006. 2012,ation is down since just under half of the people deported were convicted of crimes. those are our headlines right now. pimm: thank you very much. celebrating the annual ranking of the most influential able in 80 and
11:32 am
technology this week. at the second annual new emilyishment summit, chang and brad stone are attending the conference. with things tow tell me about the kickoff. we will be live here all day with some excellent guests. first you join us here today is bill gurley. it is great to have you on the show. he will be speaking about the bubble and whether or not there is one. you haven't been shy about urging caution, since the fed decided not to raise rates, are they postponing pain? bill: it is a super hard thing to call, there have been some strong arguments made that keeping the rate at 0% contributes to a bubble, that
11:33 am
there are signs that are showing up that we may be moving towards a correction, in which case, maybe it doesn't matter. emily: how painful is it going to be? bill: it depends how quickly we sober up and start making quick decisions. risk averse very slowly, but when corrections happen, we get sober very quickly. -- i meant sudden, to say we get risk averse very quickly. so it may come up very quick. there is a great interview with jeff austin, every time he raises money, he tells his team be hungry, be frugal. saw blackrock and -- do youates down
11:34 am
think we are beginning to see evidence of a cyclical downturn? bill: sure. they are changing because they sit at a fixed amount -- it is ridiculous. it is an ostrich with its head in the sand. all of these are rated higher than any public companies, so if the public is down 30%, they are down 40% or 50%. again, i think we are starting to see signs of a correction. emily: you have been speaking a is about china, china preview of what will happen in the u.s. when volatility hits dollar -- will dry up. what do you mean? bill: i think the voracious ares with which people throwing money after ideas, i think it is worse in china and here.
11:35 am
i think we will start to see the corrections sooner they are they on here. recent articles in the past week suggest that we are starting to privately funded companies either shut down or have to pull back aggressively. 's i am fascinated by uber strategy in china. you are on the board. you know the challenges that they are facing in china, lots of internet companies -- they have raised more money, what is the strategy there? bill: a lot of investors have had fairly straightforward investment strategies or games where they look to see a successful company in the u.s. and then they go fund the chinese look-alike. jb, alibaba -- there have been numerous ones. -- the u.s. incumbent won't come in size. so it is a strategy that has
11:36 am
played out over and over again. if you have an ambitious founder that recognizes the criticality of the chinese market, the time to go for it is at the beginning. , wee waited four years would be done. difficults know how being number two is in this market. bill: if you think about it from an experience standpoint, who has the better algorithms, experience with fraud prevention, who has been living through the problems that happen -- that is us. there are certain metrics that i'm not going to disclose, where i am confident that we are way ahead. we entered london when halo owned the market and we are now number one by a lot. i do recognize how challenging it is. i would point to apple's recent success there. >> and linkedin as well.
11:37 am
starbucks, yum! brands, they have done extremely well there. we saw google unveiling another -- last week, how far along are they? how much will driverless cars impact the business? this is something that will take 20-30 years to play out. i am not as anxious as most people. there is this thing and technology as the hype cycle, so a lot of the overly choreographed technology disruptions, people get excited like bill gates used to about handwriting, and it is doable, , so iere is a lot of ai think it is called the trough of disillusionment.
11:38 am
>> do your board members agree with you? no, i think that is my perspective. the other question -- the other we are probably the worst country in -- because having a country -- having a human injure somebody is very different than having a machine do it. emily: i want to ask you about twitter. jack is coming back as the permanent ceo. what would you be writing about twitter and square right now if you knew the ceo was splitting his time? with elon and mr. jobs, there are a couple of data points that are working, so you can't say it is absolutely impossible. there are two perspectives that led to this decision. that a mission driven
11:39 am
founder is going to try harder, regardless whether he is working at full-time fan halftime. we have seen that in silicon valley, there is truth to that. jack has a passion for twitter being successful that is unmatched. the second thing is, whether or not a person has a true understanding and feel for the product. and also, the team. and my knowledge of everyone who works there is that the employee base is very outspoken about jack and wanting him to be there. but for me, it is a platform that has more potential they are almost any large company that i know of. mind, i can imagine scenarios when the stocks are eight times higher in what they are. lot harder to say that about more companies who are more matured into their model.
11:40 am
themost important people in world in almost every sector covet and curate their twitter handle. that is a lot of potential energy if you can harness it. emily: twitter could be worth 4%-8% times as much. we will be live here all day long. thank you so much, that was emily chang and redstone -- and brad stone. twitter shares are down. coming up, we will be speaking to stewart butterfield, the 2:00 executive, that is at eastern. and i 4:00, we will be meeting one of the youngest self-made billionaires. that is up next. ♪
11:41 am
11:42 am
11:43 am
pimm: this is the bloomberg market day, i am pimm fox. european markets are closing for the session. we will go to london. mark? mark: the longest and best winning streak since the end of august. investors are buying into the narrative that policy will stay -- it was perfectly summed up today by goldman sachs. a plan that the fed will delay rates into next year. for the record, they are trading 13 point nine times estimated
11:44 am
earnings, down from an april high of 16.6. stocks make the more attractive than any time 2011, relative to government debt. on the matter of data, there was no more interesting pie ordersan germany factory which unexpectedly declined -- showing that china's market is having an impact. here are the big movers today. -- this company was down 7.7% yesterday, a record increase. since the record plunge last 70day, shares are up percent, a volatile ride if you are a glencore investor. to --considering plans japanese partner. the alliance for restructuring
11:45 am
could give more power to lessen the growing influence of the french government. btg, the biggest intraday drop in seven years. sales of the varicose vein treatment probably won't grow this year, holding back overall revenue. that is the business from london. pimm: thank you so much. that was mark barton. go to the markets for a look at what is going on with the stocks in the nasdaq. we have matt miller. match: microsoft has been making news. they have been introducing so many new products, including new phones, a new tablet, a new stylus to rival the pencil that apple came out with. a new laptop as well.
11:46 am
microsoft shares are gaining a little bit. on the flip side, we have losers in all forms of cardiac device makers. you can see that hardware and biomet are down, they cut the forecast for the batteries that power pacemakers. it has hit the entire sector. tesla is down today after adam jonas cut his price target on the stock. it is now 450. bowl on this stock, so it is very meaningful because a lot of people follow him when looking at the tesla stock. he doesn't think they will be able to hit their volume target next year because it is priced .o extensively unless they come up with a areper version, and they
11:47 am
planning on coming up with the model three in 2017. and i want to take a look at a net position that his driving two chipa, those makers get together and they are looking at a gain of about 33%. that is a big premium. that is the way these seals are going these days. was matt miller. official is israeli has putforces -- singer up $20 million in recent years to create a nonprofit called startup central -- startup nation central. -- just completed years as part of the economic council. david wainer has the story. what are they hoping to accomplish? this foundation had
11:48 am
basically identified that since the book startup nation was published, it was a test seller. and what has happened, many diplomats and investors are coming to israel and they are looking for a place that will guide them and show them what this is about. iswhat these guys want to do , they want to become the central -- for people who want to get a deeper level of understanding of what israel's technology can offer. at theo the people foundation will introduce potential investors to companies ?nd entrepreneurs in israel take them on tors and arrange conferences? david: exactly. that is one thing they plan to do. andle want to come here
11:49 am
they want to meet the right innovators and entrepreneurs. these people want to know everybody on the ground and make the connection. they want to be the matchmakers. the other thing they want to do is -- let's imagine and american express is looking to add a cyber unit to protect its customers. they want to be the guys who can pitch and introduce them to the right people for those approaches. thehey want to bolster technology space by making these connections, by knowing all of the players here and abroad. pimm: politics is never far from the service -- from the surface. is there a political aspect to this foundation? david: if you look at the people behind the foundation, paul singer is a huge supporter of israel, he is also a supporter of republican causes. whoertainly -- dan keane
11:50 am
had been an advisor to a republican candidate -- certainly, there are people here big supporters of israel who are allied to the republican party. when even definitely understand from this is that these guys are here to support israel. israel was never totally detached from political issues, there is quite a big group of people outside of israel who are internationally trying to isolate israel and the economy. and these guys are sort of doing the antidote to that. createe trying to business ties for israel. pimm: thank you so much, that was david wainer reporting from tel aviv. as we go to the break, a quick programming note. morning,n the
11:51 am
surveillance has an all-star lineup from citigroup. tom keene will be joined by morse andtwich, and the global chief economist william beutler. that is all on bloomberg television and radio and on -- and on
11:52 am
11:53 am
pimm: it is time for the options inside. let's take a quick look at how the major averages are performing. it has been a wishy-washy session. bit morerned a little distinctly negative, especially in the nasdaq. 1.2%.down particularly in biotech. let's talk options. me today is kevin kelly.
11:54 am
he is the chief investment officer. vix golly saw the below 20. maybe it will pop back up again. it feels as though things are calming down a little bit? day whichhad a great was in stark of what we saw, and what a great way to look at this market is, last fall, we had the big spare -- the big scare with ebola and it spiked to really earning season, that saved us. so in the three-day run, where we saw it go above, then we saw it come down -- multiples have come down in the market, so we think earning season could do very well because the companies have been reset. there are a lot of
11:55 am
pessimism's going into this earnings season, maybe people are being set up for being positively surprised. kevin: there will be a lot of surprises. are actuallymoves really low, but because they have shot down to the downside, they could overshoot on the outside. -- on the upside. gilead is coming out with earnings at the end of the month, this has been battered along with other biotech's. been beaten upe more than some of their counterparts. they are down 14% over the last month, amgen is only down 2%. eighter the last quarters, they have beaten in sales for earnings. epshey have done that in seven out of eight times. you can see that on the terminal
11:56 am
where it shows that the strikeng, it was a lower put over a higher strike call. you can take it, it is so pessimistic, and they are detailing at -- trading at 10 pe. they can go out and buy cheaper biotech companies. do you think that the earnings from the biotech industry is enough to buster all of the pessimism over the question? kevin: i think if they are having cash flow, yes. julie: i will be talking much more biotech in just a moment. ♪
11:57 am
11:58 am
11:59 am
york,is new in new welcome to the bloomberg market day.
12:00 pm
>> we did it at the same time. am scarlet fu. i >> i am alix steel. here is what we are learning, we will hear from the interactive chairman live in just a few moments. his interview with erik schatzker. plus, an about-face on the energy unit, brought back in just two years ago, free point -- freeport may want to spin off energy unit. -- will be the cheapest point for most of the u.s.. scarlet:


info Stream Only

Uploaded by TV Archive on