tv Bloomberg Markets Bloomberg October 23, 2015 10:00am-11:01am EDT
from bloomberg world headquarters, good morning, i am betty liu. here is what we are watching this hour. china is cutting interest rates again to keep the slowdown from getting even worse. the republican presidential nomination, the name is dan carson. a new poll shows him feeding trumpet in iowa. away $200orsey giving million of his own shares to the company's employees. we are about half an hour into the trading session. happened inat china. julie hyman is at the markets desk. julie: age-old on top of what is at the rally. jolt on top of what is a
rally. if you look at the major averages we have been seeing gains across the board. the dow, the nasdaq, all higher. today, seeingain a big list and technology today. 500, itook at the s&p has gone positive once again with a rally. take a look at my bloomberg terminal. i have been measuring how much we have been recuperating from the august sellout. drop through 12% that august selloff. almost all the way back to where we were before that job -- before that drop in august. betty: earnings a big part of it. really bank in addition to china
we had that news, top of what we particularly in technology, a lot of positive earnings. the company's earnings beat estimates. it is getting a lot of demand for internet-based programs that handle a lot of tasks. cloud-based applications. that is sending those shares much higher. amazon reporting unexpected profits, those soaring to the highest ever, up by 6%. getting a lot of traction from amazon web services, which saw a revenue rise by 78%. google, those shares by 9%. also at a record after google not only beat estimates but also authorize its first ever by back. have to mention another
stock that is not reporting earnings. facebook up 2%. getting an overall left in technology and that dramatic outperformance in the nasdaq where it is up -- the ever -- doubled up the other averages. betty: thank you. the news.k in on vonnie quinn has more from our news desk. with the latest of element in the race for the white house. a former rhode island governor is ending his bid for the democratic nomination. campaigning on a platform of prosperity and true peace. after much thought i decided to end my campaign for the president today. thank you. bonnie: former virginia senator jim webb also ended his bid for the presidency.
vice president joe biden opted not to run. a dice game lead it to a campus shooting. a 19-year-old man was killed last night in nashville. three female students were wounded. israel isn fled to easing security rules, trying to restore calm after a month of violence. the government allowed muslims of all ages to offer prayers. along the latest violence incidents, a palestinian injured by four israelis. at least 48 palestinians have died since mid-september. new pacificsay a hurricane is the strongest seen in the western her -- western hemisphere. storm withegory five winds at 200 miles per hour. evolving views on climate change. three quarters of the u.s. now except the scientific consensus it is happening.
the survey is conducted by the university of texas. the biggest surprises what is happening inside the republican party. 50% say climate change is happening. up 40% from six months ago. that is a look at our news right now. you can always find the latest on bloomberg.com. betty: for banks, in order to counter this economic slowdown. the globalt mean for economy? i want to bring in mike mcdonald, chief economist and global director of economic research, joining us from d.c.. how surprising was it to see china do this? michael: this move was not that surprising. we were anticipating we would see another rate cut by china by the end of the year. their gdp data officially came
in at 6.9%. some estimated it was maybe a little bit less than that. i think anything else for the rest of the year, more rate desire -- more rate cuts, that would be a surprise. when you look at the surface data in china you see this continued trend of weakening. there is a forward indicator showing some promising signs. credit growth has stabilized. you have actually seen it taking up. we may have seen growth bottom in china. this latest health cut will continue that trend. there is risk to that. there is a lot of credit in china. it is kind of going back to an to guarantee order short-term stability.
betty: is this basically insurance? michael bank -- michael: it is at'slear what the -- little bit more than insurance. it was probably necessary. thatobably have enough now it is going to be ok. one of the things we should look or is if we see at least in the near term any date depreciation in the chinese currency. if you do suddenly see surprised coulddepreciation, that be an indication there is something under the hood that is a little worse than meets the eye. it is not a baseline expectation. betty: stay with us for a moment.
i want to bring in another voice here on china. nick, you were just listening to what michael was saying. do you agree there are some signs on a credit side that china's economy seems to be bottoming out here? nick: that seems right. clearly needs to give a bit more support to the economy. have around 7% growth target through the end of 2015. this is consistent with what they were doing, but they may need to do a little more. have the major political event for the government. clearly they want to have some positive sentiment into that venue. it is about trying to hit the 7% growth target.
betty: a move that shows perhaps they are stabilizing. is it too early to say china managed this slowdown successfully? nick: we tend to think about this annual targeting the government does. i think they will reduce their target for growth into 2016. clearly the market is still incredibly volatile. the correctly points out concerns we have for the currency heading into next year. i think china has a tough road ahead. betty: is it too early to give them an a mark? right now they have tweaked the dials to stabilize things, but there's still a lot of risk and work to be done.
we don't have a lot of information to be able to give them a grade. betty: come back in 10 years. you raise the issue of the remnant. what could be the risk to destabilize it? >> the government, at the expense of its reserves, is fighting to keep the yuan depreciated. promisedrship has stability in the currency. what you are-term doing is spending reserves to hurt exporters. we ultimately think there will be some downside risk because of this. sharper hes a celebration in growth, if you started seeing consumption in to need tore going pull those levers more to offset
that. one of those areas is a weaker currency, which has generally been important for the economy. nick: beijing is try to keep it stable through the end of the year. we think the remedy will be included. if china allows it to depreciate further that will be a problem and will suggest the potential for global weakness continues to be very high. betty: thank you very much. , thank you so much on china. much more ahead in the next half hour. technology shares have been the biggest drivers of the markets rebound. microsoft keep the rally allies and make good
demand in the overseas market. owner of the world's largest shipping line is cutting profit outlooks for the year. the container shipping market is weaker than expected. are fallingtes because of worries about china's slowdown. physical first quarter profits beating estimates. cloud sales more than doubled for the year. it focused on subscription-based products. that is the latest bloomberg business flash. stocks are bouncing back. smp rally wiping out losses for the year. companies added $100 billion in combined market value. also the china rate cut is adding to the rally today. mike to storeg in all this out for us.
tech stockse contributed to this recent rally? mike: really this shift from growth to value when it comes to energy. it is interesting that it is looking more like a rotation than a complete selloff in august. today were very important from google and amazon, not just for the health of those particular companies but there are these trends you can extrapolate from them. if you are sitting on wall street staring at your computer the middleyou are in of the punch bowl all you see is punch. if you are a traitor in wall street, it's like the world has ended. then you get these earnings and people are really spending on amazon, these big investments are paying off.
google crisis are up. of bullishness you can take from these reports. it feels like a really strong market right now. we are flat for the year. be happy tole will book a single digit percentage game in their books and call it a day. betty: this is going to make good on many of the strategist predictions? >> they are getting closer. there were a few that cut their estimates during the august volatility. now we are at about 5% or less. is too late to bump them back up again. me of -- ly reminds
i think we need a 10 or 12% rally. to this brilliant call he made last year when he said the world was ending. active managers of funds are trailing their marks. they are going to chase this rally to try to outperform. for this whole bull market there was one year where we didn't have a really robust gain. a lot of people probably disagree with me on this but there is something to that seasonality where people try to chase the rally into the year. it's the type of thing that is true until it is in. >> especially if they severed some big losses in august. obviously the china rate cut is
helping. and ecb. the big concern was the stock markets seem to be correlated with the odds of the fed increasing rates. theharder we rally and further we felt sort of ebbs and flows with that risk sentiment in the market. did, mario what it draghi appearing more dovish, it may weaken that correlation. dollar isis the flattening out a little bit. that is good -- -- good as a bullish sign. easing, they don't want to risk a big dollar. betty: next week we have more earnings. we have first data. apple is a big one.
we have seen so much in the chipmakers. you think apple's going to be the dominant one? >> the big news in last quarter was sales in china, may be up pretty good but not as strong as people expected. people are looking at china as from awill transition manufacturing-based economy to a bit more of a consumer economy. numbers coming out of china. to look at apple as a proxy is going to be important. betty: bloomberg with all due respect will take a look at the -- will take a close look at the republican race today. we will be back.
betty: etf's are up to $3 trillion in assets and account for 30% of all trading volume. for ahyman is standing by weekly deep dive into the etf market. investors like them cheap, but there are actually some exceptions. here's a look at popular etf's that are even more expensive than mutual funds, our in-house etf analyst. it is interesting because that is one of the main attractions. what is it that is so appealing about these particular funds?
>> there are 20 etf's that charge over the asset. if you look at them, the one that caught my eye was the focus five fund. the 500 latest etf launches, this one has the latest -- has the most assets. it charges 94 basis points. dorsey writes a popular sector rotation strategy, they do a lot of technical analysis. takes a model that they were subscribing to, puts it in the etf wrapper. in addition the wrapper is tax efficient. if you are going to do a rotation strategy you are going to get a lot of trading. willing to pay up for those two reasons in that case. betty: how is the performance? eric: it's decent. it trailed a little bit when it first came out.
especially financial advisors. they love to have strategies for their clients above the buy and hold. betty: the second one is an emerging markets etf. it has 22 billion but it charges 67 basis points. trades 2.1 billion per day. here, the trading crowd still prefers liquidity. this one is starting to bleed assets. money,f the buy and hold they are moving to some of the cheaper products that is coming out in the last five years. this one should sort of whittle away. i would say half of those assets are done well. there is an underlying movement.
this is a big hit the last few years. it just captured a zeitgeist. it came 10 days out before the sony hack, so the timing couldn't have been better. and you can get these stocks in the tech etf's. this one is able to serve up something that just wasn't anywhere else and captured a moment perfectly. betty: the few of them that that -- that are out there, appreciate it. still ahead on the bloomberg market day, we are staying on the market as china cuts rates for the sixth time in a year. ♪
(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. betty: live from bloomberg world headquarters here in midtown manhattan, you're watching the bloomberg market day. i am betty liu. let's start with the news.
vonnie quinn has more from the news desk. vonnie: we start with a tragedy wine country. 43 people are dead after the fiery collision of a truck and a bus near bordeaux. it is the country's worst road accident in more than three decades. china's government is intervening to keep the economic slowdown from getting worse, cutting interest rates for the sixth time in four years and reserve rates. -quartertry's third growth was the weakest in four years. facebook with another milestone -- shares of the social media company topped $100. the company and the fastest run ever to a market value of $250 billion. among the admirers, former microsoft ceo steve ballmer. he talked about it today on bloomberg television. mr. ballmer: i think facebook is a really great company. you know, they took a germ of an
idea and they continue to build it out, and they have been thoughtful about not over monetizing nor under-monetizing. a super impressive company with a clear direction. shares gainedok more than 150 percent in three years. we developed in the race for the white house -- former rhode island governor lincoln chafee is ending his bid for the democratic nomination. the latest bloomberg politics all shows ben carson leading all republicans in iowa. he is backed by 20%, 9% more than backing donald trump. in third place, ted cruz. carson and ted cruz will join us "r a special edition of" -- with all due respect" on bloomberg tv. betty: donald trump, as you just saw, the outsider, finding
himself in the unfamiliar situation, getting beat by ben carson. he is second place in that new poll. the bloomberg politics poll showing the republican rival storming past trump. let's look at the numbers -- 20% for carson, 19 for donald trump. ted cruz, 10%. i want to bring in bloomberg .olitics sahil kapur what is going on here? it is a fascinating finding, the first poll in months that does not have donald trump in the league. what is fueling the rise is the evangelical vote in iowa. it is a large segment of the republican electorate there. about 40%. the other is tea partiers -- they like his message. some of the comments that he has made recently, that many might care to agency, health
to nazis, helaws is willing to speak his mind and appeal to this fraction of a space. -- the holocaust, he is willing to speak his mind and appeal to this fraction. betty: and he has gotten in hot water. can we take much from this poll question mark mr. kapur: the iowa -- poll? mr. kapur: the iowa electorate is not as represented. again, iowa is the first in the nation nominating contest. it is an important one. it will certainly shape the race, you know, the future contest after that, depending on what happens. betty: it will, and, you know, trump paid attention to this, sahil kapur, as you can well imagine. he tweeted out something in response to this poll where he
said "ben carson is now leading in the polls in iowa. too much monsanto in the corn , andes issues in the brain then he blamed it on an intern. he has done that before, hasn't he? mr. kapur: he has. it's is the first time he has search to the late. the question is how he handles this. indication ben carson is doing so well nationally. in the past, trump has been sensitive when he has been attacked. we will see. this will be a major test of how he handles not being in the lead in an important early state. betty: sahil kapur, take you for joining us. sahil kapur from bloomberg politics who was with us yesterday during the benghazi committee hearing. joining us from new hampshire, senator john kasich's campaign chair in new hampshire. john sununu, good to have you
back on the program. what do you make of ben carson's sudden jump in iowa? mr. sununu: i think sahil kapur had part of it right -- it is the first time trump has not .een ahead in a poll in iowa it is significant. it shows whatever allure there might have been is wearing off. i think a lot of people anticipated this happening. secondly, we get a sense of how he responds. i think he responded in a childish way with the tweet. betty: he blamed it on the intern. exactly.u: take responsibility, one way or the other. look, we have a long way to go. a process that goes state-by-state. as we get closer to the iowa caucuses, the new hatcher primary, south carolina, and other early state, those state polls -- you enter primary, south carolina, and other early states, those state polls matter more. it is a national primacy --
primary. the nationallead polls. the national polls will eventually catch up to how voters in those states are reacting. that is why we watch the new hampshire primary poll, the south carolina primary poll so carefully, because their voters are tuning in faster and sooner. betty: ok, but for you, who is backing john kasich, are you actually glad that carson is now leading versus trump? mr. sununu: no, look, it does not matter. in new hampshire and most of the primary states where you have a broad swath of the electorate is a fit -- participating, it is about building an organization, having a good candidate, a strong message, and being prepared for the moment when voters, frankly, get serious about choosing between a small number of candidates. with 15 candidates in the race, any voter would agree it is hard to decide. it is a little noisy.
it is hard to compare. when we get down to six or seven candidates, or three or four, the comparisons will be much more medic. i think someone with experience, credentials, and capability like john kasich will rise to the top, because that is the kind of leadership we need. betty: trump, a few moments ago came out with another statement, where he said he is going to -- just listen -- disavow all super pac's. he will have a super pac's that support him return money to the donors. he said let's not have this dark money infecting political campaigns. what do you say? know,nunu: well, you donald trump, he claims he has $10 billion. i guess everybody else's support, advertising and money is dark, just not his. his $10 billion is fine. that is silliness. what is important, whether it is a super pac spending or a candidate spending, what is the message?
how will they go to washington and change things -- balance the budget, reform the tax code and create jobs? that is what this is about -- your message, your vision for restoring economic growth and integrity to the country, whether it is john catholic -- john kasich, now trump, or anyone else. time will tell. betty: let's move on to what else is going on in washington, which is paul ryan, late yesterday, saying ok, i am going to run. what did you make of that? well, look, the way speakers have been chosen in the past since republicans took control in 1994 is really by consensus. who is the only person that can take the job. i think in this case it was paul ryan. i think he did the right thing, took his time, talked to the different factions and consistency test constituencies in the house. he said i can do this job, provide good leadership, but i
want to go into this with eyes open. betty: why all the back and forth? tease -- i ambig not going to do it, i am worried about my family -- mr. sununu: first of all, it is not a tease. he was honest and clear -- i care about my family. it is not something i was looking for. i need to think about it. he was chairman of the ways and means committee, a big, toortant, enjoyable role beginning up. i think he was very serious about needing to make sure he was going to take this role on the right terms with the right objectives and the right support . that means going to these different factions in the house and saying "ok, here is what i think i can a college. i need your support, i need your commitment. you're not going to be rising to challenge me three months, six months after i take the job." i think he did that effectively. that does not mean he is guarantee success. i think it means he is coming into this with the right level of support and the right level of understanding on all sides.
betty: is hillary clinton looking presidential? mr. sununu: no. i do not think so. betty: no? mr. sununu: i think she has a lot of problems. no. the committee hearing changed a great deal, but it does not change the fact that the way she handled her e-mail server was a total violation of federal rules, that she withheld e-mails that were material from sidney blumenthal that dealt with libya and the situation there. she did not respond to the security needs in benghazi, and she has always behave as if the rules do not really apply to her. those were problems for her -- i think small problems in the primary, because she has always had support from a good core of the democrat constituency -- but they will be big problems in the general election. i certainly do not think she is going to win the general election. i thought joe biden was going to get into the race. i was a little bit surprised
that he did not. i think if he did, he would have won the nomination, but it makes her life easier not to have joe biden in the mix. betty: it does indeed. senator, ike is a much. former senator mr. sununu:, --john sununu. great to see you. "with allamming note, due respect," will take a look at the election because they will have ben carson and ted cruz. much more ahead on the bloomberg market day. her are plenty of skeptics about twitter. steve ballmer is not one of them. why he is betting big on twitter. plus, china surprises with another interest rate cut -- another market rally, but does it signal growth concerns ahead? we are taught -- calling it p harm-aggedon. can the sector recover from more bad news? ♪
betty: welcome back. we are just over an into the bloomberg market day. it is time for the business flash -- the u.s. is dropping charges in a high-profile insider trading case that will reverse the conviction of michael steinberg. in new york city federal prosecutors said an appeals court weakened his case, with the ruling narrowing the definition of insider trading. procter & gamble's quarterly revenue misses estimates. the consumer products giant gets its revenuehirds of from overseas. it has been hurt by the stronger dollar. and the government is getting comical phillips the green light to drill for oil in an alaskan region that had been off-limits. federal sales were canceled last week due to a lack of interest.
that is the latest bloomberg business flash this morning. for a look at the u.s. market and the big rally we are saying, earnings,-- due to abigail gibbons has the latest from the nasdaq. bigail? abigail: big earning two ports out from amazon, google, microsoft. all of these companies beat analyst estimates with many saying it has to do with cloud-based computing or what some are calling the shift to cloud. amazon supplies to the upside in at least two ways. profit, 79rst post a million dollars, or $.17 per share versus estimates for a loss of $.13 per share. secondly, jeff bezos came out promising a profit in the fourth quarter, the first time he has done that in five years, and all of this is being driven by what analysts are calling amazon web
services and cloud computing. great stuff going on here, and it is showing in the chart. when we look at a year to date chart of amazon, nice uptrend. buyers are clearly in control. a big relative -- big performance relative to the composite index. it is not surprising, then, when valuation,ook at this stock is trading at a premium. amazon's next 12 months p/e ratio is about 75 times versus aboutcommerce group comp 25 times. it is a 200% premium. you could make the case amazon is priced to perfection, especially when you look at one-year sales growth. amazon is lagging about 20% versus the p group at 40%. all of this is probably going to put a premium on stellar performance in the future. betty: abigail doolittle, they do so much. let's head to london where ryan chilcote has the latest from london.
ryan: good morning, betty. you can see green across the board. the best markets, the dax and the cac. the ftse down on the back of natural resource companies. take a look at the stoxx 600 -- it tells you the whole story. this is a two-day chart. this is yesterday, where mario draghi acted, sending europe's benchmark up about 2%. that continued throughout the open this morning. then we had the people's bank of t here.c 4.5% between 1:00 p.m. today and 1:00 p.m. yesterday here in london. back to you. betty: thank you so much. we have breaking news on the imf regarding china. julie hyman has more the breaking news desk. julie: exactly. it is regarding china's status as a reserve currency -- the imf is said to give china strong
signs of the inclusion of the , andas a reserve currency this is according to imf representatives, according to people familiar with the matter. they have told china that the yuan is likely to join the fun's basket of reserve currencies soon. apparently, the imf has given china strong signals in meetings that the yuan is likely to win inclusion in the current review a special drawing rights. this is according to three people that asked not to be identified because the talks were private. this is something that has been hinted at, or we have seen signs going in this direction, the united states backing off its resistance to this move. you are looking at the offshore to measure one way the reaction, because the chinese currency itself is no longer trading itself. it looks like we are seeing some reaction here -- this movement down versus the u.s. dollar, as
we look at the chart. apparently, again, according to people familiar, chinese officials are so confident of winning approval, they have begun preparing statements already to celebrate the decision. so, it is not exactly clear when, precisely, betty, this would happen here, but soon is what our reporters are hearing. betty: all right. they are already. that. julie, thank you. julie hyman. we'll be back in a few moments after the break with more on this. ♪
join the basket of reserve currencies. this is up big china has pushed aggressively four. that might make more countries comfortable vonnie: with using the currency in vonnie: there for an exchange holding. we looked a few moments ago at a chart of the chinese currency. i wanted to make clear that was the dollar versus the remnant be. also, to be clear, this is offshore. this is not the chinese currency as it trades in china because it is closed for the session. just to be clear, we did see a upward reaction. betty: which would make sense. julie: correct. betty: julie, thank you so much. julie hyman at the breaking news desk. early this morning, david westin and stephanie ruhle sat down with former microsoft ceo and l.a. clippers owner now, steve ballmer, who recently announced his 4% stake in twitter. he reiterated his faith in the
company and its new ceo. mr. ballmer: twitter is a company that has all kinds of opportunity. i think there are all kinds of things that can be done better, and i am really impressed with how jack has jumped on top of it, but it is such a strong, underlying asset -- the ability to improve the product, jack is on top of it. the ability to streamline the cost structure, vucevic needed to happen -- jack is on top of it. to continue to drive monetization, jack is there. betty: he likes the guy. he likes jack. david westin joins me now. so, what did steve ballmer say about jack's announcement, giving away one-third of his shares? david: he said it was very generous of him. he made it clear he does believe in the underlying asset. he does believe in jack dorsey. we asked him does he take the position after or before he knew
jack was coming in, and he said he took it before. he to get on the strength of the asset. also, he has been clear he has been talking to jack dorsey. he has had at least one conversation. he did not want to get into details. he does not want to see it on the board -- a seat on the board, but he would like to be a friendly activist. betty: did he say what attracted into twitter in the first place? made isne point he everyone has a twitter handle. it is so universal. there is huge appeal across a lot of different platforms. at the same time, he thinks there is a lot of upside. he thinks it has not necessarily been all that it should or could be, so he sees it as a fundamentally strong asset, but there is a lot more that can be done with it. i agree, david, that a lot of us use twitter in the media world, but there is a huge swath of the population that does not use twitter at all and that is part of the problem.
david: he said twitter should be for two groups of people -- one that will feed themselves, and the others as a news feed -- you can read all the different feeds without ever participating he thinks there is upside potential as a different kind of news feed. toty: i know you also talk him about ibm and i want to play part of that conversation here. mr. ballmer: it would take years for ibm to catch up and they do not have killer apps like search, office, the amazon store. it is notkiller app, clear how you drive that investment. i think they are going to struggle in the cloud. david: this is when we asked him if it was too late for amazon to be a winner in the cloud, and to my surprise he said yes. this is an important part of the strategy of ibm that people like warren buffett and others are backing. he thinks it is too late because ibm has been too late into the game.
betty: he was saying ibm is too late. david: i'm sorry. ibm. betty: not amazon. david: ibm is too late into the game because amazon is already there. yellow thing he was explicit on -- you cannot want to work for amazon. he said people left ibm for amazon and came back. betty: we will have to say about that. thank you, david weston. much more ahead in the next hour of the bloomberg market day. more talk on china and the news that likely the chinese currency included in the sdr back, the special drawing rights. we will ask economist alan blinder what he thinks about that. we will be right back. ♪
♪ betty: from bloomberg world headquarters here in new york, good morning. i am betty liu. here is what we are watching this hour -- china tries to cushion the fall as central banks cut interest rates again to keep the slowdown from getting worse. it has been a wild week for the pharmaceutical industry with claims of everything from dangerous drugs to shady accounting. this cloud has a silver lining -- amazon sewers thanks to a fat -- sewers thanks to a trading unit. let's head to the markets desk, where julie hyman has more. we have been focused on what is going on in china. julie: with the rate cut, with the imf considering making the renminbi a world reserve currency, there is a lot of news coming out of that nat