tv Bloomberg GO Bloomberg October 19, 2015 7:00am-10:00am EDT
crisis. what it means for the rest of the world. and brazil takes a beating. its economy is in shambles. could its president face impeachment? difficult welcome to "bloomberg ." i'm david westin. stephanie: i am stephanie ruhle. david: it is a bank morning. stephanie: here to kick us off, our own christine harper, finance under, and stephanie mehta, editor of "bloomberg live." we have a big day. david: we do. i am looking forward to that interview. stephanie: tweet me your
questions. i need some help. david: earnings just came out for morgan stanley. we go to matt miller. matt: we're looking at a big miss on morgan stanley earnings. profit was $.48 a share compared to $.83 earlier. but if you take out an accounting gain, it was 34% skim -- it was $.34. $.34 compared to $.63. obviously a big miss on the bottom line. we are also seeing a big miss on the top line. a $.5e looking for billion and we got $7.7 billion instead. so missing on the bottom and the top line. the reason morgan stanley says is a loss of private equity investments. that is no surprise to we have seen that across wall street. it is definitely affecting organ stanley, combined with a loss, more seriously than other banks. harper,e: christine
when morgan stanley is saying there is a loss in their private equity investment, do they have -- christine: that has been an issue particularly with goldman sachs in bad quarters. they have had to markdown investing and lending. morgan stanley has not traditionally had as big of a business in that area, so it is surprising to me that they have to write down asian investment so specifically. it does strike me as surprising because we thought that morgan stanley had gone after asset management and private wealth, and they were more protected from these variations. it seems surprising. stephanie: we are going to be talking about some of the other bank ceo's as well, so really
interesting to see what other fallout there is. stephanie: james gorman has been the guy. he was the first bank ceo to say private wealth management is the way i am going to go. he got criticism then. since then, he has been the one to follow. are going to lean into private wealth. the guy who is the shining star in private wealth is sucking wind. what is it going to mean for those guys? >> maybe gorman has had more of these risk assets than he has led on. the investment story with morgan stanley is that we are going to be more steady and we will not take more bets on asian investment. a thing that will come as a shock to investors and they will have to revalue the company. if you look at them compared to deutsche bank, in the news today as well, deutsche bank is trading at half value. morgan stanley is trading at
about book value. morgan stanley shares this year have been down, probably because the equities market is down. that is a big factor for a company like morgan stanley that is more dependent on retail brokerage, people buying stocks. stephanie: except are trading is down 41%. they lost so many people and have taken so much capital out of that space, and still they are down 41%. what do you make of this? >> beyond me. i defer to christine harper whenever it comes to morgan stanley. probably knows surprise. i do not how the 41% decline compares to what analysts were expecting. they named the head of equities to oversee all trading in fixed income. they had not had anybody in that role in a while, so they have had to reshuffle management and
that may have been a factor. matt: fixed income trading is down 41%. morgan stanley had a pretty good first half in fixed income compared to its competitors on wall street. thispoor as far as quarter. revenue was short of estimates, down $1.2 billion. equity trading was unchanged. we looked for strength in equity trading from this bank. i pulled up the shares so you could see -- they were only down 12%, 13% this year. it in the third quarter alone you have a 30% drop. stephanie: you have to break down what is inside fixed income macros. mike no regrets just shut down shop -- mike nova grants -- mike nolo gratz just shut down shop. we saw the high-yield market freeze at the end of august, and the calendar has backed up. deals that were clearing at 6% are now possibly clearing at 11%. and this will not get better
before the end of the year. >> morgan stanley was the firm that you thought might be insulated from this because they had not made this big bet on fixed income. if it was deutsche bank, you would have expected to have a tougher time. david: i am curious about the larger story of the banks. we have had a series of reports over the last week. mayppears that wells fargo be the best positioned because of their heavy position in retail banking. and the others will have problems adjusting. stephanie: it is interesting that you bring up the retail banking situation. i think i am talking more anecdotally and i do not have the numbers on all of the banks, but if you look at the smaller banks, mid-cap banks, the ones that are doing pretty well, a lot of them are focused on --ail consumer as opposed to i will be talking about this later -- these banks are so
massive and so hard to manage. stephanie: if you think about the kind of businesses they are moving into, what will be the future of jpmorgan or deutsche bank? buy ajpmorgan looked at european bank now? why would they? they can hire whomever is left there. they can hire those individuals, even if they are willing to work at a big bank anymore. if you're seeing revenue down in fixed income, 41%, why would you want to work in this business? the fact that deutsche bank is putting garth ritchie in charge of their fixed income business, a guy who has never set foot on the fixed income trading floor, you are making a statement. david: but this is your old shop. my impression is that fixed income was a strength of deutsche bank. stephanie: it was a shining star for credit suisse and morgan stanley. this is where you had some of
the highest-paid people in the organization. but that party is over. >> it is less sophisticated in terms of the greek -- of the degree to which technology affects it. they do not need to pay traders millions of dollars. >> it is not as reliant on high paid people to do this. ultimately the fixed income markets are going to go toward that. you are seeing that in foreign exchange. david: i wonder whether in the larger story of the banks, is it a matter of, because of the regulatory environment, we are looking at banks moving from higher-margin, higher risk business into lower margin, lower risk business. that is a tough transition to make. christine: there are certain regulations affecting them no matter what risks they are taking in the assets.
ratios means that they do not have capital against their repo books. all of their businesses are having to re-bank what kind of deterrence -- of what kind of returns they can have. at least you can make a return on the capital. if you are just trading treasuries, the return opportunities are lower. stephanie: you have to look at how these stocks are performing. morgan stanley stock is down after they cleaned house. is halfe: deutsche bank of book value, and morgan stanley is trading at value. you have to keep that in mind. david: we will have to talk more about deutsche bank before we are done. christine harper, thank you for joining us. peter coy and stephanie mehta, please stay with us. jamie dimon -- he will be talking to stephanie exclusively in an interview. what would you like to ask him?
stephanievonnie: welcome back to "bloomberg ." buy ad is in talks to german competitor. wincor provides hardware and software for atm's and cash registers. wincor this year announced cash restructuring programs. government is cutting prices on some contracts. oil accounts for 80% of saudi arabia's revenue. in london, property prices had
another record. almostprices went up to 975,000 u.s. dollars. the numbers of property for sale have fallen 16% in the last year. go.d: now we go to global today we had to hong kong, where we saw china us economy expand quicker than forecast. still the slowest quarterly expansion since 2009. enda curran joins us from hong kong. we saw those numbers overnight. why don't you try to explain them to us. enda: good morning. it is something of a mixed picture from china. there is still plenty of softness. services and consumption are doing well, which is a key part of china's plan to transform the economy. but on the other side, the manufacturing sector remains weak exports remain challenged. there is still a lot of solvency in the real estate factor.
gdp in the third quarter was better than expected. but there is a lot of issue on bonds that still needs to be ironed out. a long economy has to go way before it stabilizes and is revamped. stephanie: what is the market reaction to all this? the market took it in its stride because the volatility -- the currency has rained stable. the stark it -- the stock market has remained relatively stable. people are looking for maybe a pickup in growth going into the fourth quarter. foreign investors are waiting to see whether their own stimulus steps will pay dividends for the end of the year. david: enda curran from hong kong. thank you for joining us. one of the things i am curious about, there is a talk about
come as manufacturing goes down and services come back -- to those have the same effect on the world economy? we know that a manufacturing infrastructure, there is a lot of imports. is the same thing true when you go to the services side? >> it is undeniable as you go from a manufacturing to a services economy, you will see less imports. having theirumers hair cut and going to the cinema does not joy in steel. -- does not draw in steel. even if the overall number remained robust, it might still affect the world economy. affect thecertainly world economy, but different parts of the world economy. you will see those companies and countries that have been benefiting so far -- the commodities exporters, luxury goods exporters, we have already seen them suffering.
but you want to see them rebalancing. you want to see goods being imported that appeal more to the mass market. you will see more of the production of those goods as well. matt: bloomberg has its own proprietary index so that we can more closely, realistically estimate chinese gdp. you can see the white line is china's official number, and the magenta line is the bloomberg proprietary index. we take into account a lot of the official numbers, like electricity production, retail sales, etc.. but our number comes in half a percent lower than what china officially estimates. some have suggested that the chinese government may simply inufacturer false numbers order to beat analyst estimates. stephanie: peter, what do you think? >> to me, those numbers look quite close. we are talking about the world's
biggest nation by population and the second-biggest economy. the numbersll take that make essentially the same point, sloan -- slow deflation in growth. talking about the transition from production-led and export- production-led growth. any country that competes with china in the production, now you have less stuff coming in from china. what this china take and what does it make? it is not so bad for the countries that make the stuff. i was thinking about all of the manufacturing the left china. has become so expensive in china, as you see
in india and vietnam and all the other countries benefiting from the fact that manufacturing is happening outside china. stephanie: they look at this number, what do they do? >> what you want to look at is the trend. we are seeing a stabilization of growth. what you want to look at now is, do you believe that the chinese toernment has the policy maintain that or force it to pick up. if you believe in the trend toward manufacturing and away from services come on both fronts, i would take an optimistic view. there are a lot of opportunities in china. we are likely to see more reduction in reserve ratios and cuts in interest rates. it is happening on the fiscal level as well. what we are seeing now is a major chinese policy called one belts, one road, which is trying to create growth in the western countriesin the
surrounding china. the cynical way to look at that is exporting chinese surplus of cement and steel. the opposing way to look at it is fostering china growth in those regions. there is a transformation to consumption and you have a generational change. you have younger consumers who want to get out there and spend. these are not the old consumers who grew up under mao and want to save their money and are conservative. it is more like the western world and you will see a shift toward consumption. by no new investment coming into property, that will reduce property overhang, and you are starting to see prices pick up. in an economy where 75% of wealth is tied up in property, there is a positive effect on consumer sentiment. i would take the positive view. i would take the view that we are likely to see 7% growth over the next years. stephanie: invest that way only
if you long-term locked up money because china is not a region for day traders. simon, thank you so much. peter, stephanie, you're not going anywhere. we have a lot more "bloomberg " ahead. more on china. it holds the largest part of u.s. debt but now it is selling it off and no one cares. that is coming up next. ♪
how much debt -- how much u.s. debt china has? if they sell it, what happens? somebody gets the treasuries and china gets the money. what this china do with the money? it can buy american products. that is a good thing for us. it can buy vietnamese products. then they put the money in treasuries. whatever money comes out of treasuries from china goes in somewhere else by the back door. what really matters ultimately is how attractive treasuries are as a product. let's get down to basics. who holds them is a secondary concern. david: and we want to buy them. other people want to buy them as much as china wants to sell them. peter: china has reasons for reducing its stock and treasuries. but if china cannot on net pull of putting money into the u.s., unless it wants to run a trade balance with the u.s. -- which it does not want to do -- it has
to be willing to put money into u.s. assets. david: people want to buy them for what reasons? u.s. treasuries? peter: they are the safest investment you can put your money into, and because as low as yields are -- 2% of the 10-year -- the prospect of them rising has gone down. gom not saying the yields down, but they will not go up david: -- all roads david: lead back to the fed, stephanie. the latest on emerging markets economy and positions coming up ahead on "bloomberg ." ♪
walked out the door this morning could stephanie: welcome to winter and welcome back to "bloomberg ." david: joining us is peter coy ehta.tephanie made u let's start with the first word and go to vonnie quinn. vonnie: john kerry is common on palestinian leaders to end what he calls the senseless outbreak of violence. he will meet with them this week. another attack last night after a man with a gun and a knife opened fire at a station. one soldier was killed and 10 people were wounded. the attacker was killed. the u.k. is counting on china's president to open up the treasury during the his trip there. chinese officials say the amount of investments deals that he would announce during the trip would be "huge." here he is at buckingham palace. end of the road for stephen harper the conservative party after a decade in power. s vote in tight liberal
elections. many believe that kudo will be the next prime investor. those your headlines for today. stephanie: tom keene is back from london and joins us with his morning must-read. dr.i'm going to do kissinger's op-ed from "the wall street journal." it was clearly the read of the weekend on syria and on strategy and tactics. i thought was great was no a feldman. he is one of the brightest lights and american law up in harvard and is really quite good. this is on copyright law. , david,in, i'm baffled by this idea that you can sample something, take it clean, and not have compensation. the twist this morning is that it goes to egypt and european laws. we will bring it up here.
noah feldman -- the suit relies heavily on the moral rights of an author, the future of egyptian copyright law that is common in european legal codes. that was in michigan four years ago. but it doesn't exist under u.s. law. it's doubtless that the air is going to take money damages in lieu of an outright ban. stephanie: guess what? we have a sample of it herein e right now. let's take a listen. ♪ stephanie: sean carter. david: this is jay-z's version. ♪ they do some pretty similar. from "stairwayck that ifn" and further
the issue at hand here is the direct sample. as with the tom petty case -- stephanie: how about marvin gaye's family with "blurred lines" and robin thicke? david: i hate to be a lawyer here, but these are two very different cases. when you talk about stairway to heaven, they did not license the rights. my understanding is that in this instance that they pay the owner of the copyright. this is a moral rights issue, which is in a civil code country in napoleonic code with common law. we do not recognize that ending united states. if we pay the person who owned it, we are good and clear. in europe, they said no, the original creator of it also has that survive that you have to pay them. this is a very different kind of case. tom: i like the distinction that they actually pay them the fee. asked if he mentioned, there is a lot of money involved. stephanie: a huge amount of money involved. they're not just paying almost to a song from decades ago that
is now getting popular again. they are making millions and millions of dollars off this music. tom: we should launch a discogram. stephanie: forget about paying a marshes. david: i think it is a fascinating story. this is a big issue in a lot of trade associations going on. these intellectual property rights and the different treatment around the world. on the other side, if you said that -- stephanie: they do have to break the sound. the thing about music today, whether you're talking about the beastie boys, girl talk, or anything out of rock nation, everything is sample. mash-up is the keyword at this point. the question is -- how are you going to pay for it? david: if you are a creator or composer, i'm not sure the best thing for you is i am not going to sell my rights. if more right survives, you have not sold your rights. i do not think you come out better. by the way, for the record, my
piece for the large you've was from the solicitor general's office. tom: i have read it. stephanie: for the record, i do not want danger mouse to go anywhere. i love mashup. david: thanks for joining us. i like that suit that you brought back from london. it is very dashing. tom: i feel dashing. david: stay with us please, tom. turning to brazil, the leadership is under pressure. thea rousseff coming to defense of the embattled finance minister, saying she would not be pressured to be ousting him. what happened there if i can explain it is that they brought him him last february or something like that and to much six theto try to creat economic disaster that is brazil. he has come under a lot of sniping. let us bring in julia to explain to us if this is really a political drama from the way that it looks up here? very: it has been a
dramatic situation and reacted sharply friday that he had drafted a resignation letter and was going to hand it to dilma rousseff. the finance ministry denied that he planned to quit and he stayed over the weekend. said that we agree with his policies and that he stays. it would be quite a dramatic situation if he left after brazil got downgrades in the past three months. david: she cannot lose them, can she? julia: not right now, i don't think so. the question is -- who would replace him with the economy the way it is? who would want to take his job? stephanie: how about to replace her? [laughter] julia: that's a great question and has been impassioned with impeachment talks going in and out of the newspapers. lastly, it seems that the talks kind of slowed down because of the supreme court doing an
thing withkind of the procedures put in place for impeachment. they were not valid so that slowed down a little bit, but it is still a risk at this point. toid: some people might want replace her same could the brazilian misery index has gone up, up here russia has gotten a little bit better. brazil has just increased or decreased as a great place to live. you can see china in pink. the u.s. in yellow. brazil is getting up there with russia, which is pretty bad as far as inflation plus unemployment. david: this is a very large economy. how much of this is commodities? tom: it's a huge influence on commodities. i would also say in china as well. the basic idea here is what happens if commodities rate further? that is the distinction of the
debate, right, peter? brazil isdependent as on exports to china, overall, it resembles the u.s. in being a large continental kind of economy that has a lot of its demand coming from domestic sources. so even bigger than the commodities issues and the china issue is the political issue, which is what julie was talking about. i think if you look at the fundamentals for brazil, they do not look terrible. the country still has $3 billion in reserves. it has fairly low debt to gdp ratio. it has enormous capacity to grow. what is hurting it is the political paralysis. the world's investors do not have any faith that some fairly doable changes will be made. for example, some retrenchment on fiscal spending. investment -- what brazil
needs more anything to grow this economy is new infrastructure. octoberill watch in what commodities do. it's a major mystery right now. do commodities get stability or breakdown to new lows? stephanie: how sensitive this brazil for that? tom: hugely sensitive. the key point to peter's point is not only sensitive on a market basis, but massively sensitive on a political basis if commodities break lower. david: there is a real issue with reform in terms of rule of law down there. dois a very tough place to business. there's a lot of corruption that has not been addressed. stephanie: it is interesting that julia points out that they are not sure how to do about the impeachment process in their own country. the challenge to dilma rousseff is coming from her own party, which is interesting. when you talk about who would replace her, i think it is her own party seeking to unseat her. they are upset that she is evyeloping -- defending l
and his policies, which are more austerity and financial discipline, something that i think investors are looking for. this is a classic case of politics where her own party, some of the rhetoric that she stated to get reelected , but the reality of running brazil is that you have to be more fiscally responsible. stephanie: are you watching washington? that comingot feel or not the only hot mess in town. not gond stephanie, do anywhere. tuning in at 2:00 p.m. eastern today for an exclusive interview with the san francisco fed president, john williams. when we come back home we are talking drugs. valiant has raised the price of one of its hard drugs by -- ready, are you listening? 525%. it might be legal, but is it ethical? the diabetic drug of 500%.
vonnie: welcome back to "bloomberg ." i'm vonnie quinn. morgan stanley posted third-quarter earnings that missed estimates. the bank had the same problem as some of its competitors. a drop in fixed income trading revenue. morgan stanley reported losses at asian equity indexes. the iranian oil minister says the cartel should cut production so prices rise to the $70 barrel range. that included selling for about $50 a day. opec has exceeded official production targets for 60 months in a row. media tycoon oprah winfrey has taken a 10% stake in weight watches. shares of weight watches have fallen this year. the company is expanding its focus from weight loss to helping people live a healthier
lifestyle. that is the news that you need to know at this hour. is trading up this morning after reporting third-quarter earnings that beat estimates. cynthia kunz is with us now to talk about value. explain to us -- we've talked about it a lot over the last week or two because there has been a possible department of justice investigation into this rampant increases in prices. there are also some democrats calling for subpoenas in congress could what is going on and what is the real issue with the price increases on the drugs? a model valiant has had where they have taken drugs and they bought them in a push the price appeared there has been no secret about that. it has been an well-known for the last couple of months. it started to come to probe looks me -- public scrutiny because they were caught on doing this on an old drug by a significant margin. now in congress, investigators are looking at valiant because their business model has been, let us take small drugs, raise
the price, and make money off of it. strict dollars and sense perspective, but they're going to be a lot of questions on the legality of it and what other things they had done to drug sales. david: why would it be illegal? they often by these company that have older drugs and increase the price. what will be illegal about it? think anythingot is a legal necessarily, but investigations will look at other parts of businesses like a patient assistance program to make sure everything going on there was above board. from the perspective of financial analysts, the investment community seems that valeant will be able to whether this. it's the general feeling that these sorts of subpoenas typically are a lot of noise in the stock, but really when you look at how the analyst rate the stock, there are a lot of buys on valeant shares. even if currently this price increase is illegal, now that we are focused on it,
we could see regulatory changes. to increase the price 500% -- not thee the game, player. it sure sounds like the u.s. government could choose -- change the rules of the game and then valiant would be an a bad spot. cynthia: that is a scenario that would take years and it would take agreement and congress to get that done. there could be tinkering at the margins and there will be a lot of public perception that plays into this. realistically, they will not be raising prices by drugs. they are entering the scenario where it is actually illegal to do that. that is something that will take years because laws will have to change. david: matt miller, what does bloomberg have to tell us? tells a lot about how investors value this company. if you look at this graph i threw together, the goal line is the share price, the white line is evident, and the orange line is etf's. you can see that sales growth has risen fairly southerly.
steadily. jumped 500% in a graph. just because they raise the price of a few of the drugs, it does not mean they boost revenue that much. it may cost them to continue the r&d that they are conducting that is probably saving our lives. stephanie: you also have to factor in the huge drop in the stock price was not necessarily directly associated with long-term views on valeant. this trait is a hedge fund hotel. we saw so many investors who did not necessarily do their homework and there was this style drift advancement after bill ackman. he did not add to his position, but many investors that followed him quickly got out of the market moved because they cannot be in a position where the investor said, why valeant now? they cannot answer the question. cynthia: a lot of people take issue with what matt is saying about the fact that the drug price increase is somehow tied to r&d. cynthia pointed out, and of the prices they are raising our not that they have
invested r&d into. matt: if you look at the stock price, the huge drop in the stock price comes on september 21. clearly, this is because of hillary clinton's tweet saying that drug makers charged too much and she wants government to come in and control prices in some sense. raisinge, they are not prices on the drugs that cost a lot to develop. they do have to get revenue somewhere to develop those life-saving drugs. they going to raise prices on the ones they are selling. stephanie: if you compare rmb at valeant to its competitors, they spend pennies. moneya: they do not spend are r&d, but that is not necessarily their model. but they are doing is quite interesting by doing this acquisition for the female sexual drug. that acquisition is something new. they're gone to launch the product and not have the pricing power they might have had have they done that deal six or eight months ago. they're going to try to build the market and see where it goes. that is what a specialty pharmaceutical maker does.
they are not in the business of developing new products necessarily. maybe that will change, but it does not seem to be the plan rent if you -- right now. david: it may make them vulnerable on the washington side. they do not have the defense is readily available. stephanie: they're not going to have pricing power. with that drug, a different kind of power. cynthia kunz, thank you for joining us. now here is something that will save money before we go to break. check this out. lay david killer impression of bernie sanders on "saturday night live" over the weekend. >> senator sanders, how are you? >> i'm hungry, but i'm good. if you do not mind, i'm going to die let-up right to attend. we are doomed! we need a revolution! millions of people on the streets and we got to do something and we've got to do it now! stephanie: he was not playing bernie sanders.
stephanie: welcome back. we are getting serious in news. wind raked in $2.8 billion over the weekend. -- that's right -- expectations. let's talk about this for a moment. 2.8 million dollars from line. what is your take on this? david: i don't understand. if matt or i drive a vintage automobile, you could drive it could furniture, you can sit on it.
for art, you can look at it on your wall. if you buy this one, you drink it. i don't get it. how do you know if it is wickmayer ar vinegar not? stephanie: guess what? buyou are in a position to $2.8 million of wine, that money means nothing to you and you can port out the window laughing . went for a bottle of wine that is only six years old. stephanie: what are they tell us about the .001%? more money than sense. think buying a car is a smart investment. i will say that i want to have the opportunity to drink in 1967 chateau lafitte and it was delicious. if you look at the fine wine index, it has not done well compared to investing in the s&p 500. and is a five-year chart it has gone down, down as the s&p has gone up because maybe
too many people are talking their profits. [laughter] stephanie: have you ever had a --cer from day clean softserve from day going? queen? also delicious. david: someone should tell us -- what do you do? keep it in yourself and allow people to twour it? stephanie: part of the reason you would do something so ostentatious this to say i bought this one. stephanie: whoever bought this, call me. and peter, thank you for a great hour in the 9:00 a.m.. let's hope for another good one. jamie dimon is going to sit down with us. stick around. ♪
the ceo saying more about its problems? is that good news subscription services are not losing customers as fast as they once did. that is not good news. ♪ stephanie: welcome to the second hour of "bloomberg ." it is monday morning. it will be monday morning where ever we are in the world. somewhere else it may not, but i'm stephanie ruhle. david: i'm david westin. here with us is brendan greeley and also, allison williams, but it is breaking news. brendan: it is monday morning in my heart. whatever time you are, do not miss stephanie's interview
coming up with jpmorgan ceo jamie dimon. that will be at the 9:00 a.m. our eastern time in new york. let's give you some first word news. stephanie: how about it vonnie quinn? vonnie: secretary of state john kerry is calling for calm after the latest attack in brazil. -- in israel. the attacker was killed by police. kerry spoke during his visit to spain. urge everybodyto to exercise restraint and to restrain from any kind of self-help in terms of the violence. israel has every right in the world to protect its citizens as it has been from random acts of violence. vonnie: kerry is expected to meet with israeli and palestinian leaders at the meeting. according to the palestinians, eight israel died in the latest round of violence.
could be facing another influx of refugees because of the new census in syria. the president's chips are headed for a level of serious largest city. they are backed up by russian warplanes and special forces. have been tromping read leaflets warning syrians to evacuate. that means another wave of refugees heading to the western a cyber security firm says that chinese hackers have not backed off despite a security dill -- deal the team -- between china and u.s.. the deal was announced during the chinese president's visit. private firm in california has spotted seven attacks since then. they employed former cia experts can now for a check of the markets, here's matt miller. we have futures moving down after european equities moved down. that's because of the chinese figure coming in at 6.9%. a lot of people think it could be lower.
it's interesting to look at the individual movers, especially weight watchers be stephanie pointed this out to me earlier. stephanie: why do you have to bring me up with weight watchers? matt: you're the one who messaged me and said look at weight watchers. stephanie: oh, i'm sorry. [laughter] matt: do i need to look at weight watchers or is my suit two tight? the stock is up 54% by now. oprah winfrey has taken a 10% stake. the company is issuing new shares to give her that state. she is getting on the board and what's to get involved with the product could jennifer hudson was a spokesperson. jessica simpson, charles barkley, jenny mccarthy, who is always skinny so i don't get that. -- duchess sarah ferguson and lynn redgrave. stephanie: you're taking up way back. matt: let's look at morgan stanley in the big market. they came out they can $.34 was the actual etf number. for $.63.oking
they only had $7.77 billion in revenue. we're looking at a $.5 billion. a big problem with fixed income trading and chinese equity loss at morgan stanley. stephanie: that is what they were leading into. david: let's stay where matt left it. i's big mess. it's a big miss. let's talk about morgan stanley and we're joined by allison. thank you for joining us. you had a chance to look at these numbers. what lies behind this? matt: goldman sachs's numbers are not looking as bad. a big drop in fixed income trading. they trading tends to be similar to goldman in terms of having the commodity focus more just on the credit securitized products and maybe less from the other business because they do not have the big transaction banking business. the other thing with morgan stanley is that they do have -- there commodity business tends
to be more volatile than others. it tends to be more lumpy. on the release, they call that credit securitized products. we will look to hear more about that on the conference call. stephanie: do we think six months from now that a message out of morgan stanley would be getting out of credit markets and securitized products? they both require a ton of capital and our super volatile. the headcount they need his massive as well the compensation of those people. alison: as one the bigone o reasons that we have seen a big implementationhe of the higher capital charges. i think this quarter is a painful quarter. we saw what happened with the price spread. it is not surprising it impacted the business and not surprising in a typically weak quarter that you see the business underperform. i think the effects will take a longer-term view. brendan: let me pull a quote here. the volatility in global markets led to a difficult environment.
i do not know whether i speak bank or not, but that sounds like a euphemism for we made the wrong bets. we talked structurally about what you place manpower. should it be a fixed income or equities? regardless of where you place your effort, they still would place that bets. alison: there is give-and-take in terms of trading performance in the quarter, but you also have to think about -- we talk about revenue shares in performance versus one bank and another, but they do have specialties if you specialize in the business that has a really backorder, you're going to have a tough quarter. if you believe that there is a specular opportunity over time, you will not make a decision based on that one result. david: we are joined by erik schatzker. his james gorman or anyone else giving you an indication of where they going to go from here? erik: not yet. david: we do not know what their plan is? erik: the challenge for james
gorman and allison knows this better to meet is that he has a lot of expanding to do. thank goodness, morgan stanley has that big wealth management rely on. to had it not and if it were more like goldman sachs, this would be an unmitigated disaster. it is already disastrous enough, but there is a reason -- there has got to be a reason that morgan stanley has these kinds of massive swings in trading that you see every so often. thatber a few quarters ago they basically lost money in fixed money income and people were questioning whether they still had a viable exit income franchise. stephanie: is james gorman focused on what is happening in the security division? since he has taken that position, he has been outspoken. how does this happen? he has sent to you and i he does not want to be focused on that business. if you does not want to spend a ton of money there and they are not allowed to take risks in the credit market, how are they losing money? erik: the keyword is a risk.
they are trying to reduce their risk assets because people are trading as if they had too much. allison jump in here -- the question becomes do you have enough of the business to attract the client flow you need to maintain the consistency quarter in and quarter out? the volatility of morgan stanley's fixed income numbers suggest or raises the question as to whether they do. haven: i think investors really been encouraged over the last 12-18 months about the better performance of morgan stanley's business. erik: lots of things are still going right. alison: they have done a lot better than people and we just have to remember that to your point is a volatile business. it is not like what management where you are recurring fees and it's predictable. that brings us to the other surprise. we had this big write-down related to asian private equity and i think there is a lot of questions concerning that on the call. stephanie: if they fall back on credit trading, that will have a massive effect on banking because that is where the new
issue founder comes from. i know you want to talk about this. i'm going to make you talked germany. deutsche bank announced a major restructuring of the weekend. it is a missed pressure to boost earnings and cut costs. erik: maybe for something as well. [laughter] bank pushedeutsche on and brought john cryan in. we thought it would change the culture. how are they going to change the culture of a firm just by bringing in a new ceo? they can because they blew the whole place out over the weekend. brendan: we have been talking structurally where you put your money and investor time. this instruction in changing the way the bank works. there was 16 management committees and there are now six. that is extraordinary. it is something that bank of america has had trouble with as well. and youire too much become unwieldy and unmanageable. this is not talking about relative weighting of where they're going to put their money. this is making the covenant work. david: what struck me about this is is not the lacing people --
replacing people, it's changing what the jobs are. he is trying to send a strong message on where they're going. alison: if you look back to the crisis and you look back to the conversations around citigroup and bank of america and what went wrong, there were a lot of conversations about silas and what people did not know was happening over here. we had the studio business and we remember what happened with that. you have one part of the bank creating ceos and the other part buying it. part of the reason why we had some of the issues was there was not enough connection. i think a lot of thanks to come out after the crisis and said we need to reorganize and change the way we think about risk. stephanie: deutsche bank was the last man standing. if you look at management at the positions did not change. you have the same people running those businesses. it seems like they finally got out of their seats six years later. david: this is not the end of it. erik: no, you can expect more from john cryan. i do not think you can understand how important it is
for these firms to be well led. think of the firms that survived and thrived in the post crisis peroiod. the general consensus is that they are run by capable ceos. every single woman has rotated out of the ceo. deutsche bank is the latest. look at what cbs did. it was a totally different from that was precrisis. people were questioning whether ubs would survive. there's no question under the chairman and ceo that they will because they have reshaped themselves into a firm that has doubled down on the thing that they do well, which is private banking, and deemphasizes the things where they were spending too much capital and not getting enough earnings, mainly fixed income. and for that matter, james gorman has done a lot. this quarter notwithstanding, morgan stanley is it different from that was precrisis because the double down on wealth management and thank goodness they about that business. stephanie: we're got no time
left. i'm amazed. the entire power mafia at this point -- vanish. erik schatzker, you will be back. houston, thank you so much. brendan greeley is with us for the hour. we have a lot more to cover. ceo andp, jpmorgan chairman jamie dimon will join us for an exclusive interview. what would you like to ask them? send us your questions. are we about to see tex oldest companies go with? away? that's next. ♪
if they take over pmc sierra, it would take over expenses. halliburton is getting hit hard by the volatile oil market. the largest service provider to the fracking industry posted a third-quarter loss. oil explores have drastically cut back on expending plans and cut more than half in the last 16 months. the hype is going up for the new star wars movie. tickets are going on sale two months before the debut of "star wars: the force awakens." and new trailer debuts tonight during yesterday's monday night football. this is after disney acquired the owner lucasfilm in 2012. stephanie: in today's focus, and what is the big deal? jeff mccracken is with us. we want to welcome paul sweeney of bloomberg intelligence, who joins us for the hour. jeff, no big beard?
jeff: chipmakers and semi conductors. we had three stories about chipmakers looking to sell themselves. sandisk is on the block and make a good sell -- told him a company called fairchild was also shopping in another company called maxim, not the magazine, but in other chipmaker. the chip makers have been sitting back for years and decades as tech companies have been doing a lot of deals. these guys are getting off of it but in looking to sell themselves because you either get bigger or you get out of the business. it has become pretty cutthroat in the chip space. david: what does this tell us about the chip business? a lot of the companies used to do business with ibm when they made pcs. those guys have gotten out and moved on. there are only three or four pc makers in the world. there are two phone companies to deal with -- apple and simpson. the customer base has shrunk. it's a steady business where they do not have ups and downs, but there are fewer companies that are pounding them to take
the cost up to apple and samsung do a lot of chipmaking themselves. they are losing revenue sources there as well. david: matt, did you have something from bloomberg? matt: i wanted to show you what mna looks like it bloomberg keeps track of this and we have a stellar function that you can use. if you look at blue, the volume of it has skyrocketed in 2015. the green is deal count. looks volatile because we are in the middle of the quarter right. those deals come through as jeff was talking about. we're going to see this up as well. more amazing how much deals have been done in 2015. on the other hand, if you look at the other performance of chips and semi conductor stocks versus the s&p, which is in green, semi conductor stocks and white. at's why like the they are doing the deal. brendan: there's one new customer base, which is auto manufacturers. it is grown. stephanie: cars are now
computers? cars have computers and dw wanted to cheat us. is that not expanding take look for demand elsewhere? go in january, it's all about tech, but now, it's an auto show. automakers take up 40% of the event space at ces. that's incredible. that's where the technology is going and the chips are going. the auto sector has become a big buyer of technology. think about the things in your car and they are center stage. david: the cars driving itself and parking. it's all computers. jeff: like the refrigerator at your house, the automakers wanted to be like your house. oh by the way, you've got a home look you rightl
in. that's where chipmakers are looking. brendan: it's not just your chipmaker or thermostat in your house, it's the sensors expanding at an extra in a rated what is that going to do for check manufactures? another source of demand. that was an acquisition that googled it. google getting into the internet of things. google is spreading its bets to wide or too far or two outside of its core business, but google as we all know has had 10% of the capital spending on these crazy things, on the edge of commercial viability. that might be one of those things, but they put a big bet on the internet of things. it's not just a refrigerator. it is all aspects of life inside the home and outside of the home. david: jeff mccracken, thank you for joining us. next, we are taking a look at what is trending on the bloomberg. that is on "bloomberg ." ♪ >> time now for futures in
focus. gold has fallen from a three-month high as signs of a point u.s. economy revived expectations that the fed may raise rates sooner than expected. set fund futures show a 32% chance of a rate increase in december, up from 27%. on wednesday, higher rates curb the appeal of gold because it does not pay interest obviously a competing assets. joining me to discuss his phil struble, senior market strategist at our geo futures and he joins us from the cme. what do you think of this? did gold traders really believe that the fed is going to increase interest rates? phil: that is a great question. the fed has cap a lot of uncertainty out there. that is starting to get gold roosting up a little bit. we have a 1% pullback here to clearly understand after last week's big rally. week herepretty busy for earnings. a lot of companies are coming
out and we saw morgan stanley have a miss. causekinds of things uncertainty with the u.s. economy and it should hold support in gold around the average. belowey level support that at the $11.50 level. at the ends of the year, we will see that $12.50 targete. we have seen the labor strike down there in that hits the supply demand and physical side of thing. i think gold prices should see elevated levels for the rest of the. matt: is it all about rates and inflation expectations or industrial use of metal have anything to do with the price? phillip: industrial use will definitely have some play. you will see that more with the silver and platinum palladium levels. we saw that big news from volkswagen a few years ago. a lot of people were speculating newhere the there are
mechanical things that need to be replaced. i think that that is a major reason behind why gold has moved as it has. we could see some shakier ground with the earnings pictures this week and you may see the fed takes switch out from december into january and well to next year when the fed would finally raise rates. philip, thank you for joining us from the cme. " is up "bloomberg . next. welcome back. it is time for bloomberg trans1 mostok a look at the read stories. paul: paul sweeneypaul:, you have one that you like. a great story on the bloomberg terminal of london real estate and how that continues to be a tremendously strong market. ishink what is happening that we continue to see at some of these major markets around the world, whether it be london, new york, or expanded to los angeles and san francisco, investors are looking for two things -- safety for their
capital and real estate in the u.s. markets and some the western markets. it seems to be a safe haven for certain assets. they're looking for yield and a zero rate global environment. real state shows as a good asset class. david: i used to think it was an exception. it cannot go any higher. brendan: you say investors are looking for safe assets and we should take a look at who these investors are. i've been told that one way is to look at real estate prices in los angeles and new york and london. it is important who the investors are and what that flow of money is going to look like. paul: in new york, there are some of the high-rises going up. there's one right across the street from bloomberg headquarters going up to the sky. aret of the investors there russian. there from the middle east and asia. they're looking for a safe haven in a relatively stable market. stephanie: think about the $100 million apartment that bill ackman plot. he does not plan to live it. it's an investment. what are you reading? the ecb meets in malta
that. a decision tomorrow and they may expand a cutie and that is going on up here what is happening in europe as of them happening at the fed here. there's always this understanding that if we do want stimulus that inflation will come. that has been the conversation. the conversation has shifted where people are scratching their heads going, where is the inflation? ecb governing four, he said and pointed out that markets moved after you pointed this out. core inflation is not anywhere near the target. forget about what is going on with oil. core inflation is below 1%. they cannot make inflation happen if they wanted to. david: we know where it is. it's in india. [laughter] brendan: he's doing the best he can. stephanie: but if you look at what is happening in the european markets, even if there is quantitative easing, what more can they do? the mario draghi do whatever it takes -- do what? we are not seeing the core economy grow in a significant
way. brendan: i think the monetary policy that may not speak its name -- negative interest rates. it has happened in sweden and denmark in switzerland as well. negative interest rates as an option and a tool. we have never talked about it before and you see increasingly people in the u.s. mention it. there was a negative. plot guy at the fed. that may be a discussion that we may see coming. stephanie: paul and brendan greeley, stay with us. those of the most read stories on bloomberg this morning. next, the bright spot in u.s. economy in today's morning meetings. uncertainty at the top of the united. what is ahead for the ceo of this airline. ♪
with vonnie quinn. vonnie: chinese officials have said they will announce a huge amount investment deals during his visit. his wife will be guest of the queen at buckingham palace. in afghanistan, the defense minister said taliban insurgents hid in the hospital mistakenly attacked by u.s. forces. doctors without borders is rejecting that. 22 people were killed in that attack. negotiators are in germany trying to come up with a draft plan for the united nations climate control summit. the leaders meet in paris to try to reach agreement on how to cut fossil fuel use. critics are concerned a deal would not do enough to ward off climate change. now to a check on the markets, here is matt miller. matt miller: we are looking at continued losses on futures. s&p many contracts down .3%. same kind of loss on the dow and nasdaq as european markets fall.
semiconductors are big movers. big game today after an offer for the company that would top the bid from sky works. could make a bid for micron. it is currently gaining. it announced the new management structure and is taking less heat from chinese regulators, so western digital gaining almost 5% now. i want to look at deutsche bank. deutsche bank and credit suisse are announcing sweeping changes. one. the big in the frankfurt trade, there is more volume. they have been up as high as 4%. good move in the banks morning and in the semiconductors. david, back to you. david: let's get to the morning meeting where we hear what banks are looking at today. we are joined by the deputy head
of u.s. economics. she is the worldwide authority on housing. we are going to talk to michelle about housing because there are a lot of numbers coming up this week. this has been a driver for u.s. growth. can we expect that to keep going? >> it certainly has. entire cycles it spurred the beginning of the recovery. that is not the case in the cycle. housing has been more of a supporting actor. it is still a positive. i think the number we will see this week confirms rising starts -- housing starts are rising. we are looking for housing starts to be up modestly this month and by multifamily construction. it has been one of the interesting themes we have seen since the cycle. homeownership rate has come down, rental rate has increased. we have seen a big turn up in multifilament -- multifamily building. it is a slow recovery, not normal, but ongoing. we think housing will add three percentage points to gdp growth
this year. david: that talks about the number of units. what is going on in prices? >> they are increasing rapidly. income, to the rise in i would say the increase in home prices and rental income -- rental prices has been a lot faster. appreciationa 25% in home prices from the low. rental prices have been running about 3.5% on average in terms of annual growth with some areas seeing significantly faster home rental appreciation. we have created an environment where shelter costs are high relative to the trend in income. if you look at a medium-term perspective for prices, you want to be more cautious given we are already overvalued. you can continue to see home price appreciation for the fourth short-term, especially if interest rates remain at
historically low levels. at some point, prices may revert back to income. david: thank you, michelle meyer. we will look forward to numbers and housing later this week. back to you, stephanie. stephanie: there are a lot of questions on the united c.e.o. after he suffered a heart attack a month after taking the job. the airline shares fell at friday's close in new york. the company is scheduled to report third-quarter earnings this week. does the company need an interim c.e.o. and what do we do about his condition? this is major news. if you are any sort of publicly traded organization -- well, you will not get in front of a heart attack. but you need to notify your shareholders. this is material information. >> this is sad for him and his family. but what is it remind you of? steve jobs. different situation.
we could not figure out what was going on with steve, how sick he was. that is what i thought of. stephanie: i will talk to jamie dimon. the yarn half ago -- a year and half ago, jamie dimon. you don't have a choice. is he is integral to the success of united as steve jobs? >> he has only been in the job a month. >> apple is a unique company built in steve jobs' image. with united, we are talking about structural changes in the industry. the share price has fallen but has not plummeted. >> you are right. put these c.e.o.'s traded companies, the assumption of the board is for critical success. they get special treatment, insurance, security, private planes. the theory is their well-being and presence and work is essential to price. >> at united, this is a critical
time for the company. the merger has not gone well. that is why the change was made. he's only in the job from a. investors were already skittish going into the saying a turnaround needs to occur. now you have this uncertainty. bringing up steve jobs, i'm not sure apple established good corporate governance at all. they were criticized for years about that. the morensensus is information, the sooner the better for investors. >> we wish the best for this man and his family. we hope he is falling. but the longer they take to explain, the more you start to think if it were good news, they would have gotten it out by now. stephanie: when jamie dimon's announcement came out, there were questions abound -- around corporate governance. ey share times, the the role.
when jamie dimon announced he was sick, some had left the bank. as many as top talented people as they were, many left because they had a young c.e.o. making no sign he would leave the bank. >> i think we are seeing the vindication of the theory of history. it is not structural things. it is people making decisions. if you look at banks and how well they have fared since the do asion, he did not good job at deutsche bank. jamie dimon it. that is a real distinction where learning this morning. >> united's earnings are out thursday. stephanie: the question is, who is running the process? it is not like there is no one in charge. c.f.o., but they need to figure out the narrative around their c.e.o., his health, and what they will do in the short term. >> at this point in a company,
the question is where the company is headed. >> the earnings call is a great opportunity to provide clarity for the marketplace. anher in interim c.e.o. or update on the condition of the existing c.e.o.. with a look to the military for a model of governance. they move all the time. there is constant turnover. we don't assume the entire operation or ship is going to fail. stephanie: do you know why that is functioning in corporate america is not? because they don't get a different. you don't have conversation. in corporate america, everybody is dying to be the c.e.o. with a massive bucks. the military, different story. >> you're right about incentives. there is a huge incentive in the military to be an innovative officer. when they get command, they want to make their mark on the organization and ship.
it is not completely dissimilar. they are not automatons slotted into plate. >> they groom people early on as junior officers. they send them to college, grad school. they groom their people from the beginning to be four stars. >> if you are slated for command, they get you through the right posts. i have other people that can take that position as well. stephanie: when brendan greeley says automatons, i say it is time for a commercial. jamie dimon will join us for an exclusive interview next. and next, the race for tv viewers. our networks joining forces with you to -- are the networks joining forces with you to? if you can't beat them, join them? is that the idea? stay with us. ♪
vonnie: welcome back to "bloomberg " i am vonnie quinn. morgan stanley has run into the same problem as other banks, posting earnings that missed estimates. the fixed income management trading fees also felt. the cash machine maker is in talks by german competitor. it is worth about $1.8 billion. they build hardware and software for a.t.m.'s and cash registers. the company gets about 70% of revenue from europe. shares of weight watchers have been that more than 70% premarket. oprah winfrey has taken a 10% stake in the company and will also serve as advisor. david? david: thanks.
here is a story that caught our eye over the weekend. be and nbc universal said to close to be joining the youtube new paid video service to launch later this month. it is part of an effort by networks to expand distribution of content. last week, we spoke with les moonves about how tv viewing is changing. >> people are not watching like they used to, but they are watching as much or more than they used to. interesting tuesday sick -- interesting statistic. more people are watching cbs content today than a decade ago. they are just watching in different places. >> lenny give you two hypotheses. one is is is a different way to distribute content in a digital world. the other is this is a major concession on the big content players' part. we've tried to do this over the top with direct subscription and were not getting there so we need to turn to youtube that has
a lot of people and they have a big back-office to operate. which do you think it is? >> i think it is both. media are consuming differently than five years ago. the challenge for these media including nbc, cbs, and disney, is to make sure they get their content in front of everybody throughout the day on any device. but the big challenge is to get paid. we know they get paid when they sit in front of the cable tv paide, but do they get on netflix and online options? investors are nervous that is not happening. stephanie: if i am nbc or cbs, is my risk that i am empowering youtube? theoretically, he don't want to buy into that. you want to dismiss it as a fad and say stick with us. >> you cannot do that anymore. the numbers are too big. media companies do not even suggested is not a challenge. they say it is more of an
opportunity than risk. the cannibalization risk is real, but the opportunity is bigger. investors are uncertain at this point. >> cbs has their own over-the-top offering you can pay to get. if that were successful and go to scale, they would not need to do this. by going through youtube, they are giving up the direct relationship with the customer. >> and a piece of revenue as well. the over-the-top offering from hbo and cbs, it is too early. we don't know what the subscriber numbers are. we might hear more this quarter with a release numbers. the expectation is it will be a slow build an incremental. if you are cbs and these media companies, you cannot ignore you to -- youtube. the audience and money is to break. -- the money and audience are too big. matt: they put together these numbers. the orange line is online video
advertising, which i think is probably the pain of most of our existence. but it is soaring as far as billion a year into 2019. line is television advertising. you can see how static this is from 2008 to 2019. with these online over-the-top downwe can see it comes and down. it was popular for a while but is not doing the same kind of business as a youtube video would do. to understandtant this is not advertising-supported. this is subscription. you pay a monthly fee. >> there is advertising on youtube. stephanie: all those ads i have to watch, i watch more there than i do on tv.
with tv, i fast-forward through it. >> they have two offerings, one is know as in the other issue paper watching the ads. >> let me add a supplemental theory. broadcasters are increasing leverage against the cable companies. there is this constant battle. they are still getting revenue from that. i'm assuming they want to ease that battle by saying we can go somewhere else, we don't have to go through the service. >> a new source of revenue for the broadcast networks and cbs is at the forefront of this, is getting the cable operators to pay to carry cbs programming. that is going to be a $2 billion revenue stream for cbs in a couple of years up from 05 years from zero just five years ago. it is important they have leverage over directv and the cable companies. they can say we have other races that take our programming. >> the cbs over-the-top offering came directly out of a conflict with a big cable provider when
they were taken down for a while. they said we will have our own direct relationship. the cable companies want to have exclusive access to the boxes. cableis the relation the operator has with customers. comcast knows what its customers are buying and watching. that is something broadcast networks and content owners have never had. but as they go direct to the consumer with hbo now, it knows who is watching programming, how much they are watching. it is a direct relationship they can monetize going forward. the whole ecosystem of the entertainment business is changing on many different levels. investors are stepping back and saying, where do i want to place my bets? stephanie: on bloomberg tv. >> please stay with us. stephanie, we will say goodbye to you for a bit. take a break. she will go do her interview with jamie dimon.
david: welcome back to "bloomberg " we take a look at something i did not know anything about in new york. it comes from our colleagues at "pursuits" magazines. new york features an underground part that opened saturday. there is a park on an abandoned elevated railroad line. now it has a low line. it has found a way to pipe natural sunlight underground and
are even planning to grow edible fruits and vegetables down the. brendan greeley and paul sweeney are still with us. what do you think? >> i think this is amazing. they're getting sunlight down with the same thing as fiber-optic cable. the sunlight in one end and it comes out the other. >> the science is amazing, reflectors, mirrors. >> panels that reflect it down. >> the panels are down there to direct it once it gets down. >> they are bringing down through fiber optics? >> i think so. >> it is coming down from the surface. i read about the science behind the mirrors and reflectors. it seems it is an expansion of the fiber-optic cable concept of bringing it down and bringing ambient sunlight underground. the is just amazing. >> when i first heard about the highline, i thought it was the dumbest idea i had ever heard. it was an old abandoned railroad. then it was magic, a wonderful thing.
two or three stories up, it is a beautiful park. i was wrong before, so i am open to this possibility. >> this goes back to a conversation earlier this morning about real estate prices in new york city. to desperate are we participate in this market that we've got to go underground? don't get me wrong. technology is amazing. >> this was an abandoned trolley facility. >> i think the success of the highline brought entrepreneurs of the woodwork to see what other underutilized space there is in manhattan. >> the highline changed the city in that area. real estate, they are building modern hotels. they have museums, art museums. it is extraordinary to what it has done to that area of the city. >> just amazing. that was done with the city and parks commission. this is not. this is more of a privately managed business but a great opportunity. >> i also believe they have
opened part of it, but there is a lot more to be opened. this is just the first phase. >> that is a gorgeous story. trolleys have not been in new york since the dodgers were in brooklyn. that is amazing. [laughter] they were called the trolley dodgers. >> maybe they can store all of the expensive line down there. they could have a huge wine cellar. >> there is a countdown to the first corporate party held absolutely. >> paul sweeney and brendan greeley, thank you for being with us. coming up, j.p. morgan chase c.e.o. and chairman jamie dimon will join us for an exclusive interview on "bloomberg " ♪
eric:. brennan remains here. it's like a little clap. stephanie ruhle have an exclusive interview with jamie dimon. you do not want to miss that. as we be the drum, let's take you to vonnie quinn. bonnie: american agency says at least 70,000 syrians fled in the last three days alone. the city has been a rebel stronghold during the four-year-old war. syrian troops are poised to retake parts of the city. besides troops have been recapturing territory since russian jets started backing
them. john kerry is expected to meet with the israeli and palestinian leaders during his mideast trip. he encouraged both sides to restore calm. >> we urge everybody to exercise restraint. refrain from any kind of self-help in terms of the violence. israel has every right in the world to protect its citizens as it has been from random acts of violence. an israeli soldier was fatally shot at a bus station. the attacker was shot. there have been 30 attacks by palace indians. are ignoring a new security deal between china and the. the deal was announced just three weeks ago.
they spotted seven attacks on u.s. companies since then. former fbie employs and national security exports. matt miller is here. futures are down across the board after drops. the european market is down across the board. it's about a half percent loss after that chinese gdp information came out. deutsche bank and it credits we's overhauls. 2% --sult in drops, gains? have they turned around # it looks like they have turned around. of 4%. looking at losses now it looks like they are gaining in frankfurt. take a look at hasbro. earnings are out the beat on the bottom line. for $1.52.s were
revenue missed a little bit. there are currency issues. they break their segments down into boys and girls toys. nobody ever listened to free to be you and me. i just want to point out that chinese officials are coming out. is out onsands cfo april 15. erik: he will revisit the good news that news story out of china overnight. gdp growth was faster than forecast. it suggest that they are making progress in his effort to transform chinese economy into consumere powered by spending. sincethe slowest growth
2009. it underscores weakness in manufacturing. that is if you believe official chinese data at all. david: this is surprising close to the 7% they announced the beginning of the year. they still have a lot of reserves. they can stoke up the economy or cool it down. brendan: they haven't been as good as we thought they would be at stimulating demand. everything has been to traditional engines of growth, industrial production. if the numbers are to be a believed, then you had consumer spending growth which was up a good deal more. you'd don't have to
trust levels. nobody trusts these numbers. not in america and not in china. look at the slope. look at the trend. the important point is it's going down. erik: we know lots of people who do business in china who spend a lot of time there. they will not say these things on the record. they don't find themselves in trouble. they tell me and i told you and you and you, the chinese economy is growing at 3% right now. that's what their business suggest. these people have a good read on what's going on. both on the consumer side and the industrial side. we know exports are weak. it's all about the services sector. official data suggests they are relatively robust. the fine print suggests they are not.
i've heard the same thing. david: steve schwarzman was in here. he said they are seeing a lot of consumer spending. brendan: you see a shift in trend, whether the order of magnitude is as described. this shifto seeing toward more consumption and lest industrial production. that is happening there. it's not as pretty as they would like for us to believe in --. mountinge pressure is to form a plan after ceo oscar munoz suffered a heart attack last thursday. directors were added in impasse on whether to appoint an interim ceo or start seeking a new and. one of the things i read is the board did not know what the facts were.
they were not sure about his condition. i have a lot of friends who have suffered a heart attack and are fine. this is the kind of thing that can be ok. you have to change your diet or start taking a meds. it could be a bad scenario. the board has to get together. somebody has to make the calls and get them on. they have to hear about what his condition is end and they have draft the statement and put it out. it's only monday morning. it's a :00. -- 8:00. i say give it another 24 hours. board.: think of the it takes a while to figure out what is going on. the doctor comes out of gives you options. i am with matt. it does take a while to figure out what the consequences are. let's move on to number three. a tough quarter for morgan
stanley. you probably heard that already. in fixed income. the disappointed is going to raise new questions about the resiliency of morgan stanley's trading franchise. surprise none of you and cfo have been on the conference call trying to reassure people that there are things about the business that are in good shape. i mentioned wealth management. this is a secure transformation. it is not completed. thank goodness they have that wealth management business. they talk about secular and cyclical forces. that should concern people. cyclical comes and goes. secular is here to stay. not all banks had
results this depressing. they are a little disingenuous. these things are surely true. it seems like something specific is happened at that bank. last wednesday, walmart plunged after they said earnings before eight by 12% in 2017. doug macmillan it took to the internet and wrote on the blog. he said the reaction of by the market is not surprising. we are making significant investments in our people and tech knowledge he. these investments are critical to our future success. this echoes what he told stephanie just last week when we talked to him. this is what he had to say. investment isar's on top of the cost we have. that's about $1.5 billion. we've added department managers
and on some other things in that as up to 75%. the rest is e-commerce. some of it is in price investment. it's hard for me to believe he got the -- expected the reaction he got. that's because the market suffers from short-term is among. for the sake of walmart and its employees, i hope he is right. the investments will translate into solid long-term growth. he is rebuilding the company to be a competitor for the 21st century against alibaba and amazon. that's the theory. too many times, they have tried to mask weakness in sales with other excuses. last time it, it was because of fx. they are doing this populist card. they are going to pay employees
$10. brendan: they have this goal. fast, hear clean, friendly, i hear labor costs. maybe they are suffering from short-term is him. walmart was built on a cheap american labor and cheap chinese goods. maybe that is over. and: now that the big banks reported earnings, it's time for my quarterly tally of who is hiring and firing. there are in fact some surprises. it will surprise you not that bank of america which has been restructuring aggressively continues to eliminate the largest number of people. 14,000 so far. however, two of the firms that we have been talking about this morning, morgan stanley and goldman sachs, securities firms that do not have big commercial lending businesses which have
been helpful to wall street this past quarter, have been hiring. you something. in the midst of morgan stanley is experiencing right now, this drop-off and this huge miss for the quarter, they added 155 people. david: do we know what people they are adding? brendan: they're are adding a lot of people in compliance. so are the other big banks. they all have to add compliance. they all have regulations that they have to meet. they've all got anti-the lettering and terrorist fighting regulations that they have to meet. if you look at it in an isolated fashion, their net is up. brendan: this is the criticism
of dodd-frank that has the most legs. this does not scale down to community banks. thanks with $100 million. hiring 15 people and morgan stanley is different than two people at a small bank. i think were going to see a change in that regulation. erik: we talked about united continental. what are they going to do because of the heart attack. the port is going to conclude its governance process today. they will release more details today or tomorrow. is a statement from the nonexecutive chairman. they know they are under pressure. they know shareholders need more information about what's going to happen. are they going to have an interim ceo. -- that'sl involving the breaking news.
vonnie: welcome back. rise oilrging opec to prices. they expect to double the oil it puts on the market when sanctions are lifted. the are brought -- buying -- that is more than skyworks solutions. 10%h winfrey is dying and of weight watchers for more than a $43 million. she gets a seat on the board. after falling at
73% this year. we are closer to the opening bell. matt miller is here. movers isof the big weight watchers. 83% as oprah winfrey takes a 10% share in the company. she is on the board. charles barkley was not cutting it anymore. opera is moving in and the stock is up big time. now we are almost $400 million. take a look at valiant pharmaceutical. use of a down arrow. they are coming up with a loss. we were looking for a $.27 per share gain. sales are also a miss. problems as congress looks deeper into putting a cap on drug prices. that's not just affecting of this company, but all of the bio
techs. they have been getting hit hard. jim chanos was on last week. he said he is short this. thehinks the issue here is business model, which is getting people to pay overtime and not the fact that the solar panels are so profitable. this is a 46% drop. they are going to come under serious regulatory street a for deceptive solar lending practices. that is an allegation obviously. the stock is trading down 6% in the premarket. david: jim chanos called a subprime company. it's not the product is bad.
they are financing these things. it's like they used to sell refrigerators on time with high interest rate. the question is if there are enough people buying and selling the stock to understand that. that is the financing business more than the solar. now it's my pressure to hand over to my partner stephanie who is standing by with j.p. forman -- j.p. morgan chase chairman jamie dimon. stephanie: we want to welcome all radio listeners. with me now is jamie dimon. welcome. any day is a great day to talk to. last week, we were actually saying disappointing. put it in context. morgansive loss out of stanley. but gives in the banking industry? jamie: we were happy with our
results in it was double what people are doing. the market share is up in almost every business. i think people overreact to short-term step in we compare actual results with estimates and the estimates change all the time. i don't care about that. are we gaining and becoming enter every day? i feel good about where we are. stephanie: you are gaining market share against your competition. what are they doing wrong. deutsche bank is restructuring. how does that affect? jamie: we compete with people around the world. i wish them the best. i want to make sure we do well. we've been very consistent for years about how we go about doing that. are modifying their business with the new rules. we have to do this. stephanie: are we at risk of
getting overregulated. hillary clinton seems to want to double down on dodd-frank and what happens if you get dodd-frank squared? there are interpretations of rules. if you take all of it, some of the things are quite good and some i don't agree with. they are what they are. i've been advised to just deal with it. i do think some consequences may be down the road. maybe one day they will be modified a little bit. too much capital, too much rigidity. i think you see market liquidity. we will be fine. rules mayme these have unintended consequences that we don't see yet. stephanie: would you say the high-yield market? that is where people say they have no liquidity and they can't find anybody to help them. jamie: the regulators would say
as long as the system is safer, it's fine. if you have more volatility, there is some truth to that. what you don't want is it to affect the primary markets. some how this reverberates back into the real economy. that's what i would focus on. there are certain regulatory requirements. you see a little bit of that in the volatility of the markets. it's all kind of narrow sometimes. what you see is the print. can you move $100 million in ford motor credit? you really can't without spreads a gapping up. we've got etf saying this is the base place to be. maybe that's the original etf. now that you've got high-yield etf's and liquidity as a premium. i don't think it will be
as bad as the mortgage issue we had. there is an issue about having liquidity. the regulars think about rules and how to manage that. i think the etf will manage that. some things we are worried about. i don't think that's a systemic issue. create more volatility and we have seen a couple of times in the market. stephanie: do the regulators know to ask for? we have not seen any consolidation among the regulators. we have not seen a budgets increase. are these the same people today? they don't have any more funding. is there smart regulation at? jamie: there are a lot more regulators. we pay for them. we pay. we pay $1 billion year. we pay hundreds of millions of dollars.
we pay for the regulators we have on site. there are a lot more of them. it's fair. i do think or should be special taxes aimed at banks. paying for your own regulation is completely fair. there are too many. it causes too much confusion. there are certain areas like mortgages. there are so money people involved in mortgage policy. that's hurting america. i think you get them in a room and say let's see what the regulation should be, it would be better if we finish that. we have five or six people with jurisdiction in each consists of an independent, it's difficult to get them to the table. we kind of skinny down how the regulators there are. stephanie: is washington listening to that message? is it still a very and the serial relationship?
jamie: they are exhausted. they are trying to implement what they have been given by legislators. a lot of and though there are too many regulators and to me rules they want to make it simpler. that will happen over time. it's not going to happen over the next couple of years. stephanie: that means inning happening in our lifetime. we are looking at a short-term environment. jamie: it's possible that people look back and say let's look at these things and improve them. let's simplify and strengthen them. let's change the things that did not work. beautiful those are words. is any of that happening? jamie: no. stephanie: i take you to donald trump. i asked him about bank regulations. he said i really like jamie dimon. he didn't understand why people like you another bank ceos rollover and settle.
the fines they are being hit with are so ridiculous, why doesn't a guy like jamie dimon fight back? stephanie: we have a lot of constituencies. i have 250,000 employees. we bank and 50 million households in america. you've got to do it right for your company. it's impossible for a bank to fight the government. what you try to do is minimize the damage is best you can. we could go to court. you could be dragged through the mud for years. you are still paying that kind of money. stephanie: donald trump is never been in your seat. jamie: i don't know. i'm not going to jeopardize my company. at the end of the day, if the government -- we have to operate under the law. afford to take an indictment.
you could damage the company so much that we want to settle. holder,ent to see eric i said i'm here to surrender. you're my judge jury. i have no choice. before you pass judgment, please listen to what i had to say. i went through all the things. we did a lot. i think we got some credit for that. i do know how they came to the numbers. stephanie: i member watching you that day. you walked in by yourself. does it that you and a position where you become a whipping boy? you just say thank you sir may i have another. regain the position of power? jamie: i don't comment. i'm trying to do the right thing for my company. i want to get this stuff behind
us. stephanie: let's talk about banks were not in the position you are. you are the biggest. one would say you are the best. the you think people will fade away in the next few years? what is banking going to look like with increased regulation and banks not in some the more sophisticated businesses? jamie: i hope not. i always look at it from the standpoint of the client first. if you say large corporations are going to need equity, all of those services we provide. looking consumers. more and more in the mobile phones. we look at middle-market companies, 60,000 in america. of course they will be there. who'll be providing these services in the most economical way? our clients are very happy with us. customer satisfaction scores have never been higher.
stephanie: quite as popular up still hate on banks? jamie: banks got tarnished. it became a scarlet letter. all the banks were bailed out, which is fundamentally not true. i urge people to what banks did. they let money. this is an important fact. crisis, at the same price, they let money. the market does not care. we kept rolling over. calls from competitors. we've got to be there in good times and bad times for our clients. those companies will go bankrupt. we -- it was gutwrenching, some of the things we had to do. we did not do it profit.
stephanie: why haven't you been able to tell that story and have it stick? hating wall street is going to be a general theme. stephanie: when i look at tech companies and what meg whitman gets paid, $23 million last year for a company that stock went one direction and nobody blinks. jamie: i don't play golf. want to knowople what jamie dimon is doing with that money. why does there continue to be focused on you western mark --? that's the narrative. jamie: that's the narrative. we admit our mistakes and try to fix them. our clients are happy with this. cities, schools, hospitals.
mayors, governors, prime minister's, they want more jpmorgan. say you been great for citizens and clients. that's the best i can do. we are not going to be up to rewrite the narrative in the short run. , it'sys in the press going to be rewritten by the press and not a bank ceo. stephanie: you have to tell you run. let's talk about clients you have read we are seeing macro funds really get hurt. positione not in a with all this regulation, would you be in the same place as the buy side western mark jamie: no. we have a different function. hedge funds are making money for their investors. we look at it like a business. we are one of the biggest market makers in the world. we want to give you good prices and good inventory. we call it the flow business.
betting on what people think is going to happen. counterparts were hurt. how you position right now? could you hurt like your clients are? jamie: no. wemanage the exposure that have. we don't take any exposure to anybody bigger than a certain amount. the true -- try to limit. we do it by industry. our business is always been manage that way. you are not exposed to any local counterparties. last week you said you stress tested oil prices down to $30. , reserved big issue assets is going to pay back the
loan. you can go look at it. we have a stake in all of those lines. is we will publicly have to put up another five million dollars in reserves. if you size that, it's not that big of a deer -- deal. this does not mean you are going to lose it. you've seen a lot of these companies do a good job of reducing cost. equitye putting more into their wells so they can survive in --. stephanie: you have any idea what happened to glencore? jamie: i think they've been a talented company for long time. no company doesn't hit a bump. every company has a bump. the strength of a company is how it gets through that kind of stuff, not when they don't have internet. stephanie: you view it as a
bump? ahead.ld see bad times jamie: i don't know why everyone is so surprised. commodity prices have moved 50% over my lifetime. of oil is and demand 90 million barrels a day. those kind of moves happen in cotton, corn, soybeans, wheat, sugar, cocoa, you name it. interest rates and stocks, nobody should be shocked when the price moves dramatically. i'm not predicting it. i'm saying prepare for it. i pick a lot of players are. they know something can happen. the best players come out of it. they will do quite well. toie: are you writing a note the regulators who made you get commodities business? you might be facing a rough. jamie: we are not directional.
we never had huge positions. we would've lost that kind of money. brendan: stephanie: let's talk about shadow banking. regulators need to pay attention to shadow banking. hillary clinton has had the same thing. i assume you have the same position. what would you say to hillary clinton. she noted it is a risk. jamie: i'm in favor of competition. you're regulating, look outside the banking system. a lot of mortgage is mrs. have gone outside of banking. you see a lot of competitors. they need to be paying attention to it. they are. it's just a monitor. a lot of that is systemic risk.
firms are taking businesses that you are no longer in. that does not seem like it could pose a systemic risk western things go down, they are not going to be running to the bankers. it's possible that something will create something. and of the care big enough to do that yet. stephanie: do you look at tech valuations and get concerned when suddenly real money investors are racing to get ride funding rounds? me give you some big numbers. think you go i back two years, there were 17 of a. they were valued over $1 billion. the values are $100 billion. that's a big number. to justify that, if you take the portfolio and the winners, it
may justify the price. companies, there's going to be some risk. i would not put it in systemic. it's like $100 trillion. $600 billion, if it goes in half, these are lost equity factors. a lot of these things have reset the go lower. it's not really valued at $1 billion. a person who buys it gets reset a lower price. i'm not quite sure how all that works. stephanie: you seem to be common collected. what you worried about most? when i was into carl icahn, he says do ahead. jamie: everyone is looking for black swans. isn't that a good thing? jamie: no. companies are still willing to expand. the global economy still growing.
united states is growing. added 10 million jobs in last six years. i can make a list of things it could catch you off guard. our great economist did a piece that said geopolitics, of course it's scary. it has affected the global economy. he went through 30 or 40. strong gain. the best military, the best universities. the world is envious of us. we have very low corruption. when you look at the hand we've been dealt, it's pretty good. i can come up with a million reason why interest rates should go up. they may not. i honestly don't think they will. i think they're going to go up. as i travel around the country, i have not met one person who said if rates go putting five
basis point i'm in trouble. i wouldn't told them to grow up. you should finance yourself better. it's more of a psychological thing. the fed might be into normalization. you could reduce uncertainty. stephanie: should they've been already? jamie: they are the experts. i will even to them. stephanie: take us to china. you travel around the world. what does it look like there? jamie: i feel i can to be more pessimistic. i was pessimistic in 07. they have had 20 years of 10% growth on interrupted. as they go to market reform, it's the having more transparency and more merging.
it got to reduce corruption. they are going to have bumps in the road. what happened in the summer is they show they are going to have tomsula road. the focus is going to be 10%. of growth. billion they have the wherewithal. iny have 3.5 trillion foreign exchange. they are quite bright. a move rapidly. they have huge issues. we should work with him to help get through them. i remind the american public, we have the greatest military defense ever designed. we've got friendly neighbors in canada and mexico. we have all the food. we have all the energy we will ever need. china is surrounded by historic enemies. they had a war with russia.
they've got japan and the philippines in north korea and pakistan and india. they don't have enough food, water, and energy. it's going to be a long time before they're able to take over america. when asked because of the me that theey told economy is not strong. for theomy is what pays technology of the dominance. --the should focus that the to see more collaborative politics. there are solutions to every problem. those are solutions, not ideology. i was in detroit recently. the mayor and governor spoke the lights,ads, housing, getting younger kids to open businesses. getting schools.
creating jobs for kids. that's how we make a better country. we don't make a better country by yelling and screaming at each other. smart politics, bright politics, why not raise your hand and do it. it seems like there are 78 people running for president. jamie: i'm not going to run for president. the most -- they been running their whole lives. you've got to know which are doing. just because you are a good ceo means you're going to be a good politician. some of the things are good ceos , if a ceo is good and they are getting a good strategies, i'm much or how much that translates into government. it's not sufficient. stephanie: you would not want to go to government? jamie: no. stephanie: how are you positioned? what you doing in china? what parts of your company?
jamie: we look at every country this way. chinakely outcome is that will have 25% of the fortune thousand. that, we need real's -- research and technology. we to keep up with regulations. we need legal in hr and real estate. when i told my port is were not going to jeopardize the country. -- company. if we are wrong, jpmorgan will still be fine. the bank multinationals. the chinese company is going out they had a bump in the road in the summer. are you allowed to make 20 year decisions? we are living in a short-term environment. who is your priority?
as of the people who bank with jpmorgan it? is it shareholders western mark jamie: auto share holders appreciate long-term investing. don't make earnings forecasts. you don't know what's going to happen every quarter. i don't even care about quarterly earnings. they've never done anything for quarterly earnings. last fewbased on the years. when you build systems, you have a country of a country. you're not doing that for short-term companies. because it's that going to affect our earnings and the next couple of years that forms the base for the next generation. do the right thing for the right reason. most will understand that. i think about it all the time. they want us to do that.
they won us to think long-term. the ucf as a good opportunity? inie: we were going to open ghana and kenya two years ago and were not able to. we were going to bank multinationals going in. that's what we do there. we're not doing retail or stuff like that. it's low risk. we've been asked why our corporate clients, why aren't you there? that's why we are going. we're going to serve the clients. we are a carpetbagger in ghana. we finance the power plants and some of the other projects. we want to continue to do that. we want to help that country growth. stephanie: how to things really look in europe. in june, reese is going to be ok. that's fine if you're a bondholder.
really, what is it look like there? jamie: let me just say, i support the eurozone concept. i think the politicians of the good job. of ie is a great example think people say can we live in peace? can we have a common market? they look at the united states. that's a huge american companies. those two things still exist. there is a difficult stage. getting 27 nations to agree to something. they're going to have to muddle through. they will have lower growth. hopefully, it's growing.
as an investor, it does not mean you want investment opportunities. sometimes that the press is on the stocks. what is 60% of their business stephanie:r area given the regulatory environment, are you going to do to keep their lunch going forward? release, they its can't compete with you right now. jamie: we see them every time we do something. they are still winning business from us. we gained a little bit of share. hopefully will gain share spirit think they are all to disappear. they are trying to modify how they run their business with the new rules and regulations. they are not surrendering. i see a lot more statements. stephanie: another way you are serving some of the european banks, you have a container for
top talent. jeff irwin is moving up. you've got jeff ailey and bill winters. they can this mean share some of that magic at other institutions. is that a risk? jamie: no. i was told a long time ago that if you are a good company, you're going to lose people. that's one of the negatives. and between of the best management team i've ever seen. they're going to have to compete with us. i do wish them the best. stephanie: if i am on the board, do i say jamie is the top dog? how are you going to keep that great bench with you on top with no plans to move? me.e: it's not about it's about the company. i think we have a norman stout.
i do worry very much that they will be recruited by everybody else. my job and the board's job is to retain them. i'm very close to a lot of them. they are great what they do. hopefully, i won't lose any of them. we are a very strong company. stephanie: thank you so much. great conversation. that conversation was so good. are you sure you don't want to run for office? positive? not even in the next 10 years? thank you so much. more on "bloomberg: go." ♪
morgan stanley is reporting a 42% plunge in profits. the banks sought trading revenues slump in the third quarter. a prosecutor in paris is confirming that investigators searched to volkswagen offices in france. computers received -- were seized in the raid. one million cars in france might have the software. earned --synonymy eased in the third quarter. 300,000 customers a dropped cable. that's our latest bloomberg news flash. erik: thank you very much. stephanie is back from her interview with jamie dimon. let's talk about this interview a little bit. stephanie: when we talked about
possible doubles and liquidity in the credit markets, he does not just agree with them. it sure does not seem like washington will be able to do anything about it or take action between now and the next time we had a crisis. stephanie: i do know that it's up to washington do something about that. who is it up to? verytine: you had a positive spin on almost every topic you brought up, whether it was china or europe. that he had a negative view of was regulatory environment, which he said has too many regulators. that was frustrating to him. ukip fight the u.s. government. there is a degree to which the
banks have seen this. you've just got to accept it when the government decides to hold you accountable for something, you have to give in. on a lot of the other points, all of these global risks. he said i don't see that as a systemic risk. he doesn't see the oil lending as a danger to the bank. he had a positive spin. david: thank you very much. that does it for "bloomberg: go." ♪ . . .
betty: clone bloomberg world headquarters, good morning. i am betty liu. high hopes for homebuilders. are they still that confident in the real estate market? the latest numbers are out moments from now. jamie dimon uncensored. c.e.o. talks about regulation, the commodities slumped, and his own future in an exclusive interview with please thousand --bloomberg interview. it is 2000 all over again. china's economy has not grown to slowly since the financial crisis. we will look at what this means for the rest of the world and the bright spots in the numbers. we have breaking economic news out on home builders. julie: this is a measure of confidence for homebuilders. the national association index