tv Bloomberg Markets Bloomberg October 12, 2015 3:00pm-4:01pm EDT
> welcome to the bloomberg market day. betty: from bloomberg world headquarters in new york, good afternoon. a mixed day in the markets. oil and the dollar are tumbling. two years after taking his theany private, largest tech acquisition in dell, yes orhelp no? building on her frontrunner status what will other candidates say to cut it to her lead? we are one hour from the closing now. latest and has the we just cannot hold onto this rally. julie: keep in mind the context,
columbus day, volume is trending lower. it looks like we may be extending by a tiny bit ra. stocks have been bouncing around throughout the session and oil we had opec you take the last month was the highest in three years by opec nation. that is helping to push down oil prices. readers writing a bearish stance on oil prices we've seen oil prices down by almost 5%. barrel touch about $50 a , rise against highest $50.13. the bloomberg airline index is rising for the fourth straight day. it has been gaining steam throughout the session, of 53%. that rally helps not just by lower oil prices with commentary from the airlines as well.
if you look at the individual airlines and where they are americanoday, ual airlines, delta, all of the participating in this airline rally. betty: you have oil down, but gold is actually. up. julie: the highest since july. theut --s of by best week ever last week. coming off of that, seeing some decline. betty: thank you. now let's get a check of the headlines in the bloomberg first words news this afternoon.
mark crumpton has more from our news desk. mark: thank you. u.s. cargo planes are here dropping boxes of ammunition in syria, and to a spokesman for the u.s. military commands spearheading the war against islamic state in iraq and syria. thegroups that are received supplies have not been identified, but their leaders were invented and have been fighting to remove islamic state northern syria. angus king is this year's winner of nobel prize in economics. others understanding property at the very basic level. >> people keep congratulating me today, advocate -- and i keep thinking for what? it takes a long time to sink in, and it is hard to believe. i know who to pitch myself and wake up, and there will be no and all the rest of
it. i'm slowly getting used to it. mark: the 69-year-old receive his award and the cash as of $977,000 on the anniversary offered nobel's death and the washington post is criticizing conviction of one of the orders enron, calling it an outrageous injustice. was found the of a series of charges, including espionage. he went on trial behind closed t.ors in an iranian cour the demand follows days of aerial bombardment in cruz visual attacks. russia's actions are of deep ceasen and must immediately. the communityt
colleges roseburg, oregon as students return to class for the worst times since a deadly shooting their earlier this month. oregon governor was on hand to greet the students and she says the renminbi hugs and many tears. , thepeople were killed government his own life. life.men took his own you can always find the latest news and bloomberg.com. betty: thank you. now with more on the market, although the s&p has advanced percent over the last seven days, it does not feel like it because index is still down year to date. the latest poll of wall street shows the median estimate for where it will close this year is 2115. my next guest is a little more bullish. he is the cofounder and managing partner of global advisors. 2325 is the most
bullish. i know you're in long-term bull. did you think that we have impacted the bottom for the year and how are we going to get your target? >> nobody really can call bottoms. everything you would expect in a bottom has taken place. the high-yield has been rallying. washave negative data there a huge synthetic short position that has been reversing. the vix has normalized. i would say that history says this is the bottom. betty: what about the head with that we have seen, the oil, the dollar, do you think that is behind us? >> investors have remember that the dollar to account $11 on earnings this year and oil seven dollars and dollars for those two effects. dollars going to be a tale with the next six months because of
this flattening. by january it will be down over year. oil has been bouncing and that has been a big weight on the canadian dollar so i think it will help currency stabilize as well. i think the headwinds are going away. betty: what is interesting, i was doing a little bit of --earch, back and said amber and back in september you talked to some investors and found that the sentiment was a lot worse than what surveys were telling us. people were thinking we were going to hit another 1987 crash. water investors saying now? you're absolutely right. there are a lot of guys managing money. the shock and the deterioration in stocks was worse than anybody could have thought. and now people are complaining that it is a junk rally. not always happen. energy, that is
always the sign of a body in betty: -- bottom. betty:i'm still trying to get where we are now 22325. i get that some of those headwinds will become tailwinds, but i get there in the next year? >> is part of the discovery process that will happen markets. when the markets get convinced is $10 on earnings, and oil his son, that is $17 share. but he 20 multiple on that, and you would get 340 points added from where we are now. in other words, to the extent the market start to believe dollar and oil depressed earnings, dollar reverse a lot of that. i think that is how we get a big move.
at it the synthetic short position, the oversold nation -- nature, the ones that were not fast. that .etty: the fed will be a factor credibility of the fed in the markets. i want you to hear what they said about this. about tryingorry to figure out with a ready is, because everybody seems to be getting it wrong. confidencehas lost and credibility with what they have had to say. betty: so do you ignore the fact? >> the market cannot ignore the
fed. the central banks can either try to slow down and overheated economy, or they can adjust rates to be appropriate with underlying conditions. we have negative growth rates and it will exist to adjust them. when they do it will be bullish because people realize it is a good sign. betty: if you think they will adjust in december? take anything this year would rattle markets because i think markets just want to be able to deal with what they know. next year makes more sense. betty: a lot of people are pending march as the timetable. gray to see you. thank you. more ahead in the next 20 minutes of the bloomberg market day. emc is being bought by dell for $67 billion. is this money well spent?
itsbout $4 billion from previous bid. stopaker eli lilly will production of a new drug that was not doing well in clinical trials. and the ftc is pushing back the review deadline for office depot mergers. that is according to the associated press. $6.3es wants to pay billion to acquire its one-time rival. you can always get more business news of bloomberg.com. as we have been talking all day long it is the biggest tech deal ever, $67 billion. a will transform dell from
computer maker to an i.t. company. both companies were once tech powerhouses, but they have struggled and they seem a step behind the competition. can they regain their footing? i would to bring in cory johnson in san francisco for his take on this. let's tackle your view on what's dell gets out of this deal. it is very interesting. this is such a big stretch for these guys. enemy gote ultimate b's following the oil, where ell is buying a much, much bigger company by borrowing a time to do it. they say they have the capital committed to this. but this is going to cost them so much more because it is a big stretch for them, where there effectively buying a company more than twice the size of dell. that is a big deal for these guys. getting is a broader
technology portfolio, although it is not that different in terms of the way the technology works and what already he sells in terms of servers and pcs and services. the data arrays that are sold by emc and software go to much higher margins. thatg a lot of product makes it much higher margins which should help the profitability talking about debt repayments for a long time. but it will be a private company. they will be acquiring a lot of employees who are used being paid in stock. there are some changes and things they will have to figure out. betty: you mentioned the product makers. do they have the right makers for dell? cory: we have this massive storage company that he has built. just in a time when the world is going away. this is the stuff you put in your back office for your company. it is house, on premises
hardware. the software to go with it right and services to help it make all work. 16.5 billion in revenue in last years calendar year alone. that business is growing at a much slower pace than it has been because the world, you may have heard is going to the cloud. this is the polar opposite to what amazon is doing. more companies are moving all of their physical infrastructure into the cloud where the do not have to own it and operate it. dow list saying we will be your on premises answer for all of the things you want in your factory and at your business. the problem's businesses are saying we do not want this at all. we are going to use the cloud. dallas taking a big bet that they're going to be the leader in on premises hardware and software and i.t. solutions. they have created a brand-new hewlett-packard, but they are have different management that he has been. betty: and he may not like that
comparison. ibm,e other companies, also going to the cloud, amazon and cisco and others. they look at this deal as they say what? ory: right to think about those committees when you try to see how the i.t. world is shaking out right now. look at dell saying we are going to be on premise. they will argue that they are selling hardware to the cloud, but this is really an on premise leader in i.t.. they will be much more so. you have amazon web services, which is entirely in the cloud and very low margins, better than amazon merchants. they cannot really be compared. you have hewlett-packard and ibm struggling between the two. they have some well-liked offerings for cloud services and so on. but they are still trying to sling the hardware as well and
then you have hewlett-packard trying to figure out how to split their business into two and where the debt is going to go and why both businesses are still shrinking and requiring restructuring. those of the changes going on as the world is moving into the cloud. there try to figure out the role. betty: thank you so much. ahead on the bloomberg market day, investors are pulling their money on bill gross is -- pulling money out of the gross's bond fund. ♪
a lot of people decide to go a performer. understand, he has been better at predicting the big megatrends then necessarily following up. he talked earlier this year about shorting the chinese stock market. wrote,of our colleagues he should have listened to himself, and he has these ideas, but he is not executed on them in the same way. as you say, he lacks behind his ears. give us a sense of how far behind he is behind his peers. this is my first day covering
bonds so i do not have much history. but he has been performing and the bottom third. a very narrow range behind these guys. he lost money year to date. you do not want to lose money. other people have been in positive territory year to date. told: as we know, he has bloomberg very closely on how pimco performs, and he gets upset when they have a better trading day than he does. before me were covering real estate in california. what has been going on in california realist they -- real estate? >> the biggest problem is a
shortage of housing out here. the population, there's a lot of population pressure to grow. and from international investors who want to put their money here in driving prices up, affordability is a real problem. there no easy way out of it. they cannot build enough fast enough because of land shortage and lots of constraints on develop it. -- development. betty: thank you. we will check back with you in a month when you're deeply ins caused -- ensconced. by then you will have plenty of stories. yard is news, scotland polling the officers standing guard outside of the ecuadorian embassy.
they have had officers stationed there on total for our watch after he sought refuge there in 2012. it cost them nearly $18 million to run the operation. failing tod for answer a rape charge in sweden. in pennsylvania, a deep budget deficit and some republican lawmakers think more gaming is the answer. they are predicting hundreds of millions of dollars in one-time license fees. an expansion of gambling would be the state's third in six .ears the only way to get better is to challenge yourself,
and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. from bloomberg world headquarters in midtown manhattan you are watching a bloomberg market day. good afternoon. let's start with a check of the bloomberg headlights on first
word news or crumpton has more from our news desk. mark: there is anger in the streets in ankara, turkey today. protesters are arranged over the bombings that killed over 100 people at a peaceful rally. it turned into an antigovernment measure. the interim prime minister says islamic's date is the primary suspect in those bombings. tomorrow we will learn more about the final moments of flight 17. dutch officials are expert to release the report into the 2014 fatal crash but killed nearly 300 people. it is unlikely there will be any willr-pointing and describe the damaged cause and possibly indicate what weaponry might have been involved. an united nations issued
urgent appeal today for $86 million in food aid for zimbabwe. best advanced an economic downturn in the african nation. earlier this year the government again providing meet for wild animals for prisoners after the writing over the lack of meat in their diet. more than 1.5 million people currently need food aid. pressoint will no longer for the extradition of james walter palmer. he is the american dentist to kill the law client name cecil. to theca now return country as a tourist because he had not broken any of the countries hunting laws. palmer has apologized for killing the lion. that seesaw was a local favorite, or part of a study. the l.a..gif second baseman could be eligible to play in game three of the series with
the mets tonight in new york. the chief baseball officer said his take out of the shortstop was an illegal side. his like was broken and he will miss the rest of the post season. word newsr first right now. it would always find the latest news on bloomberg.com. . back to you. we're just 30 minutes away from the close of trade. i want to head to the market desk or julie hyman has the latest on eli lilly. julie: it has been a big decline or threat the session after the company said it was halting development of a drug that it has been developing in order to bring up good cholesterol. there he number of drugs on the market that target bad cholesterol and bring it down. we are eli lilly shares to get big head. it is taking charge of as much as $90 million.
it is more the outlook for this drug that had been that it would be a blockbuster. take a look at my terminal. we are looking at the research and development spending as a percentage of sales. the green light here is sales. revenue overall pete king couple of years, and reached at low point in 2014. the covenant lost exclusivity on a number of its big drugs. at the same time, absolute revenue has been going down and research and development has been rising to around 24%. as the revenue has followed it has been spending more to try to develop new drugs to replace those big drugs on which this lost exclusivity. although they have come up from their lows of the sessions, they have also been falling. it is developing a similar drug to eli lilly. there are concerns about the effectiveness and their flipside, they are rising.
they had drugs approved by european regulators for some patients with high cholesterol. their offerings will now be more competitive. betty: thank you so much. another stock that we are watching today is tesla. shares are dropping for a fifth straight day after aston martin ceo and palmer says that his company plans to make a battery run car as well. they spoke about the new reality for tesla. >> first of all, it is an overpriced car company. one of the more interesting things is comparing it to other car companies. bmweptember, we think that sold just about as many electric cars in the u.s. is tesla did. >> you think that? but do you think that people
are aware of that? >> i think you have to look at it as a 93 story. car, it is an amazing is not sell as many as the eye three, which is smaller and cheaper. jim told me in the green room. claiming that almost their entire fleet would be electric by 2025. innovationa had is and now other companies are now catching up to them. they have to become car manufacturers. manufacturer is a lot more difficult than becoming a high-tech darling. that is the reality here, that returns a relatively low in the car business. it is relatively capital-intensive. you need huge networks. we are selling 50,000 cars a year, they are all bells and whistles. when he went to sultan million a year, they are essential.
-- 2 million a year, they are essential. >> they would not be a buyer, but i was wondering whether the play years to build up a pretty good patent protection, and then selloff to ford or gm that needs to get into the electric business. >> the problem is most of the technology is other people's. all you have to do is read their page to find that out. they have sold the sizzle and not the state. the market cap is about half of the and obvious but bmw sells 2 million cars a year and tesla sells 50,000. >> are you short on tesla? >> a potential purchaser. >> we learned in august that you are short seller city. let's just talk elon musk. is it elon musk that you are short? has added something to
the evaluation of both those companies. but at the day, as we talked about earlier, it is not about personalities, it is about the business model. akin city, we joke, it is to that movie tin danny develop -- went danny devito. >> that does not make them subprime. compare this to a subprime finance company. the subprime finance market is a knockingrent than guys door-to-door to sell you a solar panel. >> not really. they are taking credit. there are long-term deals. >> deal is dependent on the backend. that is the interesting part. itself around 8%. that is certainly junk credit.
they have a portfolio that is yielding about 7% and they are .efinancing themselves at rate baltimore recent to be bearish on installers. they are selling you power at $.17 a kilowatt hour. is average power building 12.8 cents and it has not grown. they have to get that rate down. solar is slightly more competitive than utilities in california. cheaper than other solar providers. that is the crux. other solar part of writers can -- other solar providers can get it to you cheaper. >> five how to have grateful
sales ratio was for tesla. this is a company with a $30 billion market cap. it makes $50,000 a year. >> joe: valuation is the issue. >> but solace that he is even more amazing. i have a terminal, if you want to check it out. here is tesla to simplify time sales. solar city is worth 15.5 time sales. , they are already very active in tesla. isonder if the opportunity even richer in solar city. >> again, a purchaser. are you sure tesla? we have not disclosed our position officially in tesla. let's just say i'm a very positive on the company. we will leave it on that. >> do you want to be short volkswagon? >> no, we do not want to be short on volkswagen.
i think we would be looking at it on the long side but we have not invested in volkswagen. we think they will survive. betty: that was the founder of conecuh's associates speaking about tesla. not a big fan of elon musk. much more ahead in the next 20 minutes of bloomberg. bernie sanders draws a crowd of about one about martin o'malley and lincoln chafee? democratic presidential candidates will hold the first debate tomorrow night in las vegas we have a preview.
betty: good afternoon and welcome back to the bloomberg market day. it is time for our business flash. leading efforts in the facilities industries. she was previously cohead energy and power investment banking at merrill lynch. french police have arrested six people in connection with that skirmish at a union meeting six weeks ago. they fled the scene with their shirts practically ripped off their backs after they were allegedly assaulted by a union activist. they were protesting a plan by the airline creating 2900 job cuts and longer hours. fiat chrysler spent off will more than $4 billion for the telling american automaker.
inaddition to million proceeds, ferrari will trade on the new york stock exchange. you can always get more business news at bloomberg.com. it is time for the democratic candidates to shine. sanders, jimie webb and lincoln chafee and others will face off in las vegas for the first democratic debate of the selection cycle. comforter -- governor had this advice. >> the authentec, being yourself. rewardns in the end authenticity because that is exactly what they are in search of right now. betty: easier said than done. joining us now from vegas is our very own john heilemann.
be writing hillary clinton and bernie sanders and how they do get out. what is her weak spot? say: first of all i want to vegas? it is my favorite town. clinton, she is a good debater. 2008 she debated against barack obama about a dozen times. i think the consensus was that she did not lose any of those debates except for one. she lost it because she mishandled one question on driver's licenses for illegal that is an interesting parallel to what could happen to her tomorrow. there's so much focus on her and standards are so high that if she makes one mistake on this debate, that could become the big story. she has a very high bar to clear.
as a lot of the eyes of the country are on her, there's a lot of focus on her. or you to perform well can see the narrative shift on her very quick and i have since she knows what she is doing up there. that is always helpful in these times.ons and betty: can you envision where she might stumble or what might stop her in this debate? john: it is impossible to know. moderators are always looking to create some kind of controversy. there will be focus on her flip-flopping. but she has been taking her to the preparation very seriously.
it is hard to come up with a question that a candidate does not anticipate if they are well prepared. it is also possible a questionable come out of left you cannot predict it but it could always have been. betty: what about sanders? as his main job to trip up clinton or what you think he will try to do? of those outside of the paying say he just needs to keep doing what he has been the barbie has to clear is lower but he is never done a presidential debate for so he is totally inexperienced. this will be his first time doing it. i do not imagine you'll attack hillary clinton over and over again he will probably make failed shots at her, but not a full frontal assault. what has worked for him is talking about bernie sanders message.
he will do that before a much larger audience. betty: and what about this tussle within the dnc? the vice chairwoman having been disinvited from this debate from the chairwoman of the dnc. what you make of that? john: the dnc has come under a lot of criticism in the last couple months for only having sanctioned debates. that was me unilaterally. the criticism of it and easy takes personally. i can't want from hawaii, she is one of several numbers of their vice chair level who thinks it is the wrong decision. otherlet criticized it day and then received a call from one of the staffing all saying if you're going to talk like that but maybe should not come to las vegas argued that as
it is invitation or not, but they strong shot from a chairwoman toy vice-chairman to suggest he is not free to speak her mind over the debate and i think this will continue even as may think there is some effort on the part of the chairwoman to protect hillary clinton. that is the suspension. and those who want to see more openness and more tv ratings, though say it is crazy for us to do six, and to punish those who do a non-sponsored event. there a story right now that the do not want on the democratic debate. betty: the more you try to make it go away the more it will blow up. thank you for joining us. covering the debate tomorrow. night they will feature an
betty: this is a sign of the times. another macro fund is set to be closing down. informing their because of the macro environment and how difficult it is to predict trends. let's head to the markets desk or julie hyman has more on this. stocks rise to the highs of the session, but not a runaway session by any means
extending last week's gains. can see we have had quite a draw in it today. this is how volume has trended over the past 10 days. here it is today. to the others. it is 30% below the 10 day average. prices, oil rising above $50 a barrel. opec coming out they affect nation production was the years. in three mostly unable are to hold onto these games as saw. but excitement may be around the corner as earnings season is upon us. bloomberg news and stocks editor has more on this. before we get to the just on this news, another macro hedge fund this one run by mike nova grad shutting down again.
it is a sign of the times. >> absolutely. there are so many coming out about not closing down, but a lot of problems. dividing its china currency unexpectedly, with the fed taking a left turn when they were thought to take a right, it is hard to predict any of these things it is hard enough to be a macro trader. betty: it is hard enough anyway to predict macro trends, but being distorted by -- >> the central bank, back-and-forth, yeah. this one of the more interesting times for hedge funds, that is for sure. betty: earnings are really going to dominate the trade. >> i like to look at this time of the earnings season is we have the functions on the terminal call to the earnings move. what kind of mood or investors expecting in the options market
and who are some of the biggest movers? lastf the things i noticed quarter is there's only one company with an implied move that was expected be over 10%. it is definitely a lot more companies expected to move it on earnings. earnings was netflix. moveted to have about 13% it is not that uncommon. and no one on the list was the company that was formed through the chipmaker. fell 14%.er's they're expecting a 12% move. you can expect some volatility. green mountain at one that tends
to move a lot on earnings. it has fallen for five straight orders -- quarters which tells you that they are in a little bit of a downside. expected to about 12%. the campus amazon.com, expected to move about 10%. that is a veryny wide guidance range, expecting anywhere from a loss of $280 million to profit of $287 million. betty: thank you very much. before we go to break, breaking news. fortress saying they plan on closing down their macro hedge fund run by mike nova grad. we will be right back i .
[bell ringing] scarlet alix: the dollar falling to a three-week low. joe: the question is "what'd you miss?" scarlet: hello dollar stores spurs-- the low dollar along much of the market. -- earnings season jp morgan kicks it off tomorrow. alix: we take a closer look at norway's massive sovereign wealth fund. the very unusual danish mortgage market. scarlet: we began at home with the u.s. stock market. it was closed for columbus day. a low volume in stocks, down 30% from the 10 day average.