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tv   Bloomberg Markets  Bloomberg  October 19, 2015 12:00pm-2:01pm EDT

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>> from bloomberg world headquarters in new york, good monday afternoon. alix: on this very cold monday in new york, here is what we are watching this hour. china's economic growth falling the that below 7% for the first time in six years. we will have the analysis. scarlet: does the rural area economy need more help? we will have a preview. alix: listen up star wars fans, tickets to the latest star wars film is making sure to give will be awakening early. they go on sale two months before the movie even hits the big screen. alix: let's check in with julie hyman. we have come back a long way.
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bute: near session highs, it's not a runaway game. we are seeing a little bit of fluctuation here. day inrelatively quiet the fields we look at the major averages you don't see that much decisive action here. the map is more green as we tilt more that way. health care shares are up, we have some tech, more potential deal action. energy is the big laggard today and dragging down the averages. if you look at oil prices, you can see were the culprit lies, although we have seen a bit of diversions in oil and energy stocks recently. with oil down 2.2%, we saw it rebound on friday as we saw the rig count fall to a five-year low. we also had the numbers last week that showed out that is
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coming down to some extent and yet, we have this persistent concern. production int order to -- in order to reduce prices. there are no expectations that it will do so, but that is what they should do. scarlet: by the way, we are to pump as much as we can and export about 3.5 million barrels a day. back to oil companies in the u.s., halliburton of the oil companies service companies reporting earnings, it was interesting between the seat -- because the ceo called it a trough in the oil companies in the first quarter of 2016 which could be considered a positive sign. -- we are pushing out any kind of recovery, so halliburton is in contrast with that. ishares are lower because of a look at the numbers, they still miss estimates, revenue down by
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36%. and do with what we've seen with oil prices. we could see prices to service companies for hydraulic fracturing and other things that service and sale industries could fall as much as 30% in north america. this is reflected in the kind of information that halliburton and some of the competitors are coming out with. it is more the exploration and production companies that have been taking a hit in today's session with oil -- with lower oil prices. let's check in on the bloomberg first word news. everyone.ternoon the countdown has started, vice president joe biden will say whether he is running for president in the next 48 hours. that is according to nbc news, fox news is reporting he has already decided.
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he has been consulting with democrats around the country and his own advisors. meanwhile, looking at democrats already in the white house, latest poll numbers show hillary clinton has the 16 point lead over bernie sanders. it's the first conducted since last week's debate, giving 29%.on 45% to sanders at 5% sinceort is up september. the top six advertisers of the 2016 republican provincial campaign have little to show for their money so far. the candidates are among those doing the worst in the polls. independent political action committees have spent more than $18 million on tv ads on three of the top candidates. have not had any super pac support on tv so far.
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to the middle east and israeli officials say a 21-year-old arab who killed a soldier was an israeli citizen with no record activity.t the man opened fire yesterday in a southern israeli bus station. at least 11 other people were wounded. the attacker was killed by police. urge everybodyto to exercise restraint and refrain from any kind of self help in terms of the violence. israel has every right to protect its citizens as it has been from random acts of violence. meet. kerry is expected to with palestinian and israeli leaders after his current trip to spain. military saye and they are closing in on el chapo. security officials say he is wounded and has been tracked to the mountains.
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he embarrassed the mexican -- device for government after an escape from a maximum security july. in >> let's move on to macroeconomics. china's economy grew faster than expected in the third quarter. gdp raised 6%. >> that compares to 7% last year. joining us now is gordon chang, author of the coming collapse of china. obviously great to have you on today. the title of your book implies you do not believe or think that 6.9% growth gdp is what we are really seeing in china. >> every quarterly. , -- every quarterly period, it is always exceeding people's expectations. when you look electricity, it
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was up 1.0%. growth in gdp is about 85% of the growth electricity, we're looking anyone or two present economy, not clearly at this 6.9 that they are talking about. >> 1% or don't -- >> traditionally, growth has been much higher. if you go back to 2010 with a reported 10.4%, it was much greater than the 10.4% they reported. they smooth out the earnings and what they are doing right now is overreporting growth. with is fairly significant china engineering the numbers that they're willing to go to a six handle for gdp. >> it's a psychological barrier that has been broken. it's like when they broke through from a percent to 7%. they are not willing to talk about where they are right now. we saw so many adverse developments during q3.
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bloomberg reported that stock index futures, the buying was down 95% but their services income they said was a .4% of the quarter, just like it was in the first half. that is not possible when your financial services industry has been devastated the way it was when they try to keep stock prices up and volumes fell. this is inconsistent, you cannot reconcile these numbers. >> when you take a look at how trinity consumption, why is that the right metric because it seems like china is transitioning from an investment --ven economy to consumption we only know that tax number either, but the thing is -- the point is, you are right, when you look electricity, people say because they are transitioning from a services economy, lectures of the is less, look at their industrial output numbers. you cannot reconcile that with
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all of the purchasing managers index, the ppi, and electricity. these numbers don't work, so on some level, we have to recognize that there is a wide variation --ween the chinese economy services you require a letter city -- require electricity. that is growing, the idea is that it's harder to fudge that because its actual literal revenue they are getting from the people to the government. when you look at a chart like this, what does that tell you? >> if tax revenue is going up, that's important. we'll know what they are better at enforcement or their really is more activity -- we don't know if they are better at enforcement or if there really is more activity. are so many other signs that point of the other direction, and that is the problem. there is too much discord and information when you start to parse through all of this.
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if they were growing at six point 9%, why would they need to devalue the currency and increase the school stimulus? why would money be coming out of the country at billions of dollars in august? you look at them and say what's going on here? the government is doing something right, you need to concede of some point whether it's tax revenue or something else. what are you encouraged by? >> what you are seeing is that manufacturing is becoming less important. in a sense, because consumption is growing but not growing the way people think, what is happening is that investment in manufacturing is shrinking, therefore as a matter of arithmetic, the rest of the economy is growing bigger as a percentage. when you look at absolute numbers, especially when we look companies,ts from
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both chinese and foreign, they showed a very different story from what people have been saying in terms of consumption in china. it might be growing as an absolute number, but not very much, i think. let's just say that they are would seem that the global economy can actually handle that kind of growth. why do we even care if it's -- 7% or 1% ifn everything is going to be ok? >> the last couple of years we have been living with low chinese growth as in actuality. the reason we do care is not so much the number of any one particular quarter that should concern us, it's the trajectory of this economy. they have everything been doing in gauging, this economy is heading downwards. the only thing they can do is load the pace of dissent. they had done a little bit of that through margins select
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intro -- reducing interest rates has had a minimal effect. there have been 4 -- five redemptions in the benchmark interest rate since november, and not much very -- not very much effect in the economy. they cannot change direction, and that means whether it's 1% going tos week, it's be 1% or 2% a month from now just because of the way the economy is moving. >> does that mean more currency to ration? >> probably. this is all political in terms of what beijing is going to do. we saw beijing spend $20 billion a day defending the currency in august and the first part of september. thoroughly they can put this currency at any place they want, but at some point, as you suggest, they are going to have to look the currency come down because they don't have the money to defendant. when the defenders currency, they are using dollars or euros, they can intervene in the stock
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market with their own currency, but when it comes to -- they have to use dollars. >> that you so much, always great to have you here. johnming up, we will ask williams what he makes of china's economic data. this will be an exclusive interview happening at 2:00 p.m. eastern time. >> in the next 20 minutes, speculation is rising with the ecb considering having -- adding more stimulus. will it wait for the fed to act on interest rates? johnson & johnson's ceo joins us shortly. >> tickets for the new star wars movie two months early. ♪
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alix: welcome back. it is time for the bloomberg business flash, a look at some of the biggest business news. scarlet: homebuilders have not been this confident in 10 years according to the latest national association of homebuilders wells fargo index. for housing may have remained strong in the months to come. alix: united continental airlines plans to decide it will -- if it will name an interim ceo while the current one recuperates from a heart attack. scarlet: the key to a happy employee a be a conversation about pay. suggest thats underpaid workers feel better about their income after a chat with the boss. salaries that tracks says underpaid employees that were satisfied with her compensation --
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at some point, show me the money. alix: industrial months, i want to see some kind of payout. scarlet: you can always get more business news at bloomberg.com. alix: let's get to julie hyman with some tracks of individual movers. julie: hasbro is the worst performer in the s&p 500 allowing mattel which was -- reported disappointing numbers. shares are down sharply, more than 7%. in particular, it is the brands that hasbro owns, particularly the girls side. things like my little pony and furby. it was also hit by the stronger dollar. has a lot of lucrative licenses like star wars, but the long-term revenues because those licenses eventually rolloff is going to be dependent on the company's own brands. and looks like some market tribulations.
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china is not pleased with the comments that steve made last week, complaining about the clampdown of regulation in the cow. they said the government recredit -- regretted certain opinions. they did not refer to specific it has no plans andake any changes lightly demand clear understanding and full compliance from the casino industry and shares are down by about 7.5%. morgan stanley, one of the last of the big banks to report its numbers, down 5.6% after its estimatessed analysts -- analyst estimates. reasons we of the are also seeing their shares decline. week, the council
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of the european central bank will meet to discuss monetary policy. we expect the ecb to add stimulus by the end of the year and the process could begin as early as thursday. -- he says he think the ecb will move this week. >> i think it's very possible that we will extend a length of the program and diversify our purchases. remember, this is just an aesthetic, it is a tool trying to counter a structural problem. work at the end of a super -- super cycle of debt which lasted years in china. it is a structural problem. >> the money question for hsbc and rbs with centuries of heritage, is can we access what alberto talks about it with stability and controlled --
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control like this or do it with a jump condition? chance to a fighting exit this, but we need to see the leadership around the world exit policies that puts us on a sustainable path -- the world execute policies that puts us on a sustainable path. >> the you actually see that -- do you actually see that? >> it's illogical logical to have a chronic, negative industry. >> what would happen we started going into the next downturn? >> the problem is that central banks, it is not governments raising taxes and then ruining chances of getting reelected, but japan did it, i'm not sure if europe can do it because you 20 estates, different governments with different policies and people are angry. they go on the street and look at inequality the ebs created. japan as an example, but not everybody can do what they did.
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they were speaking this morning on bloomberg's surveillance. >> the consensus is that ebc will not necessarily do anything but some traders believe they have no other choice. when you can see is how traders have really played into that idea. this is the german two year yield in blue. the ecb deposit rate is in yellow and you can see that rate is at -0.2%. to ubs strategists, they market is now pricing in at least 50% odds of a 10 basis point cut to the deposit rate if not this week, then later on. >> it seems like the rhetoric, because of what you are looking needs toat the ecb -- be very forceful in the conference as to either. >> we had talked about it but we are not going to -- qe2eevaluating a potential
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to appease the market because it is expecting so much more. there has been a lot of interesting things put out there by economist. you can actually make the deposit rate even more negative because the ecb could then have a wider bond with which to buy because they're not allowed to buy bonds. >> i think you hit the nail on the head when he said talking about the medication because that is critical. -- he said he will do whatever it takes so it has to be some forceful words because up until now, the latest commentary is that it's too early to decide on stimulus. >> seeing the dollar come off a little bit because the fed does not act adding an extra boost to the europe which does -- extra boost to the euro which does not make anybody happy. >> still ahead, only a decade since a star wars movie has been introduced, demand for this new one is so strong, already about how to get tickets, because
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tickets go on sale two months early. ♪
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scarlet: welcome back. alix: tickets for star wars: the force awakens go on sale monday, two months before the movie hits theaters. is the first of the series since disney acquired the owner, lucasfilms in 2012. it is affected to be one of the top grossing films of the year, if not of all time. alix: number one is still avatar, number two is still titanic. you wonder if it will be able to surpass either of those two. scarlet: um, yeah, it is star wars. i've already requested the day
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off. we will go see a morning show in new jersey, but we tried to get tickets and could not get them. i do not know what is going on with that, but that needs to -- you guys need to sort that out. a trailer will be airing during half-time during tonight's football game on espn which is owned by disney. be during the giants and eagles game in philadelphia. alix: the reason why to get tickets now is you have a 48 hour window -- before everything is going to be spoiled. ahead, 81 of the world's largest companies are finally agreeing on something. we will talk about it only get back. ♪ ♪
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(ee-e-e-oh-mum-oh-weh) (hush my darling...) (don't fear my darling...) (the lion sleeps tonight.) (hush my darling...) man snoring (don't fear my darling...) (the lion sleeps tonight.) woman snoring take the roar out of snore. yet another innovation only at a sleep number store. alix: from bloomberg world headquarters in new york, welcome back to the bloomberg "market day." scarlet: i am scarlet fu. starting with headlines.
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checking in with ramy inocencio. rim --r: russia finally admitting what the u.s. has longley suspected. this is meant to wrap up the regime of besar all a shot and not eradicate terror groups. asad.har al a new estimate by the associated press now has more than 2100 worshipers died last month during a stamp paid in saudi -- stampede and saudi arabia. it happened during the annual muslim pilgrimage to messe -- mecca. a federal judge ruled today louisiana must continue to provide medicaid funding to planned parenthood clinics for at least two more weeks. without the ruling, funding would have ended today. bobby jindal are restarted the defense in process after the release of several controversial videos that allegedly depict
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planned parenthood discussing the sale of fetal tissue for profit. planned parenthood denies the allegation. a cyber security firm says chinese hackers are still about this -- despite a new security deal. the deal announced just three the white house visit. crowd strike of california said it spotted at least seven attacks on u.s. company since then. they employ former fbi and national security expert. onown operators are now notice. federal regulators wilfork ire the registration of most aircraft to help attract operators to -- to ignore safety rules. the faa is setting up a collaboration with government industry officials and hobbyists to work out the details. it is meant to prevent them from crashing planes or hurting people on the ground. that is your first word news. details at bloomberg.com.
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alix: president obama will be making a push for global climate deal in paris later this year. today he will be announcing new heavyweights and his corner. scarlet: johnson & johnson and 80 other businesses will sign a pledge to take more aggressive action on climate change. what are they expecting, and will that backing be enough to rocher a deal? joining us now from the white house. thank you for speaking with us today. >> good afternoon. it is a real pleasure to be here. thank you. scarlet: cutting carbon emissions. these are all a plot of old goals. where does j&j sees the business value of the sustainable opeon? >> first and more currently we think the issue of climate and environment is a health care issue. the largest most diverse health
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care company and we think we need to be part of the conversation. it is something we have been engaged with for a number of years. over the past 30 years we have been taking steps with suppliers and value change and have made considerable reductions in the carbon footprints, use of other carbon fuels. i think we are really starting to see the benefit, in terms of what customers are expecting from us, and the business and return we are seeing internally as well. alix: can you help quantify the over the past 10 years we think we have made a 10% reduction overall. during the same time we have invested well over $350 million and 150 different projects. we think we have had a very good return on that as well in the area of about 20%. what we are most excited about is going forward. we have a goal of reducing carbon emissions by 20% by 2020.
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80% by 2050. the same thing with utilization of clean and green fuels by 2020 and 100% by 2050. we know that is ambitious, but we think it is the right thing to do. alix: where are you putting most of your eggs? >> we think it will take a variety of sources. facilitiesested and over in ireland. the same with solar panels in the united states and internationally. sensoryk it is a multi- approach to maintain that over term. scarlet: i want to shift gears and talk about j&j and the arm as he industry overall. you have 34 billion in cash, which puts you in a fairly good position to pursue deals. what type of assets do you find most attractive right now yangon small deals or big acquisition? --small deals or big
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acquisitions? 50 percent of our deals have been going through organic growth drivers and 50% going otherh and value-producing deals. we have a great history and the pharmaceuticals over the past several years of identifying novel, therapeutics early on. then being able to apply the clinical development, regulatory skills to have those products. frankly, that is why we have been able to launch so many products since 2009 that have gone on to do well. we are built great products in the medical device building. the same thing with consumers with brands like neutrogena and aveeno. we think this is definitely the right road for us. was looking at what has happened in the sales segment. if you look in the blue --
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bloomberg terminal, it breaks it down for you. the white minus pharmaceutical sales. stabilizing but lower. the orange line is consumer health. the yellow line that has done quite well is diagnostics. where do you see these going? where is the competition, and where will you cross it? >> i am very proud of the performance we have had over the past couple of years, really in the pharmaceutical group and by any measure when you look at sales growth and the number of products we have been able to launch. consumer brands and over-the-counter products have also done very well. we are a number of platforms. we have over 10 platforms with over one billion in sales that have great potential. we want to be competitive. we want to grow at or faster than the markets and each one of those. that is the way we plan on
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running our business going forward. what are just thoughts on the debate swirling around? has the environment changed echo have even able to pass on the consistent price increases on older drugs? >> we know the issue of drug pricing is certainly one we are sensitive to, as is the entire health care industry. i think what is most important is to put it into proper perspective. one is relative utilization is part of the overall health care. slightly higher in other areas. we think the most important thing we can do is to make sure we innovating, bringing the next product that will either cure or make a substantial difference and -- difference in patient's life and that is incumbent upon us to christ responsibly and
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make sure we have a lot of different support programs so patient i cannot get access, ultimately we can get products to them. thank you for joining us. alex gorsky from j&j joining us from the white house. alix: shareholders urging the hostile takeover bid to be rejected. what is at stake in the fierce contest of who will be next prime minister? the longest campaign and decade. alix: jamie dimon for president? the jpmorgan chase tells us whether he would consider a run. ♪
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scarlet: welcome back to the bloomberg "market day." i am alix steel. thank you for the biggest business stories in the news right now. watching shares of morgan stanley down with a 5% after post and third-quarter earnings that missed estimates. drop in fixed income trading and investment management fees also declined. alix: helping a social media blitz will sell workers on the tentative labor deal. the uaw management believes poor communication coakley to a previous agreement with fiat chrysler. they are now posting the benefits of the new contract on face. asked foroffering works week for free. if they do not like it will give them for use of a competing software. it is open for the next six months in the u.s. and will eventually be offended to other countries.
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extended to other countries. how globalk at markets are doing. markets were mixed monday due to third-quarter growth report that surprised most economists. " lightly over 4.5 point. the day had a drop of 160. zeb eckert boards from hong kong with more. >> china's economy grew 6.91%. that is better than expected and a strong indications that fiscal and monetary me with are working. the weakest growth since the financial crisis and reflects the august collapse in chinese stock value. there is one minor detail in this report that has potentially major consequences here to the services sector is expanding. understanding growth in the surely and slowly but rebalancing the road second-largest economy, almost by design. thank you.
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a look at how stocks are doing. going live to the nasdaq. flex starting to see some word three at the nasdaq. the composite index more than half a percent. a positive tone here. two losers we taking a look at. susquehanna came out downgrading the stock to a neutral from positive. companies failing to meet execution. the hybrid strategy failing to securitize. the analyst match the tone by cutting the price target to 35 from 60. and even a good loser is solar city. axiom came up with the sale price target. that implies 46% downside from the friday's close.
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tone of budding wave of class action lawsuit against deceptive lending in the solar panel space. the stock offer than 7% at this time. that is all for today. back to you. so much.thank you abigail doolittle at the nasdaq. a canadian oil -- alix: canadian oilsands urging shared folders to reject the veal -- steel today. about two weeks ago stephen williams was talking about the synergy and benefits of a deal. >> there is an immediate synergy there we can work on by integrating the companies. that benefits immediately.
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right away through to the reliability and operating cost of the plan, those take a little bit longer. can accelerate the process because this is the heart of what we do at the company. canadian sands ceo joins us from the toronto stock exchange with more. with what price would you consider doing a deal? your stock trading at a premium to the latest offer. >> we do know the existing offered a significantly value canadian off fans. we have an insider in the operation in suncor targeting shareholders at a very opportunistic time at a low point in the crude oil price cycle. on record telling shareholders he thinks price targets will be higher in the future. the us come out to our
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shareholders at a very opportunistic time and put an offer in front of them that assumes oil prices say dust a love for the foreseeable future. it is clearly not in canadian oilsands interest. nonetheless, canadian oil has been hurt by the rapid decline in oil price. your stock was trading around six canadian dollars before the takeover rumors started, which has pushed up this talk to nearly 10. at what price would you be willing to see a deal done, considering oil prices will stabilize around $40-$50. thisat we know is undervalues our business. they are essentially asking our shareholders to turn over one of my most valuable assets for nothing. alix: one of the things he pointed to that does a lot of
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value that you do not feel you are being paid for yet is the partnership you have in northern alberta. what premium would you put on do you wantch more to see to value that particular >> our the deal? investors understand the premium assets. -- alienon dollars barrels of fully upgraded light synthetic oil reserve. decades of future production with existing infrastructure and relatively low capital. all of those assets sit right in the heart of the region and major all of the major oilsands project. shareholders recognize it delivers the morse -- the morse torque to the upside. our share price is correlating a 98 percent of oil prices. our shareholders spot canadian oil sands assets for a reason. they want to see the upside.
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scarlet: do you expect them to come in and make a counter bit? are looking at alternative's. we have a process underway. we have assessed the data at this point in time and have concluded the shareholder should reject a bit. in the meantime, the board does have a process underway, and we will look at all alternatives we think will deliver fair value to the shareholders and investors. is it is i am hearing undervaluing the assets. the most exposure is good for your stock. you want to keep your shareholders happy with your stock. what happens in oil prices do they go to 20 or back into the 30's and stay ,here for longer and longer which is what most analysts are talking about, how do you
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justify rejecting a deal? are generating free cash flow at today's prices. we have a business that can sustain for the long-term. we are seeing significant cost reductions today. in 2015 we are seen a 20% reduction in operating cost relative to last year's level. we are also estimating we will generate $1.3 billion in cost citizens -- cost savings relative to the two thousand 15 budget we initially put out. nursing ticket cost reductions in the business that is sustainable. -- sustainable cost reductions. the most bullish call i have seen is from our place. from barclays. declines and a
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significant increase in oil prices. the fact today remains we do not know when that will happen. we do not need to see $100 oil prices in the foreseeable you jerk. even small increases significantly increase our prices. even $60 would significantly increase our cash flow by about 80%. in terms of the biggest point 9%ers, a four stake. deutsche bank 4.1%. neither of these are activist investors. icahn and freeport as well as should near. you feeling any pressure from any activism or shareholder pushing. to help your business was slow hadness? >> i have discussions with all the major
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shareholders and they're all strongly supportive of the business. they understand the quality and assets they own. they have been long-term shareholders under here for the up take. they understand the strategic nature and the immense resource we owned, then any major oil company that would love to own and control. thank you. joining us from the toronto stock exchange. alix: basically suncor go away. in canada, a nailbiter. canadians casting their vote for the next prime minister for one of the longest-serving leaders will win a rare fourth term. we will break it down. ♪
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alix: bloomberg "market day." welcome back to the bloomberg "market day." i am alix steel. -- welcome back to the bloomberg "market day." scarlet:
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stephen harper is fighting for of work term basis of competition. here to help break it down for us and everything at stake is bloomberg greg quinn monitoring the development and joins us now from skype. power base is's in alberta. the oil capital of canada. he has talked of the idea of making it a superpower. to a data platform focused on the location of keeping taxes, data and check and being tough on crime. oil prices have fallen quite a bit. comedians holiday -- this is an contract. we need deficit spending, government infrastructure and more help getting this growing again. scarlet: if oil is no longer
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booming, where will that come from you go do any have a credible answer to that question? that is certainly for voters to decide. there is a hurt -- fairly healthy lead in polls. many economists have suggested canada needs to work on the manufacturing. most parties have had to try to that back.h getting he has come up with an idea of advancing keystone fx l. we need to start thinking about the future with less carbon. canadians have a lot on the mind. what happens if no party the canadian>
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system relies on old parliamentary traditions. the convention is the party with the most gifted the first crack at governing. so from there you have to go from parliament and keep the confidence of legislature that you are passing things like budget. we have a government general, hold over from the days of british parliament. if you are defeated on a measure of confidence, you can resign and say i want the next largest party to take over or say we need an election. alix: coming up in the next hour, jamie dimon and his quest ♪.
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scarlet: it's 1:00 in hong kong. welcome to the "bloomberg market day." ♪
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alix: -- scarlet: good afternoon. alix: here's what we're watching in this hour. what does jamie dimon have to say about earning? >> don't make earnings forecasts. you don't know what's going to happen every quarter, and i don't even care about quarterly earnings. i don't care about quarterly earnings. i've never done anything for quarterly earnings. they are based upon decisions that event-based by my predecessors. you enter country after country, you are not doing that for short-term rings. -- short-term things. alix: deutsche bank undergoes a massive restructuring. what the ceo wants it to look like, and more data coming out of china. it's not good. we have the latest.
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first, let's get a check of where things stand right now. julie hyman is taken a look. an hour later, we don't have that much more direction. julie: we don't. we are still mixed. we fall into the overall category of mixed. it's a little more of a negative tone with the s&p and the doubter is slightly lower and the nasdaq trading higher. i want to discriminate on one sector, and that is biotech. they beat estimates, revenue rose by 36% in the company forecast sales above estimates. shares are down by nearly 7.5%. on the conference call, the company said it might respond to critics that have been growing of the company, complaining about drug pricing. saying it might spin off its urology line of drugs. it makes up about 10% of its tales very it might focus less on acquisitions that depend on buying old treatment and raising
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their prices. this is the shift because galleons has defended itself vigorously of criticisms of the company and its pricing practices. interesting shift. we continue to see a bit of isaiah versions with the overall biotech index. the nasdaq biotech index is exley trading higher today, although very barely. much moree it was up earlier in the session, and now a little changed. a little bit of positive bias here. notwithstanding, there seems to be relative strength in biotech. talking about the forecast for the birding -- the earning seasons, and their numbers actually looks strong. while political rhetoric over drug pricing may keep investors at bay, we think third-quarter earnings could highlight the risk of not owning this sector during a time of fundamental growth. group that isis
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bullish on biotech remains so going into earnings season. here are some of the picks we're hearing about. we are getting a mixed picture on how they are trading today. we are basically saying these companies are going to be best positioned going into the earnings season. again, focus on innovation for these companies coming out with new drugs or have come out with new drugs. this is a mix of some of the larger biotech names like gilead and lesser-known names like insight jindal next and emergent biosolutions. we will keep you updated on how these companies end up doing in the face of all the scrutiny. julie hyman, thank you. we check in with her and 10 minutes. alix: let's check in now, reminiscent to -- ramy inocencio has more.
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ramy: the top 16 advertisers in the republican residential campaigner independent action committees. they are not getting much bank for their buck. their candidates are among those with the worst poll numbers, despite some $18 million in tv ad spending. three of the top candidates, donald trump, ben carson, and carly fiorina haven't had any super pac support on television. democratic presidential local hillary clinton has a 16 point lead over bernie sanders. it is the first conducted since last week's debate. the poll gives clinton 45% to 29%.rs' his support is up 5% since mid-september. at least one leading democrat thinks joe may be too late to the party. oft is senator dick durbin illinois. he says he is not sure the vice president could win the party's nomination, even if he enters the race right now.
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meanwhile, biden enthusiasts are still playing the waiting game. nbc news says he will announce his plan in the next 48 hours. fox news says he will be a democratic candidate. in the middle east, violence in israel is stretching into its fourth week. secretary of state john kerry is expected to meet with israeli and palestinian leaders on his upcoming middle east trip. during a stop in spain, he urged both sides to restore calm. >> we continue to urge everybody to exercise restraint, and to restrain from any kind of self-help, in terms of the violence. and israel has every right in the world to protect its citizens, as it has been, from random acts of violence. my: just yesterday, an israeli soldier was fatally shot, police kill the attacker. police say he was arab and
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israeli citizen. eight israelis have died in 30 attacks by palestinians. at least 18 assailants were killed on the spot by police. say theyes in mexico are hot on the trail of joaquin guzman. they say the fugitive drug trafficker is wounded, and they pursued him to a possible mountain hiding place. he has been sought since july, that was when he embarrassed mexican authorities with a brazen escape from a maximum security prison. the second time he has done so. at our first word news. you can always find the latest on bloomberg.com. scarlet: thank you, ramy inocencio. early this morning, jamie dimon came to our studios with stephanie ruhle. the topics were varied. into how heves deep
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balances the need to make 20 or decisions with short-term earnings pressures. dimon: a lot of shows appreciate long-term investing, and some ceos start making promises they shouldn't make. if i was the ceo, don't make earnings forecasts. you don't know what's going to happen every quarter. i don't even care about quarterly earnings. i don't care about quarterly earnings. i've never done anything for quarterly earnings. our quarterly earnings are based on decisions that have been made over the past five to 10 years, and by my predecessors. when you build systems and people in relationships technology, you're not doing that for short-term things. when we open up branches and we will hopefully start opening branches in africa, you're not doing that because you affect earnings in the next couple of years. i'm doing that because it forms a base for the next generation. you do the right thing for the right reasons, and most ceos will understand that. i speak to them all the time,
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they want us to do that. they want us to think long-term and how we build the future. stephanie: you still see africa as a good future. jamie dimon: we were going to open ghana years ago, and regulator said we couldn't. we're going to bank multinationals going in, we're going to bank their biggest institutions. that's what we do. we're not doing retail, i would say is rather low risk. we have already been asked by corporate clients, why are to their -- why aren't you there? we are doing it to serve the client to want to be there and the governments. ,e were a carpetbagger in ghana but we had power plants and some of their other large-scale projects. we want to continue to do that. we want to help that country grow. stephanie: take us to europe. how to things really look there? in june, greece is going to be ok, it will be fine.
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really, what does it look like? jamie dimon: i support the eurozone concept. i think politicians of done quite a good job over 50 years getting this done. europe is a great example of -- that continent had not just world war i and world war ii, but the hundred years war, the pulley on a course -- napoleonic wars. they said can we live in peace and they look of the united states and say that huge foreign market is a benefit for american companies. it creates huge kinds of scale which benefits the people in the country. those two things still exists. the monetary union is very gettingt, the politics 17 or 20 nations to agree to something. they are going to have to muddle through. the think it is of complexity and some of the structural rigidities, they will have lower problems. hopefully its growth.
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mean investor, it doesn't you don't have great investment opportunities. i separate that. sometimes that depresses all the stocks. but maybe 60% of the businesses outside of europe. don't confuse the two. stephanie: given the regulatory environment for those european banks, they are in an even tougher spot than you. are you going to be will either lunch going forward? if you are deutsche bank, they can't compete with you right now. see them everyu time we do something. they are still competing with us and winning business from us. they gained a little bit of shares in the debt capital markets and equity capital markets and m&a. hopefully we game shares because we are good in serving our clients. i think there are going to disappear. they are trying to modify how they run their business for the new rules and regulation, but they are not surrendering. i've seen a lot more statements than we've seen in the marketplace. stephanie: another way you are serving those european banks,
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jpmorgan has become an extra ordinary incubator for top talents. jeff erwin moving up. you have just and the, bill winters. what does this mean you are seeing some of the most senior people in your organization go on and share some of that jpmorgan magic at other institutions? is that a risk? jamie dimon: no. i was told that if you were a good company, you're going to lose people. that's one of the negatives. i wish them all the best. i think they're the best management team i i've ever seen, and i wish justin bill and jeff all the best. . scarlet: stephanie ruhle joins us now. was there anything you asked him where he stumbled or didn't want to broach? stephanie: he didn't stumble. in fact, he was more careful than we have ever seen. i really wanted a push him in terms of regulation. he has already said for a
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cleaner, writer, stronger wall street. we heard the same thing out of brian moynihan. they need more consolidation of the regular tory bodies. you have sony regulators at this point. we are still not getting enough impact. he says he is not going to see in his career, possibly his lifetime, all the regulation against talked about actually implemented. you talk about all these possible pitfalls in the market. if we don't regulate the shadow banking system, it's going to be a big problem. if we don't ago closer look at tgs comments yes, it's going to be the problem. the problems around the corner. and we still don't have dodd-frank truly implement it, we are going to be saying where is this? is not enough funding for smart regulation. alix: what was the biggest surprise you heard? stephanie: he definitely has turned the corner, he had a in termseader pants on of -- he doesn't want to run for president, but he really does want to talk about what will impact the economy.
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he was really constructive around the world. it wasn't this how you like me now elizabeth warren jamie wyman -- jamie dimon. he wanted to interview with us for really long time. we finally gave him a chance. ruhle, thankie you. coming up in the next 20 minutes of the "bloomberg market day," hundreds and hundreds of americans dropping tv service last quarter. i was one of them. that may not be bad news for the industry. more proof china's economy is experiencing major growing pains. our investors handling that? ♪
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alix: welcome back to the "bloomberg market day." i am alix steel. mark: -- scarlet: i'm scarlet fu. we start with howard. they cut another 2000 jobs in the past month. the worst oil market slump in decades is the reason and sagging demand for the world's biggest provider and fracking service. halliburton says the first year of 2016 may represent the lowest point for its north american profit margins as customers start fresh with new spending budgets. earlier today, halliburton reported a third-quarter loss of $54 million. alix: iran's oil ministers as no one is happy with current oil prices. his advice to opec, cut prices so prices can rise, but not us, we're going to not cut. down 42% the last year, opec has exceeded official production targets for 16 months in a row. scarlet: you can always get more business news at bloomberg.com.
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julie hyman is a check on the individual movers, opera, weight watchers. a meetingthey have for weight watchers shareholders. shares are getting an incredible boost as oprah winfrey says she's going to be investing in the company, buying 10%. she has option to buy another 5% stake. you can see the stock is now doubling in a single session. incredible movie we're seeing. weight watchers has said it's trying to migrate to being more of a lifestyle company. apparently, oprah winfrey is going to participate in the plan. she's going to talk about that, which should in theory provided publicity boost. but today's gains in perspective, take a look at my bloomberg terminal for the chart of the year for weight watchers. it has not been a good year. and yes you have an indoor miss doubling of the stock in a single day, but the stock is still down 45% year to date. something else to keep in mind here, it's what we've seen on the short interest side. this is short interest as a
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percentage of flow. expanded around 57%, which is incredibly high. in other words, if you get a stock rising that heavily shorted, you can't then tend to have people come in and covered the shorts which exacerbates the movement higher. the last chart, sales. annual sales for weight watchers. you have it over the past two years, it peaked in 2012. since then it's come down by about 20%. there's been a lot of competition for weight watchers from things like my fitness pal, which is a free app, and other types of apps and fitness programs. that's been a challenge for the company. myrlet: do understand reference? opera, uma, noma come over. david letterman. scarlet: star wars references she gets. alix: thank you, julie hyman. much more coming up. on the "bloomberg market day,"
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cable providers are losing subscribers by the hundreds of thousands. i cut the cord last quarter. his netflix to blame? scarlet: you got netflix. alix: it was apple tv. ♪
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scarlet: welcome back to the "bloomberg market day." americans dropped pay-tv service last quarter and analyst are calling this good news. let's get to carol massar and cory johnson. carol: you are losing to the bloomberg advantage. when talking about cord cutting and what we are seeing and what that means for the media sector. we want to bring in gerry smith. cord cutting freaked out investors when espn came out over the summer and talked about what they we're seeing in terms
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of subscribers. they saw decline and they are the gold standard. what's going on with cord cutting? gerry: the good news for the tv industry is that cord cutting is not as bad as it was over the summer. is, there are still a lot of people who are canceling their tv subscriptions. leading up toysts a lot of the pay-tv companies are going to be reporting their earnings over the next couple of weeks. we asked analysts one of their estimates? they said 300,000 people cut the cord over the last quarter. that compares with the second quarter over the summer, where twice as many, 600,000 people cancel their service. it's not as bad as what happened over the summer. but there are still a lot of people who are deciding that i can live without cable tv. you had more than a
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million people in the last year get rid of their cable or satellite service. what i wonder about this quarter, does this suggest there's a limited universe of people who say i can live without it? maybe it's a certain type of tech enabled millennial? not thee trend is still friend of the programmers and the cable companies? cable companies wilsay that last quarter, a lot of college students will cancel there's inscriptions. that's a seasonally weak quarter for that whole industry. it's important to note that there are still about 100 million people out there that are still paying for cable. we pay a lot of attention to how many people cut the cord each quarter -- cory: the 1%, the one million out of the 100 million people . gerry: the whole industry model falling apart. it's fraying around the edges.
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this quarter continues that trend. carol: it impacts everybody in the space. it's the content providers, not just the delivery folks. it's everybody watching this, you think about your traditional content providers, whether it's walt disney or comcast, if they are seeing less and less, it's going to impact them. it's impacting everybody in this space. every thing is connected. you would draw a line to your favorite athlete and a huge contract that he signed. contract, thet league's charge a lot of money to the tv networks who pay billions and billions of dollars for the rights to these games. to make of that money, time warner and cbs charge comcast more were directv, and in those companies will actually charge you more in your monthly bill. it's all connected, everybody in the tv industry drawing a line from the athletes to the consumers, everybody is affected by this. posterspn is really the
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child of this, because they got the highest carriage fees, because every cable operator has to pay them that big dollar amounts, it does seem like they are the ones really most at risk here. as cord cutting continues. gerry: a lot of people will say the cold cable tv bundles is being held together by espn and some of the other sports networks. a lot of people with av only reason i subscribe to cable still is i can't live without sports. that's an interesting development going on. a slingdish introducing tv service, you can get about 20 channels online for $20. is recognizing this in signing up more deals with the sec in the nfl, they recognize they got to have live programming to keep their business model alive. gerry: right. that's another thing, the amount of advertising you can get
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depends a lot on whether you got live television. one of the big trends right now in tv is people aren't just cutting the cord, they are also watching shows like binge watching two weeks later. if you watch sports and got television, you can charge. smith, r bloomberg news media reporter with the latest what's going on when it comes to cord cutting. back to you. olivia: carol massar and cory johnson. you cut the cord. miss the republican debates. the live events. the rest of it, meh. olivia: china reporting -- scarlet: china reporting lower earnings. ♪
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alix: welcome back to the "bloomberg market day." scarlet: when check in with ramy
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inocencio. :, who hosted a roundtable with ceos to discuss climate change. intel, johnson & johnson, and her sheet were among those in attendance. the president is enlisting corporate america to basel his -- bolster his push for climate change. 81 countries have signed on. president obama: we have 81 companies who have signed on to the american business act on climate change. they have about 9 million employees collectively, about $5 trillion worth of market gap. these are some of the cutting edge, most extraordinary businesses that we have. spokesmanite house says the president is considering traveling paris next month for climate change talks. texas is cutting
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money for planned parenthood offices. planned parenthood denies allegations and videos that are heavily edited. the judge ruled the state must continue funding for at least two more weeks. panelats on a house investigating the deadly benghazi attacks have issued a 124 page report they say debunks republican claims about hillary clinton. among them, the claim that the former secretary of state issued a standdown order the night the u.s. diplomatic compound olivia was overrun by extremist and where u.s. ambassador chris stevens was killed. the democratic presidential hopeful will testify before the panel on thursday. croatia's opening its border with serbia, allowing entry to thousands of refugees who have been stranded in cold, freezing rain for two days. as refugees were stranded between croatia and slovenia on oneida nation allowing them to cross into their territories.
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the border incident caused diplomatic tensions between those two countries. a cyber security firm says chinese hackers are still at it. computer security deal between the u.s. as well as china. the deal was announced just three weeks ago during the president's white house visit. clout strike in california says it spotted at least seven attacks on u.s. companies since then. they employ former fbi national security agency experts. the first wordt news. you can also find the latest on bloomberg.com. scarlet: investors weighing fresh economic data out of china establish credit caused by the currency devaluation. alix: joining us is john tyler -- john hailer. inhas added $2 billion assets under management. john joins us in new york. you say the federal reserve has
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three problems. policy, click indication, and maintaining viability. fixable?those is it,: it's how they handle if the economy will smooth out for them. whennk one of the issues they are going to raise rates is whether -- i think to many people are focusing in on when instead of why. i think it's 50-50 whether they do it by the end of the year. why is that we are asking about what was going on with china economic data, are great?umbers that scarlet: it leads us to the volatility we've seen. chart insidevorite the bloomberg terminal. it looks like the futures curve of the vexed -- vix. the green line is two months ago, the orange line is the
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current curve. much deeper than we saw before. is the fed looking at is in making a policy decision, where is this a result of the fed's policy decision? legitimatea question. as economists and business leaders have been saying, the interaction of the fed has led to more volatility and more challenges in the marketplace. have a line is always portfolio that you don't have to worry about short-term movements. build something that helps you mitigate and manage risk, and get you through these types of cycles. there's outlook out there, the lack of movement has created additional volatility. what's in the portfolio where you can look past the things you can't control? ahn: if you're having conversation today about how to control volatility, you're going to struggle. was 1% move in the s&p 500 for 19 days, this year it's been over 50. it's unbelievable. it's a great stat. at the same time, the industry has changed.
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every thing is moving quickly. building these portfolios to help you mitigate this, and this path of active discussion, doesn't really matter, it's how you have a pretty good well-rounded durable portfolio you have built to help you ride through the storms. alix: putatively want to go treasuries when you want safety. that would've not paid off for you in some capacities. you take a look in the bloomberg terminal, this is the volatility index of the treasury market, basically. you've seen increased volatility, emacs and out, we are well below the highs from 2008, 2009. that's not very inspiring. john: you got to figure out what your risk profile is. forget about the performance profile, think about the risk profile. understand the risk you take and then understand what kind of returns you need to have. basically, the average american investor thinks they need 7.7 -- 10% with return. a regular rate of return puts
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them at 13 or 14%. that's impossible. there's got to be a balance between that. having a diversified portfolio really is critical. but at the same time, the equity split isn't going to do it for you. you need smart data, you need potentially etf's passive as well as active. you really have to think through this portfolio construction. in which asset classes do you see the most this location an opportunity? john: a while ago, you could have talked about high-yield, emerging market. when you look at emerging market you might say there's a lot going on there. how mr. china affect the american markets? how much does the strength of the dollar affect the markets? opportunities for value, there have been beaten up very you look at companies that add value. scarlet: we're talking equities. john: there are real opportunities on the equity side look at companies themselves and not looking at the overall
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companies. in theory those would be u.s. companies that have exposure for emerging market? or more localized companies? john: it's both. you have to look down. that's why i'm not the biggest fan of passing, not because i'm in the active site of the business, but sometimes they don't have the same control over picking stocks and looking at that active type of approach. in this market environment, if you find a good active manager that understands emerging markets, whether three u.s. company in the emerging markets, or emerging markets company that is local, i think that's where there's opportunity. can't talk emerging markets without talking china. the data came out last night showing gdp was below 7%. a lot of people don't believe that number. regardless, it shows a slowdown. do you trust that number? do trust the data that comes out of multinationals operating in china? how you reconcile that? john: you look at the trend.
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it's not the number they want, is not the number they need, it's not the number of the global economy. when he gets one of the pressures that on the fed. the fed is no longer the fed of the united states. i may have set some people in the u.s., but the fed is right now the central bank of the world. look at the emerging markets and the effect of china, and their growth numbers, and in looking at the u.s. themselves. that's the challenge we're all facing. whether the chinese number is exactly right or inflated or not what people think it should be, it's in the wrong movement. it's not where we need to have them. they need to us in the economy. alix: you are making a case for why you need an active manager versus passive manager. the amount of funds flows we have seen into passive managers have been unbelievable. where's active managers have stayed relatively flat. how does that play out? done a registry has not good job over the past 20 years explaining about risk. if i'm going to pay a fee, i had
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better get some return. i had better not be one of these giant funds that really is a passive investments charging a fee. some valueadd through active management, you got to be able to charge a fee and you have to explain to clients how that fits into a portfolio. i think our industry, let's talk about performance profiles instead of understanding a portfolio and finding out what type of risk you can take to meet those long-term goals. and then let's talk about products. product should be three or four down on the list, not at the top of it. scarlet: what product is safest in terms of risk, and most extended in terms of risk? john: we're talking about treasuries. there are alternatives out there. -- this ismanagement an area that's going to grow. there are no different structures out there that allow them to help them structure risk
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in a different way. you have these smart data products. you have alpha generating liquid alternative products, there's a whole host of different things you can do today other than the traditional portfolios. scarlet: fascinating, thank you. joining us, president and ceo of americans in asia and will bless america. in the next 20 minutes, junk versus quality. hedge funds with quick returns on low-quality assets could be creating opportunities for buyers of higher quality stock. alix: is janet yellen in the fed using the wrong economic models? why the fed cannot create inflation rate. scarlet: our exclusive interview with john william at 2:00 p.m. eastern time. we find out where he things interest rate should be. ♪
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alix: welcome back to the -- scarlet: welcome back to the bloomberg market day. we look at the biggest business stories in the news right now. the back-and-forth between amazon and the new york times is not letting up. a times article in august of issue with the culture, work environment, and morale at amazon. jay carney says in an article today that the times piece was misleading. the paper quickly responded taking the article, as well as its reporters. a happye key to
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employee may be a conversation about pay. recent reports say that underpaid workers deal better about their income after a chat with the boss. pay scale, website that tracks employment, say happiness increased when a manager discussed their pay. scarlet: it's all about mitigation. users if offering its they dump microsoft. we offer is open for the next six months in the u.s., and will eventually be extended to other countries. you always get more business news at bloomberg.com. alix: julie hyman has the latest, looking at some of the movers on is really boring day. julie: when you dig in, you can always find good stuff to talk about. overall, we've seen things take a turn for the worse. take a look at my bloomberg terminal. we see the groups that are
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seeing the best numbers, energy is down 2%, materials also taking a hit and health care has turned lower. biotech, which was that earlier was holding up relatively well has turned decisively lower. its oilrgy selling off prices that are leading the way. we are seeing declines today as women talking about all day, the iranian oil minister calling for opec to cut production at the same time iran is saying we're not going to cut production. we are seeing a decline of about 2% for oil. still a lot of pessimism about a global glut and how long it might take to work off that what -- global glut. got chinese economic data, gdp coming and better than estimated in that country. it is still showing declines. economic data in the u.s., the one data point we had was housing confidence. confidence among homebuilders. that rose to the highest in a decade. the national association of home builders, the confidence index arising from last month and to this high, that may be a signal
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that we are going to continue to see some strengthen the housing market. if you look at home-building stocks, we have a little bit of a mixed picture. the homebuilder index was set for a third straight game, although it had been giving up some of those gains along with the overall market. these were the best performers, although they have waned it to some extent is the day has gone. because io come back want to take a look at the biotech index. had,ee the declines we've now down about 1.2%. i been trying to look for exactly what is going on, according to one report, marco rubio without piling on this drug debate to the campaign event today. if republicans are going to be bringing this up during campaign events, debates, etc., the issue of capping drug pricing could potentially be something that's influencing. this is a group that is easily pushed around, if you will, by all the news flow that we've seen recently. scarlet: i think they call that
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headline risk. julie: there are technical risk, individual small drugmakers, there's headline risk and then there's other risk to choose from when it comes to this. scarlet: julie hyman, thank you. hedge funds are exposing themselves to a lot of junk in the face of market volatility. according to morgan stanley, this could be creating high-value opportunities. it's is a chart i found interesting today. they took a look at annualized residual return spread, between quality and junk. basically what that tells you is where investors are actually going, and what they are investing in. it shows that now quality is starting to outperform versus junk. quality outperforming junk, that spread is now the highest since december it of 2008. at 11.7%. according to adam parker morgan stanley, fundamental long short managers have been positioned
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for junk outperforming. we talked about this a few weeks ago, about what actually qualifies as junk versus quality. i'mmay people are saying thinking junk, and i'm only going to avoid quality from now on. america, to bank of merrill lynch, high-quality as a company that has smooth earnings. multinationals, being shunned by money managers. junk is low-quality. you don't know when or where earnings will go over the next half year. that'swhat's -- alix: what so striking, it's a shift because you are nervous about the global economy. our investors just looking for some thing different? this chart comes from bank of america, they wound up looking at the outperformance of shares that do a lot of repurchasing. they noticed that is declining, meaning investors are that excited anymore about stocks that buyback a lot of shares. they want better balance sheets instead. , notdea of better quality
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too interested in the eps in that capacity. scarlet: it makes sense given where we are in the rate cycle, with the federal reserve getting ready to normalize interest rates. those companies that were borrowing a lot of money to fund vivax, that may be coming to an end. to have to find another way goose your earnings per share, it will be through buybacks. alix: you see investment-grade yield move up, it's kind of a risk is going to percolate, and to you want to have that risk just for a buyback? of americake bank saying it's more about having a conservative balance sheet. cool stuff happening with market rotation action. scarlet: we like that stuff. coming up on the "bloomberg market day," the fed it can't get inflation to inch up. alix: do they have the right approach? ,ow on bloomberg another line of stellar guests. we hear about investments in puerto rico and greece, and the u.s. commerce secretary will 8:30 to weigh in on
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cuba, the transpacific partnership, and others. ♪
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scarlet: the federal reserve is constantly worried about inflation. even with interest rates news zero, inflation is nowhere to be seen. alix: why can't the fed create inflation? here to help explain is brendan greeley. do with thehas to national rate of interest. what is that? brendan: scarlet was talking about the fed getting prepared to normalize policy, to which i can only ask, what is normal? we don't know what the normal rate is. there's an idea that there's a natural rate of interest. when the economy is at full capacity, what return does a safe investment turn?
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thisdn't thought about because we have the taylor rule which looked a monetary policy and said at certain level of inflation and capacity, this is what you do to your interest rates. we are not getting any inflation. we can't read it for love or money. so we have resorted to the work of a 19th-century swedish economist. we keep hearing people talk out of nowhere, we for tom keene say what is this rate of interest? we have to calculate it. such a thing doesn't exist. if we can figure out what a safe investment would earn at a full capacity economy, then we can start to think about what the actual interest rate, what our policy rate should be to move that one way or another to create inflation. from aking at a paper man of the san francisco fed. we have his estimate of what the national rate of interest should
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be from right before the recession to right now. right now it's at -2.1%. that's much lower than we had anticipated. that has obvious implications for policy. alix: the idea is that it's weaker than the feds fund rate, you can make the argument that monetary policy currently is not actually loose. it's tight. brendan: exactly. everything is relative. is relatively loose or relatively tight. we talk about tightening and someone corrects you and says it we bring up 25 basis points, we are still only relatively tight. we don't know what it is relative to. that's how bewildered we are, that's how bewildered monetary policymakers are. they have to figure out and start with first principles, figure out what the natural rate is so we can start to think about with the policy rate should be. scarlet: to what extent are fed officials talking about this? up?they bring it brendan: john williams is broad enough, the cleveland fed was looking at this paper and responded to it and brought it
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the original work from 1898 and said this is what we're looking at. this idea of calculating the national rate of interest instead of just looking at the taylor rule is no longer beyond the pale. it's very much an active discussion. policy of about the locations. it seems like the two that come up in the san francisco fed paper is it means the interest rate will need to permanently adjust to a lower for longer rate environment, or it's going to be much lower trajectory for any kind of rate increase. brendan: ben bernanke says there's too much savings, and that's dragging it down. there's a couple of ways account delete the national rate of interest. in theways just finger wind, you can't really figure out what it is. you are looking at expectations, financial conditions, and savings. the other thing we're going to have to do, if indeed we believe in this approach is, we may be looking at negative interest rate. we all laughed when he put his dot in the negative part of the graph a couple of weeks ago.
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but increasingly you are hearing people talk about negative interest rates. if the natural rate of interest is below zero, which the san francisco fed has calculated it is, if you want to create inflation, you've got to get the interest rate. the target rate even further below that before we start to see the inflation. scarlet: brendan greeley, fascinating stuff. we got some breaking news on deutsche bank. a headline from the financial times says deutsche bank is sent to a paid $6 billion in a fat fingers slipped, and erroneous trade. was said to have occurred in the summer, and deutsche bank recover the money from a hedge fund the next day. alix: getting this information from the financial times. will berg market day," right back. ♪
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>> 2 p.m. in new york, 2 a.m. in hong kong, welcome to "the bloomberg market day."
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♪ afternoon, here is what we watching right now. for two more is meetings a voting member of the open market committee, joining us for an exclusive interview. the ceo of j.p. morgan chase says that too much regulation could have unintended consequences for the big banks. and the hunt for a mexican drug after thentinues escape convict narrowly as being captured this weekend. first let's go over to the market desk for julie hyman has the latest. julie: deutsche bank, we were just talking about headlines if you eat moments ago. there was an error that occurred over the summer in deutsche

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