tv Bloomberg Go Bloomberg November 18, 2015 7:00am-10:01am EST
solutions today. the new insider traders, hacker steal information from bank computers then sell it. ♪ david: welcome to "bloomberg ." stephanie: i was at the robinson conference. these of the biggest hedge fund managers in the world. we have been talking about how we have not really seen a market attacks in the france. more investors were simply holding tight, or sitting in cash. that is surprising. stephanie: were they talking about paris at all? stephanie: they really weren't talking about paris, but there
were talking about geopolitics and it was another example of how that are so many cracks in the overall system and these are not necessarily great times. time to introduce bloomberg's editor in chief. thank you for joining us. david: you always been a note of optimism. matt: i will disappointed today. stephanie: i think we need to get to some news first. david: we go to our first word, and bonnie quinn. bonnie: heavily armed police raided in apartment today searching for the suspected mastermind of the terrorist attack. when it was over, two people were dead, and seven were arrested it is not known if the elected ringleader was among them. it took place in the suburb of far from theot soccer stadium or one of the attacks took place. last night, to air france theyts were delayed after received anonymous threats. one from los angeles landed in
salt lake city the other was diverted to halifax, canada. no threats were found in either flight after searched. is not hisl says it time. he dropped out of the race for the white house. his campaign never really caught on. you can get more on these and other stories 24 hours a day at the new bloomberg.com. let's have a look at markets now. a look at futures, we're up across the board. for now seeing a solid direction with three extra points on the s&p many contracts. look if you would've the european index because i have them on the bloomberg here. this is an equity index i clicked into europe and you can see red across the board. losses depending on which index you look at over in europe.
we're also seeing the euro come back, it's first day gaining in four. level, myetty low testament to do with the slight gain we are seeing in a production of market expectations for a fed freight incident -- hike september. there was a slight decrease, not that anything really expects that to move, but this is what the futures markets are showing and that may be why you see some of the euro move. you could also be a from hedge fund managers today. from the chief investment officer, they expect even if the euro goes to parity in book comeback win because of the pace will be slow. here you see apple, goldman sachs although it has had apple y, it is now putting
them on their conviction buy list which is a bigger conviction. some people think that smart phone sales will be increased fairly dramatically. that in the third quarter they could go 15.5%. the iphone help which is one of the biggest david: producers of smartphones in the world. that is for sure, one of the most profitable. to we want to get back france in check and what happened. according to the prosecutor, seven people were arrested -denis inraid of saint connection with the attacks. brendan, as far as you can tell, are the police operations over? brendan: we're seeing plenty of signs that they are over.
a line of police cars just past behind me and the forensics team is on their way in and we're seeing the first signs that residents are beginning to open their windows and look out. of course, they have been told to stay in place since 4:20 this morning. we do know that the apartment block was cleared, two apartments were rated, and the target of this raid which was a massive operation that goes on for several blocks around, the the belgian who is believed to a planned the attacks on friday. he was't yet know that in fact taken, but the cycle for they haveu find already done the apartment. -- there areey are seven people in detention in the city hall. david: take us more broadly as
you look around, this is one police operation. ofthere other evidence others? david, there is evidence of tension everywhere on our way in. after we found out this was happening, and fund of the opera house i saw someone pulled over and out of his car. paris is tense. right now the level of shop am seeing in the residence this is a working-class neighborhood, people leave early. a lot of people caught outside the police cordons. this neighborhood is about 23% from outside the eu. i talked to one manus of the scary thing is they had no idea these guys can disappear in a place like this because they look like me. i talked to another man that said this is a tough neighborhood but i never expected something like this. these,ie: as we look at
these images are stunning. this is obviously a horrific attack. we look at the market, the markets seem that the beat goes on completely resilient. as at the prize you? -- does that surprise you? matt: no, what happened is comenments at some point together and deal with it. a deal with the decisively. investors are processing this. this will happen. stephanie: does it surprise you brought it up, it happened on a friday and investors had three days to sort of digested and think how it there --ly infected affect their investment. this happened in the middle of thinkinging back -- back to september 11, would we've had a different market reaction? matthew: i would say this -- from previous observations in
the first decade of the 21st-century we witnessed bombings in london, and saw 9/11 , investors are aware that this is a reality of the 21st century. stephanie: sad. matthew: sad, but it is a reality. david: maybe it is the best defense begin have. matthew: absolutely, there was no reason to indulge this behavior, so why recognize it as anything less than illegitimate? stephanie: in just a few minutes, francois hollande will be taking the podium in paris be soon ase you there as his comments begin. i want to take you back the markets. it might not be the terror attacks that are causing rumblings, we're hearing more and more top hedge fund managers have been scaling back the u.s. investments. we sell u.s. equities tumbled in the last quarter and it has been
a response after the market has more than tripled from the 2009 low. i want to bring in someone who covers hedge funds and she joins us now. i've for the last two days some of the biggest hedge fund managers of the world, and they were almost no new ideas. if anything, they were turning a corner and that fear of missing out mentality everyone was racing to get in his may be right environment to go short again. >> he is saying there are now more companies out there where he sees opportunity to look for accounting fraud, or to look for simply people overstating their earnings. there are a lot of hedge fund managers that seem to be getting out of long bets on u.s. equities, at least from what we can tell. stan druckenmiller has been super negative on the global economy for years. tactically, he has been actively trading along the market. now that the momentum is out of
the game, you were seeing investments based on , which people should invest based on. matt: if you look at the u.s. right now, we just got some manufacturing data that was very positive that suggested that the 2016 economy is going to be more robust in the u.s. than it was in 2015. if you look at europe and asia you still cec or monetary policy. overall, the is a constructive one. that means it has to be good for the economy and earnings. the interesting things is people like stan druckenmiller have said they may not want to go along because the earning situation just does not look that good for them going forward. if you look at the equity risk 500 earningss&p yield minus the 10 year yield
you can see that it has arisen here which would of made sense because this in blue is the 10 year yield. when that comes back, and right now about 2.3, the equity risk premium drops and then stays low going forward. not enough is just value, maybe it is just not worth it for big investors to get back in. we saw a big catch fund managers billiony about $200 debt equity holdings in the last quarter and only about $80 billion of that -- $120 billion of that is explained in a drop of stock prices. druckenmiller, we have heard over and over that specifically macro is harder than ever. not talking john griffin, were
talking macro investors. those who have to focus on the global economy. those are the guys and we saying this information and uncertainty is just too much. we had cliff on who said that we were up in the 90th percentile, which means there may be a correction. matthew: i would suggest one thing, if you go back and look at some of the people were been consistently accurate and they're forecasting like zaslow for rainy, back in 2008 he said this is probably the best time to buy stocks. he reiterated that in 2009, and he still is bullish. stephanie: francois hollande is speaking right now at an assembly of the mayors in paris. hollande: iscois it -- president francois hollande: the security forces that have launched the operation , they knew the danger.
they underestimated once again the violence that they would be met with. despite that, they fought until the end of the mission. a number of them sustained injuries. thinking also of the police officers and doctors who went to the bataclan in terrifying conditions, and once again they neutralized them. have suchproud to quality of police forces to protect our citizens. [applause] president hollande: these
actions confirm to us once again that we are at war. whichagainst a terrorism itself has decided to launch war against us. organization of isil has an army, financial resources, oil, and it can occupy territory. article last islamists, they've committed massacres and it wants to commit murders here and it has done so. during the night of the 13th of november, at least 129 persons
were killed and lost their lives. our thoughts are with them, with who cowardlyomen assassinated injured -- where thinking about their families who have been put in pain and grief. saddened me,as but these concern all the french wherever they live in the french territory. it is the entire country that has been attacked. for the simple reason, and five years and is pursuing to eradicate terrorism and for this simple reason of what we are. terrorists aim was to target the
, which hasnce itself happened throughout the generations. the liberty that france has, the universal rights that it beends, this is what has attacked during the night of the 13th of november. there are barbaric people in their blind violence have targeted the diversity of the french people irrespective of religion, itolor, was the france itself that was the target. , simply speaking, and the life. immense, thes anger is just as immense. it is really a sentiment of
compassion towards the victims following the attacks. at the same time, a demand for action. david: it strikes me, looking at him, that he is the french flag and the european flag and it seems to me symbolic. this is a war on france, it is also to some extent a war on europe on the common market and the breakdown of borders. this is a challenge not just to france. matthew: it is a very comforting picture in the sense that all of the people who are of diverse backgrounds that are in that picture are united. investor, there is
a lot of confidence that comes out of it. try to remember where we were after 9/11, there was just a very collective coherence response that was very positive. that really got across the financial markets, it was a great time to be investing, actually. we lost our sound from francois hollande and are working on getting it back. we will return to his remarks afterwards. at this is -- i don't want is a good moment, but we can see in the 17 countries unable to come together over the last five years. but as it relates to security, their fears, what could this mean in terms of the refugee crisis? will they come together, united, and pushing others out? matthew: hardly. you're seeing on an old finally having a common interest. you talk about inequality, it
does not matter where you are coming from, everyone wants security at this point. this is actually a benefit that was not in the political landscape. by the way, as a reminder, remer where we were seven or eight months ago with greece? david: i was just thinking, grexit seems a long time ago now. yield on aok at the greek 10 year government bond. it actually is yielding less than 7%. he noted was in july? 19%. that is been a brady -- a hell of a return on investment. stephanie: if you are an investor, you are seeing a unified front just a week ago when guys were up and france was in a great place to do business but you see him united with other countries in europe as a positive, but you have to then go to the streets. unemployment is still what it is. comingseeing more people
out of school in places like spain, and portugal, and those are places where tourism is massive. following some and like this, tourism could get hit. but the economy is not standing still. the monetary policy that the ecb succeeding,is albeit slower than anyone would like. the easier monetary policy that appear seeing is going to have a positive impact, the economy will keep growing. david: the president to candidates are paying attention as well. public and presidential candidate jeb bush sat down with the anchors from all due respect , and john heilemann is joining us now. john, bush spoke quite a bit about syria, was that he have to say? morning, he is obviously very critical of president obama. he says president obama has failed to lead on this matter.
he took great issue the president's tone when he spoke on monday. he is doing a speech today at the citadel where he is trying to outline his posture and layout's foreign affairs philosophy and how to rebuild the american military which he thinks has been allowed to atrophy to a dangerous degree. those are all relatively mainstream republican positions but he will lay them out today. the issue that got a lot of attention yesterday was a series of questions that i talked to governor bush about related to the question now, very politically polarizing, very partisan, and very rancorous over the question of syrian refugees and whether they should be allowed to and to the united states and posture should be. let's take a look to some of that right now. >> we have systems in place, if there is any kind of concern we should not allow people in.
i don't think we should eliminate our support for refugees, it has been a noble area of our countries. >> you don't want to ban muslim refugees? >> i don't, the answer is not to ban people, but resolve the problem in syria. john: that was governor bush talking about the issue, i unfortunately asked the question of him as we started that conversation in a slightly confused way. i talked about the governors, 27 they want toay keep syrian refugees out of the state and a new senator cruz who is putting forward legislation at the federal level to ban refugees from coming into the united states. syrian muslim refugees, i believe, specifically. later in the day, he clarified his posture which is that does , but he to ban refugees does understand what the governors are coming from and is
in the place that were speaker ryan is which is advocating for a positive syrian refugees to make sure that the u.s. vetting system is competent to do with the influx of refugees before we let anymore in. stephanie: obviously, bobby jindal is out of the race as we mentioned earlier. yet a chance to talk about the rivals he still faces. >> donald trump has been all over the map on the question of isis. he does not want to create a strategy, it is a good example of why he can't be trusted. probably more consistent, i'm less bellicose. itry not to use language -- just think i could be a good commander in chief. you would not put them in the same category as trump, or carson? >> on putting anyone in any category. message, thatt donald trump cannot be trusted,
many people were expecting jeb to say that for the last six weeks but he has not, why? pretty half onen trump over the last few weeks, but this issue is ramping up his rhetoric for sure. we see trump again defying all predictions and expectations on the part of the establishment that he would fade away and seems to be now gathering strength once again. ben carson may be starting to fade in terms of the public polling, the entire it -- establishment or the grown-up , they all expect that in the wake of these attacks in paris and the international focus that they will somehow benefit from the fact that they as -- they see themselves the grown-ups and hopefully the world will according to them. it will try to make a more aggressive argument that this moment calls for their brand of leadership while donald trump, most vocally, is basically
saying no, this is a moment for toughness and resolution. -- hed blow the crap uses a more colorful expletive, that is his tone right now in that message seems to be resonating as much if not more -- stephanie: the word diplomacy? the need for diplomacy is not isn't important here? john: i'm sorry, i don't know that in his lexicon, i don't know if he knows that word. we were just talking about paris, and paris is a place that is welcomed theorically refugees, united states has einstein, the greatest achievements in our technology, our
have come from immigrants. what is so disturbing, maybe unsettling, is that the rhetoric is obscuring the fact that we benefited more than maybe any other country from refugees, if you like, and immigrants. part of the not discussion, and it should be. david: john heilemann, thank you very much for joining us this morning. you can catch him and mark halperin with all due respect on weekdays at 5:00 eastern. next, why wall street and law enforcement are struggling to shut it down next on "bloomberg ." ♪
i was born in 1982, that is why i love having him here. i love that. it takes america's medal winkler, thank you, glad you are here and tom keene who was in high school in 1982, thank you for being here. tom: not quite. david: i think we better get to the first word. police in paris finish a seven hour assault aimed at the suspected ringleader of the terrorists. seven people were arrested. the raids took place in the s, notsuburb of saint-deni far from where the attacks began. david cameron is making the case for extending airstrikes from iraq to syria. he wants to hold a vote in the house of commons on expanding air raids by christmas.
continued showed trump leading the field of republican hopefuls with 22%. ben carson, marco rubio, our next. last month, carson had pulled closer to trump in new hampshire. thank you, we have a must-read now. tom: this is emotional, you see mayor'sion for the conference in paris. i think this was extraordinary. financial times, i just thought this was great. word,s a strange islamist.
maybe i would add in the where it is as well maybe decide that the london school of economics is maybe written on this one than anyone i know on this idea is justamism fractured off of what you and i studied a million years ago. is the mosts difficult part of this issue is the lack of clarity that everybody wants to have. they looked at terrorism, and the whole issue, what they get is a lot of confused verbiage, confused rhetoric, they don't know who the targets are, -- tom: go to the cinema will be the up in this idea of servitude of different parts of the arab world. back when egypt was normal, it has just all been blown to smithereens. david: this is a fascinating
piece it talks about the hierarchy within islamabad to and that there is no a fiscal thatm, but even apart from member that minister in florida that was doing things -- the thing that strikes me is why haven't there been effective spokespeople stepping up from islam. or have there been? we go to the, when middle east, we start with two very distinct groups. they have been in conflict with each other as you well know. so, when you are looking for leadership, it is very hard to say who exactly are we turning to? both sides have some validity, and the various parts and programs and so forth. politically, it is just a minefield. goodanie: you bring up a
point, for many people we don't see very distinct groups, there are two clear groups but within that there are so many splinters that your average american or those who are so concerned simply say that a whole side of the world i don't understand it, it is too complicated. there should be spokespeople to stand up and say let me delineate. m: you saw this outside of our due by office in choosing where to be. i think bringing that i did have a some clarity, our office probably is the most diverse office in bloomberg in dubai when you look at where people come from and their backgrounds. you could argue many of our people are refugees in dubai. there is a perfect example. david: thank you for bringing this up, it is fascinating, we really appreciate it. i know you have to get back to radio.
on's get you caught up now some stocks moving in for that we go to matt. let's take a look at some of the movers this morning i will start staples, the dark about it often because of its involvement . withompany came out third-quarter earnings that was in line with expectations, or estimates i should remember the bloomberg way. it problem is the outlook, , therees fourth-quarter would looking for $.29, so the midpoint of the outlook is lower as a result this stock is down 3%. take a look, this is another one of the home improvement stores that beat estimates yesterday, home depot, lowe's, earnings were $.80 we were looking for $.78, people are going to -- consumers even if they pull in they will continue
to build their homes and that is why -- improve their homes, i should say. to talke: now we have about wall street, one of our favorite subjects insider trading has a new business model. more hackers are infiltrating companies networks to access nonpublic information and trade on it. the two latest indictments ad dressing this issue, this is not just traders sharing information, how exactly is this working? throw a the whole old-school models, and they are different. we filed one in august which was traderslear-cut of the in the u.s. hacking in russia to go -- stephanie: intensive in it, right? right?- in pennsylvania,
keri: right, they waited to take out nonpublic information and made tens of millions of dollars. it was a morecase broad global conspiracy. leans of them looking for information as they hacked into dow jones, stocks trade, that the could be looking for that type of information to trade. you're seeing this confluence of events where they're not so worried about hedge fund managers and analysts trading tips and so much it is big, broad, hacking operations that are getting into financial services that could potentially be used for securities fraud. stephanie: what kind of information of a getting? keri: the case we saw the summer was exactly what that was, but the earnings guidance was or
what earnings numbers were and they're getting those 24 hours before they are released. they can be in the service of this company some of the largest financial companies in the world for years without being detected. chances are, this is going on all over the place. called it insider trading because it is confidential, but i wonder if it is? is this more akin to just theft? keri: it absolutely is theft, and when the surcharge they are very specifically charged as securities fraud and not branded insider trading, but it is a type of insider trading what information is not available to the public and you're making money on that. of course, legally, you're right. : the verb that comes to my mind is steel, they're stealing customer information that is not theirs.
>> and hacking we know is one of the toughest crimes for law enforcement to counter. it is just like in the movies, their 20 steps ahead of everybody. the u.s. government was hacked and had an enormous hack of personal information last year. stephanie: and how does this get policed? keri: it is really tough, they hire security firms and spend a lot of money. they're spending more and more on proactive defensive systems as opposed to reactive defensive systems which they were stephanie: doing for years. stephanie:what does that mean? keri: it seems like you can't spend your way out of protecting your company from hacking. we can identify that can help lead can get them out of there. ew: investors think we'll try to spend their way out of this. cyber look at the isc, security index, that is in
white. it is outperforming the application software index that i chose to compare to it. this includes companies like , sontec, but also cisco hardware, software, legal, advisory, people, investors are betting that this will be a huge growth industry and that is why it is up 152%. stephanie: if you can't spend your way out of it, couldn't the argument be made don't spend any money at all? : this gravy don't, your company will be gone and thought hours. every wall street bank will be decimated within hours. but to keep them standing and running up there having to spend hundreds of millions of dollars and this is just the new normal. a majorhas always been issue, but he crept up on us as an incredibly dangerous issue.
matthew: i think there is an analogy with insurance, is that an appropriate analogy? keri: absolutely, that is why they sell cyber hacking insurance. those companies love that sentence, spend all of your money. david: thank you very much for that interesting story. migrant talk about the crisis and its impact on the global economy. that is next on "bloomberg ." ♪
think that is an understatement. senior fellow the peterson's jacob joining us now from washington, so i would like to start if i could by asking you to set the stage. how many refugees, where are they? year, 798,000 have arrived in europe and close to 5000 have died trying to get to europe. of course, it is a massive crisis for europe. the looked at from perspective of other countries that received large numbers of refugees across the globe, for other countries the attention on europe of begs that there be a global response. whatever we find a solution workable for europe must be applicable to other countries and other parts of the world, southeast asia, parts of africa. it is a big crisis, and one that needs a global solution.
david: just that point, how much more difficult is your job become because of paris? paris has had: phobic feeling to europe, and we have to guard against that. many people have said this is wants tohat isil create, a hysteria with a ,acklash against foreigners anti-former feelings that could arise. this will feed the stream of to thes who will travel conflict areas, areas where war is waged on a daily basis and it becomes a self reinforcing closed loop. this.e to guard against the events in paris were horrific, and of course condemned by everyone, but we have to be careful not to categorize migrants and refugees in a way that it becomes easy for right wing's and xenophobes
to attack them. it creates than i dynamic that we cannot control. stephanie: it is so hard to understand exactly who is who. jacob: what ought to be stated by everyone who is responsible for law and order and maintaining civilization as we know it is just how valuable refugees have been historically culture,ody's everyone's industry, everyone's technology. if you remember in the aftermath ofworld war ii, if hundreds thousands of people just wondering the confidence. they had to find a home. those that did went on to become really major contributors. stephanie: are people really thinking about history, or their own safety today? prince hussein:
even if he were to say that a number of extremists come in with a refugee flow, and a huge amount the vast majority of refugees aren't people that can contribute to the growth of an economy, contribute to filling in the gaps in the labor market, do jobs of the people will never do at the beginning, and we have to find a way of resettling refugees on a much larger scale. it has to be a greater global responsibility to say all of us will do more to find homes for people freeing conflict -- fleeing conflict. jacob, you have been doing a lot of work on the economic consequences. overviewyou give us an of how you see the economic effects of this? realityhe unfortunate
is that the economic effects of this should potentially be positive for europe. in the short run, we will see a major fiscal expansion in the countries of major recipients meaning germany, the front tier countries, italy, greece, here now unfortunately also going to have another ramp up in security spending in france and other countries. all told, these are all stimulated a fax. run, europe is a continent that is coming under increasing demographic pressure. a significant level of inward migration and obviously the ability of these economies to absorb these them intond turn productive members and the long run will be absolutely imperative for europe's ability to continue to grow. david: as you deal with world
leaders, to the understand what jacob is saying? hussein: what does not get the impression that the extinct of -- instinctive reaction is to put a barbed wire , it is her difficult to see how you will have a europe in the future where you want to see the free-flowing movement of goods and services if you have long lines at the borders with the controls will be so restricted, every car has to be checked to make sure there is no migrant hiding in the back, every track has to be x-rayed, -- stephanie: what would that cost? exactly.ssein: think about fencing of her territories, it is not realistic. you have to instead open up channels for illegal migration. we need to look at an overall
equation which everyone can do buy into. need to have a more broader policy of resettlement across the globe and a global responsibility has to be here. david: there was no shortage of role models that should be called upon. there are dozens more where they came from. throughout europe and the notice states, they should be called upon to talk about this issue. gentlemen, we have tickets to the break, fantastic conversation. we will be back with more. up next, with ticket turn talking good business of human rights and the companies involved. stick with us, you're watching "bloomberg ." ♪ david: welcome back, we're
and jacobprince zeid kierkegaard. what struck me is the extraordinary numbers that would be required to protect the borders compared to the overall budget for the european union. : the basic point is that europe needs to spend 200 times more if it wants to achieve what i would consider a credible level of external border control. the reality is unless europe does that, he will see, unfortunately, the rise of xena phobic parties and voting ,ublics who feel insecure europe will get its act together and put together the financing ar what we call in this piece sort of security and mobility bond. closing, expanded
all out into the business of good business. u.n. issued ahe few years ago a guiding principle on the business of human rights. the author was from harvard university. we detected that the consumer of tomorrow, the shareholder of tomorrow will be much more sensitive about supply lines, much more sensitive about the value that a company aspires to project of itself. companies we believe will be sensitive and risk of verse in terms of their human rights. stephanie: thank you so much. great conversation. ♪
a lot of of people are hating on this recovery, and will housing hold up? we get the latest data on residential real estate. ♪ stephanie: from hong kong to london, to new york city, welcome to the second hour of "bloomberg ." david: we have so much to cover. we would have to put a leaf on the table. if matthew winkler, very red ,oles our good friend -- barry our good friend, and the at her bloomingdale's, not bloomberg, so welcome. stephanie: it is right next door. they go hand in hand.
those target numbers are coming out, so let's bring in another member of the family, matt miller. matt: earnings came out in line at $.86 and revenue was in line at well. pullingy're doing is off the bottom of the range of their forecast. they previously said they would have earnings-per-share for the sayingar, now they're for 65-475, that tightening that higher end which you think investors would want to see. i will go through the statement and see if they mention tssappointing sales of coa because of warm weather, that i will see if they say anything about headwinds from foreign exchange in case -- they did close their canadian stores. stephanie: they did to close
their canadian stores, that is the reason. which is why i hate weather as an excuse. >> it gets cold in the weather in the northeast. itphanie: oh my goodness, was raining out, that was why no one looked at houses today. >> target is your new favorite company. stephanie: i love the target for a reason. the third-quarter results are looking good. >> may be investors, their expectations are pretty high for this company. everyone likes to see companies beat by a penny. stephanie: that is a whole other --pect -- subject donna analysts lower their estimates than they hit them. a lot of solid information from target, they are things they are really focused on and doing well. apparel, home, baby, kids,
wellness, those are growing 2.5 times faster than the business. what's dragging it down? the grocery business. they have these good private label brands, their increasing organic, craft beer, they say that this 10% better in the key markets, but they're fresh is not great, their meat is not great. target forgoing to those big weekly trips and that's what you want, you want them in the store every week filling up. stephanie: michael, it surprises me booming here that apparel is doing so well. i set down with someone we know that burned by jcpenney, and they are looking at the we tell sector saying a lot of companies got beaten up, is this a buying opportunity? and the answer is no because retail is so hard to make money and at a time when consumers are expecting coupons and discounts. michael: that's one of the problems, it is a race to the
bottom and the internet is causing that. it is an event worldwide because it is on the net. i know you were talking before the break about cold weather, it is a factor. nordstrom says it wasn't any particular thing, but if you take a business and i have no ata what the numbers are bloomingdale's in the northeast, when it is 70 degrees at the beginning of november, and has an enormous affect. it is about coats, hats, sweaters, there is a ripple effect. when it is cold, there was a different attitude about the customer. the fact the matter is everyone is in the business of selling commodities right now. there was an interesting article ,n the times about tom's shopping was more than just sales. it is about a happening, we had this conversation all the time,
people have been going to the markets since the time of the greeks. experiment,social there is nothing you cannot to get to, you can go online, you don't have to go to the movie theater to see the newest movie, wait a week in you get netflix and go on demand. it is about on demand, and everything is about storytelling experience. i think target has ok earnings, but the ones i thought were great was home depot. on a two-year basis, whose traffic was up, the average sale was up, and the business year over year is that strong because it is about an experience, -- stephanie: they do have extraordinary customer service at home depot. >> really? i can never find anyone. stephanie: then you're going to the wrong home depot. >> let me push back, when i look
at the world of shopping we see macy's and nordstrom in the middle a little soft. hield -- high-end is bloomingdale's and tiffany's, target is also doing better, part of the reason home depot is doing so well issue of so many people with no equity in their homes, the sales volumes are still very light. that means people are spending more time fixing up their homes and saying we can't trade up, but let's -- stephanie: is apparel harder to sell? when you have people investing in homes? is that slice of retail dollar less? it may be, but consumer confidence was up over three points. gas is 25% less a gallon than it was a year ago. the fact of the matter is, in my mind, there is not just enough
newness. stores for a the long time was accessory businesses. that business is moderated, i don't believe that all the upscale stores are doing as well as you say. i don't believe that. i think that the upscale stores are being hit right now, i do not believe when the sacks numbers come out. i have no idea what bloomingdale's is at, those numbers i think are tough numbers. that would be my gas. there is just not enough newness. the disney business is terrific, ok? the apple business is terrific, the business is people have interaction with. the ability to do something creative, those are the business is doing well in whatever environment airmen. david: i want to go to matt miller before we continue. matt: i have a fantastic function to share, clients love
this. if you go to any equity and type throughuity ta it goes transcripts and excerpts from conference calls of all the company's competitors. richard: very cool. matt: i just typed in weather to see what target competitors are talking about, everyone has said something. walmart just now mentioned warmer weather somewhat slowed performance. down here, costco says not everyone is a story, but typical delays like whether have bummed us out. big lots, due to unseasonable weather conditions q2 increased 2.8%. this is a great function if you want to see what your company's competitors are talking about. you can type in any keyword and go through these transcripts. another one of the amazing things you can do the bloomberg terminal. stephanie: i'm looking macy's,
nordstrom, jcpenney, all missed last week. this week, walmart and target do well, what does that tell you? matthew: we are seeing a little bit of a retrenchment, but the bigger picture is the american consumer is as healthy as we have seen at any time really since the financial crisis and maybe even before. that will not change. when we go into 2016, the unemployment rate will fall some more and things like gasoline, cost of energy, american consumers will be robust in 2016. i would not get too depressed about this latest setback. some of these stocks look like it is 2009 again, some of these retailers look like that. that goes back to this point about the innovation in their apparel. that was a lot of competition now for that small retail dollar want to pay down your debt you
have a million other things competing for your dollar. the cell phone bill, electronics, toys, children, will you spend that money? the food industry also has my mind going, talking about restaurants. endhave shake shack on one that comes out with great earnings, and go down to the new scent of downtown in brookfield and take a look at the environment -- the french food hall which is not fast with the way be used to know that. sushi, this iss, all about a food experience. to millennials, people want that experience. if i'm spending, i'm spending on things that are exciting to me. i think there are a lot of good things out there.
allnon: we talk about it the time, the shift from people that want to own goods to experience something. we attribute it to millennials, but more and more people are doing it every day. thing, aone last comment about the race to the bottom, there was a challenge that when you look at the appeals toe pricing people that need merchandise. the real challenge is how do you appeal to people that want merchandise? i think that is a very big difference. the people that need it need to have it on the table, the people that want it it is what is that experience. we said this before, you need another pair of black pants? stephanie: never, because they have not designed one since 2009. richard: what us to we need? what gets people excited today is experiences. that is why something like shopping malls, with a new
american dream it will go into new jersey has a great potential to do something really exciting because it is not about a shopping experience. or urban outfitters buying a pizza chain the other day and investors really rolled their eyes at that maybe they are thinking the same thing. much,nie: thank you so shannon, michael, and matthew, we kept to hear overtime. barry, you are here for the whole hour. the new google lemon flagship store opening today, 11,000 square feet it will feature something called hubs 17 which is a community center for customers can take yoga workshops. they can even attend concerts. if that is not to record what michael is talking about, i don't know what to does. still ahead, some quotes from
bonnie: welcome back to "bloomberg ." more consolidation in the semiconductor industry. fairchild will be bond for $2.4 at a combinedwork revenue of $2.5 billion. they're splitting into two independent public companies, and it includes brands such as slim jim, chef boyardee, and pf chang's the other was sell frozen potatoes and other vegetable products. profit andome depot, sales both beat estimates as the second-largest home-improvement chain.
four years of rising home prices have had people buying projects. david: now let's take a look at some quotes from around the world something we call say what? andrew bring and jason kelly. so, i want to start with a familiar topic, around this a deal that isantic not getting financed. there was a risk of this happening more we talk about this and a second, the amount of the market that is on finance of all is getting larger. unfinanciable. it is the worst thing that an equity guy can hear. this is bad news. david: this is not just any equitable guy. guys trying are big to get the data buyout. this is summoned to worry about. stephanie: cracks in the system,
we see more every day. not anor is this just attractive deal? stephanie: five minutes ago, there was a such thing as an unattractive deal. barry: of course there are unattractive deals. stephanie: but we haven't been investing based on fundamentals for years. david: maybe what you're saying is that the market is finally getting rational. barry: when we look at some of the venture capital financing of the so-called your records, -- unicorns, some of these are absurd. we macy's of a similar and private equity. stephanie: just yesterday, they were saying that money is rushing following that uber enthusiasm of getting into that deal. on it. jason: the next quote comes from
partner,s is former the question is where do they end up? it is a difficult environment to be in fixed income. we spend so much time talking about when will they raise rates, now we start to wonder with roughly a 60% chance they will raise in december, now people are gaming out where do they end up and how do you invest against that. they arerep said raising rates in december and that is money to me. he is the conduit to the streets. i don't want to satan -- say 100%, but at least 90%. it is how fast of a raising, a gradual rate rise to help normalize interest rates and responds to the high demand for capital, should not derail the economy.
jason: you think that is the most there when? barry: they learned what was the 04, 05, 06 increases, and the housing market had gone too far. the last quote comes from live, coding is something talked a lot about and bloomberg. we did an entire special issue, -- stephanie: longest story ever. david: one piece. -- here itould is -- is. there is huge demand for top-notch coders. single-digit age kids coding, like five years old getting into this. when you take a step back and
think about the whole educational system, one of the other quotes the story was talking about in the current education system you have to wait 21 years to figure out if it works. david: thank you very much for being with us. stephanie: i have to get back to coding camp. david: why so many people seem to hate this economic recovery. ♪
>> gold spent many years in the mid to thousands as the safe haven over the u.s. treasury considering the debt precipice we were looking over at that particular time. now gold has seem to have lost that safe haven status. treasuries at a relatively larger bound versus gold, and the reverse was extremely quickly. tells you a lot, that tells you that the idea that some sort of global catastrophe just is not there with the general investor any longer. it is more about short-term crashes that you can buy in the
equity markets. short-term spikes you can sell and gold, that remains unless there is some sort of trend change. >> how low do you think gold can go? most people expect the fed to raise rates but not at an extreme pace. >> we talked a couple of months target of 980t a that i'm still sticking to. if you held a gun to my head, it looks like a short-term sideways channel to me. loadld be buying the new when we get there. remains inf 980 place. for the investor, it is not a good buy. there was a possible oversold condition that could happen. that needs to be a place where you go short. >> thank you so much for joining us.
stephanie: welcome back, you are watching "bloomberg ." a guy was is not between shopping mall in 10 years, barry is with us. you are talking about the recovery, how many people feel that for the broad public has not felt the recovery. there has been a steady drumbeat of dissatisfaction about the post-credit crisis recovery no matter how much the economy improves, a good number of people insist it has not. why? many of these people are the base that have been supporting donald trump. barry: there are a couple of reasons, the biggest reason is the economy has recovered, but not evenly distributed.
if you are in a coastal city or some manufacturing heartland's, and up till a year ago in an energy region, you are feeling the recovery. if you look of the difference between unemployment based on educational attainment or industry, if you don't have a high school diploma your unemployment rate is down to the mid-60's, if you do have a college or better degree, it is 3.5%. if you're in finance, management, or any executive function it is down to 2.2%. low, there ist competition for labor and wages rise. depending on how much school you have, and what industry you're in, you could feel the robust recovery or none at all. david: this is a really important fact, people don't think it has recovered because it has not for them. does it count then? barry: by the numbers, on
average, the recovery is here when you look at -- we're on an $18 million sale rate for automobiles. when you look at the unemployment rate, wages are finally starting to go up across the board. the problem is, the averages are misleading because you see some people doing well or very well, and other people just treading water with the present health care coming up in the price of other things, and that has hurt them. stephanie: housing and health care, you are staying with us. next, is there a buying opportunity in emerging markets? ♪
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get to the first word in that is bonnie cleaned. bonnie: heavily armed police raided an apartment today for the suspected leader of the terrorist attacks. two people were dead, and seven arrested. it is not known if the organizer was among them. the raid took place in the paris nis not faraint-de from the stadium where the first attack took place. france and russia have set up their airstrikes on the city of is becoming the de facto capital. a new poll shows donald trump widening his lead in new hampshire. trump is leading the field the republican hopefuls with 22%, the ben carson in marco rubio our next. month he it closed in on donald trump in new hampshire.
i will give you some breaking news on housing starts. you can see s&p futures rising and they're coming up with little bit higher right now. we did have a disappointing number as far as housing starts we were looking for 1160, we got million is the number we got that is a drop of 11% month over month. number than expected there, building permits is basically in line. we have 1150 against the expectation or estimate of 1147, a gain of 4.1% as opposed to a gain of 3.8%. look thatarts don't great, building permits looks a little bit better. it is not had much
effect on the s&p mini contracts right now. takeanie: thanks, let's you now to the morning meeting. the chief u.s. strategist, good morning. welcome. we have to talk about the global slowdown. and the effect it is having a corporate america, especially due to china, tell us, are we seeing companies really cut down on capital expenditure because of the threat of a slowdown? i think there was certainly much more concern back in august and september. i traveled to europe and asia visiting with investors and things seem to have, down -- calmed down in october. director did tighten up, partially in reaction to what the global markets were doing.
that is disconcerting, we looked --660 companies, and their they are still looking at 6% growth. obviously, we should keep energy aside, but let's break down what industries are spending. saw was aat we disappointment in the i.t. yector, they were initiall looking at spending growth at about 9% and then pulled back led by semiconductors down 19%. there is but a real pullback in the semiconductor industry may m&a issues and things in china and the emerging markets. that was probably the biggest his appointment. -- disappointment. i think that forward-looking issue is what is happening in
2016 it will be more important to investors and what happened to 2015 given that we're halfway through november. stephanie: we have seen more buyback programs, who does that really serve? tobias: we think there was a bit of a myth -- stephanie: is that why you are smirking? tobias: this is bad information, i don't know how lost to describe it. well ahead of buybacks, buybacks for the s&p 500 companies peaked in 2007, not 2014, so i don't know why this is being repeated over and over again. capital spending is outpacing buybacks even this year to date but it is rambled on and i don't know why or where the data is coming from because it is so accurate. stephanie: i'm glad you're here then, tobias, the myth the buster, joining us.
our own matt miller has some breaking news. i will break the news here, you are the person i want to hear about on this anyway. blackrock is winding down its global hedge fund after losses. stephanie: that is a huge wow right there. lost 9.4% this year, the assets are said to a fallen to below a billion dollars as of november 1. two years ago, $4.6 billion, now less than one billion. black rock says it is committed to macro investing, but it cited headwinds and decision-making. stephanie: listen, if your blackrock it makes sense to say you are committed to macro investing because you have to have some element of macro, but to shut down that specific vertical is massive.
mike platt of blue crest sold out of his share of systematic which is a macro investing spin off. this is massive, i want to jump ahead and bring in our next guest because you have to have a reaction to this. we are joined by the head of aberdeen asset management martin . martin: it shows a difficult that is to make money in the macro space now, it is not really that surprising but it is a big blow to blackrock. barry: if you look at the performance of hedge funds, leon cooperman and howard marks of the great in the hedge fund world -- they are not macro investors and both said that 30 years ago that
there were 100 hedge funds creating alpha. today, there is still 100, the differences there are 12,000 hedge funds. stephanie: when they were creating and turning 18 having 22% there was just a few hedge funds that had significantly more information. now, everyone has information at the exact same amount of time and you lost her ability to generate that. now we are in a different interest rate cycle so it will be difficult to make money ahead. david: go back to luke ellis, that was his point about macro, makee olden days you could money off of information that everyone did not have the. now it is disseminated everywhere immediately which makes it difficult -- martin: you want a central bank governor. stephanie: the reason he named his front appaloosa because you got call sheets from banks back to you. he wanted to be a fund with the because that meant he
would get the information first. an insane fact, fun fact, but it is the truth. barry: macro is really challenging. not only do you have to figure out what is going to happen before everyone else, but how that will also manifest itself. martin: i think it is just reputation. i don't think it will have a huge effect. i think it is incredibly relevant given the black rock news, take a look at hedge fund returns over the last five years and stack them up against the and the s&p is in white macro hedge funds are in green so you can see they're doing better than just straight long , this year'ss
activist investing, so event driven. but look, as a group, hedge funds have been doing horribly compared to just buying. an index tracker from jack bogle over at vanguard you could do much better with your money over the last five years than you would with any of these incredible genius masters. stephanie: i turned to my insmed bloomberg where duane saying macro investors are some of the most successful out there maybe you'd attribute it to weather. thank you for that. let's break this down a little bit, talking but hedge funds in general, let's talk about emerging markets. martin -- where is that investment today? martin: it has been a tough two years, we saw outflows for the last two years and have seen sovereign wealth funds selling
big-time equities. it has been some tough years were aberdeen, but we are seeing a slight change in sentiment with quite a bit of interest from u.s. institutions in emerging markets which is the first give seen for two years. we have not seen any retail interest yet, or even european interest really. over here, the institution stuck with the asset clause and actually are investing a bit more. david: is it emerging markets overall? or are there certain winners or losers? have nothing in china just because of the corporate governance issues, but that did not help on the meltdown came in chinese equities it affected everything so we got hit across the board. we were probably a bit too heavy politicala but it was issues, but india has been fantastic, mexico has been good, and what we have seen a some big corporations taking their chance to buy subsidiaries.
sabad a big calling and miller, a tobacco company in brazil, both of which have been taken over. we are seeing that as a trend. barry: you were born in malaysia? martin: yes. barry: how does that affect your ability to go from different parts of the world? stephanie: no one ever had to buy shovels because of the weather, so we decide think it should affect anything. were setting up in asia, i likes to think it was partly because i had been born out there that we made that move the. it was a natural move for us to make. we seeie: right now, hedge funds getting her today in seeing out, as we are outflows, there is $9.2 trillion in hedge fund investing, are you seeing money taken out of funds and put into organizations like yours?
martin: i wish we were. [laughter] martin: i should've said yes. barry: acid alligators are coming from the broker-dealer side, it is not so much from the hedge fund universe. martin: clearly it makes sense to be in the s&p during the bull market run with had inequities. it will always outperform hedge funds. hedge fund is supposed to protect us on the downside, obviously long short will underperform in that. . arry: lisa hedge funds returned negative which was better than -57% before and after. stephanie: why don't you show us with a look like in the last quarter, i have someone a just refer to themselves as the next macro master, and he is crushing it. i tend to think when you call yourself the master, it is a
kiss of death. matt: i am just looking at hld yes, we can see what his holdings are, these are the changes that he has done over the last quarter. a reduction in energy holdings probably very smart, a reduction in financials, a big increase in i.t. holdings. i noticed that, similar to what we see if i look at truck and stand rock, i wonder what you are doing differently than say black rock you don't see any changes in energy holdings. massive reduction in their financials. here it is, the black rock macro theme is now being wound down, they are obviously not doing something right that you were doing differently. last week the jimmy keenan on who knew it'd been a
tough slog but they could get through it they had long to investments. templeton,ranklin they bought companies at a $70 price, and were faced with outflows and had to sell. in it: the things we like emerging markets are definitely consumer led. we like countries like india and mexico, especially india should benefit from the lower energy prices. barry: strong holdings and pepsico, for example. hcfcn: in india, we like we like the banks in india, india has been really the star performer for us. it is quite expensive at the moment. been fortunate getting some very big holdings taking over. the problem we have is finding the investments to replace them.
stephanie: welcome back to "bloomberg ." sales picked up in the third quarter, better than expected increases. target also raise the annual profit forecast. target says its strength wellness products and children's clothing. through -- the world's rejectedesticide maker a deal earlier now it could be acquired by a chinese company. surgery on the slow selling lincoln making a come back car
when it debuted in 2013. the mpb has outsold by bmw three series in the united states. the mks the will be unveiled in los angeles. bonnie.hanks so much, we want to talk more about aberdeen. days dig deeper, you have a -- had a rough patch. martin take us into your office. your options as you look to improve performance? i think we have to stick it out, basically. what you can do is change, you have to stick with your style and just see to the cycle. we think long only asset managers don't have that option that's a hedge fund managers do of selling out of emerging markets.
we just have to ride it out. asia will come back and emerging markets will come back. stephanie: there are massive asset management firms out there who the last five years have been broadening out their investments. you have a self-contained unit, and go to that. martin: it is a great advantage being an independent asset manager. we can do it all the private banks so we are not owned by one or another of them. but you're quite right come we in bankinga trend from selling their asset managers to now realizing it is a great business to be in and wanting the more in it. i think that his wealth management rather than asset management. banks are natural earners of wealth management but find asset management difficult. stephanie: are you concerned that overplaying the wealth management trade? banks get into the
wealth management business, is there any risk that this is just another trend cycle and we will come out of it two years from now? barry: i don't think so when you look at how much money has moved in and how much is moving to places like vanguard, and when you think about it, look at it from the perspective of the ubs and merrill lynch. moving away from transactional business to long-term buy and hold has left much bless compliance headaches, -- much less appliance headaches. you are not quite fiduciary on ae brokerage side, but it is less capital-intensive business to run. stephanie: but it is not a guaranteed business. if you take about private -- talk about private wealth management, if someone like stan druck and meyer gets paid to invest, what do you think they should do? barry: it was a different relationship between the high-profile hedge funds despite
the poor performance of the shop thatsus the 1% is basically saying we can't time the market we are not great stock pickers who own everything. over the long haul, according to john vogel and the academic data, that will do really well. is a goodthink it business for banks because it will get bigger as people accumulate more wealth. they will look after themselves more than when the defined benefit schemes were so prevalent. i agree it is a good business. they have been forced out of , thatnto the bond funds is another trend we have seen especially in the u.k. which is worrying regulators at the moment. one important thing to think about, with 10,000 baby boomers a day retiring over the next 10 years we see 60 plus trillion dollars generational
wealth transfer, where with that money go? will it go to the money managers , or the broker-dealers? i'm betting it will go to the money managers. david: i want to go back to aberdeen, because it gives us insight into how one man's management system -- you did not jump at selling the firm, i think that is fair to say. did not rule it out, either. martin: i have world it out. being independent is absolutely vital to us as a business. we completely world-renowned. david: what about -- ruled it out. david: what about cost-cutting? martin: where scottish, it is always in our blood. david: how is that investment worked? at preciselyught
the right time. it was a good bond alternatives business. we're still working in a lot of integration and taking out costs. basically, we have to write out the cycle and wait for asia and emerging markets to come back into fashion. stephanie: banks cut costs by cutting jobs, will you do that? not investment jobs, we always look at integration, you don't need to of everything, but it is basically a lot of systems work, automation, things like that. you have two back office systems, and a lot of that stuff. stephanie: stocks down 23%, you have take some more aggressive stances. martin: we're always looking at our costs, it is scottish, it is our blood to continually look at costs. that is what we're doing. technologies is making
the running of offices so much better, you have your talent, then your systems that you're constantly -- new technology lets one person do what five used to do. syntax is an area -- thin tech is an area of rapid growth. clearly they are up because i'm on bloomberg. stephanie: how long can you stay? i made the mistake of saying i would retire when the great alex ferguson, i gratis football manager -- our greatest football manager, also retired. i now have to keep going as long as martin saurav does. i'm just ahead of him. been due hishave parties, that guy can stay out. good luck with that. , it will best him
there for a while. thank you so much for joining us. he is the ceo and founder of aberdeen asset management 32 years ago for all you accountants out there that is when he started, you too can live that dream. barry, thank you so much for spending the hour with us. barry: company underperformance, save for the high fees. stephanie: that was the best line i heard all day. more on blackrock winding down its global fund. stick with us, this is "bloomberg ." ♪
isls fargo asset manager here for the hour. --ls fargo asset manager management has $480 billion in two controls $1.3 billion across several funds. martin is sticking around a little bit longer. stephanie: david said guess what, stay for an hour. erik: martin is the ceo of averaging management. great to have -- aberdeen management. great to have you here. here is the vonnie quinn. the french president called islamic state "a threat to the whole world." francois hollande said it will take a broad coalition to stop the militants. all 129 people killed friday have been identified. at least 350 were hurt. were arrested in two were killed today in a raid
on a paris suburb. is dead is a woman who detonated a suicide vest. police of they will corner the man they hope that believe -- they believe planned the attack. a bomb exploded last night in nigeria. 80 people were wounded. toe 20,000 deaths are linked the secure uprising by islamic militants. donald trump's lead in new hampshire is widening. he's backed by 22% of republicans bowled by abbas -- pulled by a boston tv station. ending hisl is presidential bid. you can get more on these and other breaking stories 24 hours a day at the new bloomberg.com. matt: first off, futures are up across the board. that trend has been higher throughout the morning. we are now looking at gains of 6.25% on s&p many contracts --
mini contract. we will be waiting for a few hours more for the fed. we will get a deeper look into the likelihood that the fed will raise rates. most people are betting it will happen in december. if you take a look at the market -in-flight policy rates i have here, mrpr go on your terminal. the expectation is for higher rates at the beginning of the curve and it will flatten out a little bit. no change there. just to show you visually with this will look like. the 10-year is selling off today. we see the yield moving up a little bit right now. 2.28 is whether 10-year is yielding. people are taking money out of bonds of putting them into equities. goldman sachs recommends you put money into apple. list for on there by some time -- buy list for some time and then it moved into the conviction buy list.
erik: it's time for the five stories that matter to markets. here is where we will begin. another macro fund is shutting down. blackrock will redeem investors in its $1 billion global ascent fund. two years ago it had more than $4.5 billion. funds have struggled the central bank policies play havoc with prices. it has not returned more than 1.4% in each of the past four years. according to hedge fund researchers, 470 hedge funds are shuttered this far in 2015. artin, it's not like money management is an easy business. ceo, what is it so you and you see funds like global ascent run by blackrock, which is very deep pockets, and furthermore the macro fund run by fortress investment shutting down? guest: i think it's as you don't have any outstanding macro
trends to play with you had up until the crash. it says to me a slow growth world. the whole world is more accident prone to and you have a -- many accidents in holdings. leveraging alone is not a way to add value. erik: as the ceo of a mutual fund company, does it put at all a smile on your face to see the so-called superstar hedge funds shutting down because they can't deliver positive returns? martin: not really. we don't have hedge funds. we don't think we can mix the culture with hedge fund managers. that's just a personal view that we took. i think it's difficult to make money in the macro space now with the interest rate cycle and the interest rate outlook we saw leveraging reduced and hedge funds. it's just impossible to even cover the fee. [laughter]
bam!anie: awesome. david: the mergers and acquisitions tsunami. can anything stop it? $3.5 trillion in deals of an announced. in the past two days $62 billion worth of deals and been announced. canadian pacific bid for norfork southern and more recently air liquide agree to buy airgas. microsemi raise its offer again and month was thinking again about running at syngenta. are these individual situations driving these mergers or is there a larger pattern? margie: i think it is back to slow growth. how do you raise earnings? the cost of money is cheap so it's easy to borrow. companies have a lot of cash so often times they don't need to borrow.
it says it is a way they can be -- do more because the market has been for me towards families that have done acquisitions. all the reasons come together. i think you are companies would want to sell in this environment. valuations are high and there are questions that continued to be raised about whether or not we are in some kind of deke -- peak. why would somebody want to buy? martin: we've seen two very big deals. andby santa cruz in brazil buying of sab miller at a very reduced level. the emerging market outlook at the moment. it's been great buys for these two businesses. i think it's the wrong time to sell if they don't really want to sell a stake in as av miller. -- sab miller. it's difficult to find the next sab miller. but it's where you put the cash
afterwards which is where we are struggling. stephanie: i will take you back to a crack in the market. square. the mobile payment service is set to ipo on wednesday. what investors are willing to pay will determine whether the company warrants unicorn status. square has all the attributes of a so-called unicorn. is a productivity valued at more than $1 billion with a celebrity ceo in jack dorsey. it's a popular in simple technology. opportunity for growth, a big-name venture capital's backer. but they are also similar to a financial company with 95% of the revenue coming from payment processing and point-of-sale transaction. it seems is less more -- about the details of what square does the more about the enthusiasm around tech investing. when we look at these companies, whether public or private, people have raced. this idea that silicon valley is the new frontier in everything they do out there is touched by god.
the fact that square is having this -- i would call it applause. --a pause. maybe things aren't that good on the west coast. martin: it doesn't remind me yet of 1999-2000. but it has that sort of feel to it. i think of a look back on the internet banking sector, they did not really make it. the banks became internet banks. the pure players did not really succeed. i suspect it will be a bit of that when things like asset managers like ourselves are tech to move into fin rather than it being successful in its own right. i think it's a big thing. erik: you will turn aberdeen into a robo advisor? martin: we've got to do something. we bought one in bristol which we are going to use as a platform.
we bought a platform business to put our retail platform on. stephanie: what do you think? : i think it shows bubble-like characteristics. they are willing to pay a breathtaking price for companies they don't have revenue. you can take roughly a 10 times earnings for evaluation. if you value at $4 billion, yet to get $400 million in earnings, not revenue. . it's hard to see that valuation the uber and $50 billion, and they needed $5 billion and we kind of dropped the mic. physical service but -- -- it is a cool service but -- matt: i want to show you the measure performance a stock through the first day of trading. martin talked about 1999. we remember the insanity that happened when it ipo'd here.
after you got syndicate and a bottom-up. the ipo indexes climbed since 1999. this is a look back at that time period. they are still doing quite well. obviously they recovered from the brief drop. spinoff.nagra foods food-service business, leading provider of frozen potatoes and private-label throws investable to pursue growth and fast-growing emerging markets. the remaining company will be called conagra brands and will sell chef boyardee, slim jim, and other prepared foods. stephanie: that the special one for me. that is thanksgiving dinner for me at my house. david: the ceo plans to transfer the comedy since taking the helm in april. the stock is up more than 10% this year. explain this. what it does make sense? margie: it shows new management
can come in and look at underperforming assets and really add value and improve corporate profitability. i think it's a good move. the market is recognizing it. i think it's part of a trend that the company -- erik: the credit is going to the mention cameould in an april. just too much later jenna was pounding of the door saying you do something. much of what conagra has done has happened since jenna entered the picture. it almost doubled its holding. is now the number two investor according to public disclosure in conagra. here is what we are always struggling with. must companies. in this case a look like investors are happy but must companies and management's must
capitulate? martin: hopefully they don't. the ironic thing about this sort of situation is often the low growth company actually does better than the one where they are going to the high-growth market. david: cbs viacom is an example. istin: the material business chalking up cash and it's probably probably sensible. a lot of the big u.s. company's a very strong emerging markets exposure anyway. this is probably the board capitulating rather than anything else. atk: in principle you look not just stocks but bonds largely as well. people get into this a little later, but how much does activism matters of the fixed income manager as was of the equity manager? we always talk about in terms of the stock performance because that is where the activists are. their implications for bonds.
margie: they have been a detractor for interest rate bonds because they pilot debt and it hurts the buyer. it is high yield site been able to the acquisitions. hopefully on cash flow and value. erik: speaking of high yield, there is trouble in leverage alone land. bank underwriting $5.5 billion of debt financing for one of the year's biggest lbo's. investors could assist grabbed -- have subscribed to big discounts for they said no thanks. this could spell serious trouble for private equity firms and the banks acting the takeovers. this by outlook it done all the same because b of a and morgan stanley are committed to the carlyle group. it does raise the question about how many will not go forward. you are a high-yield manager. did you get pitched on this offer?
margie: i had no interest in that offer. erik: no interest as and 70 came to you and he said no? margie: did not even want to hear it. on that interested in helping leveraged companies go private and bailing out banks and buying bonds that are subordinate to what they are selling. i'm not interested. erik: do you say morgan stanley -- b of a surge you right for trying to hawk a deal? you will end up holding the bag? margie: they are a cyclical business. i think it's interesting that leveraged loans are trading at $.90 on the dollar. that's a pretty serious indicator of where risk sentiment is when you have loans trading below par. erik: would you see a deal like this failing -- when you see a deal like this failing, is a direct like you? martin: i think is a good warning signal that the market got overheated and high yields got overheated.
i think it's good news. stephanie: we have to do a red flag check in. trading at $.90 on the dollar. square, in theory is the perfect tech comedy led by a successful celebrity ceo. they are potentially repricing. major investors selling out of equities. in those are not very clear red flags, i don't know what is. i'm just wrapping it up. erik: that is what we do here. connect the dots. those of the five stories that matter. stephanie: the apec summit tradition continues. 21 world leaders put on the traditional shirt. the philippines national garment. filipina designer paul tabrol worked on it for four months is there personally made from pineapple fibers. barack obama looking fantastic in his. i really like those. i think i need to get one.
lyft is seeking half $1 billion in its latest round of fund raising. the right healing start up is valued at $2.5 billion. at radioshack they call it black wednesday. they will offer holiday deals the day before thanksgiving. the company is emerging from bankruptcy. that the latest on bloomberg business. matt: taking a look at a couple of deals here. is raising itsmi offer for pmc sierra to $12.05 a share. i thought is interesting to show this deal. is about $2.3 billion. he ratcheting up in the semi conductor sector. we have another one, another deal here. $90 billion were the deals of been done this year in the semiconductor space. the norfolk southern story is very interesting because canadian pacific railway has
come out with a sizable premium for nor folk. -- norfolk. it's a 20% premium to the day before we reported. it was in the making. that's not really anything more than the average premium in this sector in the small universe of rally takeovers. david: thanks. as we reported earlier, target is out with its third-quarter earnings. it met analyst estimates and raised the low end of its annual profit forecast. target, walmart, home depot, and those reporting better-than-expected same-store sales. we want to try to figure out how healthy the real retail market is. we're joined by bloomberg intelligence. that he summits are being here. help a sick all these earnings and all the reports and put them together into a store and tell us what is going on in retail. i am confused. >> it's a tale of two different
subsectors. we had some interesting earnings. if you listen to most of the retailers and you can be precrisis -- if you look at the prices, back to school was pretty good. something happened in october. fundamental pressure that retail traffic has moving and changing preferences in terms of shoppers. we had whether. -- weather. i hate to talk about it again but it's not good. in november and i'm still not wearing a coat, it becomes a problem if you sell apparel. have highthat exposure to apparel is much more pronounced. if you look at retail is a have much exposure like home depot, udc higher traffic in better results. stephanie: let's break it down. earlier today they were saying
luxury is doing well and michael gould of bloomingdale's saved about experienced spending. for the past two days as out of hedge fund managers across the board recently said retail is a problematic space. you just can't make enough money in it right now in large part because of technology in the fact that consumers can price check everywhere. where is the opportunity? >> price is part of it. they have to rationalize the numbers that they have. we just saw part of their book. as they moved on london to figure out the same thing. first, what you have in your store? and/or merchandise? -- indoor merchandise? what to the head to bring the traffic in? give a fellow lifestyle -- if they are selling a lifestyle story, they can bring in the traffic. stephanie: think about what
happened to best buy. see all the tvs but by the my name is on. >> you talk about more the general merchandise. that you provide that experience in stores and create an environment with a similar shopping experience. if i get to a shoe store and went to get issue, i find they don't have it in my size. if you have someone over there that can order it when i've had and give it to the next day or even the same day, that's a great value to the consumer. the concern really in retailers is over the face of revenue and earnings growth. from a fixed income perspective, you look at macy's for example. for20 24th that will give three point or percent yield and other offering 4% yield? margie: i think it shows its deteriorating. the winners are the lower leverages. i don't personally like retailers because they look
stephanie: welcome back. you are in for a pretty awesome day on "bloomberg ." from meeting,h plus fomc with the december hike seemingly in the bag, investors are looking to the fed meeting minutes for clues on how quickly raise ministers will rates. we love to talk about the importance of this. in your world, how important is this decision? >> it is important because they telegraphed they are going to do it before, now they are telegraphing again. it will be devastating if they do not go through, but i put it
at more than 50-50. stephanie: how will you be investing the month of december? : it will continue to have a depressing effect on the economy and that will hurt all securities. david: what would you like in the curb after december? how important is it how high and fast they go after that? margie: i would like to see them restore normalcy, so i would like to see 25 basis points a couple times a year. they are a long way from normal financial conditions and it would be a big help for the banks and for making loans to small business. it would help everybody. a fixedat happens to income manager like yourself in the interim? that thisr, let's say is a big turn in monetary policy and we are entering a long-term bond market -- a long-term bond
bear market. what has not existed since high-yield bonds emerged in the early to mid-1980's. margie: i am not sure we are on term perspective to a higher rate. i think we may be on the way to deflation. i am not looking for long-term rates to go anywhere. even if short-term rates climbed by 25 basis points and maybe more in subsequent rate hikes, you see the long end will remain pretty anchor? margie: because of low inflation. what they have done with zero rates is forced money into financial assets that have not gone into real roots -- real growth into building new businesses. are seeing yield spreads widen out and why we are seeing some stocks wobble and crash. it is more delivered players that are taking the market down than the real economy. erik: that has potentially troubled banks, right?
a flat yield curve is not helping the banking industry. margie: they will not make more in the interest margin and they will not have loan demand, partly because of regulations limiting it. even more broadly for the economy, i do not remember the last time we look forward with no expectation of inflation. that is a very different world that we are looking that -- that we're looking at if it is a new normal. margie: i think you are more on the financial players side than the real economy because they have not overleveraged. stephanie: when we say high-yield bonds are offering attractive rates, attractive rates to whom? one of the trends we have seen investorscrisis, more have drifted their way into the market not paying attention to the risks associated with these companies and the lack of volcker. post
margie: the defaults have been very low, under 2% for several years, so you tend to forget about risk. fundswe think mutual drive the market, but half the market is more permanent investors. erik: what is it like for you to compete in a world that now includes junk-bond etf's? not affect the fundamentals, because in junk -- s, can the company erik: do you worry about the doomsday scenario and all the retail investors, tourists, in j decide to stampede for the exits causing massive dislocation in pricing and maybe
inspiring some of your investors look, it at prices -- has to create chaos for a money manager with little liquidity. margie: the short-term outflows would be from leopard players, hedge funds, market traders rather than long-term investors. long-term investors are pretty much staying where they are. the fed has more or less guaranteed we will not have that kind of liquidity prices -- liquidity crisis where everything freezes up. erik: what with the fed do next time? margie: that is why they are under stress because rates are zero. you cannot rule out anything in this fed. erik: so negative rates are as well? qe4 margie: i would say anything is possible once they start down this trail. erik: really? do you think in your lifetime you will see the central bank
buy corporate bonds? margie: i never thought i would see zero treasury rates in my lifetime. nothing is impossible. stephanie: why do you think that? because super high-quality corporate bonds are more bulletproof than government bonds yakima erik: it would be the next step beyond assets. asset-backed like auto loans, for example -- i have no idea. if we are looking into the future and the possibility, as you pointed out, that the fed has guaranteed liquidity will thet, the only way for liquidity to exist in theory is if you put the unlimited resources of an unlimited balance sheet to work, and that would require them going beyond treasuries and asset-backed into corporate. stephanie: corporate bonds are far more acid -- margie: they reflect that the
economy has slowed down. the fed has gone on this trail, and they do not have another game plan to say let's do something else, let's try to raisingbank lending by rates, do more reverse repos. so they are stuck in what europe is engaging in, instead of saying we should throw out the textbook and get a new textbook. stephanie: i love this conversation. erik: does this affect the way you manage money on a day-to-day basis, or is it back -- or is it in the back of your mind gekko margie: with a slow growth market with high liquidity, we are seeing lots of evidence that this economy is much more highly levered than you might think. so i am looking to be in the highest part of the high-yield market in the more liquid names. until the highly
levered names, the ones who have piled more debt onto the balance margie: we punished? are starting to see that in the , some of the areas tech names you are seeing some modeling. you will see defaults go up as the economy slows down. you still have to say we have a robust economy, that even with the negative hits from the zero policy, it is still able to grow more vibrantly than anyplace else in the world. erik: in the western world, anyway. david: so now we are a little over six minutes into trading in new york and matt: let's look at the major indexes. you see gains across the board. the s&p 500 gaining 10 points, the dow jones industrial average peeping up to a 100-point gain, just 86 points right now.
if you look in the bloomberg, you can see that we have green across all groups. this is the imap function. the only read that you see here, utilities and telecom. everything else is gaining, but energy is the strongest gainer. take a look at some commodities. you will see that oil is rising barrel,w, about $.49 a to 41.16. gold is unchanged here. copper has been amazing to watch the last few days. absolutely crushing through a six-year low, now down to about a seven-year low. look at a five-year chart and it comes off, off, off. this is important because china is the biggest consumer of this metal, and it says something about the growth rate there, nothing good right now. staples came out with an outlook
that was disappointing to investors. fourth-quarter sales are going to be down. its earnings outlook was a little bit -- it was a range that the midpoint was lower than the market is expecting therein we have an interesting note out from bloomberg intelligence saying a decision could be made on the office depot/staples .ieups by q2 that is probably a long way off for starboard, which has been agitating for this. comes out with better than estimated earnings. $.78. solar city has raised the nectar $113 million. interestingly, $100 million of that comes from an energy resource and innovation fund. silverlake. also, it was an industrial band of my youth. let's head over to abigail
doolittle, coming to us live from the nasdaq, taking a look at two stocks headed in completely different directions. abigail: one of those stops -- one of those stocks is apple. goldman added it to its conviction buy list. a service apple as rather than just as a hardware company. she sees a significant multiyear opportunity in tv, apple pay. trading in abeen volatile but wide range. the stock is up less than 5%, not so far from where it opened the year, at 1.1139. moving in the doctor direction -- moving in the other direction, gopro is down again took her pricehy target to a street low of 15 from 20. she says for the pricing pressure is indicated, especially on amazon, and she
also sees the product on flash sale sites such as go lily and groupon. something that seems somewhat in line with a simply stunning 41% short interest. erik: that is abigail doolittle at the nasdaq. next, the best investment ideas from this year's robin hood investment conference. if you follow some of the topics from last year, how would you have done? we will tell you? -- we will tell you. ♪
the website is reporting political scoops from the past including drug use by toronto's mayor, rob ford. be all part of a broad reorganization. ford gives a facelift to a slow selling model, the lincoln mks a. sales are down 13% this year. a rectangularth grill is being unveiled today in los angeles. erik: for $7,500, you could have been at the robin hood investors conference this week where money managers share their best investment ideas. the likes of larry robbins, david einhorn. let's say you want to follow the pied piper's. what the $7,500 gets you. we follow the ideas from last year's robin hood to see how they performed. here is bloomberg's new york bureau chief. margie, you do some stocks,
a lot of fixed income. following these investors is not the type of thing you do typically, right? margie: it is always interesting to see what kind of ideas people have their it erik: but as a rule you are not investing what they are investing in because they are in it. little i saw very overlap in what i recommended versus what they have. erik: i have to say i was stunned because of the 30 long and short calls, 29 stocks, one currency, the total return if you took an equal weight position in every long and every short over the past 13 months, would have been a grand total of 0.93%. isn't that unbelievable? stephanie: a lot of the trade ideas presented yesterday were not new ideas. they were reiterating ideas that
we've heard before. erik: like mo on allergan. stephanie: lebron roberts from glenview reiterated months and two. >> also, bill eicher said it would be great if allergan and valeant got together. is saying dan loeb wouldn't it be great if allergan and amgen. look across the themes of yesterday, clearly health care and health care m&a dominated the conversation. not surprising, given how much action there is around that right now, and how much activism there is in health care m&a. interesting to see these guys talk, but a little frightening to hear that it does not really -- erik: unless of course you went with the shorts only three matt, i am not sure if you want to join the conversation, but these
guys get up and they are almost always men. in some cases they are women. stephanie: there was a portfolio manager talking charter. i like that. erik: however, these people made mostly long hauls -- long calls. a lot of them turned out to be huge duds, like gmc, clovis oncology -- the cancer company that just cratered the other day. but the shorts, like whitney calling lumber liquidators. ,t came out with a huge expose exact sciences -- they crushed it. jason: and temper on the euro. stephanie: it was a very difficult environment. lumber liquidators is an outlier. this is not your average short. 60 minutes dozen expose feature that takes the whole company
down? it is not that. fair followingay the same exact storyline as lumber liquidators, using toxic .roducts in way fair's example, they make their own furniture. he came out with the idea two days ago, and we may have seen a response by the company. i think this is probably a broader problem. i am not claiming it is unique to wayfair. however, wayfair is trying to build a trusted furniture brand. me, some little guy like when he starts testifying if you s, and ing a few product have only tested three so far and two out of the three failed. i think wayfair has a much bigger problem here.
they are trying to build a trusted furniture brand. stephanie: he came out those two days ago with the idea to shortwave. yesterday they slashed the prices of those furniture items, and some of that furniture is sold on walmart, polls, and staples. they also slashed the price is there. david: going back to what you said, in a slow growth market individual companies are much more vulnerable to individual instances. got lumber liquidators, valeant. everyone of those is a one-off, but you are very vulnerable. margie: if you have broadening revenues and profitability, you can absorb it and grow your revenue. today, those mistakes are much more important. hear: it is funny to
whitney say a little guy like me. is are unique situations. this is why these guys get paid as much as they do by investors, to find those unique once in a blue moon situations that do get these big returns. stephanie: two days ago i had a chance to sit down with robin hood chair barry stern liked. we talked about the attacks in paris. he made a comment just before the break blaming obama at the white house for the spirit he did not have time to elaborate more, and i want to give him a chance to because he put out a public statement.
stephanie:'s quote was somewhat taken out of context and he did not have time to elaborate more. david: thank you, jason kelly, for joining us twice today. andmberg news bureau chief, margie patel. stephanie: margie is staying. david: next we will look at some of our best conversations from today. ♪
attack them. >> the ability of these economies to absorb these refugees will turn them into productive citizens in the long run. >> we have to find a way of resettling refugees on a much larger scale. did not jump at selling the firm, but you did not rule it out either. >> no, i have ruled it out. being independent is vital to us as a business. challenging.eally not only do you have to figure out what is happening before everybody else, you have to figure out how that will manifest itself. >> it is not a big financial blow to black rock. it is more of a reputational issue. i do not think it will have a huge effect. >> you do not have any outstanding macro trends to play, which you did up to the crash in 2007. the world was more accident prone. and also leverage alone was
going to add value in a slow growth world. stephanie: let's get final thoughts now from wells fargo's margie patel. what is keeping you up at night? policy, has i fed think they are on the wrong track. i would like to see them raise rates and change their way of thinking. i put that at 50/50. stephanie: thank you for joining us. managing director of wells fargo asset management. thank you for joining us on "bloomberg ." tory burch of tory burch design spirit also david kirkpatrick. a huge day. ♪
good morning. i'm betty liu. here is what we're watching at this hour. targeting a terrorist, police raid a paris suburb in the hunt for the organizer of last week's attack. meanwhile, some politicians want to close the policy -- a closed-door policy. a closer look at what is the for those coming to the country. and pricing the ipo after the bell. place in thefind a exclusive unicorn club? a blow to black rock, the world's largest act -- asset manager, losses and redemption.