tv Bloomberg Markets Bloomberg November 24, 2015 2:00pm-3:01pm EST
♪ >> from bloomberg world headquarters in new york and a good afternoon. here is what we're watching this hour. president says they stand united against islamic state. it has been a record year for than $3.4ore trillion. star wars toys are already divorced to be reckoned with. a look at how big a business they are expected to be this holiday season. first let's go to the markets desk. i would rather talk about star wars toys. imagine i will be a shopper of those items. a recoveryn
happen earlier today. all three major averages were nowly in the red and hanging onto gains. investors trying to assess the jetle effect of the downed in turkey. what effect that will have on the global geopolitical narrative as well as the global economy. not seeing as much pessimism or alarm as with baked in earlier. over the course of the session you can see the early declines now have turned into gains. david: what led us back? julie: a lot of it has to do with energy, interestingly enough. have the groups that are on the move, and energy as a group stocks of 2.5%. we still have industry financials on the side. most cyclical groups seeing some pain, the worst performers we are seeing today.
oil prices moving higher. that is what has been driving energy stocks up. still up 2.6%. if there is any risk of a supply constraints that would be good for oil prices with the ample supply out there. and now another big stock that ,as made a recovery today apple. rbc saying that the new ipad pro could add in a 2.4 billion dollars in revenue for the company. it is a larger model. analysts think it will be appealing enough to make a difference in sales. david: thank you. now let's get a check on the bloomberg first word news. mark crumpton has more from our news desk. president obama says islamic state cannot be tolerated and must destroy. he says the u.s. and france must do that together. mr. obama spoke after an oval office meeting with the french president. president obama says he and mr. hollande. .ust do more together
the attacks that killed 130 in paris were an attack on the world itself. hollande will be in moscow on thursday. a u.s. official and a nato diplomat confirmed the plane was in turkish airspace when it was shot down over syria. turkey says the pilots ignored repeated warnings that they were in violation. putin said there would be serious consequences. this is an incident between the russian and the turkish governments. this is not an issue that involves the combined joint task force. the russian foreign minister is canceling a scheduled trip to turkey. he was due to visit there
tomorrow. belgian authorities are chargi ng and suspect with offenses related to the terror attacks. belgian officials are still warning that islamic state attackst's plan to highly populated areas like shopping malls and public transportation. the lockdown on brussels will start to ease tomorrow. the subway and school system will gradually begin to reopen. you can get more on these and other breaking stories 24 hours a day at the new bloomberg.com. for the bloomberg first word news, i am mark crumpton. david: the president left the meeting determined to make a show of unity against islamic state. i want to bring it megan murphy. the ambassadors joining us from our washington dc bureau. you,e start with ambassador. i wonder what your action was this morning we woke up and read
the news of this downed jet. what did you make of it? >> i think it is a serious incident. i think it is a bit like when the chinese brought an airplane down on an island in number of years back. i do not think it is going to be a cause for war or conflict between turkey and russia were between russia and nato. i do not think it is of that order of magnitude in nonetheless it is a serious incident. stephanie to be taken to -- steps need to be taken to avoid it from happening again. the chief responsibility is fact-finding to find out what happened. and they just to make sure that russia and turkey talking. megan: it could not have come at a worse time. had this been prior to paris, we would be in a different context than we are dealing today. in, givenntext we are that everyone is grappling with
trying to figure up what islamic state is doing, what the next move of the, what we need to these kindinst from of barbaric attacks, it certainly heightens tension. we could get on the verge of something that nobody wants to see happen. hopefully we will have cooler heads prevail in terms of what happened. talk about that response. when we were listening to the news conference today there was a lot of rhetoric about unity, about u.s. standing with france. anything new, today, anything strike u.s. know? -- you as a new? comment? thingse are a lot of that still need to be done. our tactics are pretty good. the short-term steps are fine. is i think our strategy still not aligned with the other key players. both on the ground and diplomatically.
going to bet is not possible to solve these problems unless countries like turkey, the united states, and russia in addition to france and other friendly countries online their points of view more than they are aligned right now. i think we have an enormous diplomatic challenge in front of us. if i were john kerry or the president i would convene a session of united nations at the foreignl ministerial level and try to thrash things out a little bit better than they have been so far. the attack of shooting down a russian aircraft just throw a spanner in the works and complicates the atmosphere. that does logically from the fact that we have to do more to get russia and turkey and other interested countries allied with us. not seen aave security council meeting on the subject. we saw john kerry going back and
forth seemingly every other day to try to release principles to the table. is there any fatigue in washington? i think there's tremendous fatigue in washington, but i think it is political and diplomatic fatigue. struggled toe understand what our strategy is, to combat islamic state, people are wondering how are we going to get this alignment? how will we get russia and friendly allies into a coalition that will make meeting will change -- meaningful change with what we are seeing a? ? what will it take internationally to get the fiscal will and the diplomatic will to change that? sumlin contenders on the i say we have no physician. what the president is saying is we have a clear position. we need people to coalesce around this. we do not think this will change things, but what we do need is better and more targeted airstrikes for better intelligence and a combination of how we can get listening and
figure out where the next move may be. but we are a long way away from a unified approach militarily and diplomatically for sure. said, we don just not want boots on the ground, but i think the same analyst and others would agree that somebody's boots have to be on the ground. if not the united states. so the question is are they going to come from? one of the possible sources is from turkey itself. other is kurdish forces. but something has got to be done to be of to meet these people on the ground. after all they have lots of forces in syria and iraq. a control of the territory. there has been a lot of talk about intelligence sharing. that hasthis group access to intelligence. d.c. that expanding in the near nature?
-- you do you see that expanding in the near future? as far were worked out back as 1952. originally had to do with sharing of signals intelligence. it has basically been into english speaking peoples. it is a very exclusive intelligence club. i think the decision has been made to share intelligence and that kind of a level of sophistication with friends. -- with france. biting -- inviting countries beyond the five to join the group. but sharing intelligence is very important and i think france will put it to good use. thank you very much. the former ambassador to the u.s. coming out with the authority associates group, and our bureau chief in washington. coming up in the next 20 minutes, the megadeal between pfizer and allergan pushing mna to a new record in 2015.
david: welcome back to bloomberg markets. it is time for the bloomberg business flash. abu dhabi is said to be considering a sale of all or part of the semiconductor factories. it comes as they review their largest industry. early development has had talks of potential acquirers. it could value the business as high as $20 billion. the company initially announced free ins to go cage july. other companies going cage free includes mcdonald's, burger king, and starbucks. and the dow list saying hello, and music lovers said all by it. -- fidel said hello and music lovers said i will buy it.
you can always get more business news at bloomberg.com. now back to the markets desk. julie: we have some companies trickling out with earnings report. about 7%.n sharply to this is a company that makes dental products as well as animal health products. normal health products. they said they had higher health care planes claims. other serial related post holdings. sing estimates by a wide margin. units beatfail is
estimates. but causes an increase in the shares today. signet jewelers limited owns jared and kay is shifting customers to jerod and kate because of the mix of products. they also had their annual forecast -- cut their annual forecast. david: thank you. breakinga record year. emily deals keep on coming. over $970r billed billion valued at about $2.5 billion.
this is a year of superlatives. go through a few of them. the latest in a long string. >> we have had the biggest beer food merger,iggest we are breaking records ever where we look. david: when you look at the motivations, interest rates and low, what other motivations? financing is so cheap, and organic growth is very hard to come by. so a lot of companies and the only way he grow his by acquisition. that is why i think we will see a lot of deals in 2016 because neither of those things has really changed. companies are not growing, and it of the fed raises rates we will be looking at pretty cheap financing. david: when you think about growth happening in that fashion are people optimistic about how it is proceeding? >> a lot of the ways the
company's these deals work is with synergies. that means a job cuts. you are looking more profitable by firing a bunch of employees. i think that is a question we're going to have to answer. looking ahead to 2016, and version is getting more and more scrutiny as time goes on. is that going to be an absolute -- obsolete portion to dealmaking? >> we have not seen as many conversions as we did. you will still have inversions because with the treasury has done so far is not really going to deter companies from pursuing them. it will make it harder to structure it, but a lot of the appeal of doing an aversion is there. there's nothing prohibiting companies from doing it. you will not necessarily see the scale of pfizer and allergan. it will be more smaller companies, maybe not facing the same kind of little push back. we survey sectors
going into 2016, are there any begging for more mna? when you look at energy, communications, is there room? i think pharma is not done, surprisingly. looking for targets. energy, more people were expecting deals to happen, and we did not see us. that could be a place to watch next year. but some of these under interest is where we have had big deals like time warner and charter, still potential opportunities. what will happen to t-mobile? david: thank you. still ahead of bloomberg markets, what should investors expect after the fed hike? one strategist says not much. we will get a market outlook for 2016. ♪
stocks in 2016? the chief equity strategist says that equity markets would be flat. he explained why on bloomberg . >> the evaluation is at the high end on a fair range of values. that is number one. number two, higher rate environment. a higher rate environment is more likely to result in a lower multiple which would basically offset what earnings growth is likely to take place. the bottom line is the reason there is a flat overall u.s. stock market is because the interaction between higher results and multiples in a flat market. déjà vu all over again which is what we had last year. and more of the same for next year. green with the fed, you disagree with the markets. you see the same gradation that janet yellen says we will get. why trust her rather than the markets? >> my responsibility is to
forecast the u.s. stock market, and my friends and which are the ones who have the policy. inflation is starting to increase, not any rampant fashion, but you up wage inflation likely on the horizon. even increasing and housing an apartment rental rates. those are inflationary drivers that would give the green light for the fed, which begins hiking december,ation in raising steadily into 2016. drivers for why they may move higher. that's more consistent with a flat u.s. stock market. >> what is that going to do to etf growth? in december, we could see more private equity ion.ress growth numbers are not looking good as it is. it seems like it will only get
worse. >> the u.s. economy is growing. a baseline is consistent with revenue growth, what leads your topline sales growth, and sales growth is what is happening and higher earnings. earnings for 2016 will be $120 s&p 500 share. earnings left by 80% this year, so the profits of energy companies are down a lot. next year earnings will come back a little bit. >> why would they go up? >> the economy is growing and oil prices and revenues were at the rate of change that has been so dramatic break $100 last year and $50 this year. we will be around these levels. flat earnings.ively >> overall the stock market is
likely to be growing in terms of value. what will outperform it not environment? some will be up, some will be down. >> a way to think about this is a bifurcated market. a split market. while the overall index will be flash, there are certain themes or splits in the market. one example would be u.s. companies that sell domestically , outperforming those that sell internationally. >> you want to be smaller rather than larger? >> unnecessarily. stocks. to be mega-cap companies tend to have more domestic sales. the valuations of those reflects that. stronger balance sheets versus weaker balance sheets. one of the steady characteristic is stronger balancing stocks
tend to outperform. me could bee growth nurses value. economic growth as modest, around 2% without would be consistent with growth equity doing better. in a scarce environment, seeking growth. you think our growth as a value, versus international, the select kind of splits. the market will generally move sideways. david: that was goldman's chief equity strategist. still ahead, we'll look at how the market is responding to the geopolitical turmoil in the middle east. ♪
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let's start with the headlines on a bloomberg report for news this afternoon. mark crumpton has more. obama says the downing of a russian warplanes by turkey underscores the difficulties caused by moscow's military operations in syria. any joint white house news obama addressed the incident and said turkey has a right to defend its territory and its airspace. the u.s. defense official and nato diplomat confirmed the plane was in turkish airspace and it was shot down. the suspected ringleader of the harris terror attacks was believed to have been planning the french capital again less after.week he was targeting a major business district in paris. he was one of three people killed in a police raid in an apartment on a northern paris apartment. if you're traveling is hard to -- holiday weekend, wait times in u.s. air route.
checkpoints are already up, and now after those attacks in paris in the downing of that russian ,aris plane -- passenger plane they will be facing a gauntlet of bonds sniffing dogs, and the prospect of longer lines. turmoil overseas is hurting president obama at home's approval ratings have slipped back under 50% in the latest abc news washington post survey. the handling of the terrorism threat has led to a new low of 40%. get more and bloomberg.com. from the first word desk i am mark crumpton. david: thank you. let's take a look at some of today's biggest movers. copart futures had their biggest gain in six weeks. advancing a little bit higher. the prices are still heading for a third straight annual decline.
the news of the russian jet sparked a demand for he that assets.- haven spell this out for us. when you have an incident like the one we sauntered to morning what affect skin that have on oil -- can this have on oil? the regions we are talking about, whether it be syria or turkey are not big oil producing regions, but what is escalation, and what happens if we see large oil-producing regions involved in this conflict? david: when you look at the relation between russia and turkey, we think about pipelines . does that stand to suffer? peter: i cannot imagine turkey a russian jet is
going to not chill relations. prudence had a stab them in the back. it will chill relations going forward. david: going into these meetings on december the fourth, there was not much they were going to do differently. what you expecting on this meeting? about nothing. we have heard talk about saudi arabia particular, then leave member of opec saying we will curtail relations with non-opec companies. but there is no plan to do this. it is more jobs than anything else. talk in this instance is cheap. david: keeping prices low, going after u.s. shale production. peter: that is for the strategy since last year. they are increasing production to gain market share. the people who get hit our offshore players and areas like canada. both ultimately have to be
permanent to some degree. so we will see damage in the strategy in 2016. david: where do things stand with other producers who are trying to engage with opec? venezuela getting hit hard and they are asking for meetings with trying to get them to come to the table. peter: opec killer lee has people -- clearly has divergence within the group. the reality as it is not a steady rate of interest to cut production right now. david: we have this nuclear accords that could open the way for a lessening of sanctions on that country. that could really change the oil market. gives us a sense of how big it could be. peter: we could go to one million barrels a day. and what iran has said is was the sanctions are lifted they are going to love the market. they have been out of the market for several years and from an economic perspective there is a
device to bring the production out faster and quicker. that is additional supply that the market is discounting, but will be vastly oversupplied. david: thank you. up in the next 20 minutes of bloomberg markets we examine the political pressers -- pressures facing the president at home and abroad. and it is not just fans looking forward to the latest star wars movie. --the is expected just disney is expecting to sell $1 billion of related merchandise. and why diversification may not be better on bloomberg tv. ♪
david: welcome back to bloomberg markets. it is time for the bloomberg business flash. unexpectedlyidence declined in november. now the lowest level in more than a year. the lowest since september 2 thousand 14. while consumers were less upbeat --ut the labor market given 100 64on has speeches to real estate and insurance companies after leaving the white house.
that is based on an associated -- announcement of record. freshors shaking off some geopolitical tensions. local travel warning is weighing on transports today. julie hyman has the details in our spider sector report. davidjulie: take a look at the a transport etf from spider. it is up offense lows of the session. thanksgiving travel, many have the tickets well aheadjulie hymn our spider sector report. davidjulie: of their travel. at the domestic
carriers. she said they should outperform those that do not do much transatlantic business. her commentary on this see these sharply down. , concern over what these kind of travel advisories global terror concerns will mean for people traveling. one more concern that is not helping cruise operators today, the rise in oil prices. up for the second day in a row, seeing its biggest back-to-back games since september. it is also links to the downing of that russian jet in turkey
and concerns of what that will do to supply. that is weighing on the transportation stocks as well. david: thank you. president obama and the french areident say they determined to hold in unity. >> i do even more together. assistance has supported recent french strikes in syria, and we will keep nothing up that coordination. david: the meeting of the two world leaders faces the political rushers they are facing at home and abroad. i know you are watching this news conference today. we have president obama reaffirming the friendship between the two countries great remembering some fondness a trip they took. what was new about what they said today? tour to checkis
the temperature of not just the united states but other world a courseand it comes the shoot down by turkey of a russian language added an -- plane which added an element of uncertainty to an already unpredictable situation. there is no certainty of what france seems to want and what the united states seems to do. no fundamental attempt to change what is going on to combat isis. and the tracks are clear. for airstrikes and better intelligence sharing. trying to accept a series future does not include a size staying. the french are mortgage russian involvement in the united they, but both presidents seemed to say what we need is russian involved, and a future syria that does not involve inside -- bashir al-assad. david: the strength and foreign policy and terrorism is a bit
diminished. easy trying to reclaim that by putting on a stronger front? >> despite being the most political president, he is less worried about his whole numbers and trying to leave the united o numbers- pau and trying toll bring the united states to a good place. trying to turn of the law enforcement and military action. look at theyou appetite for that in washington do you see much unanimity with what is going on on the hill as well? the house voting against this refugee package. when it comes to enhancing security is there unanimity? are in aause we political season and so much of the rhetoric is coming from both congressional republicans who
are opposed to the president reflexively as well as the presidential candidate i do not know if you can find unanimity in the rhetoric. there is divisions in both parties about what the right thing to do is. in terms of refugees there is no doubt that part of what animated the rhetoric is a strong belief that what america must do stay true to its values. it was was that he felt too much was done in the wake of 9/11, including the invasion of iraq in? away from its coal-fired -- core values. is trying to figure out how to navigate syria, how to navigate dealing with isis without losing sight of his view of what makes america strong, including its ability to screen refugees of the a country that takes a refugees who are in danger for their lives. david: you bring a presidential candidates and we had chris christie today talking about
9/11, his experiences. talking about how "the current with atration is to deal terrorist attack like that. i am struck by how foreign policy has come to the for hearing what happened in paris. suggested fourve months that's national security and isis were on the top of the list of issues they cared about. the sensitivity is no shared by large numbers of voters in the wake of paris. we'll be an issue and the candidates understand the reality that if they want to be out of the conversation, if they want to be covered on the news they need to be talking about this because this is warping everything else. the country is not completely rallied around them, and we have a lame-duck president so he is not worried about election. but he is worried about shipping the debate. he will be weighing in forcefully if he thinks the contours of the debate in either party were both hardee's is going off track even though he
himself will not be up for reelection. david: thank you very much. join them tonight as they take ofin-depth look at the wife ben carson. coming up on bloomberg markets the latest in a lead of the star wars franchise will open in time for christmas, and that is helping to drive a major move in holiday toy sales. ♪
-- earnings report after they split on november 1. joining me now is cory johnson. goinvestors and analysts through this report are they going to be looking at these as two separate companies or not until the next? cory: we will get results that reflect the performance of these companies as separate entities. you have hp ink which is the company that is the old boring business of computer printers and printer supplies. and then hp enterprise is supposed to be the sexy part, the commercial systems and software, the armies of consultants that will arcana telecopy what they should be doing. that is thought to be the exciting part.
the pc business, we have been getting signs they are reaching the bottom. i wonder if that is going to carry through. we do not see these results and a lot of places. dell is now a private company. this will be very interesting to look at these results and see what is going on in the world of pc. it is worth noting that the cash flow that this business has had in the last three decades has been all about selling paper and selling ink for the printer business. so the steady cash flow, it will be seen as a stand-alone business because most of the data is with enterprises. david: thinking about how little a user printer in my daily life i wonder what kind of future hp ink has.
cory: i think it is a fair point. we are part about the death of the printer for a lot more. but we see in a shift to mobile finally a decline in the printing. would have less ink being consumed which is an important thing for them to support those big levels of debt for this company. a few results are also was -- are also excited because of the restructuring. going all the way back to 2001. akin to building a new house and saying you want to remodel the kitchen. thiswill see what
continuing story of restructuring the job cuts will be. david: when you look at hp enterprise, who are the big competitors? cory: i do not think that is the competitive set. the competitive set for this company will be companies like bel, oracle, it is going to the slingers hardware. cisco. interesting to see if they haven't year-over-year decline of what they are selling and both in terms of what they've done for the last quarter, and their greatest going forward. david: thank you. anchor of the bloomberg advantage on bloomberg radio. be sure to turn in for a conversation with jeff bezos. after star wars episode three hit theaters in 2005 star wars jumpedes dropped -- a
800% from the year-earlier. star wars theme toys are moving to be a force to be reckoned with. we dig into the star wars toy invasion. >> the force awakens and the dark side returns during this holiday season. billiont evidential $1 -- evidential $1 billion in star wars toy sales. toys "r" us is ready for star wars fans to storm in. driver fora huge consumer products at the toy industry overall. we see great sales now and we a huge peak around $12 december 18. >> richard airey an
unprecedented star wars rollout. init started to years ago planning and earnest what we have executed in the stores. we have more than doubled our space and the majority of our stores. >> toys "r" us is packing his shells with historic characters like a reintroduced r2-d2, and a reengineered unit with robotic technology. along with new characters only teased in trailers. >> star wars is the biggest property inventory in the toy industry. we're talking 1.5 billion worth of toys sold. >> they spanned generations. >> you will see five-year-olds, and 50 and 60-year-olds, collectors from the 70's that neither action figures -- need their action figures. >> toymakers have grown and
looking to profit. >> 100 licensees. hasbro, lego, mattel. trigrams asknown well. >> not a lot of people have heard of them, and they are in everybody's radar. you're lucky if you can get it. >> the millennium falcon drone is another hot toy. >> that will be sold out. >> retailers are positioning themselves to be the destination for star wars toys. toys in the star wars franchise, the place to come is toys "r" us. to starthe countdown wars and christmas, retailers and toymakers will be battling for customers, hoping the force will be the -- with them this holiday season. en guarde.
from bloomberg world york, goods in new afternoon. i'm scarlet fu. the markets open down but make a come back only to give back gains once again as traders weigh the impact of turkey shooting down a russian fighter jet. go runningout to with the bulls again? by that company could be in for a huge share again thanks to the ipad. and the stocks to own for 2016 -- why technology could be the portfoliofing up your in what has been a flat year for the s&p 500. first, we are about one hour away from the close of u.s. trading. we need to check in with julie hyman. pretty much holding onto gains, but just rarely that comes to nasdaq. julie: the dow has been the leader through out the day's and things turned