tv Bloomberg Markets Bloomberg October 12, 2015 10:00am-12:01pm EDT
betty: good morning. here is what we are watching this hour. it is the largest sect deal in history. dell is going to buy emc for 67 billion dollars -- $67 billion. meanwhile, commodities are marching higher on speculation that china's stimulus efforts will boost demand. is the worst over for commodities? can the dysfunction and commodities get any worse? we speak with former senator joe lieberman and former governor jon huntsman who say there is hope that we can all get along. meanwhile, we are about half an hour from the trading session --
into the trading session on this monday. i want to head straight to julie hyman. julie: a really big week for the s&p. the best weekly performance of the year. across thech change major averages on top of that strong performance. the s&p had also risen to its highest since august 20. a couple of things people are watching today. we heard from stanley fischer over the weekend reiterating this view that rates are likely to go up by the end of the year. it still does not seem like many investors buy it. again, we are getting sicker into earnings season -- thicker into earnings season. i have also been watching the vix. it rebounded after nine straight down days. that is the longest streak we have seen in four years.
the vix is rebounding. betty: what about eli lilly? the single biggest drag on the s&p? julie: the company had been bring upg a drug to good cholesterol. lilly said it would be halting production of that drug. it is taking a charge of $90 million. that money does not appear to be a problem. of not havingct this potential blockbuster drug. this is their annual sales going back a few years. , it many large drugmakers is a problem when it loses exclusivity. in that case, a lost cymbalta xyprexa. a similareveloping
drug. then we have amgen and regeneraton. those companies had drugs approved by the fda this year. both of those stocks are going up. betty: thank you so much. let's check in on the first word news. vonnie quinn has more from our news desk. vonnie: thank you so much. hillary clinton is going to debate her democratic rivals for the first time tomorrow night. the latest survey shows she is favored by 46% of primary voters, 20 points ahead of bernie sanders. andin o'malley and jim webb lincoln chafee will also attend. republican hard-liners in the house say they could support paul ryan to be the new speaker. ryan says he does not want the job, but he is discussing it with his family. 'se washington post says iran
conviction of the "post tehran" journalist is going to be upheld. announced the verdict on state-run tv, but offered no details. they have been criticized for carrying out the trial in secret. there has been no claim of responsibility for the bombings in turkey that killed 97 people at a rally calling for peace. the nobel prize for economics went to a professor at princeton. angus deaton is honored today for his work on consumption, poverty, and welfare. hiss best known for research on how individual consumers make choices.
there is a look at our first word news. you can always find the latest news on bloomberg.com. betty? betty: vonnie, thank you. dell and emc have struck his $67 billion deal, the largest tech acquisition ever. will be a financial force in the tech sector. >> the coming together will create a powerhouse in the technology industry with morty $80 billion in revenue. it will be a leader in the number of the most attractive growth areas. betty: let's dive into the details of the deal with dan ives. alex sherman is in san francisco today for us who broke the story. alex, let's start with you on the details of this. why does this make sense? both of these companies
are legacy tech companies whose main core businesses are not growing nearly as fast as they once were and they come together because they have complementary products. this is a method you have been hearing -- method you have been hearing from both of these companies. business focuses on small and medium-sized businesses. emc has a much better relationship with large businesses. you put them together and you combine dell's server business and emc's storage business and you have a large, formidable competitor with major cros s-selling opportunities that neither had as an independent company. emc gets the benefit of being a private company because michael dell will run the company. dell is private. joe tucci, they have been looking for a successor for a while, they have been getting a lot of pressure from activist
investor elliott and this is a way out for him. he does not have to spin off part of the company and he gets a well-known, well respected successor in michael dell. at least well respected at times. [laughter] alex: his reputation does tend to go up and down. betty: as with the market. hang on. dan, alex has broad stroked the benefits. these areves are that two aging companies. make oneing companies formidable competitor? dan: emc has been a disaster the last couple years. elliott was the one that put the back against the wall. i view this as a one plus one equals 1.5 situation overall. these companies are way behind the game in cloud, big data. betty: they had to do it. dan: they had to do it.
their back was against the wall. holders, it is the best of a bad situation. this is really going to have ramifications across tech, given the $70 billion acquisition. why: why merge --betty: merge when every big tech giant is looking to split and selloff assets? optionhat was the other on the table for emc. the management believed that was not the right play. they believed there were a lot of synergies within emc, a lot of different companies that emc has hired over the yearsb. m ware is the biggest growth company. they did not want to be left with a bunch of stock that was not nearly as valuable. the idea of merging is the other side of the coin. either you split or you kick the
can down the road, in essence, by putting two legacy companies together and generating revenue synergy that way. we have seen more of the split ups scenario, but we have also seen a little bit on the other side of this. almost came together last year. we will have to see of oracle or cisco decides. maybe we need to look at emc. they may try to put together a competing bid. betty: we know pc sales have been sliding. referred to that industry earlier. jim: it is just a tough space. we are back to decelerating fornues in pcs and services
most of these companies, so they are looking for growth anywhere they can find it. is the key word in this space. betty: agree? dan: i could not agree more. there are massive headwinds in pc. that is why they had to make a transformational acquisition to morph into an enterprise company. position that they viewed as weak. dell is viewed as a position of strength. business. complementwould be a . tucci can put on a good bew, but there is going to an everest-like battle with this
acquisition. they will sell off some of the a shareholder,re this is a bad dream you are waking up to. there is a lot of fat in this company. they can really cut it. focus on the crown jewels. happens. what' they should move their headquarters to florida. it is a geriatric type company that we are seeing here. they really missed out on a lot of these trends. betty: i'm not finding it very appealing at this point. alex, i know there is an option for emc to speak to other
bidders. could there be other bidders that come out? there might be. i don't think it will be hp. they went down this road a year ago. hp came out with a public statement today and basically said, look him of these two companies are stuck in the slow lane while we are coming out with aws features. we are embracing the cloud. we are more nimble. we are splitting up our company. would be highly surprised if hp is the one. cisco and oracle may be slightly more likely. they wanted to buy emc, they have had a year to do it or so. these negotiations started in january or february. clearly, they have had a long time.
alex, thank you. thank you for stopping by. much more ahead in the next 20 minutes of the "bloomberg market day." mercedes keeps its title as the world's top-selling luxury automaker thanks to china. can it keep up the speed against bmw and audi? we are going to head live to the london metals week. aisleworking across the is a lost art in washington. we are going to speak with two men who have done it successfully. to talk about bringing back bipartisanship. \ ♪
betty: good morning and welcome back to the "bloomberg market day." our first story is gold. a seven-weekit high today. the chance of a rate increase stands at less than 40%. opec is counting on stronger demand. it pumped the most oil in three years last month. opec predicts production by non-cartel members will shrink in 2016. mercedes-benz is the world's top-selling luxury car brand for the third month in a row. it sold twice as fast as audi and bmw. were cities sales were up -- 60% lastsales were up month, driven by suv's.
hundreds ofd flights delayed on sunday. they expect normal operations today. they say the problem was not caused by computer hackers. you can always get more business news at bloomberg.com. let's head back to the market desk were julie hyman has a check on the movers and the ongoing saga with anheuser-busch. julie: anheuser-busch raised its proposed takeover offer for sab million -- sab miller. $1.63raised to about billion. shares are up 0.5%. $103.6 billion. shares are up about 0.5%. ab miller has turned down
inbev a number of times. the holding companies would get 38.88 pounds per share. this is continuing. the shares of all of these , not much change. these companies are not much changed. this latest proposal does seem to be incremental if the company wants closer to 45 pounds per share. this is another step in the negotiations. that is exactly what analysts are saying. this is the latest in what they expect to be a continuing back and forth until they get closer to that price. betty: ok. it is going to be a story we are following all week long. thank you so much. still ahead on the "bloomberg market day" like oil, metals dealing with a glut in supply.
betty: welcome back to the "bloomberg market day." aftere stocks rallying the government announced it will take more steps to bolster the economy. the government will increase fiscal support for shantytown redevelopment. satier today, jim chanos down with bloomberg and gave his outlook on china for the first time since the policy moves caused global market turmoil. jim: i think that long-term china is going to be fine.
mr. rubenstein said it had been gore owing -- growing at 10% for years and years and it is inconsistent to stay at that rate and that is consistent with what we said. now, it is 5%. 7% real, 2% deflation. it has been on a 2% per year negative ratchet down. i see no reason why that won't continue. the law of diminishing returns. first international airport in a region is a boon for growth. a second one is questionable. a third one is folly. we are between the second and the third to use this analogy in the way china is basically continuing to throw money at fixed asset investment. again, that is the problem. it is the model. china will say they are reforming to a
consumption-driven economy. household economy consumption was 37% of gdp. in 2010, it was 38%. it is just not happening. people give lip service to it happening, but the data doesn't support it. stephanie: the data we are getting out of china or the data you believe is the truth? in the past, you said you do not believe anything they put out there. have you changed your view? jim: i'm using their numbers. stephanie: you believe that numbers? apples, apples too bad stephanie. if china is saying we are going to consumption and they are saying it only went 1% five years, we are safe to say it is not really growing. stephanie: is there stockmarket reliable enough to play? you go short. many people this summer said the ?ules in the game
i think the shanghai market is completely detached from the economy in the country. the government is now heavily involved. as you pointed out. in pushing people into it and botching failed rescue efforts this summer. we would rather look at stocks that trade related to china in hong kong or elsewhere in the in companiessimply that are involved in trading with china. but playing the shanghai market is like going to the casino. stephanie: the fact that they are having this anticorruption move doesn't mean anything? jinping isse of xi important. prior to his rise, the country was open for business. as long as you made money,
anything went. and you didn't upset the political applecart. sent money abroad, do whatever you want, just grow. under xi jinping, it has changed. anticorruption has come to the fore. he has taken a very anti-western town in his outlook and how companies do business. the landscape has changed dramatically, politically and economically, under his leadership. he is a very strong leader. david: anticorruption could facilitate investment? the money should go where it should. grease and also the now you have people scared to do anything. betty: that was billionaire investor jim chanos. to bloomberge in tomorrow. speaking about china, let's show
you the chinese stocks in shanghai. we will show you where they ended up overnight. stocks responded quite favorably. up 3.3%. the shanghai composite. , we are ann the u.s. hour into the trading session. we are a little bit lower despite that big deal coming up between dell and emc. we are continuing to wait for bev. on sab miller and ab in tomorrow will be jpmorgan and the bank earnings. a lot to watch for for the traders in the market. as a bipartisan front unites in new hampshire, jon huntsman and joe lieberman are joining me. ♪
the news.t with vonnie quinn has more from the news desk. vonnie: we start with the middle east. are being told to avoid using the core door used by russian missiles. missiles launching from ships in the caspian sea. delta officials will release their report into the fatal crash of malaysia flight. mh17. says he is not considering any changes in his syrians dratted g despite russia -- strategy despite russia's new role. president obama called it a desperation move. >> if you think that running your economy into the ground and having to send troops in in order to prop up your only ally is leadership, then we have a
different definition of leadership. vonnie: the administration announced that the u.s. will stop training moderate syrian rebels. minister and the palestinian leader can agree that neither wants a palestinian uprising. israelisinians and 4 have been killed this month. britain is pulling guards from the embassy were julian assange is holed up. they have come at a cost of $18 million. that is the news you need at this hour. you can always find the latest on bloomberg.com. betty: thank you so much. vonnie quinn at the news desk. even though lawmakers are on recess, there is still plenty of headlines.ating the tomorrow, we have the democratic
presidential hopefuls taking center stage at a las vegas casino for their first debate. have aepublicans leadership vacuum after a group of hardliners drove house speaker john boehner out. last night, president obama said this about john boehner's exit. >> i'm a little concerned that the reason he left was because there are a group of members of congress who think having somebody who was willing to shut down the government or default on the u.s. debt is going to allow them to win 100% of the time. me now are two men on a mission to fix that mentality. we bring in former utah governor jon huntsman. they join me from the no labels
convention in new hampshire which has attracted eight residential candidates who will be speaking all day long. thank you so much for joining me today. you just heard the president say there is dysfunction in washington. it seems to be getting worse. john, how do we take care of this? >> come to new hampshire and talk to the citizens here, who do not rely on anger or acrimony, they want results and problem solving. president reagan was able to do clinton was able to do it. we had shared common goals. entitlement reform, tax reform, balancing the federal budget. we can do it again. we have gotten out of the habit of identifying common goals. the good people of new hampshire gathered here. what is even more unusual is we
have republicans and democrats running for president, everyone from bernie sanders to donald, who are here to talk about not just the entertainment side, but let's talk about how you are actually going to get your agenda done. betty: do you mean trump when you are talking entertainment? [laughter] >> he is good at it. i suspect he's going to want to talk more about the big issues of the day. betty: joe, this is to you. as jon huntsman just noted, you have several residential candidates from trump on down to k-6. -- john kasich. do these presidential candidates represent what you believe is going to be bipartisanship in washington? do you think anyone of them could do it? >> not yet. that is what this is all about. marshaling theut citizenry.
who are angry and fed up with what is going on in washington, which is that happening fors our country in washington. very partisan, very ideologically rigid. anger is not enough. this is an attempt by people in both parties to say to the presidential candidates, as john just said, we don't want to just know what you want to do as president, we want to know how you are going to do it. theican history shows that best way to get something done in washington is to work across party lines and be willing to compromise to get something done. we are going to ask them to make a promise to bring whichever one of these candidates is elected, bring in a bipartisan leadership and commit to try to achieve one of the big goals.
we are going to give those who do make the commitment the no labels seal, which will guide voters in new hampshire about who is going to be a different kind of candidate. the bottom-line answer is we don't know yet which of these candidates really will answer .he how weston can't help but noticing one front runner is not there. hillary clinton is not. are you surprised at disappointed she is not there? >> i am disappointed. clearly, she and a lot of the other democratic candidates are out in las vegas preparing for the debate tomorrow night. but we have a satellite truck out there and bernie sanders and jim webb and martin o'malley are all coming into this convention today in a question-and-answer live session with our delegates.
we are disappointed that hillary clinton was not able to do that. we are going to give are many more opportunities to come before no labels and hopefully to agree to the promise of bipartisan government that america needs. betty: she said she is busy preparing for the debate area of john, you have been a part of several presidential debates. what advice would you give not just hillary clinton, but the others? >> i think you are always smart to be yourself. so often campaigns, people tried to contort themselves into pretzels to appear -- appeal to whatever group happens to be in the audience. sometimes you get groups of rabble-rousers who the networks bring in to kind of added little bit of spice and you are up there on the stage and you want to say things that are going to bring a sound bite, but that lands you in trouble later on. the advice to the candidate is
the authentic, be yourself. americans reward authenticity because that is what they are in search of right now area >> i could add very briefly to that area hillary clinton really has to show that she is experienced and she is ready to be president based on all the experience she has had. she has really interesting challenges on the stage with her. bernie sanders has become a phenomenon. but also martin o'malley, jim webb, lincoln chafee are going to be out there. anyone of them could be a wildcard tomorrow night. they could go after hillary or bernie. or just say something very .nusual betty: and throw everyone off. .efore we go, paul ryan
should he run for speaker of the house? >> i believe out of chaos and collapse, you can find renewal. in a guy like paul ryan who appears -- appeals across political borders and has been associated with tax reform and pro-growth, that is i think he would be a terrific addition to leadership in the house. i believe you get renewal a lot of chaos and an opportunity for a new start and i'm an optimist. this could be a very good thing for the united states. through new leadership in the house of representatives. betty: thank you so much both of you for joining me this morning from new hampshire. cochairman of no labels. much more ahead in the next 20 minutes of the "bloomberg market day." shares in eli lilly are getting slammed today after the drugmaker discontinued trials of
a heart disease drug. we will have more on the controversy surrounding daily fantasy sports companies. it does not seem to be hurting their business. draft kings and fan dual just posted their biggest weekend ever. $44 million in entry fees. the economy may be strong enough to withstand a rate hike this year. you think so? is stanley fischer on the right track? ♪
new deal. eli lilly is stopping work on be awas said tob promising cholesterol fighter. it was supposed to increase good cholesterol and lower the chances of strokes and heart attacks. apple is shutting down its news app in china, but it is not exactly saying why. the usually insist that companies must be responsible for censoring their own content in china. you can always get more business news at bloomberg.com. it is time to get you caught up on all the actions are on the markets around the world. this is your global market check. let's start in asia where there is green across the board. hang seng up 1.2%.
one big story out of the region. what might be ahead for the mainland chinese market? more from hong kong. >> let's take a step back and look at where we might be headed for the shanghai composite, which is a very momentum driven market. tom schroeder is a veteran analyst. the fizzling out of the rally back in the summer. he told bloomberg that over the next couple months, shanghai will head toward 4100 and then fall back down. a 25% rally up until christmas and then a 41% drop by next year. that is largely a china story. this is something that has played out very clearly. it is where you get this transition mechanism into global markets. in short, buckle up. betty: fasten your seatbelts. let's had to europe where mark
barton has the latest from london. pretty much decliners in europe. betty, you said it. the stoxx 600 is declining. the longest winning streak in two months, well, it could still rise with 40 minutes left in today's session, but that is you europe.ue across we are all awaiting more stimulus from china. mining toot give much. there is glencore. it announced details that it chile andl mines in v australia. the market does not seem too enthused by that. pile is a $29 billion debt
. the stoxx 600 basic resources index had risen 49 can you give days. that has not happened -- for 9 consecutive days. that has not happened in quite some time. quite an astonishing run for the basic materials industry. these are the big gainers for today. since 2008. gain that is after the german government announced the paystry has enough funds to for the shutdown and the cleanup of nuclear power plants. stoodonth, this company the most since 1999. could prover plants insufficient. we are seeing a huge sigh of relief for investors in german utilities today. the pound is up for two consecutive weeks.
three monetary policy officials from the bank of england speak this week. one of them has voted for rate hikes for three consecutive months. stirling is up today against the dollar. have a look at what is happening in the bond market. money is moving out of equities, into the safe haven. the european bond market. could showices inflation as negative within the eurozone. we could see a fallen industrial production. that data tells us it is an economic recovery that is fragile. tocould tell us we are going get more qe, which is good for that load of asset. thank you. we will check back with you in an hour. for a look at how the u.s. markets are trading, matt miller has the latest live from the nasdaq in midtown manhattan. i'm taking a look at the
nasdaq listed stocks. hasmaker of barbie mattel had a tough time of it since losing the "frozen" princesses to hasbro in the fallout with disney. there was a cover story on the serious upside of mattel because it could make amends with disney highf barbie and monster franchises may be able to grow a bit under new management. mattel is showing some new games. we see gains in drugmakers like regeneron and amgen because of the bad news in eli lilly. ai lilly stopped trials for cholesterol drug. it has also hampered the other efforts of drugmakers trying to come up with a drug to reduce good cholesterol while reducing bad cholesterol.
regeneron, amgen, they make a cholesterolass of drugs, which will continue to be selling well as long as the other drugs do not come out. those companies are doing well today. over here, green mountain coffee roasters. the curate stock is not -- keurig stock is not doing well. ordoes not like cyclicals keurig coffee. betty: thank you so much. speaking about make your own ,rinks -- still ahead controversy is apparently good for business in the world of daily fantasy sports. and fanduel have posted their best weekend ever. more on their $44 million taking this weekend. ♪
betty: welcome back to the "bloomberg market day." it was a thrill of a weekend for you football fans cap. by this moment last night. the giants against the 49ers. 1:49 to go. the 49ers score to take the lead. eli manning then with the perfect throw and larry donnell with the perfect catch. the giants over the 49ers. i think eli manning really needed that. with real sports moments like that, it may be no surprise that daily fantasies boards is so alive and kicking despite cheating allegations within draftkings and fanduel that have come out in the last week or so. , none of that controversy keeping anybody away. i'm looking at the numbers. 7.1 million entries over the weekend and 44 million entries -- $44 million in entry fees.
josh: it seems like we are not all that worried about the allegations that came out over the last week, which are basically that employees at draftkings and fanduel were using inside information to win money on the other side. betty: someone at draftkings won money at fanduel. josh: an employee at draftkings bet money on fanduel and there was question about what access to information he had. betty: porch people wondering whether this would be sort of like what we saw years ago with online betting or online gambling? it was kind of like a black friday. suddenly people decided, i'm not doing this anymore. josh: there are a lot of parallels between daily fantasy and the online poker world. daily fantasy sports are legal. there is nervousness that there will be some sort of government regulation or crackdown.
when these allegations came out, people were nervous for a couple of days. there has been a lot of talk outside of the fantasy sports world about what needs to be done and people were concerned that something might happen. betty: what does this tell you? is it business as usual? josh: at least in the short-term, it does not seem like this is going to scare people away. more specific revelations come out, i think that might change things. there could be additional regulation. it would not necessarily be bad for the players, unless they actually shut the sites down. it could make it a less lucrative business for the sites themselves. betty: was it surprising to you that it was such a big weekend this weekend? what was so special? josh: the nfl season has already been far and away the most successful period. they have been advertising like crazy. betty: i've seen the
commercials. josh: you couldn't miss it. they continue to attract players. they are relying on new players to come. if you are reading about the non-fairness of the games, maybe you don't try them out. that did not seem to be the case, which is a little bit surprising. you think people would maybe hold back a little bit until it played out. better?ho is doing draftkings or fanduel or are they in a can neck? josh: draftkings is doing a little bit more volume. fanduel was slightly more profitable than draftkings over this last weekend, which is a function of how they set up their tournament. it is a little bit hard to tell. anh companies have incredible amount of money they have raised from investors. they are both valued over $1 billion and they are deciding how to spend that money in various ways. if draftkings seems more
profitable one weekend, that means they decided to do -- to spend money in a different way. betty: do they both lose money? they both lost makers right now? josh: they both lose money because of the marketing hit right now. the games themselves are profitable. not always. if they can't fill tournaments, they will end up losing money. all of the smaller fantasy sport companies are still in that stage. they are still losing money. the two big guys are pretty consistently making money. betty: thank you so much. josh: thank you. betty: much more ahead on the next hour of the "bloomberg market day." is the economy strong enough to support a rate hike? ♪
♪ from bloomberg world headquarters in new york, good morning, i'm betty liu. here is what we're watching this hour. two years after going private, dell is on the new again. company buying emc for $67 billion in what will become the largest tech deal in history. it is a question the fed has been battering around for months, is the economy strong enough for a standard rate hike? after suffering to airline disasters in 2014, malaysian airlines is trying to rebrand its image. can the carrier remain in business as it teeters on the brink of anglesey -- bankruptcy? we are 90 minutes until the trading session. i want to head back to our market desk with julie hyman. she has the latest on the markets. julie: stocks are having trouble
sustaining begins we saw last week. it was a eight week asked week, the best of the year we have seen last week with the s&p 500 rising to its highest since august 20. now we are a draft at the moment. take a look at the bloomberg terminal and the various sectors and where they are going right now. and even balance between green and red on the screen which is what you might expect. if you look at the imf, energy is down, materials are down, industrial is down, utilities and consumer discretionary is helping support any gains we are seeing and helping us from falling further, that is. it is the commodities related sectors that are leading the currency day, betty. betty: william sachs with his bearish view on commodities? julie: that is reiterating that and the rally we have seen with commodities prices does not significantly change the fundamental view, that long-run supply trends and hard data on
emerging markets paint a bearish picture. that is being refunded in oil prices today. we have data from opec. we saw the highest production in three years last month from opec producing nations. that is producing a bearish buy in oil. at the same time, we are seeing hedge funds get more bullish. take a look at the terminal. this is cftc data on net long in oil. you see the upswing on the last part of your screen, actually seeing that figure at the highest in about 14 weeks for the net longs in oil prices. there is a debate in the industry as to where things stand for oil, with the outlook is like for oil. as for some of the comedies, copper is actually rebounding. the continues to be optimism here as glencore is cutting production as other companies have cut copper production. that is going to bring down supply and reduce copper prices. hanging onto a gain of a quarter of 1%.
also, something that might be more bullish for commodities is the fact that the dollar is still under pressure and trading at its lowest in seven weeks. some of the commodity currencies are trading higher today as we have seen in this model the rebound generally. julie hyman there with a look at the markets. we checked out -- check now with vonnie quin with headlines. vonnie: u.s. demanding that putin back off from missiles in syria. they say that russia should only bomb islamic state's or other recognized terrorists. are expecting to release the reports on last year's fatal crash on the malaysian airline flight in ukraine. speculations that rebels shot it down by mistake, but bloomberg news is reporting there is
unlikely to be any definitive finger-pointing. the flame was -- the plane was on a flight from amsterdam. a washington post reporter has been convicted after a closed trial. than abeen held for more year on a series of charges, and cling espionage. the washington post calls the verdict and outrageous injustice. the nobel prize for economics is down to a professor at princeton. he was honored today for his work on consumption, poverty, and welfare. individual for how consumers make choices. scotland yard is boeing it's officers -- is pulling its officers from outside the embassy. d up sinceeen hole 2004. british police say there is no imminent solution to the red -- to the issue. to question wanted
him about sexual assault allegations. is a look at our first word news right now. you can find the latest news at bloomberg.com. our newsnnie quinn at desk. the federal rate hike might be a good thing. that is what the former ecb president told bloomberg this weekend at the imf annual meeting in peru. when -- the question is when -- the central bank of the united states of america be,eases rates, it should in my opinion, a good sign. it means the open markets consider that unemployment is theect, that they know that inflation in the medium and long run will go back to what is considered the appropriate definition. it is good news. news, ok.is good
joining us from chicago is the professor of economics at the chicago booth school randy cross, also the former governor. taking some q and a, of course, the chicago fed resident. has metthe labor market the fed liftoff conditions. he says the job market is good enough that we should be able to raise rates. do you agree? >> i think most people would --ee that the label market labor market has come back significantly, green 200,000 jobs for month for many months. unemployment down 5%, even some of those broader measures that janet and others look at are starting to come down. the real question has to do with inflation and the prospect for inflation. betty: that is right. we have not seen that.
we don't see inflation take off, which we haven't, is that enough to say let's pause in december? randall: the key has to be where inflation is going. it is the trajectory of inflation. you don't want to wait until inflation gets to 2%. by the time the fed has some impact on the markets, inflation every 2.5% or 3%. you want to do it in advance, but the key is do we have enough evidence that inflation is moving back toward the 2% goal? i think they felt they did not have enough evidence. if you look at the market measures of expected inflation, those have been going down rather than coming up. it has been hard for the fed to say we feel confident inflation is going up at the same time the market is coming down. betty: that we have enough evidence i december? randall: that is the real question. we will have to wait and see what is happening in the global markets, with commodities, and with the dollar. all of those will have impacts
on inflation and inflation expectations. things seem to be stabilizing at the moment. as you mentioned in the previous segment, the dollar seems to be rather than strengthening, weakening slightly, or the stabilizing. that will provide the foundation for the fed to move back to 2%. betty: why don't you think that so far a rate hike is considered a good thing? why don't you think that is coming out enough, randy? randy: i think jean-claude is right. if the fed says everything is looking good in the u.s., we are confident the labor market is strong enough to move rates up and inflation is coming up, that would seem a vote of confidence for the u.s. economy. i think the fed was very close. the fed is a cautious institution. with all of the volatility happening over the last weeks just before the meeting, they said let's just wait a little while longer. three months one way or another
will not make or break the world economy. at least, i hope not. if it is, we are in such a fragile situation nothing that you will be helpful. betty: i think and this conundrum, you saw that spelled out in the imf meeting over the last few days where there was no strong conclusion about where we are heading. columnist layview that out in his column today where he said days of deliberation at the annual largest gathering of economic and financial officials resulted in boilerplate language and coverage in the traditional in -- and uncontroversial outcome is unlikely to do anything to advance the world's quest to persistent economic malaise. everyone is hedging themselves, randy. randy: you didn't expect the world bank imf meeting to say we are going up or we are going down. number ofrge officials talking with each other. it is rather will be some sort of change. back in 2008, there was because
of the world financial crisis happening. there actually was a policy response. there was a strong statement. that is quite rare. i don't think we will expect too much from the bank fund meetings. i think what we really need is to see the progrowth reforms in so many countries, the imf, world bank that -- and others have talked about. that is what we need. we can't depend on whether oil prices are up five dollars or down five dollars. you have to make sure you are using the resources in the economy productively. unfortunately, so many emerging market countries are now focusing on that. betty: before we go, if you are janet yellen, would you be communicating anything differently? randy: i think the munication was not strong -- as strong as it could've been right after the announcement in september. i think the message has become clearer. focusing on the strength of the labor market and focusing on the reasons that the fed thinks the inflation will move back to 2%
will be the key. what criteria are they using? what are they using, what are they looking at? that will reduce uncertainty in the arctic. i hope they have the courage of their convictions to move. i agree with john claude that if they agree the u.s. economy is strengthening, that will be a boost to everyone's confidence that it actually is. so much, fromou the university of chicago booth school of business and former fed governor. in the next 20 minutes of "bloomberg market day," the largest tech deal ever, dell buying emc $457 billion. what happened to malaysian airlines flight 17 that crashed in ukraine last year? we will get the final report. ceo as telling us what his company is doing to battle competition from the curate cold machine -- keurig cold machine.
♪ good morning and welcome to "bloomberg market day yuriko it is now time for our business flash. our first story, anheuser-busch they are with -- offering $104 billion, 4 billion more than the prior bill. a.b. miller has refused to negotiate. they say that they are undervaluing the company. how about $4 billion more? they will stop development of cholesterol drug. they say the drug was not effective enough incredible trials. the company will take charge of as much as $90 million in the fourth quarter because of that. southwest airlines says they have fixed the computer glitch
that has delayed hundreds of flights. they expect things to return to normal as the day progresses dried yesterday, southwest urged passengers to print their own boarding passes. employees had to manually process travelersinstead of using computers, and that resulted in long lines. you can always get more business news at bloomberg.com. let's head back to the market does good julie hyman with a check on some of the movers this morning. emc and dell. julie: dell is not moving because it is a private company, but emc is the one we are watching as a result of that. $67 billion is the largest technology acquisition ever. we are seeing those emc shares up 1.5%. not a huge change. these reports have been out here, so there is a little delayed reaction, or the reaction already happened. plus tracking stock in vmware, the company
which emc is an owner of. it is a competent acquisition. because of this tracking stock situation, there are too many tracking stocks out there. there appears to be a little confusion over the valuation of it. stock will be nine dollars for each emc share. vmware trades at 70.55. a nine dollar tracking stock is what we are talking about. potential dilution, will there be more vmware shares issued because of this deal? it seems that there is confusion about there. it doesn't seem like there will be other bidders for emc. thate just announced oracle is said to not be interested in pursuing an emc counter offer. those oracle shares are little changed right now. take a step back and let's look at the technology acquisitions this year on the bloomberg terminal, or over the past five years quarter by quarter. uptick in thebig
acquisitions this year, both in terms of number of deals, the green line, and volume of deals. you can see the latest quarter the number thus far, of deals is not high, but the volume is, the value of these deals because of this giant deal that is now getting done. i have been looking at how the various groups in the s&p 500 have performed this year. it is a bit hard to read, but i can tell you there are only three groups within the s&p that are higher on the year. there you have it. one of them is technology. it has risen almost 1% this year as we see all of the deal activity that has been going on in activity -- in tech knowledge he. betty: -- in technology. betty: just when we thought we wouldn't have more, we have more. julie hyman at the markets desk. let's stay with technology and the pending purchase of emc. $67 billion as julie was talking about, or presenting the largest and most collocated megamerger in the tech industry today. -- most collocated --
complicated. for more details on the deal, i want to bring in bloomberg intelligence's oanna. why is this just accommodated? -- complicated? >> one of the parties does not release much financials. you are talking about a lot of debt that needs to be tapped before now and deal close. the third part of it is the tracking stock. know, they own a significant, almost 81% economic interest in vmware. part of that will come out to finance the transaction. when you put those pieces together, it makes her a collocated transition -- transaction,, given the signs. betty: as you say, this is the biggest tech deal ever. is that why it will take so long to close on this? anand: that is part of it, for sure.
the size, complexity, financing required, regulatory approvals that need to be met. all of this makes her a longer closing process. in our view, this is a must to do deal for both emc and perhaps even dell. exposed to aically shrinking area of corporate i.t. and network storage. the fact that they came together diversifies both platforms. more importantly, what has to happen after the deal closes is they have to undergo a significant amount of reengineering to be relevant to the cloud model. betty: in your view, how does this affect ama and tech? anand: the fact that this is as large and complex as it is, as interesting and convoluted as it is is a testament to the market right now. if you look at the large corporate i.t. landscape, there is lots of different segments of the market that are undergoing disruption.
occur inhese deals segments that are growing so that these large, slower growing companies can tap into a faster growth area or into a different model altogether. betty: thank you so much, great to see you. ahead on bloomberg market day, the safety board is out with its report on last year's crash of malaysian airlines flight 17 in eastern ukraine. we look at the airline's tumultuous year.
it went down in ukraine last year in july. four months after an age -- 370 went down down over the indian ocean. since then, they have contracted, gone private, and are trying to rebrand out of a virtual bankruptcy. we have the details of the airline and what they might say in this report. >> before we get into that, i want to look at what is actually happening with malaysia airlines right now. it has been 15 months since the world saw these images right here coming out of ukraine, billowing smoke from the crash. of course, a swath of wreckage of malaysian airlines flight 17 strong apart the country. the financial impact was great. its stock price plunged 13% right after that happened. 33%anaged to climb about through december of last year, then, right here, it stopped. the company delisted from the
malaysian stock exchange as it went private. it is owned by malaysian sovereign wealth fund. restructuring is on the way to the tune of $1.9 billion in a major revamp. capacity cuts are just one of the egg's results. they are also continuing right now, australia, for example is seeing its biggest hit. , four of everyty 10 flights cut. brisbane flights are all gone, sydney, melbourne, perth, all accordingpacity cuts to the center for pacific aviation. north asia is seeing one of ,very five cuts -- flights cut 22%. south asia also down 20%. europe is the second biggest hit after australia, one of every four flights gone, frankfurt, as well as a stumble off the map. only london, paris, and amsterdam there is one stand, if you can call it that. south east asia, plus 1%.
malaysian airlines focusing back on its core. a quick look at north america, 0% change. because there are no flights. the only flight is to los angeles and that was canceled in april of 2013. the company is cutting 16% of its capacity, more than one of every 10 flights. no longer in service. looking at our own bloomberg terminal data, you can see cuts in capacity have been needed for a while, anyway. this graph shows passenger numbers from 2012. they hit a three high at the end of 2013. then they plunged right here by one million passengers in the nine months after. now, they don't have public members -- numbers. betty: outside of capacity cuts, they also had management changes. a new ceo. i am told he is nicknamed the terminator? anand: he is not so fond of that as you might expect -- ramy: he
is not so fond of that as you might expect. kristof miller. he arrived in march of 2014. he is the first non-malaysian to head the country's national carrier, an interesting thing in itself. nickname the terminator. aat is because he has reputation for axing people. this june, he proved true to that name. the old malaysia airlines had 20,000 people, the new company will have 14,000, one third of the entire staff. betty: thank you so much for your view on malaysia airlines. onwill have much more ahead "bloomberg market day," stay with us.
with vonnie quinn. vonnie: we begin with the terror attacks in turkey. the interim try minister says the islamic state is the primary suspect in a deadly suicide bombings. at least 97 people were killed saturday and hundreds were wounded. took place at a rally calling for a peaceful solution to turkey's fight with kurdish rebels. airlines are being warned to avoid a quarter used by russian missiles targeting syria. flying over iraq or iran could prove dangerous. russia is launching missiles from ships in the test b&c. the washington post is calling this an outrageous injustice. held in a runr for more than a year has been convicted in a closed-door trial. this is according to a run tv. he was facing a number of tried it -- charges including espionage. no word yet on what sentence he will face. hillary clinton will face for democratic rivals for the first
time tomorrow night. the latest cbs survey shows that clinton is favored by 46% of primary voters, 20 points ahead of bernie sanders. the event will be held in las vegas. webb, willlley, jim join hillary clinton and sanders on the stage. some republican lawmakers in pennsylvania say more gambling is the answer to a budget crisis. they insist it is better than raising taxes and they are predicting hundreds of million of dollars in revenue. an expansion of gambling would be insulting is third in six years. that is a look at first word news right now. you can always find the latest news on bloomberg.com. betty: thank you so much, vonnie quinn at the news desk. it has been a bumpy couple of years for soda stream with a stock price that has been declining and growing competition from the big guys, coca-cola and keurig. the company is optimistic about his future, even as the
competition heats up. green mountain has come up with its own cold brewer, keurig cold. there is an issue of americans treating west soda. it showed up in pepsico's earnings last week, better than estimated as the company turns to healthier drink options, not their core. the ceo of soda stream joins us now. daniel, good to see her. i have heard you say this before, you welcome more competition, why is that when it looks like sales are declining? a good competition is thing for us. we have been alone at it for decades. in the meantime, the big soda brands have been declining for decades in the u.s.. they need to do something different. different is home carbonation. why would you ever buy another bottle or can and should let it home with the sugar and chemicals in it when you can take tapwater and transform it into any locally drink you want? that is what we do at soda stream.
coca-cola is a bracing that idea, and we think it is fantastic. betty: a couple of things there. straight soda or soft drinks are pretty cheap. how do you justify the price for that? daniel: the price that folks pay for soda is in the sugar and chemicals and all of the other stuff. the environment paid a price, too. we create $1 billion -- models we create one billion bottles and cans every day. that is criminal. it has to stop. our bottles are reusable. you can use sparkled water. we are the number one sparkling water brand in the world. that is the future of beverages. betty: i go back to the fact that you can get a two liter bottle for $.99 or something like that. why do you want to bother making the same thing at home? daniel: a two liter bottle of sparkling water with soda stream costs $.40. everyone should have it. everyone in america should have it. it makes perfect sense.
you take tapwater, transform it lemon,bbly water, add orange juice, any flavor that is natural and zero or low calorie, it is great. there's a big difference between what we do and what coca-cola is doing with keurig. betty: in the meantime, soda sales are planning. it could be $.40 to make it at home, but people don't want to drink coca-cola anymore. they don't want to drink sufferings. daniel: that is what is happening. that is why coca-cola is looking for a different angle. what they have done is replicate coca-cola in a home solution. they thought that if they put that logo on a product and take g logo and put it on a device -- $375 device -- it is myopic. how do you think people will buy this? betty: the reviews on that have been pretty bad. daniel: i wish they would have come out with something better that make more sense. i want better competition.
i want healthy competition at the value. that is what makes the category alive. it has been happening in the copycatting white. betty: don't you have a partnership with pepsico? -- it has been happening in the coffee category. you can't say why don't people want to do coca-cola at home and do pepsico at home? daniel: the pepsi's homemade, half the calories, naturally sweetened, no high fructose corn syrup. people with -- who want healthier pepsi can do it with soda stream. that is different than what coke did. -- rep located the same formula that you get in a can. who would do that? betty: some people might. daniel: let them come on. betty: what is the appeal of doing a different flavor or type of pepsi-cola? daniel: half the calories, and you can do it the way you want. more bubbles, less bubbles, more sweet, less sweet. it is naturally sweetened.
pepsi has courageously taken the step to create a new extension ,o pepsi called pepsi homemade sierra mist homemade. they are really trying. replicating, throwing a logo on it, and thinking people will buy a. that is different. betty: looking at the second quarter, sales went down to $107 million in the second quarter. your sales are decline. what is going on there and how do you turn that around? daniel: our sales are not the kind. in the u.s., they are declining, but we are in 45 countries around the world. our sales are up in europe and asia. in the u.s., we have to do a better job extending to the american consumer why they need a soda stream at home. it makes the perfect sense. i believe we will find the right way to communicate that. betty: what happened there? had lefthe former u.s. in late 2014. it has taken a while to bring in your new u.s. president. what went on there and what were
you not getting right in the u.s. market? daniel: the u.s. is only 15% of our business. germany is bigger than the u.s.. there is a lot of great things happening here. john shepherd is an industry veteran. he spent 19 years with coke and turned around cod industries as the ceo. the u.s. is only 15% of our business right now. it will be bigger. the u.s. is up on consumption of soda stream. we are doing a lot of gas exchanges. inare the number one sku many industries in america. that is ther, number one item in big retailers in america. we have a lot of uses. folks who use it love it. our challenge, john challenge in the united states is to expand to people why they need this device at home. betty: what do you think you didn't get right before? daniel: i think the marketing was off. we didn't come indicate -- what we did earlier was we had all of
these flavors, cola flavor, ruby or flavor, we behaved like a soda -- rootbeer. america does not want soda. it is obvious. what we really want is water. you fill it with tapwater and you put bubbles in it. that is what consumers want. that is 70% of what people are using it for. we were on the wrong strategy. we were on the soda strategy, but we are healthy sparkling water business. betty: this is jogging my memory. u.s. have the super bowl commercial where you targeted coke and pepsi. you are saying that messaging was wrong, what about this time around? daniel: what that message did was get us on the map. we are a tiny fraction of what coke is. coke has spent $2.4 billion in green mountain. betty: they did put you on the map. this time around, what will you do for the super bowl? daniel: now, we need consumers to help us. we need consumers to help us do
the talking. we'll have money for super bowl. we had a great product, we have a new product of all-natural ,lavors, cucumber, basil fantastic stuff. we need people to tell their friends and family. betty: thank you so much for joining us this morning. the ceo of soda stream with a new message for consumers. much more ahead of 20 minutes of "bloomberg marketing." the parent company of barbie and hot wheels could be getting ready to take off. el shareshy matt could search 35% in one year. job cuts according to one reporter. look at jack dorsey's plan to make twitter more efficient. we take you live to manchester, new hampshire for the noble labels -- no labels problem solver convention, a presidential candidates making a rare joint appearance.
♪ betty: blocking back to "bloomberg market day." i am betty liu. time now for the business flash. in our first story, the creation at a corporate computing giant. dell agreed to buy data storage company emc in the greatest tech takeover ever. price tag? $67 billion. they are number two in service else. opec is counting on stronger demand for its oil next year. the cartel came out with its forecast while disclosing that last month, it prompted the most oil in three years. opec is predicting production by non-cartel members will shrink in 2016. there is another sign of how foreign companies can operate in china. the new york times says apple
has disabled its news app aimed at chinese customers. apple is not saying why they are doing that. the company usually insist that chinese company -- china insist that companies are responsible for centering their own content inside china. you can get more business news at bloomberg.com. european markets are just closing for the day. for a look at all of the action, londono straight back to where mark is standing by. mark: it is over. the six-day rise in european stocks, the longest since july, has picked. picked 39 minutes after the session begun, and now it is back downhill. -- peaked 39 minutes. hoping for more stimulus from china. the eight-day winning streak, mining shares ending their longest run since 2000. before today, they rose nine consecutive days, 26%, 45 billion euros of value. it is over. i could say that many times
today. those are the big moving chairs in europe today. up like 15%, the biggest increase since 2008. the german government is announcing the industry have enough funds to pay for the shutdown and cleanup of its nuclear power plant, a huge sigh of relief. 6%ncore down by si today. citigroup and ubs say they could fetch as much as a billion dollars. sab miller down by 1.3%. poundsng a new offer, 43 point 50 pounds, well below the offer price. what does that tell us? investors still don't think it will happen. that is it for me. betty: you sounded a little sad when you said the six-day winning streak was over. i was.rk: eight is very rare that i get to say it is over. only in my personal life.
[laughter] betty: let's not go there, but i get it. mark barton in london. for a look at how u.s. markets are trading, matt miller has the latest live from the nasdaq in midtown. you can say it is over, matt? matt: we have .2% gain on the nasdaq. the nasdaq has had a great week over the last five, 6, 7 trading days. we are still looking at a record that is alive. f you look at the year to date chart, the nasdaq had a big dip in september, a big dip in august as well. we are slowly working our way back up. i want to give you the top stories of my day. 's upgrade.tel last week, i was at a conference in toronto where we were hearing the bear case for mattel. it was based firmly on the fact that the company had lost the princess from frozen to hasbro.
it's relationship to disney had soured. that is where all of mattel's growth that come from. management at mattel may be able to firm up the relationship with disney. good things good, that. plus, it could also do good things with its standard brands like barbie, monsters. as a result, we see mattel gaining. it is that it on the nasdaq today. another great story of the day has been eli lilly's trial stoppage of its cpt, cholesterol drug. thatew blockbuster hopeful should lowered your bad cholesterol and booster high cholesterol. no one has had much luck creating this drug. merck is still trying to make one, but lily says it is not affected and has pulled it from trials. other companies that have competitors like regeneron and amgen are trading up today on
the nasdaq. i want to mention a number of different stocks. me, also nordstrom corp., united national foods, am, technology solutions, these are all on the list, companies that have low cash flow on equity and low cash positions. he is from wolf research. he says these are on his list of companies too short. investors are heeding his word and selling off the stock. betty: thank you so much, matt miller there at the nasdaq market site. a week ago when twitter's jack dorsey was finally named the permanent ceo, he had been on a conference call that the company morale was good. jack: morale at twitter is really strong. we do not believe this will affect morale or attrition negatively. we think this is a pretty good positive. it adds a lot of clarity. betty: now, reports have surfaced. the company is planning job cuts.
bloomberg news sarah joins us from san francisco. sarah, what are we hearing about these job cuts? sara: we think they will take place this week, they will probably affect all departments, especially some departments and engineering. these job cuts are aimed at making twitter a little more focused. it is a problem the company has had over the last several years, disagreeing over the most important tasks. critter has -- twitter has been resized for its low product rollout. come in and said he wants efficiency. this is part of the plan. betty: something like four to 100 employees. 4100 employees, where are most of these cuts happening? sarah: we don't know for sure. one thing to keep alert for, when twitter employees leave, they tend to tweet about it. we should see some public statements coming up. betty: how is this going to affect the culture and morale? you just heard jack dorsey last
week think that morale is good. sarah: i think that -- i have talked to former and current employees of twitter for the last few years. i think there is a sense that stuff has trouble getting done. there are projects that get killed. people want to be rallied around efficiency. it is one of those things where if you are cutting jobs -- we have seen a lot of attrition at twitter among top product people. it could cause some issues with morale. outsiders, at these people who have been at twitter before, see this as a positive because of the stagnation in the products department in the past. betty: they have a rollout for new products and get that pipeline going. onah frier in san francisco the impending twitter job cuts. still ahead on "bloomberg market a," checking in on the options market as markets bounce around today.
betty: good morning and welcome back to "bloomberg market day," i'm betty liu. let's check in with julie hyman. isie: thank you, betty, it time for today's options inside great coming up at the top of the hour, let's look at how the major averages are performing today. as we haven't talking about, a stall, more or less, for the major stock averages after last week's games. they are gaining a little steam throughout the session. joining me today is jim, a strategy -- a strategy analyst at an km holdings. after the big week we had, the for nineng straight sessions, it looked like there would be a rebound today. i am not sure that is holding up now that stocks are doing better. the importantly, last week,
futures curve went from being inverted back into contango, upward sloping overtime. that is really steady-state for the volatility of markets. i would argue about something we have talked about here for a while is that these tend to have duration to them. we talked about the fact that vix doesn't sustain a decline below that 20 threshold for several months. what we are talking about is not significant risk of downside in equities, perhaps a move up in vix and debris and version of the vix futures curve. not really expecting this recent low is truly sustainable. julie: i want to turn to your trade for the day. there is a lot to say about it and things surrounding it. it is on goldman sachs. there has been a lot of talk about the financials recently and whether an increase in interest rates will be positive or negative for them. citigroup is upgrading goldman
sachs today. the shares have been benefiting from that. which cap are you and in terms of the earnings trajectory for companies like this given that rates are, at some point, sometime going to go up? we no longer cover the sector from a fundamental perspective, but it was the second highest performing s&p 500 sector. the s&p was up 7% and they were the third worst performing. not even on the upside have facing momentum come into the group. what we focus on his goldman sachs for the simple reason, it is the worst performing of the universal and investment banks since those july highs. lower, instructure is line with jpmorgan, and significant lead below citigroup, bank of america as we read it. a divergence out of
the options market that is interest -- interesting to us. julie: term structure meaning what? it's implied volatility over time is lower, a suggestion that the underlying stock is lower risk men bank of america and citigroup. is comparison that we made valuation based, im sure embedded in the view that we take out of the option market. we want to go all the way up to january. we think there could be near time -- near-term downside in financials. in generate, you pay $3.30 and you are creating a night 5-1 payoff with stocks above the 2.21 level, exactly where was in july prior to the stock. -- shock. julie: is that the only stock you are looking at going into this earnings season jim? jim: we were using xls shorter-term. look at the november expiration
, or to express a short directional view. we like buying 22.5% strike put. expressing a view that in the near time, -- near-term, we could see a weakness in financials, but a stock like goldman will outperform over the next few months. julie: thank you so much. it is a big week for these financial earnings as we are financial, goldman sachs. take you so much, strategist at a km partners. we will be back in a few moments looking at the markets, the commodities role in the stock session today as we go to break. you see all three major averages are rising to their highs, such as they are of the session. stay with us, we will be right back.
julie: good afternoon. i am alix steele. dellet: i am scarlet fu, puts up $67 billion to buy emc, the largest tech acquisition ever driven by storage. alix: glencore adds copper to the list of assets to unload passengers are losing out. who is cashing in on their misery? for more on today's activity, we want to head to the market desk. julie has the latest. we are at the height of the session. julie: looked like initially we were going to stop out after last week's gain. that stall has revved up a