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tv   Whatd You Miss  Bloomberg  October 13, 2015 4:00pm-5:01pm EDT

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joe: and i am joe weisenthal. et: stocks closing, the s&p rising. joe: the question is, "what'd you miss?" scarlet: will the report strengthen or weaken the rally? joe: and intel. we will talk to the chip giant. alix: and don't forget about the emerging markets. we are going to get a top fund manager's perspective. but, of course, we are going to take a look at what the markets wound up doing at the end of the day. it was pretty weak overall, down versus its 10-day moving average. the china trade data.
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joe: the longest streak of andining vix came to it after a nine-day or 10-day of volatility. nothing we saw today was that dramatic, with the seller, we did see that. scarlet: and julie hyman is looking at the numbers. hi, jules. julie: revenue coming in better and the grossed, margins at 63%, in line with the company's own outlook. now, intel, like other chip makers, are trying to diversify away from what is not working, the internet of things, for example, other types of memory chips that power other types of devices, and the ceo was saying they executed well in the are, also talking about a challenging
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economic environment, and customers are excited about the new core processor, and they also introduced a three-d technology, so a new category, a. i am also seeing something in the wake of forecast, 2%, plus or minus a couple of percentage and revenue forecasts at these are the and kinds of ranges that intel tends to offer. so in other words, it looks like for the fourth quarter, it is that the revenue forecasts are largely in line for what analysts had been expecting, and they are getting a forecast for the year of capital spending, plus or -$500 million, so those fromto be the highlights
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the statement so far. i in looking to see how the stock is performing, and it looks that we are not seeing much in after-hours trading. shares down a little bit. all right, thank you so much, julie hyman, and as julie stated, intel, coming back down we aree bit to 1.5%, and still waiting for the jpmorgan results. they normally report in the morning at 7:00 a.m. any type ofavoid conflict, they moved in forward to this afternoon. we are still waiting for that. alix: and a bloomberg intelligence senior editor joining us. we went to take a deep live in two things about bank earnings, and the first one has to do with bank loan loss reserves. allison said this one over to me
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before, and when that number is negative, it means that things are actually getting better, that they are spending less money in their account. they are approaching a zero flatline, which could the more in their piggy bank could be left, which means it could be a negative for the economy, so talk more about that, allison. allison: i think the expectation is for cost to be stable this quarter, but i think one of the isngs they are looking at that this is a negative for the revenue environment for the near future, and we are not sure what happened in 2015. on the cost side, they have already been doing a lot, and this is in terms of people
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meeting their targets, cutting costs to offset that revenue, and looking at credit and lower mostly, it will stay lower for longer, but there is opportunity, and last quarter, we already saw this. and i think what analysts and investors are going to be looking at is are there any signs, with the feds watching, for the important credit side, and it is important to know what is going to happen. the piggy bank, it actually helps your earnings for that quarter, so what is your actual underlying premium? there are so me questions about where banks get their growth. they can only release reserves for so long before people come back. they have not really been able to answer that question.
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rebounded, but that has proven to be very volatile, and you cannot count on that quarter after quarter. joe: i went to look at my terminal, something that alison brought up, something not like jpmorgan. that is the goal line versus the 10 year treasury, and it just goes to show about bread and butter banking. up, and therene are more regional banks, and benefit,ally, they and, of course, when we saw rates collapse, it hurts thanks, because their spreads change. pieces, but how do you see the rate environment affecting that? they really have been trading with long-term rates. they are going to be the biggest boost. they show you what is expected
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for rates ahead. banks, whichgional are tied to the bread-and-butter levy, have shown that relationship, and they tend to outperform the market with people think rates are going up, and then the opposite when rates are going down, but even jpmorgan a bank of america, citigroup, they get their revenue from trading. international sources. they still do that, and, in fact, bank of america is one of them. alix: you have been looking at interest margins. tracy: this is a problem, because they also have a custom -- custody this, which also does not do well when they are low.
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of the strength about the jpmorgan business model is the have this diversified source of revenue. they have got trading and bread and butter lending. it seems like neither of those 20 engines are really going to pull ahead. we are probably going to see trading come down quite a bit. we might have a better environment in consumer lending than hard lending. joe: isn't all of the volatility supposed to be great for trading? tracy: the banks were complaining. this is what i say about banks. they are like the volatility world. they especially complain when stocks are coming down and things are volatile, so we are probably going to see that this earnings season. we will definitely see it in fixed. and you feel the net pressure when you're talking about a banquet wells fargo that
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does not deal with capital margins. not the way morgan stanley does. and the relative strength, of the financials versus the broader market, so it does not necessarily mean it has declined, but what it does mean is they have underperformed versus the s&p 500. me see if i can pull this up. this point right here, the financial group has actually gained, but the s&p 500 during that same period rose explain 6%, so some people are saying because of this underperformance, we may be set for some catch up earnings do come in better than expected, and managing earnings expectation. this to myn brought attention right before we got on air, and if you look at the bloomberg terminal, it shows estimates have been cut so much for banks, and this shows goldman sachs.
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alison: and that is sort of building on the expectations. goldman, what expectations are s, and thel market decrease we have seen over the past month shows that expectation has really fallen. as i look at this, one of the things i will be focused on is the commentary. we really did not see that. there is the cycle where commodity prices collapsed. we started to see a bit of a recovery, and i think everybody runof the mind that it has its course, a maybe we can start looking at how to price things once again, and then the bottom fell out once again. tracy: and a huge chunk have
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been funded by wall street. they have been funded by places like goldman and jpmorgan, and now with the follett in the commodities complex, this could potentially come back to affect banks, and we have seen some rumblings. we have seen jpmorgan saying that banks may have to take some sort of write-down and the second half of beer on the energy exposure. that said, banks are kind of in control of the oil market. they can choose to keep refinancing loans and keep extending credit, and that provides a little push and. -- a little push back. want toey are going to get paid, so it is a benefit for them. in order to get their cash back. tracy: right, but the big thing is the regulators. a lot of them are energy companies and oil firms. they could potentially put pressure on banks, and that is
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the point where he might see some banks turn away from markets. and the reason we were paying attention to this was they have a lot of issues that are pacific to their industry, including challenges with higher but there was a report that indicated that financials are a way. they make up 16%, but in terms of earnings, the make up to 21% of earnings in the s&p 500, so the showing up the banks might jeopardize the broader market recovery. alix: it also seems things like ipo's, we can get a read. alison -- what is your take on that? higher volatility, so investors are going to want to sentiment,that, ceos
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and once volatility dies down, eventually closing, so it could be a differential. from a broader economic perspective, i think investors are going to want to hear about are the banks seeing in the weakness, are they seeing any feedback from the market turmoil. we talked a bit about energy credit. very positiveome trends on the consumer side, and so for someone like wells, yes, energy is worsening, but mortgage credit is still getting thatr, and overwhelmingly, is leading to a benefit. also joining us to discuss bank earnings is a columbia university joining us now remotely. professor, we have been talking
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a lot about the different issues. to thoseoing to happen reserve loan losses, and are we going to see more money basically kept in that piggy with a more difficult macro economy? what do you think? professor: the rat has run through, about their size, and loan losses, when they come back, they do not really have a big effect on market value, but the big problem with jpmorgan ,ight now is what is the story and if you look at their price-to-earnings ratio, it is about 10, which is half the price earnings ratio for the s&p 500. if you look at their ratio, it is about one. the ratio is higher for many other banks in their class, and wells fargo is i think about the issue for jpmorgan,
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i think, is where is the gold coming from, that i think i heard you talk about the problem, and that is very much because low interest rate help keep this low for so long. it is hard for banks to get value. you are paying more interest. when interest rate are zero, there is no savings. before,ou also said savings are limited. professor? hold on, because the numbers are coming across. scarlet: adjusting for one-time items, you're looking at an eps that is lower than the consensus of $1.38. the second quarter, as well. the third-quarter numbers, to in legal1 billion costs. i do not know what the legal costs refer to, but $2.2 billion
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in tax benefits, and there are a lot of moving parts here, as is usually the case. in terms of credit losses, we're just talking about the money for that loans, and this is $82 million for the third quarter. year at this time, it was north of $900 million. $935 million. jpmorgan,ary from saying results were decent this quarter. in terms of the other business $2.89net revenues, billion. and then the commercial bank revenues, and corporate and thattment takes, and includes the trading option, capital markets, and the investment thanks. $8.17 billion. in terms of how they are trading in the post-market, reaction to
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the jpmorgan results, it looks like it is 1.4%. again, not number, the most pessimistic forecast, but certainly lower than the consent is. -- consensus. have cut their estimates for jpmorgan p and we are talking about a much lower bar. alix: it is a much lower bar. i have no idea what is driving them. but there was a lot of talk about this competition, penalty that jpmorgan and a bunch of other banks were called in. that might be one issue. strikes me when looking at the jpmorgan balance sheet, which seems to have shrunk again, and we hear talk all the time about regulatory pressures, and we are seeing that bear out in numbers. the $1.32, when you
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back out the tax benefit and the legal costs, what is the word i am looking for? it was $1.32. no, i'm sorry. that was the earnings per share, but, yes, this commentary from , hejpmorgan ceo jamie dimon doesn't knowledge a challenging global situation. the consumer business benefited from trends and credit quality. putting up less money for bad loans the thing speaks to that. >> we are looking at that. was that a surprise to you, that they did not have more money in their piggy bank, alison? alison: what they specifically said in terms of what is going
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on in the different areas, although mortgages continue to be a great area -- gray area. those are likely continuing to and we aree energy, probably not seeing losses, but we are seeing some divisions for it just those areas. fixed income coming in a $2.93 billion. investment banking revenue is slightly higher at one point $5 billion. all right, thank you so much, tracy, as well as alison from intelligence," and we have more behind these numbers, right after the break. ♪
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alix: i am alix steel. "what'd you miss?" let's get right to julie hyman. julie: interest from two of its including western digital. according to our reporting, they were in talks with sandisk about acquisition. sandisk would be, if it was acquired, part of what we have seen thus far this year. a busy year, the industry capped off by intel, the acquisition of alt expected to be completed
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next year. gera, sandisk of a similar size, a market cap as of the closed today of about $12.6 billion, they are up by around 13%. a disclaimer that you usually gets is that nothing has been made yet of the acquisition. it may not result in a transaction. alix: all right, thank you so much, and with us is charles from columbia business. thank you. you have heard the numbers. million, about $682 year on year last year, $900 million. can you extrapolate what that is for how jpmorgan economy? professor: well, i do not know how they see the global economy, but this is not a major source of news for them on their stock
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price one way or another. there is some exposure in other areas. i do not think there is any new story coming out about credit exposure or about any particular game that is going to benefit stockholders coming from recovering some of those reserves. that this is really not a very big part of the story. the big question here is when will jpmorgan have a growth driver? because, as i said, there's p/e that of the s&p 500. one issue is monetary policy. i know it is not great to tell you on the news program, but there is not going to be a lot of news about jpmorgan. they are not going to be making
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spending cuts in the near term other than to say they have already done a lot of cutting. there is concern, keeping price depressed, monetary concerns, and whether they are going to start raising their interest rates. or whether the monetary policy will be, let's say, more reassuring print the market is not getting a lot of respect to then in terms of multiples, and i think that is why we are really seeing this kind of stuck. calomiris, we have the democratic debate tonight, and they will take turns criticizing wings. another round of tough regulations or regime change in anyway that could hurt major banks like jpmorgan? miris: it is hard to say. i was on capitol hill a couple
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of times the last couple of months, testifying on various issues that are relevant to this. there seems to be some bipartisan interest in getting thanks -- getting bank lending up again. of appetite a lot in congress to do anything too romantic that would be too disruptive -- anything that too dramatic or that would be too disruptive. going populist on this issue with the big banks, i think there is a right to be concerned. on the other hand, i thought the hillary clinton announcement that she had for wall street and how to deal with them were very reassuring. that is although she is talked tax ideas for wall street and new regulations, it was all pretty much within the context of the existing law, aggressive, so i
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think it's a -- it's a main street candidates from either party is nominated, that i do not think the risks are very high. over the next couple of quarters, what might be the context? calomiris: how much intangible value creation banks they really have been leading the class for the megabanks, and they continue to do so. their recent acquisition of ge i think is kind of interesting in that respect. i would say among the big banks, jpmorgan is still kind of in the middle. charles calomiri s from columbia business school.
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scarlet: coming up, intel rising ♪ inshares after-hours trading. ♪
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♪ scarlet: i am scarlet fu. "what'd you miss?" let's get to mark crumpton. benjamin netanyahu says they are working on aggressive steps to respond to the worst of violence and the 2014 gaza strip war. came in the middle of a meeting with senior security officials, and the speech also came as more deadly attacks occurred, and authorities say two a
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palestinian man boarded a bus and began shooting and stabbing passengers. another attacker ran a car into a bus station. two of the attackers and some bystanders were killed. and the 2014 downing of the malaysian airlines jet over eastern ukraine, a milestone. the reports that a russian-made missile brought down the jetliner, fired from it area where russian backed rebels had been operating. the prime minister disputes the findings, calling them an attempt to make a biased conclusion. the report also said ukraine should have shut down the airspace. and scanning sites in colorado as possible alternatives. search is part of a long-delayed effort to shut down u.s. detention centers in cuba. gitmo,soners at including some cleared for
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release. and joe biden has not said he is running for president, but that has not stopped a super pac from backing him. mr. biden thought the initial spot was two personal, focusing on the 1972 car crash that killed his wife and daughter, and the ad airs on cnn tonight ahead of the first democratic presidential debate. and that is your news. back to you in the studio. thank you so much, mark crumpton print let's go back to jpmorgan. company reported adjusted earnings-per-share of one dollar 32 cents, missing the consensus estimate. it also represents a decline from the same time last year and from the second quarter. over the past months, 20 one analysts have ratcheted down there estimates for jpmorgan, so a lowered bar.
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decline from last year, jpmorgan blaming the , andg revenue that fell having said all of that, capital markets and trading would be a real sore spot for the bank. it turns out all of that manage expectations that jpmorgan did leading up to the results did affect things. the equities revenue topped analysts estimates. in addition, also better than expected. and in terms of credit losses, the bank set aside millions for bad loans. put is down from what was aside last year and in the second quarter. which was amazing. scarlet: all of the energy credit, right? alix: right, in breaking down
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jpmorgan. johnson has more on a stock that is up in after-hours. cory: joining me now a guest from the intel headquarters. stacy, when you look at the interesting moving parts, what i was really struck by what was going on in the pc business, and the continued declines we see. both in notebooks and desktops. what have you seen? and theh what we: business has been offset by what you saw in the pc segment. the pc segment came in actually a little better. the quarter was a little better
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than we thought. you saw better pricing in your chips sold. you were thinking that the lower volume, it would be tougher to get price. ith: for us, it comes down to innovation. quarter thein the architecture. we saw today apple making an with the imac and s, so that is giving us a bit of an uplift as we go into the third quarter. cory: the macbook is an amazing machine, working on an intel chip. mr. smith: yes. you saw increase in the
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average selling price and also in volume. what is going on? smith: yes, so we saw 12% revenue growth. the first half was closer to 15%. generally what we are seeing cloudis very, very strong marketing, and that is significantly outperforming expectations we had at the beginning of the year. with the datafset center. this correlates closely with overall economic growth, and that is what we thought when we started the year. to your question, that is consistent with what we have had for several years in the data center. buying richerople
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configurations, and there is less space, and so you have more computing power per square foot. cory: interesting. the gross margin march, if you will, after taking a big hit, the guidance for next quarter was for a slight degradation in gross margins. mr. smith: i think you have to take a longer-term view of gross margins. range isl gross margin between 50% and 60%. as we have done more innovation and have focused on cost and 65%, or what we're seeing over the course of 2015 is the high end of that range. the fourth quarter. we are manufacturing more of our product, but it is still a bit more expensive.
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that takes it up a little bit, but it is pretty normal, and in the higher range than we have seen. cory: as she pointed out, better than you have seen. the internet of things. i have been trying to talk about --without being too height hype-y about it. is hard to not fall into hype, but we're seeing more and more devices that are intelligent and connected that are now becoming intelligent and connected. it is growing fast. but i think different from a lot this being a see tremendous growth opportunity for the country over the next several years.
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many that were not intelligent and connected are. that is good for us to sell products. cory: altera? smith: when that closes, it will give us the ability to take programmable logic. cory: you can get aztec-y as you -- as tech-y as you want. we can't take it. mr. smith: their secrets, their algorithms, and program it. that is going to be huge in the internet of things and at the data center and will allow us to have devices that will provide real value to customers. with the integrated product, it will be really, really cool. cory: thank you, we appreciate
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it. mr. smith: thank you. a selloff in stocks, currencies, and bonds. a ♪ performing manager, next. ♪
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scarlet: i am scarlet fu "what'd you miss?. third-quarter earnings beat analysts estimates, helping to make up for a slump. thelargest railroad in eastern u.s. had earnings per share ahead of analyst estimates of $.50. csx reaffirming its
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forecast in the mid-digits. alix: anheuser-busch him back ,as agreed to buy sab miller and sab miller has rejected several other offers from ab inbev. wells fargo is buying ge assets, and among them the corporate and financial distribution business. they had been shrinking the finance are to focus more on operations. apparentlyandisk has received interest from two arrivals. western digital and another are said to be in talks with sandisk about a possible acquisition. and that is your bloomberg business/. scarlet: the last wave of the global financial crisis?
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we have a chart that shows how s happened caught in a tailspin that now threatens global growth. with emerging markets at blackrock. are we?here would it be the second inning? fourth inning? goldberg: this is important for emerging markets, because it is mostly correlated with prices. there are some that are behind that, like china, and also manufactured. joe: one of the stories we have analystshat obviously of anoted it is not as big
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deal as it looks because so much of it is domestic that it is not as important as it was in the 90's. what is your take on this? the debt markets are much stronger? have much more depth? goldberg: i think both statements are true. it makes a big difference. in the 1990's, or going back to the 80's. , exchangeve a tool rates, and you have way less rigidity than you had before. currency pegs are not as rigid as they were? goldberg: back in the
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1990's, almost every other one was paid to the dollar. right now, that is not case. even 30%, 40%, 50%. not as much on the debt side. it is the beginning of a solution. joe: you were at the imf meeting. what are the big concerns there? erg: it was whether or not there's something in the market that was bringing them the slowdown. it was really surprising. you know, there is way more talk about the fed right here. everybody just waiting for this to happen. : talking about the credit and the debt, we have seen asian , and starting to lever they have a long way to go with
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the developed markets. what about as credit markets do seize up? debt, iterg: fueled by became more intensive, the growth that we had. -- theyt in the sense are slowing down the pace. is less means there fuel into growth. you are going to have to find growth some were else. a lot of it depends on what because theyina are integrating, and that is why this morning it generated a little bit of noise. but, yes. productivity has to come back. scarlet: there is noise,
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stresses. which is the easiest to quantify, and which is the hardest to quantify? it is very much concerned about the pace of capital outflows. i think some of those risks have moved away, and some numbers are better than expected. this is a little bit better. that will take a little more worstbut some of the risks that we had are probably now gone. will getall right, we some more specific recommendations from you. pablo goldberg. and about the fed moving interest rates. ♪
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alix: i am alix steel. "what'd you miss?" goldbergack with pablo of black rock, and they were talking about turmoil. investing in the emerging markets, brazil, india, we'reia, and a lot saying going to invest in the u.s., as , but it ise world is much better than it is anywhere else. joe: pop, i want to get your take on brazil. we have seen one company come up , still elevated. what is your take on the
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situation? basis points.400 i am not necessarily more bearish on the outlook. the beginning of the movie is continuing, but what is very confusing is the crux of the whole problem. explaining already the elections in 2018. the opposition does not want the government to do well. they want to continue to do something that people like. and then you have the judicial investigation. it keeps the whole discussion. it is very confusing what is and if the climate does not clear up, it is very difficult.
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around.sentiment turns joe: so we will have to wait. it is unlikely we will see much of a turnaround. ldberg: there is so much going on, congress, structural reforms. a tax to get things going. there are too many things going. in brazil, it is not that important. petrobras. what they had in their revenues. the government is biting the bullet on that. if you look at how brazil does, versus other bric
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countries, brazil is the only bric countries that has seen a decline. russia, by the way, has done better. , ande recovery in oil there is little change in china data. so russian fundamentals. anglesking the political ? mr. goldberg: how politics affect investments, and this probably has stopped being the case. we at blackrock, we took very important decisions. and then we realized that sanctions were never going to get to the level, and then we came back. one of the reasons we like the country the most. to the point of what is from the right now
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1990's, it is what currencies can do, and currencies can do a lot. this is for the first time in 10 years probably. joe: one of the things we have been talking about this year, the trouble for emerging markets, is there anything that is not priced and? i know you are saying down in lima, people were talking about the fed. can we just ignore the effects of the fed? the first rate hike could potentially bring some noise. i like the way the governor put it. get it out of the way. do something that reduces volatility. very slow in time. alix: so a good rate hike, helps with volatility.
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that is a good contrary in view. berg up blackrock. we will be right back. ♪
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scarlet: i am scarlet fu. "what'd you miss?" bank of america and wells fargo out. earningsreported revenues that missed analysts estimates. --alix: andt tomorrow, netflix. it is about subscriber growth. very critical. joe: and another critical number, we get retail sales excluding gas. 0.3% of a rise the month before.
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alix: is the volatility hurting what we are actually buying? all right,
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mark: i'm mark halperin. john: and i'm john heilemann. "with all due respect" to democratic candidates debating here tonight, you can run, but you can't hide. ♪ baby, vegas.gas, good evening from the first democratic presidential debate. we are at the win hotel -- winn hotel here in sin city. although you could call it spin city. it's the spin room, the spinderdome. we will be your spin buddies for the next hr


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