tv Bloomberg Markets Bloomberg November 24, 2015 3:00pm-4:01pm EST
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 positive, the
leader but very slightly. it is very much back and neck with the s&p 500 as investors try to assess the downing of the russian jet in turkey and what the implications will be for the global political situation. if you look at the dow as one example and movement throughout came in the news premarket session when we saw -- when we saw stocks fall sharply. so that's quite a turnaround and now it's up i-35. if you look deeper into the s&p 500, it's still looking mixed on a group like group basis. utilities and consumer discretionary's have been the worst-performing group and energy has been the best performing group and that has to do with oil prices, also because of the events in turkey. is some speculation that
it could lead to crimping of supply and because there is such oversupply, any talk of that is driving up prices. those are some of the big cap oil movers we are seeing. is kind of the regular story we see with oil. what are some of the standouts in the other sectors? julie: some of the standouts are the big tech stocks. facebook, alphabet, aka google. amazon had been rising and closed a record yesterday. many of the cap tech stocks have been outperforming as of late, so those are the companies that are pulling back today. you very much. we will check in with julie on some individual names. we want to get to a check on the headlines with mark crumpton at our news desk. u.s. military said it
heard communication between turkish and russian pilots in the moments before turkey shot down the russian fighter jet. a u.s. spokesman confirmed turkish pilots issued 10 verbal warnings to the russian pilots and the russians did not respond. turkey contends the russian plane entered its airspace, but russia claims the plane was in syria when it was shot down. withjoint news conference the french president, president obama says turkey has a right to defend its airspace and called on the two sides to engage in dialogue. , likeent obama: turkey every country, has the right to defend its territory and its airspace. i think it is very important right now to make sure both the russians and the turks are talking to each other and find out exactly what happened and take measures to discourage any kind of escalation. mark: meanwhile, the russian president meeting with jordan's king dela, called the incident
and "stab in the back." belgian authorities have charged a fifth suspect with terror offenses relating to the paris attacks. authorities are looking for one person seen with a fugitive two days before the attacks. the terror alert in brussels has been extended for a week. the locked down there will start to ease tomorrow. the brussels city subway and school systems will gradually start to reopen. a health official in liberia have recorded their first ebola death since july. a 15-year-old boy who was confirmed positive for ebola died last night. he was the first ebola patient in liberia since it was the clarity ebola free for the second time since set number. traffic deaths in the u.s. spiked -- some of the reasons include texting, distractive
driving and lower gas prices. pro-dex 42 million people will drive 50 miles or more over the coming thanksgiving holiday weekend. can get more on these and other breaking stories 24 hours a day at the new bloomberg.com. i'm mark crumpton. scarlet, back to you. scarlet: we have breaking news at this hour -- the federal reserve setting tougher standards for examiners of large u.s. banks following criticisms by lawmakers that the agency has been captured by the lenders it supervises. we are talking about new minimum operating and documentation lawmakers have questioned the quality of the said's supervision. we want to fold this into our conversation about markets. the s&p 500 is coming off its best week of the year. with a potential rate increase on the horizon, should investors caution?ding with
ass.ing me now is martin s you just heard the headlines i gave you. does that make banks more or less attractive to a value investor like yourself? i think there are some more important factors, particularly interest rates. higher rates tend to help the banks and most are sensitive and will get spread widening as a result. is going to be a big issue coming up. in probability the fed hikes december. what could surprise markets and make it vulnerable is with the tightening of the labor markets could be more than
expected and last longer than expected. shallow thaness projected? market ise futures pricing it in at 60 basis points and we are looking at more like 100 basis points. we feel like we could see 100 basis points a year as the fed normalizes policy. what does that mean for the stock market? martin: i think it is a bit fragile on the short-term. we have had a broad bull market and i have been delighted to participate in it. i think one needs to be much more select of. one can't just change -- one can't just chase momentum stocks. we have narrow market breath in
the -- market breadth in the market. of past times that became difficult. prior to the telecom crash, we had that kind of situation. i remember the nifty 50's stocks that preceded a crash in the market. i'm not predicting a big crash, but i think things will get more challenging and investors should focus on high conviction stocks that will show growth well in excess of the markets. are there seems among those kinds of companies or are you looking at a bottom-up respective? martin: sometimes bottom-up, but sometimes a theme emerges. one of our themes of health care. health care stocks had gotten beaten up about -- after hillary's tweet about health
care. there are some leading names like allergan, for example. now it's going to become pfizer. at about 10g now times our estimated 17 pro forma earnings. trade that 16.5 times. the yield will be 4.9%. there's a real disconnect in value. the same with mylan. rejected a bid of $82 a share and now the stock is $50. one -- all ofer those stocks are going to grow
double digits. sensitive to the economy or the emerging markets lowdown. scarlet: what is considered a safe haven? stocks are safe havens in the sense that they are not sensitive to the economy or two interest rates. it's really going to be driven by earnings. ,carlet: and of course consolidation. last year at this time, you told bloomberg there are several sectors ripe for consolidation. what is your call this year? martin: where we are seeing some interest besides health care -- there's also going to be a big high-back which is supportive of stocks and free cash flow, suppliers to the telcos and cable companies -- we have had a
slowdown but that is going to re-accelerate starting in 2016. some of the stocks are really cheap. have an announced acquisition of pace. that u.k. company is sort of an inversion. accretiveny will be to their earnings and diversify nationally. they will be buying back stock and delivering. the bnst closed on division. you have two companies that have consolidated and are getting scale and strength from that and are not being appreciated in the marketplace. scarlet: in more than four
decades of investing, you have helped to launch and nurture some hedge funds. these different companies and investments, do you go for the concept or do you go for the person? martin: it's a little of both. it's more the strategy, which we look for differentiated strategies that are non-correlated and provide real diversification. management is always to glee important. andnage a hedge fund myself a mutual fund. team is the equity team and that is my passion but we also incubate other companies. scarlet: i look forward to seeing you again soon. we have much more coming up in the next 20 minutes. with $234ompany billion in sales last year does
not misfire, but their push to make shopping more precise may have backfired. we explore as black friday approaches. nato's next steps? the former ambassador to nato, nicholas burns, gives us his take on this tense situation. just hadtock market its best week of the year but his office records set in may. we will look at whether equity valuations were -- equity valuations are on target or over evaluated. ♪
propose new rules that would put high-speed trading under fresh scrutiny. they want a new registration standard that would affect as many as 100 firms. biggest up to oversee automated trading. i booed. b is said to be considering a sale of all or of its its semi--- semi-conductor company. they have held early talks with potential acquirers. in another deal in the semi conductor industry, micro city has one a war for sierra. solutions with through its own offer, ending a month-long contest. semi-conductor makers have pursued mergers at a record pace this year. you can get more of that story and other business news at
bloomberg.com. let's stay with the tech sector and turn to apple now, the world's most valuable company. shares giving a list today after one analyst suggested the new ipad pro could unlock $2.4 billion in extra revenue for the company. he's keeping his $150 price target, arguing the stock is undervalued thanks to their cash pile and the potential to gain more market share in smart phones and tablets. the softwaremember protocol that was supposed to revolutionize retail? after was lodged two years ago, the technology that could make it possible to get precise coupons on your phone as you shop pretty much a old. what happened? joining me now is our bloomberg reporter. you experimented with ib can when it came's out -- when it
came out. what was your impression? >> i set up my phone when i walked into macy's, got a message that said welcome to macy's, walked around for a while and got another message that said welcome to macy's. it seems likeand a lot of people are getting the same sorts of experience. seen to be something a lot of retailers would pick up and it doesn't look like as many as expected have. scarlet: how come there hasn't muchas many -- as happening with it? josh: it's not clear what consumers would get out of this. it is one of those things advertisers would love to send you a coupon when you are standing in front of the thing you might buy. it's not clear that we as people who own phones want that, so i think there has been a question about what value it is going to
bring to someone. personally, i think it would be kind of creepy. josh: this has been a big problem. a lot of people describe it that way. one person found that it could only send one message essentially from an app ever and once it sent a second message, people started -- people stopped using it. there's also a question about the technology behind it. you have to have the app and a lot of people have downloaded the macy's app. some companies have tried to use it by using more popular apps. the other thing is you have to have the bluetooth turned on. it's not clear how many people do that. there are widely divergent numbers. does it saywhat about the prospects of apple pay?
that is something else apple has tried to venture into and has not hit a home run. josh: i think there's an interesting parallel. mobile payments follow a similar pattern. people in retail have been saying there's a future for a long time. apple introduced its version and now people are asking what is it? why do i need it? it's pretty easy to swipe a credit card. scarlet: it makes you think twice about buying something these days. in thehead, stocks are green after a roller coaster trading day. we're going to look at options next. ♪
shire is preparing a new offer for best salt the -- four that's four baxalta. the two had been in talks before but it did not end up working out even know shire has been acquisitive of other companies. let's turn to today's off -- today's options insight. on this holiday shortened trading week, we have a lot of news on the geopolitical front, so we have seen a little volatility coming in today because of that. seem there's a lot of concern at this stage of the game. what are you seeing in options? >> we are seeing two times the amount of puts being traded
against calls and staying in a tight range. people don't see a big move from tightstaying in this trading range we have seen for the last couple of weeks. to your want to turn trade of the day because that is timely as well, talking about oil and oil producers. linked been rebounding in part to what has been going on and the upcoming opec meeting. i get the feeling you don't think it's going to last? kevin: i don't think it's going to last. on a day like today when a russian jet is shot down, you would expect oil to explode around 15% or 20%. that producers have rung out tons of cost across the board. how much more can they wring out? coming from earnings season, $50 a barrel, and we have been below
that and we could be below that going into the future. we have the ceo of bp saying he sees lower for longer. you want to get into the smaller names and exploration and production companies. so this is an etf with a basket of 64 oil and gas exploration and production companies. that's important because if you look at the major etf, 30% is exxon, mobile, and chevron. diversified. kevin: exactly. this is the way to play it. i came up with an option straight it's real simple. out to35 put all the way april of next year. it gives a couple of months to let the trade shakeout and let producers go bankrupt.
we have seen 37 oil and bankrupt -- oil producers go bankrupt. that could be telling because wells are more efficient. julie: we do have breaking on cosco. , andding to the cdc outbreak of e. coli has been salad to cosco chicken and as of november 23, 19 people have been infected. people have been hospitalized, no deaths have been reported. rotisserieemoved all chicken from its shelves and the stock is taking a leg downward. we will bring you more as soon as we have more information. ♪
crumpton. mark: a u.s. defense official in washington and nato diplomats say a russian warplanes entered turkish airspace for turkey shot it down. acrossne reportedly flew a two mile section of turkish airspace, meaning it was only there for a matter of seconds. russia disputes that with vladimir putin saying the jet was flying .6 of of mile inside the syrian border. the suspected organizer of the paris terror attacks is believed to have been planning to get the french capital again less than a week after the november 13 violence. that's according to a french prosecutors who said he was targeting a major french district. he was killed during a police raid in a suburb north of paris. and other islamic state attack involving a suicide car bombing targeting a hotel in the northern sinai region of egypt. seven people were killed,
including two judges. the attack was the latest violence in the peninsula. for policeman and a civilian were among the dead and at least 10 people were wounded. the president of tunisia has declared a state of emergency and imposed a curfew after an attack on his presidential guard. at least 12 people were killed and dozens wounded in an illusion in tunis. did in an explosion in tunis. funny 7% of americans, or 66 million adults say they have been addicted to painkillers or know someone who has. clips in cars are crashes as the leading cause of accidental deaths in the u.s. these andt more on other breaking stories 24 hours a day at the new bloomberg.com. i'm mark crumpton. scarlet: thank you so much.
we have under 30 minutes until the close of u.s. trading, so we need to check in with abigail doolittle live at the nasdaq looking at the leaders and laggards in today's session. the leaders here is dollar trade, having its best day since the company beat revenue estimates. they did miss earnings estimates driven by higher mix of low-margin family dollar products. this stock has been dogged by liquidation integration issues for six months, but this could signal investors think these problems are coming to an end. turning to two stocks moving down -- priceline and american airlines are down on the state department global travel alert. these companies share something in common -- significant revenue u.s. d from outside the
this could mean these stocks may domesticorm with more revenue and after today, that possibility is stronger with both priceline and american airlines trading below all their major moving averages. abigail doolittle reporting live from the nasdaq. as mark crumpton has been reporting, the french president and president obama declared unity in fighting islamic state today. complicating matters is turkey downing a russian jet which has complicated the international campaign against islamic state. erik schatzker spoke with the former u.s. ambassador to greece and former u.s. ambassador to nato. >> it's going to be interesting if they can convince president putin to turn airstrikes against islamic state. the russian airplanes were not
flying anywhere close to islamic state this morning. in fact, the turkish government had worn the russians in the last several weeks that they had been bombing syrian turkmen villages those to the turkish border. so the russians continue to direct most of their airpower against the enemies of the assad government. not the islamic state. that's a major problem for the coalition. the foreign minister canceled as planned visit to turkey. perhaps that shouldn't surprise anybody. but the language from vladimir putin was especially strong, terming this a stab in the back by the turks. what does that tell you about how they are going to handle the situation in the weeks ahead? the russians are not transparent and not open with their public. they have been trying to convince the public their air operations were going perfectly well and denied any civilian
casualties. i doubt the russians would be open or even tell the truth. they obviously have 24 domestic reasons, act in a tough-minded way. everything will depend on whether the turks can convince the world community that the russian plane did enter turkish airspace. erik: how hard is that to do? guest: it shouldn't be difficult. they are tracking their own fighters and they are to have the own, and if not video, they ought to have radar to establish the position of those airplanes. if they can do that, the united states and other nato countries are going to have to support the right of turkey to defend its own territorial airspace and its own sovereignty. warned theave russians a multitude of times not to cross the border, which the russians have been doing.
and here is the balance -- it is in the interest of everyone not to see a repetition of this and see an escalation of the conflict. i think the united states would asking themcenes be 2-d conflict their operations and have transparency between their airports -- there are forces. which country can prevent most meaningful role in preventing this situation from escalating? guest: turkey and russia, of course. aen that the united states is nato ally of turkey and we are in communications with the russians, we are well placed to do that. to make the point to president putin that he needs to control his air force and keep them out of the territory of other time,ies, but at the same openness and transparency where the militaries are talking to typeother to prevent this
of incident -- no one wants to see an escalation. it is dangerous and does weaken the fight against islamic state. scarlet: that was nicholas burns speaking to erik schatzker. and one more note -- bloomberg news published a story about the stocks with the most to lose should tensions escalate further. includes russian energy companies as turkey is russia's second-biggest market for export. other companies include the russian search engine. you can see the reaction right there in the late hours of u.s. trading. coming up in the next 20 minutes, what are the best stocks to own for 2016? his opinions share and here's a hint -- they are largely in the tech sector. hedge funds specializing in distress debts are having their worst year since 2008.
scarlet: good afternoon and welcome back to bloomberg markets. i'm scarlet fu. it's time for a look at some of the biggest is the stories in the news right now. u.s. bank profits rose 5% from a year ago. banks earned a little more than 40 olein dollars according to the fdic. cookingbig and the day and the packaged food industry. tentacle foods has agreed to buy older brands and a deal to add gluten-free baked goods and very free spreads. it aims to make the brand more appealing to millennials and other can imris seeking natural and organic goods. shares rose today on news of the
acquisition. another lookking at the uber drivers arbitration agreement. california drivers are demanding 57.5 cents for every mile logged and want to be treated like employees. if the court decides trimers can disbursement, it could go up by hundreds of millions of dollars. you can read more on that story and other business news at bloomberg.com. int is in store for stocks 2016? the chief equity strategist at goldman sachs believes equity markedly flat. but he believes other companies are poised for bigger growth. google -- yett, starbucks. they have one of the rare
investment category -- characteristics, to get margin tire. >> when you think about visa and all the disruption in that business. david: when you think about these and the strength of the balance sheet. mike analyst colleagues and where they are finding margin expanding opportunities come a can be different drivers of that. domestic revenues -- we talked earlier about why for king markets and stocks that will do well and stocks that will do less well. growing, theomy stronger dollar and not having to contend with export competition. ,.s. bancorp, wells fargo there's a lot of characteristics we are looking for. >> everything you have mentioned is a service company, not an industrial. thed: that's one of
characteristics we picked in our basement. the transcripts of the companies from their quarterly conference calls. one characteristic we found is the idea that the consumer is strong but the industrial facing businesses are showing signs of contraction. that's the management reflecting demand for their products. that there's less demand for oil services or oil spending. that is capital spending revenues for the industrial companies. point, there are a lot of industrial companies having more challenging environments and less revenue growth and margin expansion opportunities. >> we know what you love. what do we want to avoid? david: weaker balance sheet companies. >> is there ever a year you are looking for a week balance sheet? but for years, you had extraordinary outperformance,
one of the most steady outperformance and the reason was, if the fed was keeping rates low, that was enhancing the opportunities, but that's not the environment we want to be in. .hat was the 2015 story he wanted to shift from a weaker balance sheet series of multi-your outperformance to stronger balance sheet companies. you are saying avoid weak balance sheet companies and industrial. are we really just talking about oil companies in the west doing the shale play? david: companies that are driving most of their revenues from international is a challenge. it's a challenge with a dollar that's likely to continue to be increasing. scarlet: that was the chief u.s. equity strategist at goldman sachs speaking this morning. let's stay on this theme of what
is ahead for 2016 and look at where valuations and earnings are right now. joining us right now is joe weisenthal to give us a preview lix will beand a talking about on "what'd you miss?" end, the overall headline was not very good. everyone knows it was dragged down by the weak dollar. the strong dollar. joe: excuse me, the strong dollar. people are coming out with their forecast for 2016. i'm a traditionalist and the people should wait till after thanksgiving. but they are coming out. you can hear he's not excited about 2015. there are some specific stocks but 2016 is going to be kind of a mess scarlet:.
the strong dollar being a drag on earnings will continue to be a theme. the federal reserve will either begin to continue on that path -- we just don't know what the path is going to look like. : there's been a lot of hope were we have these quarters where everyone complains about the strong dollar, but maybe it won't fade away given so many strategists think dollar strength is going to be with us for a while. it would not be that surprising to see several quarters intro tore as the dollar continues rise, especially these companies with a lot of foreign exposure would say it may have been better were it not for the dollar. they usually do beat analyst estimates, but the margin is starting to strength. joe: exactly. every quarter, you expect me to this was not a fantastic order in terms of earnings beat.
nottheme -- people are just that excited about stocks right now. you are not going to find many people saying sell stocks but it's hard to find a lot of bullish enthusiasm. an analyst from bank of america came out for a call for 3500 on untilp, but that's not 2025. her call is like next year is going to be ok, but long-term, stocks are the only game in town , so it doesn't make sense to get out of them. scarlet: i was talking with he was talking about near-term caution and how you don't want to get too far ahead of yourself. look at strong balance sheet and companies that are not linked with the economy, but safe haven types. joe: everyone is looking for those stocks with a strong allen's sheets and their own
secular growth story that doesn't have to do with the economy. for a long time, facebook was and probably still is and amazon, people don't think it is economically sensitive, regardless of what the dollar does this quarter. scarlet: and they don't rely on buybacks. joe weisenthal and alix steel have a stellar lineup for "what'd you miss?" they will discuss equity valuations. coming up on bloomberg markets, the market closes just a few minutes away. here's a look at how some of the most heavily traded stocks are today. ge, pfizer, bank of america all moving higher. cisco trading down by .1%. ♪
bloomberg markets. i'm scarlet fu. u.s. equity markets the day in just about 10 minutes. up-and-downa fairly day. julie hyman has your final market check before the closing bell. drop, butmuch as a 1% not as much movement on the upside. julie: the dow jones up as much as 109 and it looks like it's going to finish very little changed. up 15.5 as we close in on the closing bell. we had the big event this morning with the russian jet eating downed in turkey and investors trying to make sense of that as the day went on. that gave a boost to oil stocks. the other big gainer that helped boost the dow was apple, shares higher. ibc said the ipad pro could add $2.4 billion next revenue to the
company. oil prices themselves seeing a back-to-back gain. the biggest since mid-september. back to the russian jet downing. in some latebreaking news the past hour -- cost go according to the center of disease control was selling a chicken salad that sickened people with e. coli. 19 people in seven states. about .7%. down contrary to a case like to pull a because in this situation, it seems as though the exact source has been pinpointed. latebreaking news story is that shire is preparing a new bid for backs all the -- lta. baxa
shares surging by 7% before the closing. scarlet: moore m&a drama. julie hyman, thank you so much. as for hedge funds, they are getting hit. funds replicating etf are seeing .eturns lagging behind joining me now is our stocks reporter. this is hedge fund woes showing up in different ways. joe: what we are seeing are these etf that are supposed to follow the strategies really getting crushed compared to the broader market. it's not all that surprising when you consider these are etf's buying up the most popular hedge fund shares. they have almost a disproportionate share outstanding.
so when you see selling pressure or any sort of rush for the exits, they all get out at the that drag the etf down and exacerbate volatility to the downside. scarlet: do you see that same kind of crowded mentality and distrust that as well? a little bit. some of the legacy investments that these mps had, they are all in that and that was the last time there was an exciting trade for them. not a lot of new big stuff that's exciting. argentina is doing well that not as well as you might think. ricod that, maybe puerto energy will pan out but these things are far away. decide what to fund companies they should try? are they just taking their cues from each other? joe: that is pretty interesting.
it is somewhat of a self the filling office he. those funds are all reaching similar conclusions. is heavily owned, so we should included in our fund. worth considering something beyond just the trade percentage of hedge fund ownership. companieso look at where there might be a crowded position and the number of funds in the stock is extremely high and the average daily trading volume is disproportionately high. a concern i hear more and more from people who allocate hedge funds. how much is a fund portfolio similar to the next one they own , whether it be in distress or in stocks or event driven? all these different strategies being sold off at once hit a lot of people. your few out performers on the stock side have owned different things or tried to own different
things. they say that they do and we more or less have to choose to believe them. the stress is keeping money off the table and just a few little places here and there, otherwise it's hard to make money. avoidt: and try to energy. everything else has taken a hit because of it. scarlet: thank you so much. for bloomberg markets. as we had to break, here's another look at how stocks are trading. -- as we head to break, here's another look at how stocks are trading. ♪
alix: u.s. stocks were framed from higher losses. little changed in near a two-week high. joe: what did you miss? alix: u.s. consumer confidence weaker than it has been in a year. + tensions between russia and turkey. a russian fighter jet is shot down by jerking your the syrian border. how this incident is making a very messy situation even worse. spots in emerging markets. an expert is bullish on latin america. with a stockgin market. overall it was relatively quiet day. volume, little bit more but it feels like we are going into the holiday weekend