tv Bloomberg Markets Bloomberg November 11, 2015 3:00pm-4:01pm EST
welcome to "bloomberg markets." from bloomberg headquarters in new york, good afternoon. i'm betty lou. here is what we are watching at this hour. investors continue to debate whether the economy is strong enough to handle a december rate hike. the biggest corporate loan on record. finance theto biggest beer deal in history. get a cold one. allie baba roxette set more than $14 billion in -- allie baba racks up more than $14 billion in commerce today. we will hear more. we are about an hour away from
the close of trade. i want to head to the markets hyman has theie latest. a lot of controversy over the fed. julie: and nothing really stepping into the breach catalyst-wise. there wasn't any earnings data out today. you see this drift in the markets. we have now drifted lower. ago, thingsn hour were little changed. we have had this back and forth in a narrow range throughout the session today. take a look at what we are seeing in the moment in terms of sectors. these others have been fluctuating around. even energy and utilities have fluctuating. utilities, i wanted to highlight for a moment because we are seeing a third straight day higher for utility stocks. here you can see the entered a
of a up another 9/10 percent. now, you cannot ta credit for the bond market today because it is closed for the veterans day holiday, but over the last few years, we have seen yields trending downward. it looks like a little bit of a relief rally has been expressed this week. energy stocks are taking a big hit today. whether you look at the large cap majors, you can look at exxon, chevron, kindred morgan, all of them are dragging. there are specific movers like anadarko and apache. anadarko said it did approach apache about a potential acquisition, but then with jury with its offer.
now, there is a deal on the table. is at its lowest since august. according to reports, the petroleum institute said there was built in inventory. oil is down about 2.7%. we will get the official government response tomorrow at 11:00 a.m. betty: thank you, julie hyman, at the markets desk. let's get to the headlines. mark ramped and has more from our news desk. crumpton hasmark more from our news desk. mark: security loopholes raise in the united states. after a series of drug and weapons charges at u.s. air words, lawmakers are seeking changes to expand screening and background checks. prevent anyove to
more jet disappearances like that of the malaysia airlines flight 370. planes can be tracked by satellite, not just from the ground. planes that already sends signals to the ground could also send them to space. president obama honored veterans today during a wreathlaying ceremony at arlington national cemetery. the president said the nation is now witnessing a new wave of the vets that served in afghanistan, iraq, and elsewhere. president obama: if tomorrow we roll up the banners, sweep the halls, and go back to our daily lives, forgetting the bond between our veterans and our obligation as citizens, we will be doing a profound disservice to our veterans and the very cause they serve. president had the a breakfast reception with veterans at the white house. today is the 97th anniversary of the end of world war i.
a million and a half people tuned into fox last night for the republican debate. the associated press says it was -- about 13.5 million viewers tuned into fox last night for the republican debate. the associated press says it was the most-watched program on the network in history. andcan get more on these other breaking stories 24 hours a day at the new bloomberg.com. from the bloomberg first were desk, i am mark crumpton. betty, back to you. betty: thank you so much. mixed data out of china today. industrial output slowing further last month. retail sales coming in better than expected, and of course we had better than expected blockbuster sales from allie baba.
our guest is not convinced. why not? china i think the issues has our structural. over the last five years, you have seen bank accept -- bank assets grow. a ton of debt in china, and every time they stimulate, it drives down the value of their currency. when you look at output and new construction, all of those things are moving negative versus gdp. if the weakness continues, it is a structural problem. structurals a problem, but is in it one that china needs. they need to pull back industrial output and focus more on the service sector of the economy, don't they? test: 100%. we are looking at commodity stocks and the impact of the overall economy.
is you are going to have deflation in china. you look at the cpi and the pediatric. they recently came out negative. are china tells you is they going to export to inflation to the rest of the world. that's negative for the complex -- industrial complex and stocks like caterpillar. a lot of people think they bottomed, and we think this is just beginning. bottom line then, short-term, you are negative china. long-term? >> we have been in a two decade boom in china. think there could be a bubble bursting. a half to three years in china are going to be quite bad. we think it is a necessary adjust and. betty: this is the pain they
have to go through. so you are not buying industrials. wakes we have been shorting them. we think there is a big downside. stocks are going to trade off significantly. the beauty is the bulk of u.s. investors are not focused on the u.s. story. betty: what about mining companies? are they -- are you short those as well? think there is big downside and iron ore. if you look from 1994-2004, iron ore prices averaged roughly in the high 20's. adjusted for inflation, we are talking about low 30's. we think iron or has more downside and there is more downside and mining stocks as well. betty: you are short those? >> yes. betty: what are you buying?
>> there has been weakness in sun edison. yesterday, down 22%. simple.e there is it's a complex story, but quite simple. kos,tors soured to yield which is essentially a vehicle that allows investors to invest in a company backed by a solar project because of the guaranteed yield. but what happened is risk increased for yield kos. sentiment soured. all of these companies have taken on billions of dollars of debt to build projects they plan on taking on in yields. what are they going to do with all these projects? i think there is a big risk. betty: you think there's a bubble. >> it looks like the bubble's bursting. what happens to all this debt? that is the issue that needs to be resolved and it hasn't been yet. betty: thank you so much.
we appreciate you joining us. gordon johnson, managing director at axiom capital. much more ahead in the next 20 minutes of bloomberg markets. the beer carousel keeps spinning. to snap up the miller brand. in a housing bubble? prices are soaring in cities like vancouver. that has the government contemplating a crackdown on foreign buyers and maybe more transparency. the company defends accusations it doesn't do enough to get rid of counterfeit goods. ♪
betty: good afternoon and welcome back. time for a look at some of the biggest business stories in the news right now. walmart workers have successfully lobbied for higher wages. now, a new demand. they want a bigger discount on food. they receive a discount on some items, but not the vast majority of food items. .he change won't come cheap it could cost the retail giant more than $400 million a year. the retailer will begin its black friday sale on links giving day at 3:00 p.m. the news comes after h&m said stores in the u.s. will close on length giving for the first time. danish brewer carlsberg
plans to cut about 2000 jobs. it says this will lower annual cost by as much as $288 million. more business get news at bloomberg.com. big news in beer today, thinking ofch miller.ts rival, up for investors? joining us from princeton is can shake, an analyst with bloomberg , nllligence -- can shea list with bloomberg intelligence who covers the beer industry. do we have any hints that regulators could improve this deal? >> it seems that anheuser-busch certainly did its homework. the announcement was that it
will be selling a 68% stake in miller coors. a lotk that will appease of regulators. but the second big hurdle is the shareson in china where will go to about 37%. betty: what do they do there? >> that is the million-dollar question. they are working with regulators. maybe they can come to an agreement whereby anheuser-busch can keep that share, and maybe give the majority stake to the .hinese betty: we keep hearing about how
people aren't drinking as much beer as they were before. did a be really have to do this beth --abn anheuser-busch really have to do deal? regs i think it did have to increase its footprint. reason i think is to enhance its portfolio. there has been a movement away consumers drinking popular brands and toward craft beers. i think anheuser-busch is doing just that. it's getting a double dose of that shift with the miller and coors brands. betty: right, going a little more boutique. event you for joining us, senior analyst for bloomberg
intelligence -- thank you for joining us, senior analyst for bloomberg intelligence. canada may have a dangerous housing bubble. prices in vancouver rose 14% in september alone. prices in toronto up 10%. the huge run-up in prices has trackingnational agency looking into foreign homeownership. joining us now is our bloomberg canada tv anchor. pamela: i think the question is being asked right now, and it sort of at long last, a crack is opening regarding the rules of foreign buyers in these huge in vancouvernly and toronto. canada said they are going .o look into deals
it sounds like basic information, but the truth is it hasn't been compiled and it's something the country has been asking for for some time. is it just a low interest rate environment? is consumer sentiment ok? what are the other pieces and do foreigno fire -- buyers play? it's not illegal, just as in the united states, you can buy a house or two houses as an investment in a foreign land. but is there perhaps a policy reaction that needs to be made? betty: is there a sense that foreign buyers are piling into luxury property? pamela: it is, and that is what we are talking about. a year-over-year 14% rise in vancouver. if you look at just the first , 2465, that'sar
48% higher than it was last year, of million-dollar homes selling. what it also brings to the market is a lot of slipping. a buyer will come in and we don't know exactly where they are coming from. we need toher piece have clarity on. doesn't seem to be a consensus of information on how that plays into things. betty: a reminder that bloomberg tv canada launches on monday. arel ahead, markets bouncing around today. a look at how options are trading. ♪
betty: welcome back to bloomberg markets. i'm betty lou. optionske a look at with julie hyman. julie: joining me is a senior equity derivatives strategist. he is focusing on a sector i have been talking about a lot today, retail. we have been talking about a retail selloff sparked by macy's. this is something you have been hinting about, or forecasting, i should say. >> yes, this is something we have been looking at for a while. at the beginning of the year, i was thinking with labor markets tightening up, the next step would be wage growth. this might not happen right away in the first half of the year, but it might happen in the second half. here we are and we are starting to see evidence of that. a year overe saw
year growth. with e-commerce, it's a really for theseure companies. julie: macy talked about warmer weather. retailer's love to talk about whether trends. warmer weather preventing people from coming into by colder weather merchandise. it is there something on the consumer side? you would think with higher wages and more jobs that people would be spending more money in stores. >> it may just be a question of timing. apparel home goods are not necessarily the first place people spend. they may be looking to appliances and big ticket items. sense, a clear
obviously, with retail data. trade is pegged to retail data specifically. >> right, the survey forecast is for growth for the month. given the data from macy's and others, there may be a big disappointment. 44 and a half strike for november expiration. you could buy those this morning for about $.55. that gives you a lot of downside exposure and your risk is limited to the premium. they expire on friday. >> a week from friday, and if you want to hold until next week, that's an option. but the date of release is the focus. julie: thank you for talking us through what's going on with retail.
betty, back to you. betty: thank you so much, julie hyman with options in sight. let's take a quick look at how markets are trading before we had to break. it has been a choppy day today. not a lot of news other than , but that's not enough to move the markets here. it's really just a focus on what is the fed going to do. as you know, traders have been making higher and higher bets that the fed is likely to raise rates in december, but no big earnings news or economic news to move the markets. is lower bythe dow about 41 points. singles day was a record breaker , over $14 billion in sales were made on one day. emily chang of bloomberg west
interviewed jack my overnight after this breathtaking number. they outdid all her sales from last year in half the time. hand.spacey was on it was enough of an extravaganza that the company said they may even look at doing singles day york, so london or new watch out for your wallets. we will have more of that interview in a little bit. ♪ york
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watching bloomberg markets. i'm betty lou. a check on headlines. mark from tin has more from our news desk. mark: egypt's president once tourists toonce know that shone l shaikh is safe. he made a surprise visit to the popular vacation destination today. he was hoping to reassure people in the wake of lats -- last month's plane crash. the investigation into the crash continues. sweden says it will introduce temporary border controls to stem the flow of refugees. they will begin tomorrow and last for 10 days. nearly 200,000 asylum-seekers are expected this year. president obama honored american's military veterans today. thelaced a wreath at tomb of the unknowns. today is the 97th anniversary of
the end of world war i. a hurricane is taking shape north of bermuda. hurricane kate is packing winds of about 70 miles per hour. it's heading northeast at about 40 miles per hour. the national hurricane center says kate's swells will likely cause rip current conditions. in the rockies is making travel hazardous. the system is expected to affect more than 36 million people from colorado through ohio and from texas through michigan. hasnational weather service issued tornado watches. you can get more on these and stories thatg bloomberg.com. betty, back to you. betty: thank you.
at's go straight to a look two notable movers on the nasdaq today. at one ofave a look the worst performers and one of the best. starting with the worst. greenmount and shares are off significantly after ot or cut it -- otr cut its rating from negative to mixed. year-over-year trend in supermarkets has decelerated. tough year for shares of cure a greenmount and. valuation -- four green mountain. november 18 will be a key day. this is when the company reports its fiscal fourth quarter and expects to see a degree of year-over-year declines in earnings and revenues for a second quarter in a row. aw let's take a look at
winner, amazon. shares are trading at a record high. analyst brian novak said the cloud-based unit will contribute of amazon's profitability in the future as public cloud adoption accelerates. spectacular year. amazon has more than doubled consideruary and we that new morgan stanley price target. it suggests amazon could climb higher from nearly 20% from here. betty: thank you, abigail doolittle, live at the nasdaq. it is veterans day. in china, it's a very different day, singles day. it are did in the 1990's as an for singlesne's day and it has now ballooned into
the largest shopping day in the world. allie baba racking up a record $14.3 billion in sales. brought in celebrities like daniel craig, mr. bond. come to the u.s. and challenge amazon? emily chang sat down with jack and asked him about his u.s. goals. >> we are very thankful for the united states. the united states internet, there would be no ba, and without american tourists coming to my city, i would never learn to speak english. and without the wonderful innovations of silicon valley -- people think, when will you come to america? are you going to compete with amazon? when are you going to compete
with ebay? we do not go there to compete. if we go there, we want to have a small business, helping them to china, helping them to asia. we have such a huge demand of chinese consumers online. people, even on the mobile phones, shopping on our site. we need good products, unique products, in which the usa has a huge potential. , i i think in five years want our team to be thankful, to invest in the high tech knowledge, invest in startups that help them to grow. inw not only in money, but one day coming to china, a huge market. emily: amazon is focusing on india. you are focusing on russia. when do the world's biggest e-commerce companies collide? jack: well, amazon and ali baba
have a pretty different model. have small, we business and big business. we believe every company can be amazon. platform, there are a lot of companies. they buy and sell using cloud computing, using our logistics, our payment system, these are the services. we want to enable every company to be e-commerce. not an e-commerce company. i don't think amazon and us would compete. a lot of people to have the success of amazon. emily: should amazon be worried? jack: i don't know. if they worry, they worry. betty: one of the challenges still facing the company is the
significant number of counterfeit goods that pass through its website. the chinese government has recently come out and said 40% of products sold on chinese sites are fake and said ali bob bob a is one of the worst offenders. jekyll and they did not use accurate data. the cheap -- jack: they did not use accurate data. how do you measure progress when it comes to counterfeit products? vendors say you will take something off but three days later it is back on. jack: ask any company in china. buyn days if you counterfeit products. ask all the vendors if they work with us, if they call us.
of companies send lawyers. these lawyers don't understand the business. they don understand e-commerce. they come in here to say hey, you know, what are you going to do or say this is what we do. well, i represent my client. i don't want to hear. entering a new era. today, in this world, in china, arrested close to 500 people last year. we have destroyed millions of and ins, fake products, the past 15 years, i have never postponed or canceled one meeting for counterfeit because who buyssumer counterfeit from our site, we lose five customers.
so we are victims of that. years. been fighting for but we are fighting human nature, human instinct. been in china for 30 years off-line. but we are fighting it online. and we are all so helping to fight it off-line. we have 2000 people full-time working on it. we're 5700 volunteers working on it. performers, with the technology we have, we are making progress. opportunities, we are running a platform for more than 10 million businesses. they are tiny. theare everywhere. speaking very earnestly about the company and challenging counterfeit goods. much more ahead in the next when
coca-cola. he calls the company's policy deeply immoral. ackman says coca-cola contributes to obesity and diabetes. valley and fought back and said those comments are irresponsible. canceling hundreds of flights scheduled for tomorrow after losing two bids to stop the strike by flight attendants. the strikes continue at habs in frankfurt, munich, in dusseldorf. and a dark is says it is no longer pursuing anadarko says it is no longer pursuing apache. stephen colbert has landed a post-super bowl timeslot on cbs this winter. it will air directly after the game.
the slot is the most desired and television. it follows the telecast watched by more than 100 million viewers. you can always get more business news at bloomberg.com. the dollar may be weakening today, but it has still been on a terror of late. now the currency has support of a key ally. the interest rate market. joe wiesenthal joins us now with more. interest rate expectations are rising. colin the keyword has been to virgin, policy rate of urgent, interest rate -- : the keyword has been rate oft, policy urgent, interest rate divergent. you want to put your money where you are going to get paid more.
that is making the dollar go up. everybody is wondering how long this will persist if the fed hikes and the ecb eases. it's kind of expected, so it may be priced in, but the extent to which the cycle is fast or slow, the extent of the qe, all of these things are very much driving the euro-dollar exchange. more to some of it has do with currency weakening believe thet also a fundamentals are improving in the u.s.. >> it's hard to disentangle one from the other. the economy is improving. that's good for the dollar, theoretically. the fed is likely to hike. that's all so good for the dollar. people are also talking about the euro-yen divergence and the u.s. dollar-yen divergence. all of these economies are in a different stage of easing and that is what is driving a lot of
currency speculation right now. betty: i presume people are focused on this not just in but alsoexport growth in terms of earnings. >> the dollar every quarter for the last several, has been a story of the strength of the dollar, the hurting. the fed doesn't care that much about earnings, but it does care about growth. the dollar is hurting the earnings of big multinationals, i don't think anyone is going to lose sleep over that. if it looks like it is really going to slow down growth, it could be an issue. but the dollar is not going away and that could be a major concern for a lot of companies. right, joe, thank you so much. joe wiesenthal, cohost of what did you miss? much more ahead.
betty: welcome back to bloomberg markets. the market close is just 10 minutes away. julie hyman has your market check. julie: as we get closer to the close, it looks like the direction is a little more decided, and that direction is down. the bond market close today. volume was actually higher by about 14% versus the 10 day average. it is lower, however, for the s&p and the nasdaq. all three major averages down about a quarter of 1%. we do continue to see this push and pull in the market. we are seeing strength in big cap tech stocks today.
amazon and facebook each trading at records today. microsoft has been showing some strength as well. we did have a price target upgrade over at morgan stanley on the strength of its web services business. that's going to $800 a share. that's contributing to the gains at amazon. on the negative side, cvs is one of the top decliners today. in the sameng morgan stanley call. we saw a decrease in recommendation for oracle based itits cloud business, that is not showing strength on a relative basis. exxon mobil falling with oil prices. we have been talking all day long about the weakness in retail. macy's came out with numbers estimates. analyst
it has been dragging down the rest of retail as well. there is concern about other companies that have yet to report. one of them is coles. jeffries cut earnings estimates today, again citing weather. out with as earnings. ,n the face of retail weakness it could not sustain gains. betty: investor confidence in the fed is on the rise. traders are clocking in about a 68% chance of a hike. that's up from a week ago. we are joined by our stock reporter and a bond reporter. s first.ke stock what are you seeing right now in terms of the effect on the fed? >> we are seeing an all-time low
for declines in financial stocks. that is definitely a reaction to what we saw last week. janet yellin said there is a loud possibility of a rate hike in december. that is the most talk is she has been. then we had the best nfp growth. joblessness was down and we had growth expanding. a lot of good signs. we have a lot of economic factors combining to make people pretty confident that this rate hike is going to happen in december. to be clear, it's not like rates are going to spike upward and they will be getting incredible fees from people all at once. it's going to go up 20 basis points, if at all, in december. one question i have is how much the downside risk has been reduced for a lot of these
banks. they have reduced holdings in riskier debt, riskier securities so much. you have to wonder, is this really a bet on the fact that the downside potential is less. on theand not so much upside, not so much we are going to start minting money here with higher fees. definitely don't want to confuse a lack of headwind with bullishness. if the fed is going to move rates, the economy is going to be in a certain place. they want all the pillars of job growth to be there. that helps banks. it's a win-win. also, the economy being in the right place. lisa: i do have to wonder, with notfed rate hike, it's
going to be smooth sailing necessarily. in the past few months, banks have not navigated that turbulence with great success. a question of whether the turbulence will lead to higher profits or lower profits. >> we did see bond trading profit down after the big four banks reported the season. they were the third worst performing sector as far as beating analyst estimates. the bar is going to be set even lower this quarter. how low do you set the hurdle and how surprised will investors be when you beat the hurdle? lisa, you are seeing a warning sign in the credit markets right now? lowestight now, the
rated junk bonds are yielding the most relative to higher rated ones and stew thousand nine. since 2009. this is a concerning factor because this means people are not swooping in to invest in the riskiest and neediest companies. this is all it because there are a lot of investors out there with a lot of yelled. bonds are rated junk yielding more than 14% right now, almost 9% points more than higher rated junk bonds. more companies falling into that category? lisa: exactly. and there have been more downgrades than upgrades, and the default rate has started to climb and is expected to climb at a rapid pace over the next few years. difficult to be more to generate profits from
underwriting services that they got around these companies when they issued a lot of debt. betty: that big gap appears to be widening, or at least not narrowing. thank you so much. that is it for bloomberg markets . the market close is up next. speaking with the head of currencies at brown brothers. ♪
>> u.s. stocks glowing -- closing lower. joe: the question is, what did you miss? plaintt: two charts makes . joe: the trouble with buybacks. we speak to the author about report on the puerile's of short-term thinking. an nyu professor joins us on new rules in the pharma sector. with thewe begin markets. the u.s. stock market was opened , no real economic data. retailers were the big loser. the dollar weakened and oil came down a little bit but it was kind of a ho-hum day.