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tv   Bloomberg Markets  Bloomberg  October 9, 2015 1:00pm-2:01pm EDT

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scarlet: from bloomberg headquarters in new york, good friday afternoon. i am scarlet fu. i am alix steel. here is what we're watching this hour. the health-care industry has been feeling sick. buy or stay away? we will get some insight. scarlet: and we will talk to a ceo who has never lost faith in glencore, the beleaguered mining company. alix: world leaders are meeting in peru. we will find out more. to the: let's head first markets desk were julie hyman has the latest. tgif. although it looks like traders are feeling tgif by going away.
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markets are not moving much. had been gaining. now it is down about .1%. the nasdaq is the winner of the three, but it is only up about .25%. all that said, the dow is on track to have its best week of the year and has retraced more than 50% of its losses from the summer highs. from july 20 through the august selloff was down more than 12%. it has come back more than halfway. exceeded the 50 day moving average. is best performer on the day ual, the airline gaining after he got some updated numbers, including margin numbers. margins will be a little higher than previously anticipated.
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disappointing sales for banana republic last month. marissa webb is out as creative director for that chain. she came just last year. the ceo says the women's close don't fit women right. -- clothing doesn't fit women right. alix: that's interesting for a guy to say. julie: i a guess he hears from women. today wasother mover lockhart. julie: we keep hearing this commentary but the bond market shrugs. the yield on the 10 year has moved up to some extent this week as we have seen buying and stocks. but if you look it currencies, a similar view is reflected. the euro, for example, has been
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moving higher quite strongly against the dollar. of course, their perception is that we are going to see more quantitative easing out of europe and that we are on a trajectory for rates to go up. it's just a question of when. the currency and bond markets say no time soon. they remain unconvinced and have all along. julie hyman, thank you so much. alix: we check in with mark crumpton. mark: outgoing house speaker john boehner is reportedly urging house ways and means committee chairman paul ryan to succeed him. the washington post reports they have spoken twice over the telephone. boehner reportedly told ryan, the 2012 republican vice pri presidential nominee, that he is the only one who can unite the party. an aide to ryan says he appreciates the support, but the answer is still no. kevin mccarthy appears to be the
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front runner for the speaker's --, but he stunned his appeared to be the front runner for the speaker's job, but he stunned his colleagues yesterday when he withdrew his name from the nomination. the president will meet privately with victims of last week's deadly college shooting that left nine people dead. obamathe shooting, mr. said changes to the nation's gun laws are needed. in arizona, one college student is dead and three others wounded in an early-morning shooting that happened that northern arizona university when two groups of students got into a .onfrontation on campus a freshman was arrested. >> we awake this morning to a terrible tragedy on our campus. we are, of course, shocked and deeply saddened. mark: the shooting took place in
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the parking lot outside of northern arizona university dorms. the pentagon says it will scale to battle moderate train rebels -- to moderate syrian rebels. the program produced only a handful of combat ready rebels. the white house says stronger commitment to privacy -- hopes stronger commitment to privacy protection will entice more americans to sign-up for health insurance. the website will now have a privacy manager that lets consumers opt out of connections to third-party advertisers. also automatically on her consumer preferences on the do not track setting. consumer preferences on the do not track setting.
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fee for will hold an emergency meeting of its executive -- fifa will hold an emergency meeting of its executive committee after was asked to step down following a bribery scandal. we will have more information as we get it. in health care, is it a pause or a major correction? scarlet: one person says the selloff is a buying opportunity for long-term investors. he joins us now. a lot of people call this the big reversal. how far along are we in this unwind? >> i think there are two aspects. we are fairly far along. more importantly, everybody thinks about a sector as an etf, sell everything, by everything. we think it is more nuanced. we think active portfolio
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managers can make a difference. businesses are just fine. that creates a real opportunity for active investors. thelet: what happens if drug pricing conversation really picks up team -- picks up steam in washington? was talkinginton about human health care pharmaceuticals. zoetis does animal health care and is 20% off its high, a great buying opportunity. scarlet: in what respect might this retreat be justified? jim: when you look at the pes versus growth, there is still a huge justification for owning companies. these are going to be leaders know matter what happens in the global economy because their products are in demand, not overly priced, and they serve a discrete niche. most of the companies we own or
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serving medicare and medicaid. for beingustification purchased, but what about justifications for being sold? jim: everybody can argue about what is right. i think people were not thinking about the price. i think they were wholesale selling etf's. two piggyback on scarlet's point, if you take a price increase is altogether for the group, what is the fair value if you take out the ability to raise prices? jim: i couldn't agree with you more. there are certain companies whose business is based off raising prices. we don't want to be anywhere near those companies. selden is an interesting company to us where real innovation and r&d is rewarded. companies raising prices randomly, we don't want to be anywhere near that. drug companies a
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defensive group or a growth group? jim: both. but when you look at underlying demand, the demand doesn't go away. when you're looking for high-quality, sustainable growth, it's an ideal sector. scarlet: when people boil it down to an etf, should they be looking at it as a defensive stock or a growth stock? dimm: it depends on the etf. look at biotech. 45% of the industry's biotech companies. 55% represents a whole bunch of that are making a lot of money. put that together, and investors in that security are forced to buy it all or sell at all. we would rather be stock pickers. alix: part of what has held up the stock in recent years is m&a . what happens to m&a if there is
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regulatory scrutiny and drug pricing comes under attack? jim: it could get tougher and some of the tax benefits won't be as great, but that is why you have to find a couple of companies that can grow volume and have innovative new products. that's what you really want to find rather than buying a broad-based etf. scarlet: thank you for joining us today. the: lots more coming up on bloomberg market day. we are digging deeper into glencore in the last couple of weeks for drama -- of drama for the company. ♪
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alix: welcome back to the bloomberg market day. i am alix steel. scarlet: i am scarlet fu. increased expectations now
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for a downturn in the u.s. economy. the probability of a recession is 15%, the highest level since october of 2013. 10% forum had held at 13 straight months. reasons for the expected downturn, expected fed rate hikes and turmoil in the global market. leonet: a study in sierra is being conducted in an area where the most recent cases of ebola have been reported. being conducted in the u.s. and europe. alix: insurance companies will be taking a hit from the wildfires in northern california. it is estimated they caused more than 2 billion dollars in economic damage last month. insurers are on the hook for $1.3 billion. state farm is the largest insurer in california, followed
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by farmers and allstate. always get more business news at bloomberg.com. scarlet: julie hyman has the news on some individual movers. tesla has had a bad week. julie: a number of downs and target cuts. was still . on tuesday, morgan stanley cut its. it will be the longest weekly decline. the bear market has pulled back by more than 20%. it is below the 200 day moving average. that is the purple line. as i mentioned, it is having the
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longest losing streak of the year. -- on theook lookide, apple, take a nearly 3% today. up nearly 3% today. i hear a lot of people are using apple pay. julie: i don't think my phone is new enough to use it. scarlet: harris associates increased its stake in a british -- in british mining group glencore. this morning, the ceo explained why the company bet on a rebound. >> the stock had dropped quite aggressively. we view glencore as one of the mining businesses involved in a key commodity, copper.
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good structure. trading operation. they provide a foundation for earnings. when you combine their involvement in the right commodities -- with the exception of coal, and their strong trading operation and a management team that actually thinks about returns on capital and has a lot of skin in the it's to us -- by the way, the first time in 15 or 20 years that i have a mining company. >> i was stunned. i want to know how you parse the aencore balance sheet as the tradinggainst operation. can you discern and delineate those two? >> clearly, there was too much debt on the balance sheet given what was happening to the price of copper. it literally got cut in half in the last 18 or 24 months. debtly, there was too much
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when you look at what would copper went through $5,000. 4500 dollars, probably ok. but given the pace of the , managementopper thought it was important to bolster that balance sheet. anour chairman is independent member of the board of glencoe. do you want to see, as an activist or large shareholder, a change in management, a change in board structure, a change in initiative forward by glencore? >> as a large shareholder, we really don't invest as activists. that's not our mo. we are a large shareholder, probably three or four on the registry now, and no, we don't believe a management change is warranted at all. we are fully supportive of what has happened.
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there are reports we want to shake up management. that is the farthest thing from the truth. scarlet: we talk a lot about commodities in peru. did you buy or sell in the two weeks when there was crazy volatility? >> win we invest in a business, itdetermine what we believe is worth. as prize departs from the valuation, we buy more. as the price gets closer to that target, we sell. can see the price aggressively left what we thought it was worth, so i guess common sense would tell you what we are doing. >> would you support the break off of the agricultural business? would you still want to be involved in some way? >> there are all kinds of options of what to do with assets. as long as the decisions made are reflective of long-term value creation, we are all for
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it. especially if they can sell a minority position at a big price and still have control, we think that would be a very distinct positive. long as it leads to mid-and long-term value creation, we are happy to absorb volatility. alix: great interview. scarlet: we will have more from the imf meeting live right after this break. ♪
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alix: this is bloomberg market day. scarlet: world leaders are in lima, peru, to debate the global economy and the timing of the fed's rate hike. francine is in lima with the governor of the bank of italy. hey, francine. francine: hi, thank you so much.
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i am delighted to speak to you. thank you so much for joining us. doing too badly. are you confident they recovery is sustainable and almost nothing can put it to one side? call it an't recovery. we are talking about growth. growth is going down. growth rates are not very high. in this sense, there are still , and still in need of consolidating this growth. there is an of course, all this worry about inflation not picking up, that it is lowing. -- it iseeling this slowing. what is feeling this concern?
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>> clearly there have been risks . there are still pressures on prices. downward pressures. the latest data is negative. but deflation risks, perhaps, have been reduced in the last month because of our asset purchase program. i would say just at the , 35% ofg of the year items in the consumer price basket were negative. 25 percent. so, there are fewer items showing negative price changes. francine: but the trend is still going down? do we need more qe?
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makes it is stable. -- >> it is stable. we were a little bit below 1%. in that sense, there is too low inflation. even ifs are there, they are less than nine months ago, and we see that in the inflation expect haitians that have stopped increasing. and the -- inflation expectations that of stopped increasing. to be prepared. francine: prepared for qe? the instruments we have. francine: including qa. >> including the asset purchase .rogram we will decide next year whether to extend the programs.
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the size of the program, we can work on the composition. one thing we have to be careful. this is now a so-called unconventional market. we have to be careful with the unintended consequences. francine: have you met with janet yellen? >> of course, a number of times. francine: what did you discuss? >> we discussed communication. the economy is recovering some, but still, we have needs that are not going down. important thing, i believe, preparing andon guiding the markets, but each
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day increasing rates. this means that the recovery in the united states is strong, the growth is going to be sustained, and this is good news for the rest of the world, not bad news. -- it remains the, dating remains accommodating. francine: thank you. inx: that's francine lacqua lima, peru. later today at 4:30 p.m., france and will be interviewing you and secretary-general ban ki-moon. -- interviewing you and secretary-general -- united nations secretary-general ban ki-moon. ♪
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alix: welcome back to the bloomberg market day.
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news.t: we start with our mark: fee says executive committee will hold an emergency they filed anr 20 official appeal against his 90 day suspension and demand to know the reasons behind the decision. is the subject of an investigation. he says he will step down after a special election to replace him on february 26. for major sponsors want him out immediately. more evacuations for coastal residents in south carolina. the state is bracing for the possibility of more flooding. more heavy rain is expected this
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weekend, with the worst forecast for saturday. be alert for possible scams time to the flooding in south carolina. people should be careful when making donations to flood victims because dammartin trying to impersonate charities to get money or private information after a natural disaster occurs. irs.gov can help to check the status of a charitable group. despite russia's heavy artillery, isis will refuse -- still appears to be gaining ground. they controlled villages near aleppo. this comes as a wave of russian hitets targeting insurgents rebel groups. european union and some individual nations now have the power to seize refugee smuggling
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vessels of the highs he's off of libya. that is after the security council adopted a resolution today that has been on and off the table for month. authorizes search and seizure operations for one year and can be enforced militarily and nearly 3000 refugees have drowned or suffocated this year trying to cost the mediterranean influence ibo -- across the mediterranean influence ibo you can find more news on bloomberg.gov. alix: the first few weeks of october have brought deep uncertainty to the credit markets. you basically have corporate bond prices rising, but high ugly credit picture. money flow into the corporate bond market in china. that makes no sense to me, so we
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have our reporter here to break it down. we are in fear of here in therade u.s., but not china. a the chinese market is not particularly open market. it is pretty dominated by sticky investors in china that was safety. if you think about what has happened in the past couple of months that they that the people at head of the chinese stock market has deteriorated rapidly. so they go to the corporate bond market. but now the corporate bond market is starting to flash the same warning signals of people were seeing in the stock market a few months back. basically are starting to see leverage picking up. people are using borrowed money to buy corporate bonds, which always adds a little explosive edge two things and then you also have lower corporate profit. inse are concerning factors the $6.7 trillion market.
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this is a potential concern point for people. so what happened? do they come in an interview the risk of popping this bubble or do they step back and let it continue to blow up? scarlet: because it is a domestically driven market there really isn't much more for dissipation. of the more inclined to provide a back spot -- backstop? >> what backstop with a be doing, qe or sometime of bond purchasing program. it is a long same lines of we cannot equity prices fall further. were talking to their chinese peers and they are very concerned about the u.s. frankly. and there would be the u.s. is saying what is going on over here because we actually see slowing growth here and potentially some ripple effects going over to china. they are actually concerned about us and we are concerned about them. alix: talk about what happened
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to the credit market this week. we saw a little bit of a recovery. is that is meant to be believed? >> if you talk to any trader out there, the answer is no it is not a real time of rally. it is a very confusing rally. you are seeing the price of bonds increasing, even though you have companies failing to actually raise money in the debt market you have dell which is going to have to raise $40 billion in financing to people are wondering how it is going to be so creative to make this happen. this is something that people are really watching and they are saying what is the disconnect. you see mutual fund money moving away from this space while you see etf inflows that are dramatic, over $1 billion in the past week. scarlet: how much of this can we check out to lack of liquidity? if yes the federal reserve,
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particularly the analyst who published a couple of stories week, there is no problem. everything is fine. always asverything is it always has been. they are pretty upbeat. they see things look pretty good. and if you talk to anybody else there, they say nothing can get done. it is very confusing and choppy market. dealers have pulled back in balance sheets dramatically, which arguably is because of regulation and they do not want the risk. whatever it is, it is a very choppy market and people are failing to get things done that they want to get things done. alix: i do not know that mutual fund investors on over 20% of the corporate bond market and previously was under 10%. that is $12 trillion. that was a striking statistic that they sent over. these bond investors and ms. risk managers -- and these risk
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investors leave at the same time? what happens? >> this is used as a proxy for many different ideas. the composition of the bond market has shifted dramatically. the consequence is what will happen if there is some catalyst to prompt some big movement of money. a systemic issue. people are very concerned about this. andyou wrap around this demonstrate the strength of data is very unclear. you are seeing that difficulty right now. alix: i love that chinese traders are worried about the u.s.. up, and coming the minutes, what happens when it activist investors knocks on a company's door. unprepared for members are for that challenge. as they may conference
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playoff run, they are driving profits and -- off the field. crown winner goes for the first grand slam. ♪
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scarlet: welcome back to the bloomberg market day. it is time now for our friday business flash. the information for 35 thousand dow jones business customers may be in the wrong hands. hackers breach their system. at risk customers have been notified.
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dow jones says it is not aware of any attempted misuse of private information. alix: shares of seaworld entertainment work down today. they are reviewing plans to build a new keller hartwell habitat and 10 diego that killer whale habitat in san diego. seaworld is going under pressure from analysts -- animal-rights activists. scarlet: an amazon is working to .ake their workers happier you can always get more business news at bloomberg.com. alix: let's go to julie hyman with the latest. looking deep into commodities. it has been quite a week for the the down copper and oil. julie: it really has been. , i willthe commodities
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get into at the top of the hour. take a look at while prices today. little change. a barrel since july for the first time. oil is having a relatively blockbuster week for the second straight week we take a look at them on the weekend we see those gains despite the little bit of a pullback of 9% on the week as we have seen commodities really rebound from the lows we have some sentiment coming into the market that we will see more of a stability in the supply demand situation. we have not so encouraging numbers on the production this week. but while rallying. however coming back this week as
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well. much in percentage terms, but a rebound the across the different commodities. gold prices as well. they have not been moving in tandem with the other commodities all the time, or as much as oil and copper. oil prices up 2% on the week. measureook at our broad of commodities, the bloomberg commodities index committed is trading higher by almost 4% on the week. it is having its best week since 2012. as alex and scarlet talking about earlier, in addition to what we've been talking about with this chart specifically for oil, we could have potentially seen the worst. interesting commentary as we have those cutting down on their production. scarlet: thank you. a number of activist investors have been making headlines this week, including carl icahn and
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others. 20% of public companies were approached by activists last year in the number is expected to rise it could have wesequences on board rooms have more from washington. a fascinating topic. is this number and company had previously anticipated? >> and has been rising quite frequently. we have seenyears activist investors approaching companies. are inger name companies this mix. those are new, but the number of activists that are in this field has grown. the money being grown into these phones has been tripled over the
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last few years. we anticipate seeing more. the question becomes our quest are companies prepared? the smaller companies that are actually more prone to being approached by the activist investors that have not had the time or the resources to prepare as much. and they end up in a mass scramble to figure out what to do next. as better preparation mean they are able to spend more scarlet: -- to spend more time with these investors? >> it to be either one. responseok at what the is.
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alix: m&a is now a leading board priority. do you have a sense of why that is now, is it a lack of organic growth? what is a say about the global economy? factors.er of we have companies with a tremendous amount of caps on the balance sheet in the wake of the .ecession track corporate growth is always in the top five. areis so prominent, and we glad it is contractor's minds right now. in terms of turnover, that has increased.
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endboard added a new director in the past year, up 54% in the prior year. is that a reactive move, or is that. preemptive?g >> this is actually a longer term cycle we are looking at a if you think back to the great recession, so to speak, we had a lot of stagnation and turnover in the last few years. we started to see these open up a little bit. is boards making a effort to refresh. even though it is 72% that have opened up, it is one seat. it is not a lot of turnover. it is good for boards to refresh. we think there is a positive development. alix: what we must surprised about from the survey results? >> the preparation side.
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the point you referenced in terms of the activist investors. we have seen this trend growing and growing very quickly. more and more money is being funneled into the activist funds. the disparity between the number of companies approached, which , comparedlarge number back to a few years ago. boards focusing on preparation, that is good. they're are talking about activist investors and what they need to prepare. scarlet: thank you. fascinating stuff on your latest survey. up, new york has a new cable tv star. the ratings have jumped since he joined the team. ♪
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scarlet: tonight the new york mets play the first postseason game since 2006. as before they partnered with comcast. they have suffered through some .ean seasons congratulations. >> it has been a terrific season. scarlet: how has winning translated into better success? >> we're up to 60 or 70 percent. ratings have doubled year-over-year. are you increasing advertising rates for the season? >> you have the last two months
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of the season that are very to program when we have not had a several seasons. into october.ing you have relevant fourth quarter was for us is the new opportunity in recent years. as we move into next season we have the success of the current season. alix: what do you do when you do not have the playoffs? >> everything but the games. we have shows on the off days, pregame shows, of postgame shows, rep of shows. digital programming that we did. games at our national carriers that are running around and we do is to service the fan. huge bumpou had a when you joined the team on july 31 they are debating what to do after the playoffs. prettyams are
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freewheeling with their spending, but the mets have had to watch because of losses from the bernie madoff scandal. how valuable would it be for them to have him come back? >> before he came to the mets, our ratings were still up in percent. it was not just him. the team really took off for the second half. his addition to the line of help this. but they have a pitching staff going forward that is second to none in major league baseball. i think the mets are in pretty good shape. they are going to field the winning team. changed does that something in the way that they all felt about the prospects? to the team owners look at your at personallook changes? >> we certainly talk about would be the effect, but we have always run separately.
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at the ownership level, and they , howhe majority let owners much they take that into account is not something that we discuss a lot and i'm sure it is hard of the mix. alix: where are people going to be watching games over the next year? seems over the counter is really where you are going to see more value. what do you think? >> sports has remained in the bundle and many say it is the region the reason why has stayed together as it has. people are finding other ways to watch games and ethics forces the game.figure out their trade forgot the best equation. scarlet: it is something people
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have not figured out just yet. the ability to bear the games during the playoffs. what happens during the winter. do not have access to pro hockey. what do you air from october through fair for -- through february? >> a lot of college programming. we have a full slate of college football and basketball programming. are played on the national networks but there are so many games out there. the role of regional supports network is not competing with the national networks. boards our local -- the sports territory covers make sense for us. my charges to operate as an why. do you have to be a mets
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fan to work as an why? think you have to, but what you are working as an one it is really hard not to be. mets in three or four? >> in four. scarlet: you heard it here first. thank you for joining us. their playoffrted series with the dodgers tonight in los angeles. scarlet: mark crumpton cannot wait. coming up next hour of the bloomberg market day, american pharoah looking to go where no others or to has gone before. alix: we will hear from the breeders' cup ceo for the grand slam. ♪
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>> it is 2:00 p.m. in new york. welcome to the bloomberg market day.
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good afternoon. worth best week this year. the price of cool tumbles as california becomes the first state to the best it all in the commodities. a big event in thoroughbred .orseracing will take place i will talk to the breeders' cup ceo. let's go to the markets desk. julie: we are seeing a quiet friday to end the week. a big week for stock. the s&p 500 is set to have its best week of the year.

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