tv Bloomberg Markets Bloomberg November 19, 2015 12:00pm-2:01pm EST
scarlet: from bloomberg world headquarters in new york, good afternoon. i am scarlet fu. alix: i am alix steel. that's are heating up the fed will raise interest rates. reaction in the market is needed. as the hike then priced in -- been priced in? scarlet: pitt qb square -- a cool valuation valuing the company at about $1.3 billion. alix: we would talk to the ceo mna andgo on big pharma goile mylan's bid for perri failed. scarlet: we want to get a snapshot of the activity -- checking in with julie hyman, a mixed day. julie: after a three-day rally for stocks, it has stated to
some extent. we got the fed minutes, and it would seem that december is likelier than not, but once again, the fed is emphasizing the gradual pace of rate increases. stocks are little changed, but twitter between positive and negative. if you look at the bloomberg terminal, you have the poroshenko. utilities trading height -- push and pull. utilities trading higher. tech and consumer staples doing well. health care and energy the big laggards. health care, on united health care's announcement that it is considering trimming back on its affordable health care act coverage. again,trading lower once although it has paired its declines once again to some extent. still a hangover from yesterday's inventory report. interesting call today. goldman sachs says the mild winter, if we see it continue in the u.s. and europe, that we
could see oil in the u.s. fall to as low as $20 a barrel. this is even though brent is higher today. wti is taking a hit. the dollar is declining. 0.08%, on this assumption the pace of the fed will be gradual. said he was not saying it was $20. julie: if the weather continues, as it has been, i was looking at laguardia airport average temperature, eight months this year, it has been above the average. november is 20 degrees above average. alix: that is why it is so pivotal, you have to go beyond the cost. began commodities, a breakout short-termbove moving averages, the eight-day and the 10-day. something to consider.
julie: even though oil has not benefited from the drop in the dollar, gold seems to be an offending from the. -- seems to be benefiting from the drop in the dollar. this commitment of the sentiment on gold seems to be negative. there is a company called bmi ofearch, a unit -- unit fitch, that says gold could fall below $1000 an ounce before bouncing up, and citigroup saying commodities markets are not pricing in the outlook for increased rate. alix: definitely a call their as well. goldman sachs saying it will be lower longer continuing. it's tough. to her, julie hyman. -- good stuff. thank you, julie hyman. the bullish we have heard is next yearn oil calls due to capital investment coming down so much, but over 12 months, it will be ugly. scarlet: let's check first word news.
mark barton has those from the news desk. -- mark crumpton has those from the news desk. development in the investigation of the paris terror attacks. hans nichols reports from terrace. -- paris. : france officials have id the body. they say he was killed. it took some time to make thingic proof by matching to prince that the ringmaster was indeed killed in the operations wednesday. here is where we stand, continued raids in belgium, looking for other suspects, other accomplices, and the french president has won in the lower house of the national assembly, authority to expand state powers. minister, in making the case for enhanced powers, suggested france and elsewhere in europe could be at risk of a chemical or biological attack. later, he clarified they did not
have concrete intelligence on that. meanwhile, the climate summit later next month is set to go on. president barack obama has indicated he plans to attend. another terrorist -- we still do not know the location of that person or whether or not his corpse was among those that died in a hail of bullets and suicide bombs. back to you. mark: hans nichols reporting from paris. planning --ama is promising to veto any proposals that tighten security on syrian refugees. iraqild block syrian and refugees from entering the u.s. until top officials tell congress they are not a threat. paul ryan calls the president's veto threat "baffling." that is a look at the first word news. andcan get these stories
other breaking stories 24 hours a day at the new bloomberg.com. scarlet: thank you so much. the hawks are in. the doves are out. minutes of the federal open market committee meeting indicated the fed is ready to raise interest rates next month for the first time in nine years. alix: but there is one thing the fed cannot control -- the weather. expect aay they can warm winter. i want to bring in bank of america merrill lynch senior economist michelle meyer joins us from our offices in new york. hey, michelle. meyer: good morning, or good afternoon, i should say. have seen how a cold winter has led to a mild patch. with a warmer winter create more robust prints? it could lead to a
winter that is much warmer than we have seen on record. if that were to happen, the risk is you get some upward bias to economic data in the first quarter for a few reasons. the raw data will look stronger when you have warmer weather. you can have more homebuilding, more retail sales, more churn in the overall economy. the second, critical factor is that seasonal adjustment processes will be looking for a cold winter, akin to a we have had the last two years, and we the dataat into higher. it could result in robust that if the winter is warm. scarlet: the first quarter data could be affected. what does that mean going forward for the rest of the year? ms. meyer: you are right that it can redistribute growth. warmer, iter is much could pull forward activity that otherwise would have happened in the spring, but i think it generally inflates data.
for example, when we were talking last winter about the cold winter, you are saying part of it is a timing issue. part of it is if you have excessive snowfall, you will not go out with many restaurants, not be as active, be more inclined to stay home and not spend as much. the reversal be true if the winter would be much warmer. you will have my -- more people out and about spending. alix: we got the fed minutes out, and the indication was it was more hawkish, december would be a go. we did not see a reaction in the markets. if anything, it seemed like a relief rally. the zynga said hike is priced -- do you think i said hike is priced into the markets? is priced i think it into december. the burden is on external shocks . the bigger question is what comes next when will the second hike be, and what will the path look like. that is where there is debate. alix: you raise a good point.
carl riccadonna of bloomberg intelligence pointed out that what was relayed in the minutes is the neutral, real fed funds rate might be at zero, maybe lower for longer, which could imply one and done scenario. ?hat do you think about that ms. meyer: i agree with the premise, talking about a lower rate, butfed funds the conclusion, i am not sure it would mean a one and done. i think it is a small probability that the fed would just go one step. it means the terminal rate is lower. they will not accomplish as high a path of interest rates, but that is also what the market has been telling us, and frankly, what the market has been telling us for some time. it should not be a big surprise to market participants. it is more fed officials are resetting their own expectations. scarlet: there is a reset all over the place.
bloomberg has a weekly regan consumer confidence and in the section they asked about the outlook for the economy, that is stuck at a two-year low, add-ons with the assessment that the economy is strong enough to withstand truth rate increases -- at odds with the assessment that the economy is strong enough to withstand interest rate increases. ms. meyer: i think what the fed is trying to communicate is we have seen a period of growth the last several years. the cumulative process has been sufficient to allow the fed to begin hiking interest rates. in their own forecast, they do not have an acceleration in growth in the next few years. they have growth at a pretty low 2% pace. it is more a question of what have we accomplished thus far, getting that weren't off the 0 -- weren't getting off the zero bound, and i think the answer is yes. money managers like tony james of blackstone are warning of a possible recession in the next few years.
economists do not see that. the fed does not see that. what do we -- economist -- markets see right now that economist like you do not? ms. meyer: i feel comfortable that is likely we'll see recession next year. we have data, indications about momentum headed into 2016. further into the future, the crystal ball gets wealthier. is it possible we fall back -- fall gear. it is likelye -- that we will given that we are seven years into the recovery. the challenges timing when that term habits. i would argue given the data that we are seeing now, we do not have access -- excesses building into the economy that would turn the cycle. it has to be a shock, i would think. alix: good stuff. scarlet: we have much more coming up on bloomberg markets. next 20 minutes, unitedhealth
is close to a 13-month low according to the latest consumer comfort index. one in five said the economy is improving. 45% say it is staying the same. scarlet: the city of san francisco is telling american express the party is over, suing them, accusing them of stifling with fees. american express says the suit is without merit. biggest iceuebell cream operation is back in production. blue bell is the fourth best selling ice cream brand. i like haagen-dazs, actually. you can always get more business news at bloomberg.com. scarlet: let's check over to julie hyman with a check on individual movers. favorite ice cream? julie: i get a little artisan of. alix: there is off, and then there is julie. julie: let's look at individual
movers. best buy shares are down sharply after revenue fell. they were down sharply. cap coming down a little bit. -- they are coming up a little bit. revenue fell and that is because of weakening demand for electronics. we have seen in commentary from target and walmart, but the ceo does say best buy is making industrywiden as sales of electronics are falling. the company did manage to post a positive same-store sales numbers. the fourth quarter will be heard by the closure of some canadian stores. things are looking better at salesforce.com with strong demand for cloud-based software and some of it is larger -- some of the large competitors have been struggling, salesforce does not seem to be. sales that began in february are
likely to be higher than analysts anticipate. my favorite is a quote that called salesforce the taylor swift of the cloud computing industry. fantastic. janko solar, that company beating estimates. it is one of the china-based solar companies that trade in the united states. revenue is ahead of estimates. the company says it will ship ..4 21.7 gigawatts of modules those shares are trading lower. they had been seeing a gain after the earnings, which looked like they were better than estimates. sun edison, a fascinating story, shares surged yesterday. they were halted for volatility and then searched. there was some speculation they might get refinancing or debt help of some kind from a company like laaksonen, but then reuters -- blackstone, but reuters
reported the unit of blackstone would not. this has been a volatile stock. it had been a heavily hedge -- stock, andop those countries have been pulling back on investments. unitedhealth group says it might pull out of obamacare. scarlet: the athena health ceo says he is not surprised unh is potentially pulling out. christ a product called health insurance with so tightly regulated you could not build a differentiated product. they specifically said you want everyone to be able to spreadsheet and choose the lowest number. who wants to play a commodity magnet game, especially for the small number of lives that will have to be individually customer service. i want to bring on drew
armstrong. is this a united health care issue, or issue with obamacare and insurers? drew: it is an issue for insurers and for stockholders. they are freaking out. anthem is down. hospital chains are down. there are worries there will be more problems in the obamacare exchange. it is set up to cover about 10 main people next year. the government gets subsidies, private insurers come in, they offer plans, people go shop and buy them. they are getting a lot of new people they have not dealt with before, and united is saying these people were way more expensive than we anticipated. the market is not working the way we thought it would, and it looks like they are getting out. they have said they lost hundreds of millions of dollars. scarlet: in other words, they have not -- it is not worth the expense. have we gotten any indication that was a problem brewing? wobbles thatsome
it would not be that profitable, but i do nothing we had seen any indication that the biggest health insurer in the united states, not necessarily the top player, but a mess company was planning -- massive company was planning on turning out entirely. united health is not a huge player, so doesn't really have that much of an effect on obamacare? drew: i think the biggest impact will be politically. was he republicans who oppose the law take it and hold it up as an example that the program is not working and we should roll it back. scarlet: are there examples of insurers that have profited handsomely from this? at now. have heard from a lot of them are taking a wait-and-see approach. alix: is there an opportunity to make up for a lack of profit with more volume, the more they are signing up, will that offset the issue? drew: you can, but if you are suffering losses, you will make
up by suffering even more losses. when you are losing money, the more people you have, the more you are losing. it has been a serious problem for them. scarlet: a pr problem for the government. drew: indeed. scarlet: jewel armstrong, thank you for joining us. he will join us at 12:40 to discuss a pfizer aliment merger. alix: square going public. we bring you the latest next. ♪
square founder and ceo jack dorsey live from the new york stock exchange. dorsey: it is something that has been a long road, a milestone. what can accelerate us as a business. this is what can help us ailed the tools to serve our customers in the right way, and that is what it is about. joining us is bloomberg tech reporter sarah frier from san francisco. everyone was aghast at share prices, but with it up between 40% and 60% today, isn't that what it wants to see, a nice pop? sarah: that is what they manufacture this thing for. they want a nice pop. people will still look at the nine dollars ipo price. that is the idea -- to raise money, and they raised a lot less than they could have based on the valuation. 140 companies -- more
than that, who are worth more than $1 billion, and they will be looking at square right now thinking what will happen to us? are we going to be able to maintain our multibillion-dollar valuation in an ipo or acquisition? are people saying jack dorsey manage this ipo process correctly then? anytime you get a nice pop like this, it is something where people come away saying that works. i think square is just the first big consumer name company we have seen ipo in a while, really , since twitter, and people are going to be using it as a yardstick for how they should be doing. i think it is clear, even with the share pop today, that the price is a little lower -- i mean, they were valued at million dollars in the last round. another --llion -- $6 billion.
another under $3 billion. late-staget do for funding for unicorns in the market? sarah: it scares them, and employees might not be as rich as they want to be. alix: were they might have to wait even longer to get paid out. sarah: they have already been waiting. alix: thank you, sarah frier. scarlet: still ahead, pfizer and allergan getting close to a deal, but could regulate is get in the way? alix: what, regulators? scarlet: yeah, it happens. alix: that doesn't happen. ♪ the only way to get better is to challenge yourself,
it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. alix: from bloomberg world headquarters in new york, welcome back to bloomberg markets. i am alix steel. scarlet: and i am scarlet fu. let's start with headlines.
mark crumpton has those. mark: the man suspected of organizing the terror attacks in paris is dead. the french minister says he was killed in the predawn raid yesterday in the paris suburb of .aint-denis he was a belgian described as an islamic state operative, believed to be behind four of the six attacks in recent months. france is preparing to extend the state of emergency declared after those attacks. the lower house of parliament has voted to let the government keep emergency powers for three months. the government can ban public demonstrations, carry out searches without warrant, and hold people under house arrest without court oversight. final approval on the extension is expected friday. incident obama says he will veto -- presidentn obama says he will veto any proposal to tighten screenings of refugees.
billouse will vote on a that would block them from entering unless four law enforcement and security officials tell congress they are not a threat. the white house says that would not increase your security. when it comes to the candidate with the better temperament to be president, the public and overwhelmingly picked ben carson over donald trump, but trump gets voter backing when asked who can get things done, fixed immigration, and manage the economy. those are some of the latest results from the bloomberg politics national. trump was the first choice of 24% of republicans surveyed. carson was next. marco rubio finished third with 12%. the biggest diamond in more than a century has been discovered in africa. the 1100 caret rock is slightly smaller than a tennis ball. it was recovered by machines and a diamond mine in botswana. the only diamond that is larger is part of the british crown jewels.
that is a look at the first word news. you can get more on these and other breaking stories 24 hours a day at the new bloomberg.com. i am mark crumpton. back to you. alix: thank you so much. we have breaking news on intel. the company is boosting its $.26 arly dividend to share versus $.24 a share. than whatbigger boost was expected. on a full-year basis, that looks to be $1.04 a share. we are getting revenue growth coming in at mid-single digits. the street was expecting 4% revenue growth, so that also seems in line. again, the read, that intel is boosting the quarterly dividend of $2.20, and shares are moving slowly higher, a small pop on the news. are a closeocks we eye on today -- pfizer and allergan.
shares of both companies are falling hard, even as they are said to be near a 150 billion dollar merger, but could the u.s. treasury department stop what could be the drug industry's biggest deal ever? drew armstrong joins me with more. it is a variety of things. the treasury department about , sendinger last night a message to ron wyden, one of the senior democrats on the finance panel in the senate. they said they would basically take measures to stop inversion. they did put limits on what the power could be. administration has done this before. the pfizer-allergan deal, should it happen -- a lot of it is about tax and pfizer been able to have a legal address outside of the u.s., get outside of the rate, andorporate tax the u.s. government does not want that to happen.
it is a major political risk, and it is something they will probably take severe steps to do everything in their power and presence of things that are beyond their power to try to stop. --x: you raise a good point how much is in their power, how quick regulations could be passed meaning that the stock will be down? are they reflecting a different concern? drew: last year, the treasury department did something similar, play now guidance that if you want to do a tax and version, we will make it slightly more difficult, and it stopped some. guidelines have actually never been formalized. they were mostly a threat. what the government did was say if we do form them, they would be retroactive to the date where we declared it, so putting a warning out there saying you try and do this going forward, we will do everything we can to stop it. in d.c. saying
the government might try to put out something stricter, and that could hold of a deal. in the meantime, litigation in the courts, fighting over if the government overreached, or something like that. in the world of business, that might be enough to put a halt on pfizer-allergan, if this were to happen. there is some skepticism on if this deal gets done at this price. alix: the price? share, which380 a would translate to $150 billion. we have heard talks are near finishing at this point. we could hear something in the next week or two. alix: awesome. thank you so much, bloomberg's drew armstrong. i want to turn it over to scholars who is following another big pharma story. scarlet: speaking of megamergers, one that did not go through with mylan's $32 billion bid for perrigo. only a hundred 10 deals have
been canceled. now that mylan is out of the forture, what is next perrigo. joe julie: -- joe papa joins us now. what is next, are you open to other bidders? i am delighted we have the support of shareholders, but we did nothing it was a good deal for perrigo shareholders. as we think about the future for us, it is continuing to go back to what made us strong, focus on the business, growth at 5%, 10%, and supplement with additional m&a that we believe can help us add another 5% to 10% a year with transactions. cynthia: given what we have seen, you are a company with significant operations in the
u.s.. what could the treasury tightening the screws mean for your business -- what is your worst case scenario? made a transaction -- we did a transaction in 2013 onere we acquired the el pharmaceutical company. what it has allowed us to do is have a gateway to europe. prior to that, we had no gateway to europe. rather we have a gateway to europe, we are excited. we did an additional deal by acquiring omega. we believe we have brought our company from a u.s.-focused company to an international company. we are now doing in 39 countries. we think we are exactly what companies are trying to do, become more global in our approach. do we look at what is happening with the treasury department? yes, we have looked at it. is there a potential risk of a couple hundred basis points on our tax rate?
yes, but we think more are focused on the future of the business, growing our business, becoming much more international in our focus. cynthia: the couple hundred basis points -- is that the worst-case scenario? i do not know the exact legislation, so i cannot speculate. i do nothing i want to speculate on that. we have looked at it in the past when treasury came out with additional comments earlier in the air. somewhere in that is the worst case. what it has allowed us to do is move from a business that was about 80% u.s.-based, to know about half u.s., half rest of the world. think the need for quality, affordable health care products, which we provide, not just the u.s. need, but a global need, and that is what we are excited about. cynthia: how much of an advantage is having the global tax rate? ian reed said they are at a competitive disadvantage to be an american-domiciled company.
how much does it help, having a lower tax rate? what we have been able to do is use the business model and expand globally. europe,us a gateway to allowed us to acquire a company called omega, a phenomenal, business that we now have as part of the company. it gave us so much more. the taxi part of the issue? yes, it is part of that, but it gave us the global structure to acquire the omega business and now we are focusing on more businesses into omega and that is what really is important to us. cynthia: when you talk about more deals, could we see them before the end of the year, maybe next year? how quickly do you have the capacity to move? dramapa: during the mylan
we faced, there were some issues, but important, we think there is more we can do now and we are looking forward very much to doing additional things. stay tuned. we will have more to say. i will not put a timetable on it, but we do think there is more we can do. scarlet: joe, i want to get your comments on newsweek talked about earlier, united health is considering pulling out of obamacare. what kind of knockdown effect does it have for your part of the industry? mr. papa: i cannot make specific comments about what is happening specifically at unitedealth care, but for us, i think there are two winners in health care. one is on the companies that, with new innovation, specifically on pharmaceuticals. the other one is for companies that make health care more efficient. we operate on the side of making health care more efficient. a quality product. make it more affordable. i believe that is going to be one of the big winners in health care. that is where we do really well. every single day, every second of every day, 1600 people take a perrigo product.
we believe those are the kind of things we can add value to have good by being more efficient. scarlet: so the policy is not hurt profitability? mr. papa: no, in reality, more and more people are coming to the store-brand, private label part of the business. therefore we think it will be more favorable to the long-term. , thank you forpa joining us. ,nd bloomberg's cynthia koons our health care report. coming up, building more casinos in macau -- two gaming giants are confident they will be returning. we will have details. like previous airstrikes could stop the islamic state's moneymaking businesses. we will tell you about how much money they have and what is being done to stop the terror group. later, and excessive interview with peter benedict, the cofounder and partner of the united talent agency. he will talk about the art of the deal -- not the donald, but the art of the deal.
scarlet: you are watching bloomberg. i am scarlet fu. alix: and i am alix steel. this is your global business report. scarlet: here's what we are watching. airing and focus on gradual tightening from the federal reserve is lifting emerging markets docs and currencies. what is the outlook from the goldman sachs international co-ceo? alix: crude is not gaining much traction. one top economist says it is a global price war. scarlet: and after a slump, building casinos in macau still looks like one of the best investments around. start in london. global equities posted a fourth
day of gains. european stocks holding a three-month high, but emerging markets are a standout. richard notter says there are opportunities in this space. : from a longer-term perspective, they still offer the best prospects for growth. when you think of global growth out of china, it is a 30%, 40% complete. they are continuing to global growth, and you managers and opportunities are significant. gnodde also said he thought the opportunities without ray the risks in the next year. -- would outweigh the risks in the next year. according to people with the matter, pfizer would spend up to $150 billion to buy botox maker allergan, which is located in ireland, and allow pfizer to take advantage of lower taxes. crude oil is hovering monks a 3 --- around a three-month low.
gary shilling says the global oil market needs to focus on marginal cost. : when you are in a global price work, it matters. it is not the cost of budgets for saudi arabia, venezuela -- it is the marginal cost. volkswagen of america chief executive officer michael moore and took the stage at the l.a. autoshow and apologize to customers and dealers. it is another makarova over the emissions scandal. the company will have a remedy for the most 500,000 cars sold in the u.s. involved in the scandal. and luck is turning in macau. new project will hand back an average return of 20% three years after opening. that is compared to an estimated 10% return from hotel groups out of hong kong. chinaors, including sands and galaxy entertainment group had earmarked $20 billion in
spending in the region over the next three years. scarlet: time for our bloomberg quick take, where we provide context and back on on issues of interest. today, the focus is on you and currency controls. international monetary fund says the currencies traded widely enough to be considered a reserve currency, marking a huge milestone that some analysts estimate could trigger a $1 trillion which into chinese assets, but there is a long way to go in easing capital controls. here is the background. this chart that we have of the dollar versus the yuan -- as soon as we pull it up -- it would track china's evolving policy on currency. in 1994, beijing set a fixed rate. that indoor for a decade after china joined the world trade organization, in 2001. select institutional investors were permitted to buy yuan -denominated stocks. the peg was dropped in 2005, but
unofficially returned in 2008 to insulate china from the global financial crisis. in august of this year, china devalue the yuan, as his economic slowdown weakened. where's the tension? there is the argument, china has a small share of the world currency despite being the second-biggest economy in the world. a more wily used currency would raise china's influence, the going setting prices of commodities from iron or, and given individuals more choices with savings, but as the yuan , the trade-off is aggravating the economic slowdown. that is your global this report. for more stories, visit bloomberg.com, or bloomberg.com /quicktake. and now i want to get to bloomberg's abigail doolittle live from the nasdaq, where she is looking at stocks, including apple. aigail: apple is up for
second day in a row, nearly 5% over the last two days, yesterday on a bullish call out of goldman and today on reports the company might be looking for a second supplier for the next generation apple watch. some are saying sales could top 10 million units this year. the stock will open well above 100-day moving averages, suggesting buying momentum is in place. another stock in play today, kerri green mountain. they beat the adjusted fourth-quarter outlook and the street estimate, making one penny shy of what they made last your, but much better and what the street had been looking for. this stock has been off significantly over the last week, more than 20% on a bearish analyst call, but with the strong results and 2016 outlook that forecast growth, we could see investors start to look at the stock's very attractive
valuation. last, it has been a busy day here at the nasdaq. along with the match ipo, mindcast went off. shares of this cloud-based archiving and security company are now trading well above the ipo price of $10 per share. scarlet: thank you so much, abigail doolittle, reporting live from the nasdaq. alix: coming up on bloomberg markets, why the islamic state has no shortage of funds to carry out terror attacks around the world and what the u.s. is doing to try to cut off the group's financing. ♪
funding, but as the united states has learned, that is easier said than done. alix: we are joined by bloomberg reporter cam simpson in london. great to have you here. your article was fantastic. how does isis wind up making their money? : my goodness, they have some in a different venues. oil is the big one everyone knows about and talks about. when they took over vast swaths syria, even starting in syria in 2013, they started putting themselves in position to cap oil fields across both countries, and they make upwards of $500 million a year -- the estimate right now -- just on oil. they make money from virtually everything else. if you control a territory of a million people, you can tax almost everything. they tax students, there are religious taxes, taxes on transactions, utilities, mobile companies, virtually everything. that is hundreds and hundreds of millions a year just from the
set -- tax system. they pretty much have limitless, and this resources to do whatever they want. scarlet: so, striking isis at the heart of their operation, through their oilfields or through their oil supply control really does not do it then, in terms of crippling them? mean, you're talking about -- i think we have this, sort of, misconception that there are wells and there is one pump. you are talking about hundreds -- you are talking about thousands of hoses buried underground where someone feels up a can or a truck -- fills up a can or a truck. the u.s. said last year, a year ago, that we had bombed isis's oil revenues down from $350 million a year, to about $100 million a year. that turned out to be completely wrong. we say, making $500 million a year. so, it is really, really hard to hit this infrastructure.
it is hard to make a difference unless you also want to kill civilians, and i think the obama administration has been really reluctant to do strike that will significantly endanger civilians. alix: what do they spend their money on? for example, a while ago i know they had to pay out the families of some of the soldiers -- some of the group that winds up dying, and as the death toll rises, the cost outlay become significant. talk about that part of the equation. cam: their biggest outlay is for their army. i mean, they pay their forces -- depending on the estimates, up to 100,000 men under arms, and they pay them. a court into estimates from people in the rand corporation that i talked -- the rand corporation that i talked to, the defense department outside think it's that they fund, they can pay that from oil revenue twice over. they have significant resources. it is not like a government, if
we think about a government, because they do not care about the kind of stuff that we care about. they are really just paying their fighters, and they have more than enough to keep doing it forever. they seized up to $1 billion just from 90-plus bank branches that they took. scarlet: right. cam: when this with the cross iraq, so they are running at a surplus. alix: thank you for the time. cam simpson, you can read his full story on the bloomberg businessweek edition. scarlet: the cfo, the impressive. ising up, we will speak loosely to the cofounder of united talent agency. ♪ you used to sleep like a champ.
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scarlet: from bloomberg world headquarters in new york, good afternoon. alix: you are we're watching at this hour. the s&p 500 is looking like it did in the 2011 correction. does that mean the bowls are ready to run? scarlet: despite pricing lower square is acted, jumping more than 60% in its ipo debut. go over to want to the markets desk and talk to julie hyman. puse ine are seeing a stocks today after the rally we saw yesterday. earlier, stocks were lower and now they are higher but it has been a very tight range as we had seen in trading today. there is significant push and pull in the market so if you look at my terminal, you can see the sectors creating that push
and pull. the push downward is coming from health care and energy. energy is falling along with oil. side, the poll upwards is technology, utilities gaining as rates are lower today and consumer staples on earnings news. let's get more details on health care. we are seeing big declines on health care stocks after united health care which is the largest desert largest insurer in the united states says it is scaling back marketing efforts for plans to sell this year under the portable care act and considering pulling out of it entirely. this is one month after it said it was expanding its exposure to the aca. this is having repercussions for the other health care providers as well. united health care says it has to do partially with the cost. health care, the hospital companies are lower and other insurers are taking a hit.
here you have all of them down pretty sharply today. you see that big drag we are getting from the health care group. what is giving stocks a lift? julie: it has partially to do with earnings. if you look at the earnings movers we are watching today, that accounts for some of the better performing groups. that is technology and consumer staples. on the plus side, green mountain coffee rising today pretty dramatically, up 22.5% after the company's earnings beat estimates. revenue fell year-over-year but ahead of what analysts anticipated on the company raised its dividend. in consumer staples, we are looking at smuckers which meet -- which beat demand on coffee and pet food.
everybody knows that cloud computing is hot and salesforce is one of the pioneers in this area and still seems to be holding its ground quite well. alix: thank you so much. in on first's check word news with mark crumpton. mark: thank you, the man officials believe organized the paris terror attacks is dead. french authorities are that he died in yesterday's seven hour rate on an apartment in a paris suburb. he was a belgian of moroccan descent and had been linked to two failed islamic state terror plots in france. the house of representatives is scheduled to vote this afternoon on a bill to block syrian and iraqi refugees from entering the top lawtates unless 4 enforcement officials say they are not a threat. president obama says he will veto the bill. says speaker paul ryan
that baffles him. for more on that debate, phil mattingly joins me from washington with more. eyes good afternoon, all are on democrats, not republicans. how many democrats will vote with republicans on this hill related to syrian refugees? the president has issued a v2 andat -- a veto threat republicans think they can get a vetoproof majority and this is what paul ryan had to say. >> it battles me, i don't for the life of me understand why his veto threat came as it did especially given the fact that his own law enforcement top officials came to congress and testified that there are gaps in this refugee program. pelosi is urging her members to stick with president obama and vote against the bill. there are democrats who have already committed to vote with republicans and several more on
the fence. one thing i have heard from how sources is the administration sent a number of officials to give a presentation related to this program and sent some democrats the opposite way. they are struggling to keep democrats to stay on their side. theseyou can get more on and other breaking stories 24 hours per day at the new bloomberg.com. from the first word desk, i am mark crumpton. alix: thank you so much. scarlet: when it comes to equities, the s&p 500 looks like it did in the 2011 correction which was followed by a multi-year bull market rally. i have charted it here. the first square on the left is 2011. aat you will see is short-term trendline, that is the green line falling below the long-term trendline in pink and harris --bearish.
move. we went higher and then you have the situation now. death cross in late august and bouncing around the 200 day moving average now so if history repeats itself, there could be a golden cross, a bullish signal around here, which would take us into next year. alix: that was fascinating and well done. let's get some perspective. what do you think? are those technical indicators leading indicators? >> we have seen a massive divergence he and the equity market has responded very well the last couple of days. at the same time, you see weakness in the credit market. it was interesting that what's dragging down the equity markets is energy and health care. they are in the high-yield market and they have been pushing down. you see talk about deals getting cold. there is -- some concern in the
credit market that one will have to give an either credit will outperform. does credit lead in this case? >> i am concerned that it doesn't in this case. i look at the credit markets and people seem very there is -- bearish. it's a sign that it could rebound quickly and there also should be relatively little activity for the next couple of months so people buy bonds. think people to are becoming too pessimistic. alix: we have the high-yield spread. that is blowing out and you can see it's about 60 basis points. you also wind up seeing the investment grade yields have also been rising. does that reflect something different this time around? does that reflect that monetary conditions are actually tighter than we think? >> i think it reflects that a
little bit but there's this weird confluence of things and people are getting ready for december liftoff so companies are issuing dividends. it good readget until we see things calm down and normalize. i'm not getting a real sense of credit concerns in the investment grade space away from a few sectors. i think it is a technical that can play out and come down quickly. scarlet: there is a supply overhang coming to market after mark what about the demand side? what do you see in terms of positioning ahead of that liftoff? >> the investment grade space is done well in investment grade credit is an area people like and they prefer to treasuries and high-yield. that is winning out and the extra income is winning out versus treasuries and the high-yield space, the leverage loan space, we are seeing deals have trouble pricing and like in the equity market, anyone who
gets it wrong, is penalized heavily. are trading six points over treasuries. at what point does that spread get you really nervous where it's not just high-yield but it does spread? >> that's exactly what we're looking for is how much does it spread before the names? does it look like it was across industries? we don't see that as much. it is more isolated to the weaker names and the fact that you get weaker names and weaker industries is a concern. we are watching very closely but there are so many bearish sentiment out there so it could turn fairly quickly. --rlet: what is the language what is the linkage between the credit and treasury market? >> the treasury market is fallen little bit out of favor. professional asset managers look at it with pension funds and would rather pick up investment grade don's and pick up 100 40 basis points. liquidity is not a good -- as
good in the corporate space but people are getting used to managing in an ill liquid environment. alix: what's the nature on the general bond market? offertain names of fallen and it creates opportunities particularly in the automobiles were volkswagen drag the entire space down. that was a really good buying opportunity. the other names are starting to do well. we own some of that paper and recommended them at something to look for is the outliers. alix: thank you very much. scarlet: much more coming up on oak what bloomberg markets" in the next hour. we will look at how lofty tech valuations have gotten. alix: gary shilling gives us his take on how much lower he thinks oil will slide. scarlet: e-commerce sales have an slowing even as the companies into theironey companies. alix: we will hear from united talent agency cofounder peter
alix: it is pretty gross out in new york city. it's rainy. scarlet: it looks like a superhero movie. i did that for you. alix: welcome back. scarlet: it is time for the bloomberg business flash. warning to yahoo!, change plans to spin up your stake in ali baba or face a proxy fight from activist investor star board value that says yahoo!
should sell its search and display advertising business. board,tter to the star board said it will look to make significant changes to the board if they continue to make decisions that destroy shareholder value. 's deal has been deemed superior. this is after a weeklong bidding war for the semiconductor maker. themierra has given notice. first-time claims for unemployment benefits stayed near a four decade low and fell by 5000. employers have held the line on firing and one reason is a tighter job market makes it harder to attract skilled workers. you can always get more news and economic data at bloomberg.com. let's go over to our markets desk and julie hyman.
julie: let's start with match.com. allowsbeen off from iac investors to bet on dating sites without having to buy the other also owns on the shares arising 23% in the first day of trading. this company owns match.com and okcupid and raise $400 million in its ipo. it's seeing a good bump in demand for that stock. then there is square. arrange for the stock ahead of time that it sold below and with the gains today, it was still below the initial estimates for the shares. not only that, it's still below where the shares were the last time they raised money in a private funding round. even though we see this big game
today, and that's a success for the company, it still pales in comparison to how much money raised as a private company. it's an interesting situation. i also want to mention twitter. bothdorsey is the ceo of companies and he said today that he is capable of doing both jobs. hese shares are up 1.5% but still has to do some work on that other job. twitter, since the ipo going back to november of 2013, the yellow line is the ipo price. initially, we saw the spike in twitter shares and they have come down substantially since then and continue to trade around that ipo price. there have been a number of challenges that twitter has faced this year specifically with deck cost low stepping down and jack dorsey stepping in and then a permanent ceo. he has been cautioning investors that you will have to wait to get some sort of broad adoption
scarlet: welcome back. streaming services are changing how consumers experience content but also how the stars of those programs find work. scarlet: erik schatzker set down with peter benedek in an interview earlier today. how the changing landscape affects the search for talent. >> the agency business is a
business that in many ways leads the transition or as part of the transition. the agency business at this point is it ordinarily linked to the technology business and as technology changes, the agency business adapts to the changes and focuses on how it can best take the assets that we're involved with and the talent we represent and utilize the changes in technology to their benefit. how do clients and you view the emergence of these platforms like netflix and others? how is that changing the game? >> we view them with great enthusiasm. they are new buyers. the agents are salespeople at the end of the day. it's simple economics. we -- andlers and if
we want to be in a marketplace where there are more buyers. erik: true, but it comes down to what you are selling. lister's awayore a- from traditional platforms to these newer digital platforms? >> i believe so. i believe thousands of people are smart and are interested in experimentation. toit gets harder and harder make interesting movies, that the movie business becomes andntic lock busters academy were oriented films, that there is a middle ground, a place where movie studios are not willing to go where television does want to go which is the area of really interesting longform storytelling. erik: why can't the movie industry figure this out? >> people don't want to pay to go to see the stones in the movie business has become a
business which is much younger, if you will. erik: you say there is a pool of is buyers now but there always creative destruction and if the new buyers are successful, the old buyers will go away and there will not be more money the way it seems there is now to buy at all. >> i don't believe that's true. i believe the network television business is very healthy. i believe the retransmission fees that are a newer part or have become a part of the day way the to networks look at their business has revolutionized to their business in a strange way. i believe the networks still have the largest audience of any of the platforms. i also believe, at the end of show in frankly, a big a television network remains a place where talent to make the most money if they are willing to go down that road.
erik: let's also talk about movies. you mentioned big-budget productions and a lot of them are based on franchises. >> yes. erik: is the movie star and endangered species? >> i don't believe so. i believe the movie star is still a movie star. erik: as much as they used to be? >> if you are asking me whether a marvel franchise can be the brand can be a big a star as brad pitt, maybe the answer is yes. brad pitt is still a gigantic movie star as well as angelina jolie and will the rain is probably a gigantic movie star. is probably ane gigantic movie star. a takes a big start to make superhero in a marvel movie work. upset erik: actresses are
they don't get paid is not -- paid as much as actors, what can we do about that? >> we can make sure our clients get paid as much as the men do. that's the way it should be. this is an area where if you look at sports, at wimbledon, taking tennis, it took a while and i guess it was because of king, but if serena williams wimbledon, she makes the same amount of money as rafael nadal. erik: a couple of your competitors like william morean ris have expanded beyond what they used to be as talent agencies. do you feel pressure to go further beyond your roots? >> we just acquired a music agency, the agency group. we have not gotten into the sports business yet.
i don't know where we will go with that but time will tell. erik: is it inevitable? >> i don't know. i will not say it's inevitable. what caa has done is different from william nomura's -- william morris and others have done. ideaare dedicated to the of being in the business. that's a business we are not and i truly wish it poses a whole both -- a whole host of problems. it's not a business i want to be in but i admire their tenacity. erik: one business you could be in now, what would it be? now, we we are sitting are the leading agency in the digital space and i would want our digital business to continue to grow and flourish in the way it is right now. that's why the essentials of innovation and the agency business and i would like us to be at the forefront of that innovation. scarlet: that was erik
what. you don't have a desk bed? don't be left in the dark. get proactive alerts 24/7. comcast business. built for business. tand that's what we're doings to chat xfinity.rself, we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. alix: from bloomberg well derek jeter is -- from bloomberg world headquarters, welcome back to oak wrote bloomberg markets. french prosecutor confirms
the man suspected of organizing the paris terror attack is dead. was killed during the violent predawn raid in paris yesterday. he was a belgian described as an islamic state operative. he is linked to several other plots that were foiled by french officials. at least two people died in the rate and eight others were arrested. france has extended the state of emergency that was declared after the attacks. the lower house of parliament voted to let the government keep its emergency powers for three months and the government banned the public immigrations and we'll carry out searches without warrants and hold people under house arrest without court oversight. final approval of the extension is expected on friday. democratic presidential candidate hillary clinton is outlining her plan for defeating the islamic state. speaking in new york city today, she says slamming the door on every syrian refugee does not
represent what the united states stands for. >> and more effective coalition air campaign is necessary but not sufficient. we should be honest about the fact that to be successful, airstrikes will have to be combined with ground forces actually taking back more territory from isis. mark: she says she opposes a large-scale u.s. ground war in the middle east. u.s. and iraqi intelligence say islamic state is aggressively pursuing chemical weapons. u.s. officials do not think they have the capability to produce sophisticated weapons like nerve gas but the french are stockpiling and distribute antidotes as a precaution. iraqis say they can develop their own weapons program in secret because of the large territory they control. former subway spokesman jared fogel has been sentenced to more than 15 years in prison.
he pleaded guilty in a deal that imposes lifetime supervision. in his plea deal come's lawyers agreed not to seek a sentence of less than five years behind bars. prosecutors had asked for a sentence of 12.5 years but the federal judge went further with the 15 year sentence imposed today. you can get more on these and other breaking stories 24 hours per day at the new bloomberg.com . thank you so much. alix: it's a big day for some technology news. yahoo!, star what value is asking them not to spin ir stake in alibaba which will present some challenges. marissa mayer is already struggling to turn around the internet giant. joining us now is emily chang. boardf this is star saying your core business is worthless.
emily: they estimate $2 billion baba one analyst said marissa mayer should be fired. others say give her some time. time, i talked to previous members of the yahoo! board who say they need more time and you guys have to be patient. if you look at the core business, there is a big question -- what is yahoo! minus alibaba? scarlet: they are trying to turn things around after treasury hinted -- emily: right, the irs has refused to give its blessing that it won't taxes. they don't think they well that if they spin it off and then tax it, that's billions of dollars that shareholders are on the hook for. alix: any word on other shareholders that agree with star board? emily: i think marissa mayer's
is just on the other end of the firing range at this point. there are many people who were not happy. scarlet: one newly publicly traded company -- alix: it's a mixed bag. scarlet: square is enticing investors this afternoon. match group is also doing fairly well in its debut. will investors want to swipe right? you spoke with joe -- with jack dorsey question mark emily: i saw him on the floor of the new york stock exchange and it's also his birthday. it's a good day for square so far. they priced at nine dollars last night. it was two dollars below the bottom of the expected range and it opened at $11.20 and now it is about $13. we will have to see where closes but there are broader questions about the future of the business. is it a technology business or payment business? he says it is both an analysts say it's a payment processing business and it should be as such. scarlet: it also faces a lot of
competition. more analysis, let's bring in a partner at triton research. same question that emily attended to answer-is it payment company or technology company? >> in terms of payments, 75% of the revenues are from payments but where the technology side gets people excited as the other 25%. they have various marketing services and software and that's were the tech guys are getting behind his deal at a lower level. we will see what happens. emily: i spoke to the cfo of square and we will air that on "bloomberg west" about the other businesses. she says square capital is doing quite well. business ist something that can contribute significantly to the bottom line but it will take some time to alix: would you agree? >> i do and part of the question
of how quickly it will grow is why the deal is priced at nine dollars. there is the element of wall street for silicon valley where silicon valley is focused on headline valuation wall street says show me the money. what you see is wall street wanting to see the profitability. they have seen square has raised $600 million privately. they say now let's do it. they say square has a lock down on the small business market? i zeroed in on international growth and what countries they are most focused on. >> the united states alone, there are 20 million small businesses that don't accept cards. it would just focus on the u.s., it is massive but there are 85 million small businesses around the world. emily: so any countries in particular? >> we have a pilot in australia that we are excited about and will continue to look for the
right market at the right time. emily: we did not know about the australian thing. that is news and that's a tough market were credit card rates are high. i wonder how optimistic he will be about an international square. >> international growth is something people get excited about. payment is a relatively mature business. the real square growth potential is in other businesses like square capital. alix: we have also seen the private market get involved before they go public like fidelity had to write down their investment unsnapped chat. chat.snap >> i don't think an outfit like fidelity has any business being in this space, to be quite honest. i don't think they know how to play the pricing game and when you get these public companies invested in private spaces, you're asking for trouble.
scarlet: traditional mutual look foruld not investment, do you agree? >> i don't. private companies are growing much faster, much larger in the private market. you see the's different investment classes like hedge funds and mutual funds trying to get exposure to growth and they need to invest. what's happening now is that traditionally it was venture capital funds that marked up down,portfolios up or once the quarter kept the metrics tight, you have hedge funds and mutual funds stepping in. saysf a sudden, the world it's worth $16 billion and fidelity steps in and saves worth less. the two sides are trying to work together to figure things out. i think the way the square deal is trading, both sides realize they need to compromise. they need to do their
homework and some of them are but there is desperation to get these hot names whether it is square or snap chat. there may not be as much transparency as you would get in public markets. alix: this is a late stage investment. the yellow line is the late stage investing. if you are an investor and you want to invest in private companies, what do you do when you see square go public for less than the private valuation? it's actually doing pretty well in the first day. >> i think next year will be fascinating. these unicorn companies worth over $1 billion, there are about be $500hem estimated to billion. they might have thought it was not cool to go public but $500 billion in valuation, some of these guys will go out of business and some will stay private and some will go public. watching that dynamic play out in the next year or two will be interesting. scarlet: what is your assessment
of match? we rate all companies based on the fundamentals. match scored lower than square. we were concerned about match and the management. jack in the interview is a charismatic guy. they have a great team. match hasment of barry diller but they are being spun away from them and they are just a hodgepodge of different dating apps with various ceos. our friend from tinder got in trouble yesterday. scarlet: is that a liability now? >> yeah. emily: it was a little unprofessional. about to person who is be part of a public company say things like that? jack how can we praise
dorsey and distance him after that for not being able to do it. is that fair? emily: jack dorsey just got back to twitter, to be fair. alix: some say he will not be able to do and is not the right man for the job and that was the rhetoric and now it square, we say he is awesome. i think jack is done a good job it square surrounding himself with solid executives. sarah frier did a majority of the roadshow. it makes you wonder if jack will step down and let a more experienced person step in. scarlet: i want to go back with the timder ceo said. emily: they cannot be repeated on television. he is addicted to tinder his own sex life and gave details
that you don't want to read about and a public company. scarlet: it got attention but probably not the right kind. tinder.is emily: it was not family-friendly. alix: thank you both so much. scarlet: coming up in the next 20 minutes, just how low will oil prices go? we will give you startling predictions with gary shilling. alix: tori burch was in the house and we will get her take on how to turn around a sluggish retail environment. scarlet: pfizer and allergan are getting closer to a deal that could regulate his break up the potential marriage? ♪
scarlet: welcome back. alix: time now for the bloomberg business flash. it's a look at some of the biggest is the stories in the news now. intel said its 2016 sales will climb into the make -- mid single-digit range for the companies making the case that doesn't need a strong pc market. the interest better growth was 4% next year. intel has seen decline from a declining pc market. its dividend. scarlet: it's about time for exports of swiss watches which sold 12% last month which is the most in six years. the decline was led by a 39% drop in shipment to hong kong, their biggest market.
watchmakers have been hammered by the 11% surge in the swiss franc. alix: one of the most eagerly anticipated records of the year will not be available for streaming. the new york times says the new adele album will not make it to pandora or spotify or apple music. it's her first major release in five years and industry executives expect first week sales to top 2 million copies. businesslways get more news at bloomberg.com. scarlet: let's go to the markets test because there has been much discussion of huge amounts of cash that companies have in a balance sheets. there is a new note from an analyst at credit suisse that it it is masking the profitability of corporate america and julie hyman has details. wang wrote about this and she was kind enough to share that charts. it's an interesting story about credit suites. they argue that return on
invested capital would be about four percentage points higher if not for that $1.5 trillion sitting on corporate balance sheets. the argument they make as if a company raises $1 million and spans only half of that, the return is still judged on the original $1 million even if they don't do anything with the other part of the cash. you can look at the price-to-earnings ratio and isat credit suisse does account for the excess cash. goingve the s&p 500 p/e back to 1996 and the blue line is the price-to-earnings ratio. if you look at it adjusted for the excess cash and look at it considerably below that level and more near historical norms, not an overvalued market but an historically fairly valued market. another way of looking at it is a return on investment if you return the excess cash. here's the return on investment and here it is adjusted up to
14% if you remove that excess cash under this credit suisse model. you look at that excess cash, it's about 10% of corporate balance sheets and was less than 5% 20 years ago. it seems like something that is so straightforward and it's interesting it's not talked about more but it was eye-opening looking at these numbers today. alix: good stuff, thank you so much. how low will oil prices go? it has dropped to the lowest level in three months. u.s. crude stockpiles rose to their highest for this time of years 1930. alix: earlier today, gary shilling sat down with us and he expects to slide lower. >> there's nothing permanent about $20 but that's the marginal cost of producing oil in texas in the persian gulf. we are nearing a price war and that's what this is, it's the
marginal cost that matters, it's not the full cycle cost of drilling a well with all the pipes and infrastructure. it's not the cost to meet budgets for saudi arabia or venezuela or anybody else. it's the marginal cost. the saudi's are basically saying that's what we will do. it's a game of chicken. we will not back out as we have in the past and let somebody else come in and grab our share whether it's other opec companies or russia or american ers.k when opec at their meeting on december 27, their quote it was 30 million barrels a day and now it's more. will the consumer benefit immensely? >> at 85% of the windfall in gasoline price declines has been saved. people have not gone out and spent it and many people thought it would do that and it would spur consumer spending. in tough times, people normally increase their savings rate and
they do it in recessions and have done at this time. you are not really seeing that windfall in terms of spending. andsee increasing saving consumers are way under saved in their assets are lower than they need for retirement. but it's not doing much for the economy right now. you get to $20 per barrel, it will not stay there long. somebody major will be forced to the mat to back out and eventually the price goes up where the average cost will be covered by the price. you can do a lot of damage in the meantime and you got the major oil companies that are borrowing to pay dividends. they think that is so important. scarlet: that was gary shilling. we have breaking news -- the house now has enough votes to pass the refugee bill. we're looking at live pictures of the house boating. they have enough votes to pass
alix: the house now has enough votes to block syrian refugees from the united states. we are looking at live pictures of the voting and president obama has threatened to veto the bill of it comes to his death. we will keep you updated as they cross. as the holiday season nears, retail has taken a turn for the worst. sales in brick-and-mortar stores and online have fallen below expectations. on bloombergs this morning and talked about changing consumer behavior. >> traffic has slowed down
tremendously in the last six months. it's an interesting phenomenon. customer.o entice the they are going to malls now and instead of going to 10 stores, they are going to 2. we are joined by shelly banjo. are we looking for more promotions going forward? >> we are looking for more promotions, certainly. the ceo of macy's said we will have tons of sales so if you are a consumer, good for you, bad for the retailers. scarlet: there is a premium now on experiences and services.you have written about urban outfitters and how they took an unusual step of buying a pizza chain to ask their offerings. they sell some home decorating items in addition to clothes. does that make a difference? people can out eat pizza and shop? >> final think it will right now but they surprised the heck out of people when they said they would buy this pizza chain.
it will probably not make a difference in their earnings near-term but they have the right idea. when he to turn the stores into something where people want to come in and people can experience. alix: is this the amazon affect? we are shopping less brick and mortar and more e-commerce, is this on amazon? >> that's a big part of it. tory burch talks about this phenomenon but there has not been positive traffic since 2012. that's something that continues on and on. these retailers need to do something to figure it out. leads me to the inventory overhang and apparel. slowingws the e-commerce sales and if you come in to the bloomberg terminal, you can see the inventory to sales ratio in apparel skyrocketing. they have to get rid of that stuff so does that benefit? >> it benefits the consumer first of all and there is always the off-price retailers.
there are the kind of stores that end up getting some of those clothes. scarlet: thank you so much. i love discounts. i am so excited. scarlet: now you can find something in season. alix: it's not just macy's but offbrand retailers will do better. it's a different dynamic. scarlet: coming up next hour, we will hear from kkr head of asset allocation. ♪
♪ from bloomberg's headquarters in new york, here's what we are watching. it has the potential to be the largest health care deal ever. could the u.s. treasury department to derail the deal. where are matched and square training out? where is the islamic state getting its money? a look at funding and what the u.s. is doing about it. let's head over to the markets desk. >> i want to start with commodities. there were some interesting calls on c