Skip to main content

tv   Bloomberg Markets  Bloomberg  October 20, 2015 10:00am-12:01pm EDT

10:00 am
betty: from bloomberg world headquarters, good morning. i am betty liu. the fast food company behind ksc and pizza hut is goal in cold turkey in china. why yum! brands will spin off one of the most valuable parts of its business. the latest poll showing a big for hillary clinton. why joe biden has a big decision to make. in the nine-year reign of stephen harper came to a sudden and at the hands of young liberal party leader justin trudeau. is just another fallout of the oil market. are half an hour into the trading session. we go to julie hyman. i feel like i have been saying this the last few days.
10:01 am
we happen waiting here. feels like ally stock driven market. the movement is stock specific. overall right now, we are seeing a little change market with the dow down about 2/10 of 1%. the s&p and nasdaq little changed. the young, more action with the stock win back our percent. the company is trying to remake itself as a cloud computing company. as it goes through that transition, it is still dependent on its legacy revenue. the company coming out with numbers that missed estimates and cutting its forecast. in dealing the tinge of currency fluctuations. harley davidson also lower. the largest u.s. motorcycle third-quarter profit missing analyst estimates. it also cut its shipments forecast.
10:02 am
it is basically seeing less demand. , because inside this market that is so our earnings driven, inevitably there will be winners and losers. travelers and united technology higher. both of these in the dow. travelers is the loan property-casualty insurer in the dow jones. profit of about 1%. sales accelerated. it had improved underwriting margins. united technologies saying it will not be making large acquisitions that it will continue to spend on buybacks and its third-quarter earnings also beat analyst estimates. betty: housing, we have numbers again. pretty positive. julie: 6.5%. that was positive. permits, a forward-looking indicator, not as strong. what strength there was an housing starts mostly coming from multi family buildings. apartment buildings.
10:03 am
we also see it for raymond james on "continued strength and multi-housing -- on multifamily housing fundamentals." these are gaining, but but not huge gains. betty: julie hyman at our markets desk. in on theeck bloomberg first word news. vonnie quinn has more. the empire state has reached the $550 million settlement with state tobacco. eric snyderman says the agreement is tied to money that has been in escrow between a decade-long dispute. japan says for the first time, a cancer diagnosed -- a cancer diagnosis is linked to the fukushima nuclear plant.
10:04 am
-- about 7000 people are still working at the plant. u.n. secretary-general ban ki-moon is making a surprise visit to israel and the palestinian territories. a wave gamble to bring of violence to an end. encourage ando support all efforts to lower tensions and prevent the situation from spinning out of control. the visit comes after a series of palestinian attacks, most of which included stabbing. isre are fears that region in for a new round of violence. russian airstrikes killed 45 people in syria. a human rights group says the attacks targeted a coastal province. a commander from the rubble or surveys reportedly among the dead. rubblemmander from the rebel -- rubble --
10:05 am
forces reportedly among the dead. brandsshares of yum! getting a pop after announcing plans to spin off its struggling china business. joining us now for a look at what this means is craig giammona. !, as you have been documenting, has been having problems for some time, right? there is a supply issues they have not bounced back from. numbers are bad. it has not gotten back on track there, which is important to them. betty: this is the answer to taking care of this? craig: in some regards. this deal will not close until 2016. if sales stay bad, but this is e-risk from china. so investors can invest in the
10:06 am
new company. you have the stability of ksc and taco bell and pizza hut outside of china. betty: what was behind this decision? craig: the investor. craig:they haven't activist invest -- they how an activist investor involved. keith meister has been put on the board. betty: has he been calling for the split? craig: this is one of the tracks. this company was set up 18 split from pepsico. a lot of analysts say this does not fit for the 20th century. we need to do something to update the structure for the 21st century. i splitting off china is one thing talked about. the other is splitting off taco bell, one of the strongest brands in the u.s. an attempt to say here are these companies on one side, here is china on the other. betty: those who want to play china are, they would go
10:07 am
directly into that part of the company. what about directly investing in taco bell and kfc? will that be just as attractive or more? craig: it is different. analysts also think china has a bunch of upside. yum continues to be the biggest restaurant company in china. kfc the biggest restaurant chain. there is more stability on the other side. they have done well with taco bell in the u.s., but there is still work to do with kfc and pizza hut. and c out of popeyes chick-fil-a. there is work to do. they have done well with taco bell. betty: but it is not enough. craig: they need the other two going as well. betty: thank you on yum! brands. craig giammona zero bloomberg news. let's move to politics. vice president joe biden has a big decision to make it and soon, especially looking at the
10:08 am
latest polls. clinton now leading bernie sanders by at least 20 percentage points among primary voters. and joe biden by more than 30 percentage points. i want to bring in jennifer epstein who covers the clinton campaign. we were talking about this yesterday with phil. is the window closed? jennifer: i think joe biden thinks he is this unique candidate that no matter when he gets into the race will still be a part of it. this week in particular has factors, whether it is the benghazi during thursday, which if he announces after that will easy nats am trying to capitalize if it does not go well. but there is also this big i like jefferson-jackson day dinner. that is been a great moment in the last couple democratic races. 2007 whenig moment in barack obama got real momentum. it showed he was a real threat to hillary clinton. ifre has been chatter that
10:09 am
biden is going to get in, he will get in before saturday night so he can deliver a speech there in des moines. betty: it seems the longer he waits, the worst the outcome is. if you look at the latest polls, not only do they show hillary clinton expanding her lead, they also showed democratic voters do not want him to run. let's bring up the polling numbers. 38% of democratic voters say biden should not run. 30% say he should. that is a change from a month ago. donifer: some of that has to with clinton solidifying her candidacy. some people, especially in august, there were reluctant clinton.ound hillary this invisible front runner. and the debate performance was reassuring, i think. and other polls have, since the
10:10 am
debate and more polls that will be conducted and will come out soon will probably show the same thing. if the benghazi hearing goes well for her or does not go badly, at least -- it is kind of an awful thing to speak to congress about -- if she does well under that pressure, that is another thing that will make make her a little stronger and make it harder for biden to break through. it sounds like all indications, none of that matters to biden. betty: i think we have biden live speaking at george washington u. still out there probably talking and engaging with what the public is again. viewers eking about the race. democraticg to some voters and supporters of clinton, they want to see a more vibrant race. they do not want it to be just clinton and no one else. martin o'malley was speaking
10:11 am
about clinton last night. i want to play a part of what he says is the vulnerability of hillary clinton. martin o'malley: she could not bring herself to say we need to separate commercial banking from because shebanking, cannot. she said in the debate "i represented wall street." she did. i think she does not have the independence needed to protect the mainstream economy from excesses on wall street. betty: without the headache vulnerability? jennifer: -- betty: will that be a big vulnerability? isnifer: what she is saying i want to go beyond it and do the right kind of targeted response and ways to prevent the next financial crisis. some of that has to do with the fact that she has the ear of the a lot of wall street donors. but when it comes to policy, she
10:12 am
is focused on practical solutions and solutions one will two,hrough congress and will deal with the issues at play and are not just what the activist base once. which can -- what the activist base wants. her, but shet wants to make the right policy choices instead of a knee-jerk move. betty: at the debate, she said she wanted to get ins done. she is practical. jennifer, thank you. much more ahead, a rough third quarter for ibm. the company's earnings missed sales and dropped below estimates for the 14th straight quarter. it stoppedng on to down on this news. united named its third euro in less than two months. what this means for the second-largest airline. and what is driving sonic's success? much more ahead on "bloomberg market day."
10:13 am
10:14 am
10:15 am
betty: good morning. time for the bloomberg business flash. a look at the biggest business stories. amazon looking to hire 100,000 people for the holidays. head towards the holidays, job offers from other retailers are expected to remain at -- flat. iszon says holiday hiring there no way from stores into
10:16 am
warehouses. homebuilders had a better month than expected. housing starts up more than 6%. the number of multifamily homes up 18%. another big merger in the health care field. -- amsterh holdings wants to buy team health holdings pays the takeover would urg's contract dr. operations. urg says teen health rejected an offer last month paid you can always get more business news at back to the desk where julie hyman has a check on the movers. julie: i was going to talk about this merger. let's skip to my second story. i got a little m&a theme. a perfect segue. , the stock iset lower after the company said it was conducting a strategic
10:17 am
review, including the possibility of putting itself up for sale. it said it could prove you designate go for value enhancing strategies. the founder was in talks with apollo about a potential deal to be stock was upgraded to neutral over credit squeeze on the speculation. and on a new ceo whose could bring strategic change. whatontinuing news about is going on in the semi conductor industry, bloomberg learned that sandisk is an advanced talks western digital and that companies could reach a deal this week. of again, not even to $80 a share. this is something bloomberg news , that sandiskweek was in talks with western digital and possible early
10:18 am
micron. it looks like they made more progress with western. we get more earnings from sandisk tomorrow. it could be interesting if we get commentary on whether a deal is imminent. betty: it is certainly a trend in the chip makers. thank you. we stay on technology but to their big little. fell third-quarter results . on a conference call, the cfo explains how the company is in transition. >> we are going through a significant transformation. where we have been investing, we have been driving tremendous growth. that gives us confidence the strategy is right. the authorities -- the offers we are giving are resonating with customers. betty: here to help bring down the results is an electron. you and i were talking in the break that this is essentially
10:19 am
ibm trying to turn around and transform a company that has a huge legacy business, right? anurag: it is what it is. it will take a long time. i think -- this is something the cfo is trying to explain. that people have to be patient. because the legacy business is still there and slowing down. it is going fast -- it is not big enough. it will time, that is all. betty: will investors give them the time? anurag: that is the biggest question. stake, that's huge gives the management team more time than would have been given another country that does not have such a large shareholder. betty: even giving them the break that this will take a a while and it is hard to do, are they making mistakes? are they taking too long in
10:20 am
areas? anurag: it will take time. they are making the right investments. they are in the right places. those businesses are growing well but they are a small piece of the pie. just like michael dell decided to take the company private, can you do something like that with a company as large as ibm? betty: is there talk about that? heard it, but not these changes are hard to do in a public setting. betty: they are, as michael dell found. we had michael ferro on, who overhis company to ibm for $1 billion. he was saying that they both want to good deal, but ibm really want to the deal. because they putting a lot of money into watson. will that be a key question for investors, how well they build out watson? anurag: it is an important piece.
10:21 am
cognitive computing is the next place to be. that is watson. you want to build out applications. that is where the acquisition comes in. so it is an important piece of the puzzle. rana withrag bloomberg intelligence. still ahead, united named its ceo in less than two months. what this move means for the second-largest airline as their other ceo is recovering. ♪
10:22 am
10:23 am
betty: shares of united are all slightly. this is after the company named bret hart the interim chief executive officer less than a week after oscar munoz suffered a heart attack. he is in recovery. there are questions about why
10:24 am
united shows a lawyer to take over. i want to bring in michael sasso from our atlanta euro. what does it mean that they appointed this person as the interim ceo, who is essentially the legal counsel at united? michael: that is the big question. the thought is maybe mr. hart is just the caretaker. me perhapsody put to they want to keep their operations people in operation. havehey do not want to them running the company or doing all of the various things they have to do. united has a lot to clean out. they have a week operation, compared to delta and american. it is sort of thought that all was a caretaker for the interim. betty: has united given any sense of how long brett hart may be there in the interim? michael: they have not. i think the thought is maybe
10:25 am
just a few weeks, rather than months or whatnot. betty: what about oscar munoz and any details about his condition. or any shareholders asking for more details? michael: there are. there have been a lot of criticizing about united. they have not been that forthcoming about the future of this company and the future of the ceo all weekend. investors and analysts wonder what happened to mr. munoz. they did it knowledge yesterday that he in fact did have a heart attack. that was reported that they had never acknowledged it. it is unclear about his situation. i think he thought is things are probably looking up, because they did say the new acting ceo is talking and in touch with esther -- mr. munoz. that looks good for the company.
10:26 am
is there a sense this will help long-term ramifications or is this a temporary lip for united -- temprorary blip for united? michael: they hope it is temporary. low morale and their employees. the former ceo the parted a month ago -- the parted a month at -- departed a month ago. people person. oscar munoz was and can the interim ceo continue that. betty: thank you, michael sasso. we talk fast food with sonic's ceo.
10:27 am
10:28 am
10:29 am
betty: cherry limeade. live from bloomberg world
10:30 am
headquarters. you are watching the "bloomberg market day." iron betty liu. let's start with our bloomberg first word news. we go to vonnie quinn. vonnie: we start with china's president. xi jinping met with queen it is ah today to surprise british -- it is the first british visit by a chinese permits are in a decade. senator john mccain of arizona, criticizingn president obama's plans to keep troops in afghanistan say those --get itre not enough to done. >> it is clear that what you need to do was withdrawn a basic conditions, not on calendar. what happened in kunduz is
10:31 am
indicative of a fundamental weakness that cannot be addressed unless we stay and give them the support they need. president obama also plans to keep 5500 troops there after 2017 to train and assist afghan horses and conduct counterterrorism operations. the house back in session. republicans will ask paul ryan if he has had a change of heart about being speaker. he met with confidence in dos confinements in wisconsin over at the long recess. if he will not, john boehner will be asked to stay on to the end of the year. presidential candidate jim may drop out of the race and run as an independent. he was secretary of the navy under president reagan. that is a look at our first word news now.
10:32 am
you can always find the latest news on betty: thank you. we have hot restaurant earnings on cap. chipotle reports thursday. mcdonald's, seeing if there turnaround is impacting their order earnings. will all day breakfast boost d's and sales at mickey other places. now we deal into a drive-in chain more than 60 years old. shares of sonic higher. -- chicken, sodas, and waffle cones sunday help boost sales during the quarter. sonic's ceoing in cliff hudson. good to have you. we are big fans of talking about fast food on this program. your sales are what? they came in the mid single
10:33 am
digits, i believe. in august. betty: that is lower than when you put -- than what you reported in prior quarters, right? cliff: yes. our business has more seasonality with the drive in nature of the business. 4.9%,ird quarter, while was the third last quarter of the year where we had a roughly 5%. analysts can look and say can you come over your biggest quarter, yes. the momentum of our business continues in healthy ways. we always like higher comp and would prefer it, but a 5% on top of a 5% on top of it 5% over three years is a nice run. betty: are you feeling the same effects of mcdonald's where they are struggling with, because people are going to chipotle and
10:34 am
panera and elsewhere? cliff: our industry segment is getting that's. dining is getting it worse. fast casual is pulling it off of casual. of our food is made to order -- i think we have a different service than our competition, our traffic is -- betty: it is drive-in. cliff: yes. the food is made to order after the customer orders. add a tomato, hold a tomato, add mustard, do whatever they want with their wood. food. we have it traffic growth, sales growth. while fast casual is pulling business off of our competitors, they are really not pulling it off of us.
10:35 am
the other competitive thing is convenience stores for drinks and the lower prices. in our case, because we specialize on drinks, we even have about 20,000 different combinations of drinks 60 calories or less. a lot of options. our drink is is is up. betty: we were showing us that about cherry limeade. cliff: that really is our quintessential sonic during. drink. based in oklahoma. betty: you are just domestic. oklahoma and texas, you have expanded rapidly. have you seen any impact from the downturn we have seen in the oil market? cliff: no. that came up yesterday in our conference call. our response about the oil patch. few stores and limited markets in west texas. it is not negative, it is just not as positive as the rest of
10:36 am
the system. west still positive in the texas markets, but we are not seeing that impact. betty: what about cheaper gas prices? cliff: that has been a boon. betty: more people driving in? cliff: sure. and more cash in their pocket. regardless of the oil patch piece, whatever portion of affects, lower gas prices positively affect 100% of the population, particularly west of the mississippi, where people drive all day. this has been positive for our business. betty: can you quantify positive? cliff: it is hard to segregate. in a given time, our sales were 7.3%, with was that new media -- yes. product -- yes. lower gas prices -- yes. kind of all of the above. out someled to portion
10:37 am
portion. say to ports was for this and reports for that. betty: even though analysts would like that? cliff: they always ask and expect an answer. you saw the news about theybrands and the trouble are having in china. you are not international. you thought about it. would something like what is happening there give you more pause? cliff: no. why is it not? one is we have enormous opportunities to still expand in the u.s. we are spending $70 million in national advertising the next seven years. we are not in maine and new hampshire yet. we want to be. just now opening in rhode island. our first store.
10:38 am
this opportunity for growth is it if it can't. the next 10 years, we could double the size -- we will not double, but we could grow substantially the next 10 years. there is an enormous upside here. and with a very high brand awareness. , iwe go about international am not sure what countries, we deal with that in private and we have ongoing discussions about it and inquiries from third parties. it will be years before it has material impact on our business, because it takes so long to get a foothold. betty: but it is in the cards? cliff: at some point. betty: thank you for joining us. of sonic.on, ceo much more ahead in the next 20 minutes on the next -- in the "bloomberg market day." results are out in canada. liberal score their biggest
10:39 am
victory in years. and is it do or die for mercer mayer? -- marissa mayer's? we. the earnings coming up. ♪
10:40 am
10:41 am
welcome back. just over an hour into the "bloomberg market day." time for bloomberg business/paid and unexpected forecast from lockheed market -- lockheed martin. they say their sales will be little changed. sales at lockheed have fallen three years in a row. has left am china dent.
10:42 am
talk to steal -- is under pressure to raise the issue of china selling you at a loss to world markets. barclays wants a smaller workforce for no on the way you may think you they planned to roll out a wellness program, including activity challenges between employees, wearable than 75rackers for more thousand employees to slim them down. you can always get more bloomberg news at this is get sue london where ryan chilcote has the latest on the selloff. ryan: i do not know if i need be chipotle or the fit bit. you look at european equities. there is some green, but it is mostly red.
10:43 am
that is because the stoxx 600 is down. we will spend a little time talking about this. you can see it opened. at 9:00, it held precipitously. the first day the stoxx 600 has fallen in four days. because to reports came out from the ecb. the first set the capital account is narrowing. some people say perhaps that means exports are declining. some people say -- this is what --heard from enp para ball bnp paribas --that some investors are taking their money off the table for equities. the other important, perhaps the more important of the two, said banks aren't lending in the eurozone and they are doing that to companies on more favorable terms than earlier. that is good news, especially for companies. some people speculate that good news for the ecb now means it will decide the do not need more quantitative easing. less connotative easing means
10:44 am
less money to buy equities, hence the slump. that is good news for the euro. the less money, the more it is worth. we saw the euro spike at the news. tnt express, a company we have not heard of too much since april 7, check it out. up 10%. there was a report out that said eu regulators have no major objections, unconditionally a to accept fedex is bid for the company. betty: thank you. now for a look at u.s. markets. i want to bring in abigail doolittle live from the nasdaq. il: we're looking at memory and mania over here. bloombergs alex sherman yesterday broke the news that sandisk is in advanced talks with western digital to sell itself to western digital. 80 andomewhere between
10:45 am
90. the deal could be announced as early as this week. western digital it receiving a $3.8 billion investment from a chinese university certainly, increasing funds available for this sort of deal. western digital has been down as much as 4%. sandisk up more than 5%. company hadthis initially been brought in as a potential of fire of sandisk as well. not as much talk about that today. but micron technology was announcing extreme flash technology. a faster flash memory. the company thinks it could revolutionize the way the designs forindustry instant performance. the stock down 2%. betty: thank you. on the nasdaq.le after more than a decade in
10:46 am
power, canada's preservative -- conservative party is out. justin trudeau one the majority in the national election. gained 150 seats, the biggest political comeback in canada's history. >> this is what positive politics can do. this is what a positive hope -- a hopeful visiona nd a platform and a team together can make happen. across this great country sent a clear message. it is time for a change in this country, my friends. a real change. payroll or richie joins us now from the toronto stock exchange to explain the global impact. what happened? it was a landslide. 184 seats for the liberals. returning trudeau is
10:47 am
to the home where he grew up. he grew up in the official residence for the prime minister in canada, which we call 24 sussex drive. he was there when his father was prime minister. he now returns with his own young family to be the first -- the lead in the first liberal majority in 15 years. mr. harper had been in charge with the conservative party in canada, a great asset for the resources sector for almost a decade. he resigned last night. the conservatives came through with about 102 seats. in total, the parliament has 338. he came in well behind mr. trudeau and resigned. some other the things we expect from mr. trudeau, promises for a greener commitment, canada into the world stage. it is also promising to set a
10:48 am
price for carbon, moving forward on some of those rights. any big plans and late the economy. -- to stimulate the economy. react,had in the markets particularly the currency market? did a littlew it as the results were coming in. and when the majority was announced, when mr. trudeau made his speech, we got it would did. it is back up $.77 to the u.s. dollar. that has to do with oil uncertainty added, but we see it stabilizing therefore top. the tsx is up. many of the winners, construction companies. they will be an infrastructure focused the. and engineering side of things. the loser, pipelines. looks like there will be less emphasis from mr. trudeau on key
10:49 am
pipeline projects like he's done. for the rail companies. canadian pacific and en rail. more winner, interesting story from our toronto bloomberg , pot stock. marijuana stop. mr. trudeau promised to legalize marijuana. betty: thank you. i understand that we are launching bloomberg tv canada and you are show debuts mid-november? pamela: mid-november from 4:00 to 5:00. we will see you on and more often. betty: wonderful. thank you. from bloomberg tv canada. atll ahead, we look manhattan real estate. ♪
10:50 am
10:51 am
10:52 am
betty: welcome back to the "bloomberg market day." complexn's biggest ever -- blackstone agreed to buy stuyvesant town for more than $5 billion. twohanged hands last in thousand six. what does this price tag say about the manhattan real estate market? here to answer that is sarah mulholland. what does this mean for manhattan real estate? arah: there has been a huge reald for new york city
10:53 am
estate. particularly family is attractive, because it is difficult for homeowners to abide. people are renting, driving up the price of rental housing. in new york city has a housing shortage. this is the largest complex in the city. it is pretty special. betty: how does this fit into blackstone's real estate portfolio? hadh: blackstone has tremendous success in raising money for its real estate funds. this move into new york city residential is pretty new. they just made their first acquisition in the area last month. groupray, the head of the , he was speaking here and said they are focused on the residential rental market here. i guess this is the big play he was -- he was hinting at. they are the largest private equity real estate business by our. betty: and the largest owner of
10:54 am
single-family homes as well? sarah: yes. betty: is this a turn for them, they go into multi family? the idea isnk people will continue to rent, whether it is a single-family home or multi-family home. the theme is the same. that people who may be struggling to all of y for a mortgage or cannot afford to buy in places like new york and miami, they will still need to rent homes. betty: that makes sense. stuyvesant town has a storied history in manhattan. walk us through what happened in 2006 and why it was a disaster. blackrock bought it for $5.4 billion, a record at the time. -- one of theence differences is that blackstone and their partners are working with the city on this to maintain the of audible component of this complex.
10:55 am
to maintain the affordable component of this complex. the previous owners was their plan was to jack up the rents and kick out the tenants. that is one factor. also, people are not planning the same kind of leverage on these deals that they were in 2000 x. in 2006. i expect it will be more equity. back in 2006, was there not this huge uproar? sarah: they eventually sued and won. there was a settlement in that case, which dictates how you can raise rents it the complex going forward. part of the reason it was clear for sale, because that hurdle had been cleared. but i think of them working with the city to make sure that -- betty: affordable housing. sarah: that they will maintain that component. i think that is a a deal. -- big deal.
10:56 am
betty: anything we can read into the back of the price has not changed much? is so much demand for commercial real estate in new york city now, that it just speaks to this huge demand. is a lot of demand and there you go. record prices. sara, thank you. sarah mulholland, our bloomberg real estate report appeared tomorrow, we will speak with blackstone group's president and ceo tony james about the $5.3 billion decision to buy the largest apartment complex and more. ♪
10:57 am
10:58 am
10:59 am
betty: it is 11 in new york and 4:00 in london and 11:00 p.m. in hong kong. welcome to "bloomberg market day."
11:00 am
♪ betty: from bloomberg world headquarters in new york, good morning. i am betty liu. here's what we are watching at this hour. stocks are fluctuating and bouncing around and investors looking for directors from corporate earnings. bloomberg businessweek breaks down the best business schools of the year. guess who is on top? yahoo! kicks off the first of blockbuster tech earnings. marissa mayer faces questions on alibaba spin off and executives who have less. is her time at yahoo! coming to a close? are 90 minutes into the trading session. i want to head back to the markets desk where julie hyman has the latest on the averages. so disappointed every time. i can see it on your face. we are not seeing more movement
11:01 am
and that remains the case here. the nasdaq has very little change of the three major average. we are not seeing much decisive action here. that remains the case as we have seen it throughout earnings season. it is really the individual stock movers that are the story of the day. look at my bloomberg terminal and we had the imap here with the various sectors and health care lacking the most and technology lagging as well. arecom and materials gaining, but it is a mixed picture. in terms of the stocks doing the best and the worst in the s&p 500, let us take a look at those as well. that tells a part of the individual story. on the plus side today, we have apple going higher. beenteresting note who has able on apple, he says that apple music has more paid users than estimated -- 6.5 million and the trial. he says that means it is higher than the 5 million or so that analysts had anticipated. verizon is rising after the company reported third-quarter
11:02 am
profits that beat estimates. it had a lot of sales promotions, which in the longer term might be a problem. it also has some numbers that beat estimates. --ally, united technologies that company's earnings also beating estimates and continuing to devote money to buy that. that is the plus side of the equation. let's look at the negative side of the ledger. a lot of it has to do with technology. ibm coming out with earnings that missed estimates, particularly the forecast is what folks are focusing on is the company tries to make the transition the cloud computing. google and amazon are also weighing down the s&p 500. amazon closed at a record yesterday. both of these companies report later in the week. google and amazon are different companies from ibm, but technology earnings are important for the overall earnings growth of the s&p 500 and of the u.s. market generally.
11:03 am
it's going to be interesting to hear what they have to say. betty: thank you so much, julie hyman at the markets desk. your first check of alert news. vonnie quinn has more from the news desk. vonnie: we start with a surprise visit to israel and the palestinian territories. ban ki-moon arrived there. moved to end are month of violence. i'm here to support all efforts to lower tensions and prevent tension from spending out of control. israelis having killed and palestinian attacks, most of them stabbings. many of them have been killed by israeli fire. london, a ceremony for chinese president xi jinping. you can see the live pictures. earlier, he visited the queen anne road in our carriage to buckingham palace. david cameron says that she is
11:04 am
ready to make deals with billions of dollars during his trip. there is the british prime minister welcoming him. in canada, justin trudeau's election victory has construction and marijuana stocks rising. trudeau says that as prime minister that he will increase spending on infrastructure and will promise to legalize and regulate marijuana sales. reached $500e has million settlements with big tobacco. the agreement covers money held in escrow during a decade-long dispute. that money is intended to help the state pay for smoking-related public health costs. and on capitol hill, the house returns to work today. searching for a speaker. republicans will be asking paul ryan if you had a change of heart about the job. he discussed it with confidants in wisconsin during the weeklong rest. last john say they boehner to stay on to the end of the year.
11:05 am
look at our first work news right now. you can always find the latest news at betty: thank you vonnie quinn at the news desk. bloomberg businessweek just released its annual rankings for the country's top business schools. that was moments ago and that is a surprise at the top. i want to bring in francesca levy who has more on this. good morning. a different university on top. who is it? francesca: harvard business school. it's a fantastic business school and has done strongly in the rankings. this is the first time it has been number one since we started drinking business schools in 1988. betty: what happened? francesca: the story is that students get great salaries when they graduate. six to eight years out, they still have really strong careers. employers and recruiters who hire mbas love harvard. those are the things we rank schools on and they did strongly in the measures. betty: last year was duke. what happened with duke? francesca: they fell a little
11:06 am
and part of the recess league is that we did refine our methodology this year. completely apples to apples, but did performed strongly in employer ratings. people who hire mbas also love duke. betty: these are all the top of the top when it comes to business schools. you mentioned a change in methodologies. what was the biggest change? francesca: we refined our methodology by focusing on what people who go to business school care about -- getting a great job in a great career. that means not just making a lot of money, but ending on a career path that they feel good about. we ask about all kinds of things that deal with careers, job placement, salary levels when they graduate, and also what alumni think six to eight years out of school. this is the first year that we have surveyed alumni. we talked to 12,000 graduates. betty: stanford's rank number one in salary and alumni survey data. what was behind that? francesca: people who graduate
11:07 am
from stanford and that making a lot of money right when they graduate. that is one of the salary data points we look at. alumni are really happy with the way that the school help them get to where they are in their careers. not only are they and careers where they make a lot of money, but they feel like stanford help them get there. they also report being really satisfied in their careers. it also matters whether you are in a choppy like. betty: i hear anecdotally about how the stanford network is really tight. we know harvard is, but stanford and critically senate -- silicon valley. francesca: there are so many resources to get into tech and startups and make a lot of connections there. the school and the students really capitalize on that. betty: let's talk about salary that. what did you find when you are doing this raking? with salary find earnings as years progress with the mbas? francesca: one of the interesting data point is that there is a pay gap between male and female mbas. it starts out pretty small.
11:08 am
when they graduate, they are both making somewhere around 100. i think men make 98000 and women make $95,000 he. $140,000ars, that goes women and $170,000 men. gender seems to affect everybody. even mbas where you think men and women would be on an equal playing field. what i thought was interesting is that what is driving that gender pay gap is bonuses. it is not the base salary that is differing that much. it is how much they are getting paid when it comes to discretionary income. justggests that it is not -- you can get a good base salary, but it still matters what employers think about your performance. and some of that is discretionary. it sort of interesting. betty: what stuck out to me is that columbia had the worst gender pay gap. francesca: men six to eight years out are almost making $100,000 more than.
11:09 am than we cannot say it's because they went to columbia, but it's interesting for a business school to look at these numbers and think, what are we doing to not just let in enough women, but also make sure there's parity when the graduate? betty: the focus on the tech world and most of the mbas are going into financing consulting. francesca: 60% of mbas and up in finance and consulting and tech. betty: that's almost half going into consulting. francesca: absolutely. we really see them drive the same interest as you would expect them to drive. betty: francesca levy of bloomberg businessweek, much more ahead on the "bloomberg market day pick up ." the drink i want to give coca-cola and pepsi a run for its money. missing estimates for the 14th quarter in a row.
11:10 am
what does it mean for the company and its chechen nation? big news involving kfc, pizza hut, and talk about. what that means to you and business in china. ♪
11:11 am
11:12 am
betty: good morning. welcome back to "bloomberg market day." it's time for a look at the bloomberg business flash -- a look at the biggest business stories. yum foods is spinning off its business. kfc will split off its china unit 28 trading company. it has been and they sales slump there because the food has safety scandals and increased
11:13 am
competition. we will have more and a moment. there was an unexpected forecast from the world's largest defense contractor. martin says their sales will be little changed. that surprised analyst with a rebound. sales of luck you have fallen three years in a row. amazon is looking to hire 100,000 people for the holidays. than last year. hiring at traditional big-name retailers is expected to remain flat. amazon says because of the increasing demand in online shopping, holiday hiring is going away from stores and into the warehouses. you cannot was get more business news at the business desk where julie hyman has a check on the biggest movers. julie: it did not take long. keith meister was the head of the yum board and now we are seeing the china spin off. the shares might be hired by moore, except for the fact that he has been pushing for this for
11:14 am
quite some time. this is a substantial move for yum and probably the biggest since the spinoff from pepsi 20 years ago. look at my bloomberg terminal and i was looking at the breakdown in revenue. this is quarterly revenue by the different segments of the business. the red line is china and this gives you an idea of the relative size of the china business and it accounts for $1.9 billion of revenue for the company. descending order, young kfc, talk about, and pizza hut that account for the other outlets in the u.s. and internationally. the spinoff will be substantial for the company. by the way, it will be a franchisee of yum's parent company. the location will be franchises. speaking of food and beverage, monster beverages getting it pump today. thatis after analysts say mcdonald's is testing a monster beverages and some of its locations with "positive results."
11:15 am
this could cause potential upside for monster in these quick service restaurants according to analysts. those shares are up 5% and are among the best performers in the s&p 500. rounding out the food, it is brinker's going in the opposite direction. the owner of chilies came out with earnings below estimates and had the low sales estimates falling half of 1%. saw ai's, they decrease in sales. the only increased and better than estimated reading was in franchise international locations. though shares down about 5.5%. betty: thank you, julie. this week might be light on big economic news, but that is not stopping the fed chatter. a number of key speeches by fed officials could shape market expectations for the time being. just yesterday, we had john williams speaking exclusively to bloomberg television.
11:16 am
he sees a reason to increase rates in and slowly. here is why. a good place.n the u.s. economy is strong and have good momentum going forward. we have significant headwinds abroad. with the balance of those, we can remove monetary accommodation over the few years gradually and get these goldilocks economy -- not too hot, not to call. -- not to call. betty: joining us now is very rich whole. do you think with comments like that that that is confusing the markets even more? barry: i don't think so. it has been clear for a long time of the fed has been having an internal debate. there are hawks that would like to see rates begin the process of normalizing. there is a handful of does that look at the economy that is still relatively soft are not as strong as they want. in particular, inflation is tactically nonexistent and
11:17 am
deflation is the concern. there's another group within the we have beenhe -- having a few nice weeks or two. betty: you sound like an economist. barry: we have had volatility in the market, but let's put this into broad context. rates are nearly at zero. we will collect it 15 points because the fed says it is a range. if they were to go up to 25 points, that is an insignificant move. the hawkish argument is that it provides a some confidence to the market and the fed is seeing something that nobody else is seeing, that there is no mystery economic data out there. we can start moving off of our emergency footing. i think theis what general view is that there is so much discussion about what you just said is not that big of a deal.
11:18 am
there is more and more chatter that the fed is losing credibility. americans are not trusting them anymore. barry: that's chatter, . when you look at institutions like the white house, the state house, in terms of how the public views them, the federal reserve is the top ranked of that group. congress has single-digit approval ratings. the white house is better, but at the bottom of the line. betty: what you think? barry: what do i think about congress? betty: i said don't even think about congress. barry: the federal reserve really looks like the only at all in the room when it comes to deal with problems. -- adult in the room when it comes to d dealing with the problems. lapbernanke is on a victory promoting his book. betty: most definitely a victory
11:19 am
lap. you are looking at what julie was doing with yum! brands. what did you want to say about that? barry: whenever you are at a poker table, warren buffett says to look around for the patsy. thealways want to know who smart money is. these guys are selling that and you have to wonder why. the answer from my perspective is that you look at the problems that mark donald has been having -- mcdonald's has been having with chipotle and shake shack. you look at the brands in the young portfolio and they are very old school -- kentucky fried chicken and taco bell. betty: you're not buying it? barry: absolutely not. millennials are moving away from that junkie, high carb, greasy, low-quality food and going to places like chipotle. are moving towards healthier and better food. when you look at the soda companies, like coke and pepsi,
11:20 am
their big brained growers are not carbonated sugar water. it is all the waters and other minerals. betty: we're going to have somebody from zevia on to talk about it. stay with me to talk about the mar markets in the short interest and whether that might be another valley here. you're looking at live pictures of the chinese president is addressing both houses of the british parliament. he is on his second day during the u.k.. we will have more of his visit on "bloomberg market day." ♪
11:21 am
11:22 am
betty: welcome back. 7%s&p is up more than since bottoming in august. new research shows that short
11:23 am
interest has not budged in the last few months. barry who stays with us and all of her, what does this mean exactly? oliver: the rebound is not really the case. if you are an investor, you can make the argument that they could be a bit of a sign of a strength that there is actual conviction buying here rather than people saying that we have got to the level i want to get an want to cover my position. it's interesting because not only did short interest get pretty high before that august selloff, but it continued climbing through the selloff and through the return we had to the august low in late september. betty: is that a bear sign? oliver: we have people saying i want to keep this protection. does that mean they are betting on specific stock on down or holding onto their hedge? it is unclear. the idea is that if you have all the shorts out there and you have not yet covered and stocks continue climbing. sayome point, the guys will
11:24 am
we will have a lot of buying power than that. betty: what do you think of that? barry: i tend to attract short interest on individual companies. when you see a very high level short interest in a specific company, when any good news come definitely rocket fuel. shorts cover and they go higher. you look at the broader market and look at a specific index, it is really hard to draw a conclusion about the short-term wiggles, weekly, monthly. on the other hand, we occasionally see things reach extremes over the long haul and that is usually a contrary signal. week to week and month to month for these moves, what were we down 12%? betty: doesn't make you feel better that there is true buying going on since the bottom? barry: no, i do not care one way or another. it does not make a difference. a group of short-sellers relatively tiny to the overall
11:25 am
market. we are talking about trillions of dollars in market cap when you look at the total amount of short sales outstanding. it is relatively modest. when things get extreme, and might be an important signal. betty: but right now, it's not? that: i am not convinced short interest over the intermediate term gives a whole lot of signal relatively to the noise that it provides. it is always good to know and to see. that we have entered a choppy or period. the overall one decision by and they just buy stocks and they kept going up. that phase of the market is over. now we are in a range and we will see if we break to the upside or downside. it short interest was high before the selloff and during the rebound, i'm not sure what to make of that in terms of a tell. betty: oliver, what are the data points you are looking at? oliver: i'm glad you brought
11:26 am
this up about individual security because what this actually is is an average of the short interest across all the stocks in the s&p. this is not hedging the s&p wire or benchmark overall. this is an average of all the company's. betty: oliver has been working on this. h-pooh'd over what he's been working on. barry: there is no doubt that individual stocks have run amok. i bet these short interest are things like netflix and tesla. the energys also space as well. there are some names that you will expect to be there. barry: the key question is what does this mean for the overall market? and oliver, thank you for joining us. we will be back with "bloomberg market day." ♪
11:27 am
11:28 am
i just had a horrible nightmare. my company's entire network went down, and i was home in bed, unaware. but that would never happen. comcast business monitors my company's network 24 hours a day and calls and e-mails me if something, like this scary storm, takes it offline. so i can rest easy.
11:29 am
what. you don't have a desk bed? don't be left in the dark. get proactive alerts 24/7. comcast business. built for business. tand that's what we're doings to chat xfinity.rself, we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. betty: live from bloomberg headquarters in midtown manhattan, you're watching the market that. let's start with the bloomberg
11:30 am
first word news. vonnie quinn has more. we start with vice president biden in the race for the white house. the question is whether joe biden will launch a while -- a white house bid is up in the air. at an event honoring former vice president walter mondale, biden recalls joining barack obama's presidential ticket and how it merely did not happen. >> i honestly got thought i could help them more as chairman of the foreign relations committee. he said, i need to know right away. i said, no, i do not want to do this. i was on a train and spent 80% of my life on that train. he said, how much time do you need? >> i said, i do not need any time. he said, go on and talk to family and get back to me. my family was right and made the right decision. the best decision of my political career was to join the president. vonnie: biden is expected to announce by the as of the week whether he intends to run for president. wisconsin congressman paul ryan has reportedly want to becoming
11:31 am
the house speaker. paul ryan will make the final decision any plans to make assurances from token hard-liners that he has her full support. those talks may start to market -- to market these warships are being sold to saudi arabia. improve helping to their military after agreeing to back the nuclear deal with iran. it is that what most people think of when they go to ebay looking for a used car. a 1967 for rory is on sale there. the price -- $9 million. only three of the cars were ever made. this is the only one available to take out for a spin. i just want to look at it. that is our first word news right now. "find the latest news on betty: i love that. thank you so much, vonnie quinn at the news desk. calorie counting and health-conscious americans have
11:32 am
been backing away from sugary soft drinks. more recently, people have been withing diet soda as well the long-term effects of artificial sweeteners. experts suggest that the consumption of carbonated soft drinks is the lowest point since 1986. is this the right time for zero calories naturally sweetened shareto snag the market or is the craze over for good? i want to bring in paddy spence. i'm sure that you get these questions all the time. how do you grow in a market that is basically shrinking? about sodaamazing a is that we on average drink 40 gallons of soda. drink thisicans product and the bubbles and the sweetness. betty: maybe not millennials though. >> they do not trust the ingredient in conventional sodas. that is where a brand like the
11:33 am
via comes along. we take that paradigm of sophia and turned it on its head. you do not need sweeteners and you do not need caramel colors. this is a soda that is completely clear. is that we finding are the fastest-growing soft drink brands in the category because consumers are looking for a brand with ingredients that they can trust and all the benefits of a classic soda. betty: how do you get a cola taste without the camera? paddy: it's caramel cover not caramel flavor. it has been linked to some studies to cancer. consumers are saying i would love a soda, but i do not feel comfortable sharing this with her family. betty: maybe i'm a little scared of drinking it and any of the sodas if i know the color is not necessary. so, how do you compete then against coke and pepsi? they also use zevia. paddy: they have, but they use in mid-calorie drink. the folks looking for zevia say
11:34 am
i drink diet coke and diet pepsi and sprite zero. i wish there were an better for you version and that is where we come in. betty: how do you replicate the test of it -- taste of it? paddy: cola was a natural product. there was cinnamon, clothes, nutmeg, etc. made first not an elaborate lab but with natural ingredients. we are going back to the roots with soda. betty: what are your growth rates right now? you are in whole foods. paddy: we started a national retailers like all foods. like a lot products, we are expanding into retail. our products. everywhere that so that is distributed, there are people ia -- airlines,c professional sports like the oakland athletics, movie chains, and hospitals. you going to surgery and they give you an aspartame sweetened diet soda. it does not add up. betty: why did coke and pepsi do not decide to use zevia and make
11:35 am
it a zero calorie soda? paddy: we find consumers dig deep and they look at the ingredient panel and say i do not like the caramel color and i do not like artificial flavors and preservatives. betty: you are saying that consumers are going away from coke and pepsi not just because of the taste but because of the ingredients? paddy: we are seeing in packaged the change in consumer relations. for 100 years, they told what they would like an advertised what consumers wanted. brands like us are evolving with the consumer. our fans say that we do not like caramel color. we are worried about the health risk and we removed it. it is much tougher for big companies to be nimble and evolve. we are seeing it. starbucks removed caramel color from inspired lattes. fromy is removing it chocolate. it is all happening, but not in the soda category. andy: what does pepsi
11:36 am
coca-cola decide to move in that direction? you are still a small player. paddy: trust is a key component in that relationship. using a retailer fast food analogy, coke is mcdonald's and zevia is chipola. it has a health halo around it and has better ingredients in the branch is responsive to what consumers ask for. betty: do you hope they buy you monday? one day? paddy: we want to be the same atoms of soda. betty: some have compared you to vitamin water. vitamin water was not upby pepsico? paddy: coca-cola. betty: sorry. you are as large and now as vitamin water was when they were brought by code. paddy: that's exactly right. betty: might this be a time now to look at offers? paddy: the playing field has
11:37 am
changed and emerging brands can compete with the giants and way they could not 15 years ago. we have a bright future i and there are a lot of people drinking zevia and just discovering it. betty: paddy spence, the ceo. much more ahead on "bloomberg market day." disappoint quarter for ibm and the software they are betting their future on. much more ahead on ibm. ♪
11:38 am
11:39 am
betty: welcome back to "bloomberg market day."
11:40 am
i am betty liu and it's time for the bloombergs business flash. we are looking at the business stories in the news right now. home had a better month than expected in september. housing rose more than 6% last month to the second highest level in eight years. the number of multi family homes was up 18%. teen health has rejected an unsolicited takeover proposal from answers. answers offered $5.2 billion in cash and stock. team health said that undervalued the company. it deals with contract and dr. operations. they rejected offer last month as well. shares of harley davidson are dropping today. the largest u.s. motorcycle maker posted third-quarter profits that missed wall street estimates. costtrong dollar has harley sales to foreign writers. -- rivals. you can always get more business news at painse president's easing
11:41 am
has just wrapped up his speech to both houses of the british parliament. a four-daye u.k. on visit looking to strengthen business ties between china and the u.k.. bloombergs caroline hyde is outside of buckingham palace where this evening the president will be honored with a white tie dinner. caroline: the red carpet has been rolled out for the present of china and his wife. the royal family hosting him at buckingham palace and then got the u.k. government looking him to the houses of parliament to speak with mps and lords. this is all about economic tid s es, about $46 billion with a deal set to be announced over the course of this trip. concern andll some protests on the side about the human rights reputation that china has. there is perhaps pressure on the steel market here in the united kingdom. at the moment, this is about forging relationships with the energy sector and the financial sector here in the united kingdom.
11:42 am
with that, i hand things back to you. betty: that was caroline hyde at buckingham palace. i want to head back to london where ryan chilcote is standing by with more. before we get to out the european markets closed, tell us how important this visit by chinese president xi jinping has been to the u.k.? it's been a very important visit and we heard members of parliament say that his visit can lead to their relationship between the two countries reaching new heights. despite criticism from outside of the u.k. that this government is too close to china, despite the criticism from this country's own steel industry, which is very small and has been complaining about the chinese dumping steel on the market, those kind of comments are music to people's ears here in the government. the government a short while ago saying that they expect this visit to lead to $30 billion worth of deals. that is 45 billion dollars worth of deals. they need that.
11:43 am
the have a special relationship with the united states they have a contentious relationship with the european union. they need the world's second-largest economy on board. it is a very big deal and that is why starting right now, now that he is done speaking up of parliament, the chinese leader is going to head back to buckingham palace for a state banquet because they want to make sure he feels welcome. betty: they do. there are certainly concerned about those ties. back to the european markets and how are they closing? we pretty much the already across the board, right? ryan: we did and we have some patches the green, but mostly red, particularly down 6/10 of 1%. the reason for that is straightforward. you look at the stoxx 600 and that is the benchmark for european equities nfl today for the first day in four. the fall begin at 9:00. the reason for the fall or at least one of them is the report that we got out from the ecb. the ecb says that bank lending to companies is going well. that's good news for companies,
11:44 am
bad news for share prices you could say. it is one of this classic cases where good news might be bad news because it means perhaps there is going to be less cute you down the road. one final thing to point out on the bright side things is that one company you may not have heard about is a courier company here in europe is the best performing on the stoxx 600. the shares are up more than 10% today. why? the reason is simple. today we learned in a report that the eu has no major objections and without any conditions is prepared to accept the federal express is purchase of tnt express. we will see shares rise more than 10%. that is when we learn that fedex was interested in tnt express to begin with. betty: ryan, thank you so much. london.ryan chilcote in back here in the u.s., abigail doolittle has the latest live from the nasdaq and you were
11:45 am
saying that some of the chipmakers -- abigail: we are looking at two stocks on the move but in opposite directions. there are two in opposite directions. the composite index is down 2/10 of 1%. two stocks on the move big-time. we are starting off with the red -- rambus. this company reported third-quarter results yesterday after the bell, missing expectations on the top line and guiding down fourth-quarter revenue expectations to a range between $71 million and $77 million versus expectations by an list of $83.4 million. their claim to reduce their workforce by a percent and expect to save the company $10 million in 2016. shares are up more than 25% at this time. investors are clearly not liking some of this news. now turning to the green -- monster beverage. the stock was up as much a 6.4 percent.
11:46 am
it's the biggest intraday move since may 11 after ever court isi show that the test marketing products at a few mcdonald's was "positive results." the analyst see potential upside for monster and could add as $1.30s the dollar 30 -- to incremental. qs our stands for quick service restaurant and the that is what we have from the nasdaq at this time. betty: thank you, abigail from the nasdaq. is working to remake itself is spending a lot of money in the process. the latest quarterly results show it still has a long road yearly outlook. in today's west coast wake up, cory johnson joins us now to talk about what is going on at a blue. corrie, you were speaking earlier this morning and you
11:47 am
said it takes time to transform this company. cory: i guess, but you are not seeing it in the results. i understand what ibm is talking about and how they are intentionally striking the top line to get better margins and more profits. the problem is that while they have been chunking the top was successfully, they are also striking margins and profitability. you just see a disastrous results across every single business unit at ibm. you can certainly see that in the profit growth, which has fallen dramatically, down 6% year over year. that is after many quarters of decline. i think even more so what you see from this company is that while the profit growth is falling and the revenues are falling, ibm has not reported a third-quarter of less than $20 billion in revenue until registered -- yesterday, all the way back to 19 77. down quite aing
11:48 am
bit for this company. when you look at what these guys are doing an individual business units, the results are bad at every level and everything you look at. can't they squeeze more out of their profits even if their skills are -- sales are falling? cory: maybe they could get more out of profitable businesses. what we see is that margins are getting worse and they are getting a lot worse. we saw for example a 10% decline year-over-year in their software sales. that is a great concern for this business. software one point was supposed to be the future. we have seen two quarters where software sales have been down over 10%. they have lost ground in software now. that is for the last five quarters. that is concerning. you look at the services business, the biggest business down 3% over year. that is a big worry for them. betty: as we see on the bart
11:49 am
chart, software sales are declining and that is a big concern. is that still key to the turnaround at ibm? cory: when i talked to ibm customers, they say good things about the cloud services. by the mentally what you see is a business that would like to be in the cloud. the cloud has less profit. amazon is willing to lead in the cloud business because they are doing to take a lot less in profits than traditional vendors software.dware and if you look at all the big news in technology coming out of the technology world, you can look it into two categories. you can look at the on on premises software like dell and hewlett-packard and cisco. you look a off premises and look at companies like salesforce and are notose businesses profitable businesses, they gaining market share because they're not profitable and looking to take profit. they are looking to grow top line the expense of any kind of bottom line. the problem is traditional businesses that have debt and dividend obligations and spend a lot of money and buybacks like
11:50 am
ibm. they are suffering because they want to have some profits and those businesses are not growing the way that they used to. betty: i do not think anyone is talking about it, but ibm needs time to turn around. that any privatization talks at all? at?body speculating on th cory: it would be tough with ibm because they have a lot of debt out there. with financial engineering, anything is possible. they have taken a lot of the cash and committed that the paying back their debt and using that to buy back shares. the financial leverage of the company is limited. this spent many billions on acquisitions. that is another thing that is when you hinder them for making that big turn. betty: corey, thank you so much. that is cory johnson in san francisco on ibm. still ahead, seth meyers will join "with all due respect" on comedy politics and a lot more right here on bloomberg television. ♪
11:51 am
11:52 am
11:53 am
betty: good morning and welcome back to "bloomberg market day." it is time for today's options inside. julie hyman is here with more. julie: let's look at what is going on with major averages right now. the s&p has mixed pictures throughout the session. we are seeing it continue right now with a slightly negative vibe. i would like to bring in kevin kelly who is joining me with today's option insight. he is the chief investment officer at recon capital partners. i thought you made an interesting point in your note to me today that the market has shifted to a focus on on systemic risk from systemic
11:54 am
risk. in other words, what i've been talking to betty about all day is that it is very micro instead of macro right now. what: that is absolutely is happening and you can see that across individual names no matter where they are performing you look at maggie and consumer story in china is doing well. yum! brands is not doing well in china. you're focusing down on what managements are going to be doing going forward given the market environment with the dollar as was the chinese market. everything is starting to get settled and focus on what are the managements going to do for your future cash flows. traders are specific stock and it is on amazon, which is out with earnings on thursday, i believe. the stock closed at a record yesterday. reportinto this with pretty high expectations. kevin: you have seen in the past three quarters of the stock has run up into the earnings and they still have performed well. it has been to the detriment of ibm.
11:55 am
ibm cannot get any traction, especially going into the cloud. amazon is actually the cloud player that they have to compete against. they have gotten everybody to adhere to their new ecosystem. julie: there is no shortage of cloud players either in this environment. kevin: not at all. what is interesting is that amazon's consumer discretionary stuff is not a tech option for people looking for tech earnings to help the s&p 500 this year when it comes to earnings. what amazon is doing is that they are low-cost player and the number of the cloud space. that is why you have into it and nike and netflix is even a customer in their consumer discretionary stocks are the trade here is going just till friday. there is the amazon weekly options and just buying at the money call right here because they have done so well and the calls this time are cheaper than the average. the average stock moves at 10.7%. the options are implying about
11:56 am
8.7% moves. we have seen over the last two quarters that it has outperformed and that volatility has beaten those average numbers. julie: just quickly, what you have to lose if the stock is down? kevin: all you have to lose is that call premium you pay. it's about $22 to buy it at the money right now. that is the most that you can lose. you have the upside that could greatly exceed what the options are implying. julie: we shall see. amazon has struggled to make profits, but the market does not seem to care. kevin: revenues are what matters in this marketplace. look at ibm's stock. revenues down and amazon is up. julie: we only looking at the amazon sales. thank you so much. we will be back with more "bloomberg market day." ♪ ♪
11:57 am
11:58 am
(ee-e-e-oh-mum-oh-weh) (hush my darling...) (don't fear my darling...) (the lion sleeps tonight.) (hush my darling...) man snoring
11:59 am
(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. scarlet: good afternoon.
12:00 pm
alix: housing starts posted big gains in september. activist investor already promoting change at yum! brands. alix: and the value of an mba. it turns out that for men, it is worth thousands of more dollars than it is for women. we want to headfirst to julie hyman who has got the latest on the markets. red arrows all around for now. julie: yes, but typical of what we have seen in recent days. there is not an enormous amount of movement on the macro side because everyone is what -- is focusing on earn


info Stream Only

Uploaded by TV Archive on