tv Bloomberg Markets Bloomberg November 27, 2015 12:00pm-1:01pm EST
from bloomberg world headquarters in midtown manhattan, good afternoon, i am erik schatzker. >> and i am alix steel. here is what we are watching. by 5 p.m. in new york on wassday, $1.1 billion already spent online. we are going to check out if the rick and mortar situation -- check out to the brick-and-mortar situation. and another dark day for our glaze -- barclays. they are facing an accusation of financial misconduct. we will discuss. erik: let's find out how the financial markets are shaping up. julie: about an hour left in the trading session on this holiday
shortened day. s&p running about 42 percent below the 10 day average at this time. all three major averages not much changed. if you take a look at my terminal and the sectors on the move. some stocks are more resistant to economic weakness, telecom, staples, health care. energy and consumer discretionary stocks remain lower. energy has been weaker along with oil prices. alix: but because it is black friday, you are not going to draw a correlation. you are not going to go by consumer stocks. julie: true. let's start with amazon. very little changed today. abouthave been talking all morning, you can not necessarily extrapolate
thanksgiving or black friday sales to the entire holiday season. role 43% year-over-year. amazon comparable sales, 29%. big boost for amazon. i did want to mention a big news story. is going to soon let prime members who use their video service tap into what would be like a bundle for the cable network. interesting potential from amazon. up 7% in terms of what we saw on manx giving. shares up very slightly today. of -- thanksgiving. jcpenney was perhaps the thanksgiving and black friday
stand out after it opened a couple hours earlier than last year at 3:00 p.m. in particular were popular. finally, let's take a look at walmart versus target. thatnalyst, all chan, says analyst says walmart is weaker than expected. erik: many days left in the holiday shopping season. alix: it's right around the corner, guys. get cracking. let's go. hanukkah is really early, december 6. i am going shopping after this. more fromonohoe has our news desk. in oney: we first check turkey today. russia is retaliating against turkey for shooting down that
jet. agricultural products from turkey will be subject to additional border checks and controls. says that thedent military would do the same thing if the country's airspace was violated again. russia and france have agreed to action in military syria. putin said that russia would avoid hitting moderate rebel groups in syria. still, the two sides disagree over bashar al-assad. francois hollande says bashar al-assad cannot play any role in syria's future. it is a national day of mourning in france. the ceremony was held to honor the victims of the attacks two weeks ago. the names of each victim was read out loud -- were read out loud.
pope was speaking in nairobi, kenya. he said the common good must prevail over special interests at the harris climate conference. aids is now the leading cause of death for teenagers -- paris climate conference. aids is now the leading cause of death for teenagers in africa. the number of teenagers dying of aids related illnesses has past 10 years.e 60% of infections occur in sub-saharan africa. the u.s. also shows a worrying rate of infections among teenagers. you can get more on these and other breaking story story four hours a day at the new bloomberg.com. from the bloomberg first were desk, i am courtney donohoe -- first word desk, i am courtney donohoe. erik: it may be a quiet day here, but investors still have much to chew on. there are sagging commodity
prices and weak consumer spending by americans. our next guest says it is time to be bullish. his forecast is the second highest on the street. he is the chief market strategist for oppenheimer and company. is interested in your year end call as i am and what am ase happening -- i interested in your year end call as i am and what you see happening in 2016. >> the market has been hit with everything but the kitchen sink but it is remarkably resilient in terms of averages. we have to think that 20 16 will likely be, especially as we view it here toward the end of the year, that people will expect it will be a better year than this year. trends are not favorable. i am looking at third-quarter earnings. read that you -- revenue growth
is negative, earnings growth is negative. a lot of that has to do with the collapse of energy, but other sectors are showing weakness, industrials, health care utilities. materials andto industrials, they naturally got dinged by what was going on in oil. but we expect that as global growth comes back, those sectors will do better. the rally thatto has occurred since september 20 eighth of this year, among the best performing, you will find materials and industrials. im underweight energy on a fundamental basis, but myustrials and materials, recollection is they are in the top three. the lowereems like for longer oil story is here to
stay. without a substantial industrial china growth, how does the the 2311?e basedit would have to be on a santa claus rally and in anticipation of a better year next year. fourth-quarter rallies can be remarkably powerful. they are a combination of window dressing and managers anticipating what is going to happen next year. you talk about a place of bifurcation within the markets. there are those who are bullish and bearish pretty much down the middle right now. we would have to think, looking at here, all that qe in japan, china utilizing stimulus -- they have responded to their problems better than anybody would have anticipated -- will have a better year.
and the markets tend to feel that. any strategist has to be something of a macro economist, doesn't he, because you are counting on qe in europe to drive growth. you are counting on qe in japan to drive traction. what if they don't? john: i think if they don't we will see underperformance. have more problems them at. john: today, the news out of europe was better. we have data points that would indicate better than green shoots in terms of economic growth, whether it be spain in the third quarter, germany's low ismployment rate, and this within a challenging situation. we can only think of our own challenging situation and how well we have done.
we are now beyond recovery in an economic expansion that seems aable enough to withstand racing of interest rates by the fed, hopefully in december. i hope we don't have to wait until the first quarter. alix: thank you so much. coming up, online sales surging as holiday shopping gets underway on this black friday. what will that mean for brick and mortar retailers? we have the latest from a target store just outside new york city after the break. ♪
shares of disney are falling because of its most profitable channel, espn, losing subscribers. consumers are getting away from traditional cable tv packages. insurance giant aig is considering whether to sell off books of contracts. cahn has been pressuring them to, and so has john paulson. cibersome are calling it friday. online spending today should hit $2.7 billion, while cyber monday sales should hit $3 billion. many people are shopping with their smart phones and a want to wait until monday. you can always get more business news at bloomberg.com. erik: i say it is time to stop giving silly names to shopping.
alix: right? it isspeaking of which, black friday and it isn't nearly the revenue bonanza it used to be. sales have been declining. so has foot traffic. pettypiece is at a target in jersey city. discussed this with brian cornell, the ceo of target. it is not such a big dale for -- day for the brick and mortar parts of these businesses, but there is still a lot of investment in it. a lot more traffic coming online. we saw online traffic on manx giving was up 25% from a year beef -- thanksgiving was up 25% from a year before. day before black friday, according to adobe. black friday sales -- the stores
are still expecting traffic to be up a bit from where they were a year ago. i was out at this target behind me at 6:00 p.m. when the doors opened. it was everything you would expect from black friday, big, long line around the corner. today is more like a typical saturday. i am sure it will be a busy day, but not the body to body man to man combat you would expect from black friday's in the past. figurees are trying to out how to balance on line with in-store purchasing that they need to get right. erik: thank you very much. good seeing you again. for more retail analysis on black friday, we want to bring in part flickinger. flickinger. who are you seeing as the big winners and losers today? >> jcpenney and toys "r" us for
the comeback. both had financial issues. both getting big support from the merchants. toys "r" us clearly the winner in star wars merchandising. jcpenney's in-store white merchandising as well. erik: let's talk about star wars. we spoke to the ceo of toys are us this morning and here is what he had to say about star wars. >> the customer today wants to buy what they want, when they want, where they want, how they want. make it easy, we spokeseamless and customer fy to purchase in all those channels and to deliver in a quick and efficient way, then you are going to get left behind. out -- and pardon me, that was not actually the soundbite i was looking for. he did address star wars specifically. he said it won't be a season saver. >> it won't save the season, but
toys "r" us has added merchandise across the store, target orher walmart is. it will give them the cash flow they need to make up from the mistakes of the prior management regimes. alix: how deep are the discounts you are seeing today? on wednesday, consumers were saying yes, i will buy stuff, but you have to give me a really big discount for me to want to do it. we are seeing discounts, but they are on the wrong stuff. for example, walmart has twice as many tires advertised as christmas trees. both companies are really in their christmas merchandising. hence, jcpenney with a 72 page color add this year, supported by the vendors, is really winning. macy's is going strong, along with some others, but some on
mistakes, given the brian cornell management, turning target around, dartford l turning walmart around, but -- the neweaning up head of walmart turning them around, but they are cleaning up mistakes from prior management. why is it the retailers continue to engage in the textbook definition of insanity? trying the same thing over and over again and expecting a different result? these national lines of merchandising and they don't flex the stores properly. they don't flex between online and in-store. to your good comments you and alex made with julie hyman a few minutes ago, as a result, the vendors are too influential. even target, cosmetics and fragrances are a big part of the
prophet proposition, but they are so worried about people shoplifting or stealing from the stores that they have those sections blocked off. why is jcpenney getting it right and walmart advertising tires? of goodney got a lot people from home depot. is the seminal turnaround genius. and carol thomae, chief strategy and financial officer. bob nardelli left toys "r" us -- i'm sorry, left home depot completely impaired the same way he did with chrysler. blake came in and was transformational. he knows the rhythm of merchandising. in the former ceo of sacks went on the board of toys "r" us. it's all leadership, whether it black friday, christmas, key holidays from memorial day to
labor day, there is a real lack of leadership in the u.s. and worldwide today. importantused an word, flex, the ability to flex between in-store and online. so many retailers can't do it. why? >> they are shaking down their vendors for money to place product in the store. the vendors don't want to reinvest and change fashion out of season or accessories, hard-line, softline, whatever it is. fewer workers,000 today on an equivalent basis versus what they had 10 years ago, so they don't have the people to flex the merchandise or stock the shelves. leadership is turning it around but it's going to take time. alix: bing -- erik: thank you very much. alix: we are going to check in with the head of lord and taylor and sacks.
erik: welcome back, everybody. alix: we continue with a holiday theme as black friday shoppers to send on major retailers. joining me as someone with extensive experience preparing ceothis day, hudson bay's and former toys "r" us ceo jerry storch. much for joining us. what is the number one trend you are noticing today? jerry: you read a lot of articles about the so-called demise of black friday but you sure don't see it out there. consumers are out into ropes. stores are crowded. people are shopping. inhink -- consumers are out
droves. stores are crowded. people are shopping. rate has unemployment dropped and the dollar is strong. people who come here as lack friday tourists -- black friday tourists don't have the spending power they once did. jerry: we have lord and taylor, a better department store, saks off fifth, which is a value retailer. we also have hudson bay in canada and a store in germany. they are all different. certainly, the currency rates are affecting retail trade. what we might lose, for example, in the u.s., where the europeans and the canadians, and the brazilians on the russians are we mightg to the u.s., pick up in canada. the canadians are walled off in
canada and might shop there because it is too expensive to shop in the u.s. today. meanwhile, the weather has been warm. there is a lot of cold-weather inventory out there. so, price slashing has begun. there are tremendous deals for consumers today. have a lot ofou diversification and you just explained it, but you did allude to losing something here. can you quantify what the strong dollar has cost you? jerry: i'm couldn't do that -- i couldn't do that. but if it's raining, you sell umbrellas. if the international customers are not here, we focus even more on the domestic customers. today, if you spend 150 dollars at sacks this avenue, you get a $75 gift card. that's pulling a lot of native customers in. how hard are you having to
work together for traffic today? jerry: lack friday in my career has been the lowest margin day -- black friday, in my career, has been the lowest margin day of the year. people need real deals. if you really look at it, there is no doubt that black friday deals are the real deal. they come for the deals and the deals are real. every case, the gross margin rate is the lowest of the year on black friday. jerry storch is the ceo of hudson bay. that's going to do it for me. alix: i will see you guys after the break. ♪
markets. i'm alix steel. mark crumpton is at the news desk. mark: francois hollande is talking tough on terrorism. he is vowing to destroy the army of fanatics responsible for the attacks two weeks ago. in paris this morning, the victims were honored in a somber ceremony. the names and ages of each victim were read out loud. belgian authorities have reduced the maximum terror threat level. they say brussels is no longer facing an imminent threat. the subway re-open and completely this morning, but troops are still -- reopened completely this morning, but troops are still searching the streets. russia is striking back at turkey for shooting down a warplane. more restrictions will be imposed on agriculture products from turkey. russia will, with economic measures to impact flights, trade, and investment.
chicago's shopping district is expected to be crowded today, but not for their reason retailers were hoping for. protesters have crowded the magnificent mile to protest the killing of a black teenager by a white police officer. the officer has been charged with murder. that is a look at our first word news right now. you can get more on these and other breaking stories 24 hours a day at bloomberg.com. i'm mark crumpton. alix, back to you. importance of black friday might be fading. and the numbers don't lie. the national retail federation has been tracking data for a long time. black friday sales were down 11% last year. sure, this day is still important. the weekend accounts for 10%-15% of holiday sales, but to the trajectory is declining. the big problem for retailers is
getting people in their stores, and that's a factor year round. beenover year, it has not positive. this is since the fourth quarter of 2011. that puts the pressure on e-commerce sales. e-commerce sales are expected to grow 14% to this holiday season, retailve the overall landscape. amazon killed it in the online ofe area, but the jcpenney's the world, walmart, even nordstrom's, these guys are still struggling online. overall sales are still in positive territory, yet they are definitely struggling. it is a downward trajectory. you can see here measuring gap, jcpenney, nordstrom, walmart, nordstrom in particular you can really see that decline. non-amazon e-commerce
sales growing just 4.5% in the second quarter. the good news for us who are wherever youhat go, there will be deals, and that's because the inventory sales ratio has moved higher as we have seen inventory rebuild in the first part of the year. a lot of retailers are left with a huge bunch of stuff in their inventory and need to offload it to make room for new inventory. so, with the pressure to move inventory out the door, the outlook for trig additional brick-and-mortar -- for traditional brick and mortar stores is not bright. growing competition from amazon and the high cost of operations is presenting an uphill battle for the likes of macy's, walmart, target. morning, tom keene asked his guest just how bad the outlook is. >> thousands of stores are going
to be closing. malls are going to be closing. tom: what is jerry lungren's biggest headache at macy's? with the bigoubt problems. he did a good job managing it, but -- dealt with the big problems. ,e did a good job managing it but he never dealt with how to survive. tom: how do the department stores survive against amazon? our goal and a lot of them will continue to be great, like -- howard: a lot of them will continue to be great, like the downtown stores, but your lundgren is in the process of closing them. is in theundgren process of closing them. a lot of those stores are not going to be viable. they are too big and the cost too much.
-- they cost too much. >> what is going to happen to all of the realtors? to open on black friday or thanksgiving even in some cases. howard: it's a market share game. if you are a department store business, you have lost market share for 20 years. 20 years. that's just going to continue. tom: my basic take is in the photos of garden city east of , is it blew on black friday? my sense is it is. howard: by this afternoon, it will be over. it will be dead. tom: because of amazon, correct? what is your view on amazon? stagger, but i go
every day. of overall sales in the u.s.. people do like to try on clothes. is there areroblem too many stores doing the same thing. a genius who figured this out, l brands., limited express, do?crombie, what did he he got rid of all of it. he got rid of all of it because he understood that there is an oversupply and too many people doing the same thing. he got into lingerie, cosmetics, and that is management. tom: we have sacks this avenue, hudson bay, black friday -- saks fifth avenue, hudson bay. on black friday, things are 40%
off. where is it going to be after christmas? howard: sam walton started in 1999 jerking around with amazon. you know where they are today? 2% of their business is online. these companies, they should have killed them in the cradle. me bring in john farrell from london. retail,ward, legacy legacy real estate assets, who is getting out of them, who is ahead of the curve, so to speak? howard: american realtors are doing all kinds of things with real estate, a lot of it crazy. there is all sorts of talk about lease backs and all kinds of arrangements.
i think macy's approach to it is the smartest. if you are in the department store business, you have to control your real estate. or in the food business. you can get a lot of money up front and play leases -- pay leases for ever and you will be cooked. the real control estate. i think macy's approach of doing it a chunk at a time is the best. john: so your advice to retailers in the u.s. is to get out of real estate before the supply all comes on line at the same time? what you tell them? stores, ink, great my opinion, are going to continue to be great stores. we have 400 great malls. they will still be great as far as the eye can see. we have downtown stores worth a fortune. they will be worth even more. bad?then why is retail so
if you look at a chart of internet stocks like amazon versus macy's, target. the market is pricing depression in bricks and mortars. howard: of course. the market cap of amazon's more than walmart. that's pretty serious. tom: if you have a cup of coffee with jeff bezos right now, what is your prescription for him to do women's fashion where bonnie by stresses on amazon? howard: the biggest christmas gift is apparel and apparel stinks, so that is a big problem. .com.stygal that's fashion on the internet. great stuff. howard always has a good opinion. russia starts
alix: welcome back to bloomberg markets. it's time for a look at some of the biggest business stories in the news right now. volkswagen announcing a $2 billion savings plan. the company is facing recalls, over thewsuits, all diesel cars that trick to missions tests. emissions tests. the u.s. and germany have
launched investigations into vw's luxury car units. at its lowest level in five years. investors are increasing their bets that the fed will raise interest rates next month. gold less make valuable. it is headed for its sixth straight week of losses. you can always get more news at bloomberg.com. tensions between turkey and russia are rising. vladimir putin has ruled out military retaliation against turkey for shooting down a military jet earlier this week, but russia has begun economic retaliation. it will be suspending visa free travel with turkey. joining us now is ryan chilcote in moscow. we not only have these the issues, but russia also announced that certain projects issues, but russia also announced that certain products will be subject to border controls. what is the next thing we will
see? ryan: they are slowing down or stopping imports without officially announcing that. what comes next? the prime minister yesterday gave the government to days to come up with specific measures, but it looks like they want to go the full monty. they are talking about kicking turkish businesses out of russia. they have already rounded up a couple of turkish businessmen and sent them home because they said they did not have the proper paperwork to be here. they also have a travel ban where you have russian tourists who efficiently -- effectively turkey, pretty much at the kremlin's instruction. potentialking at the for all kinds of import bans on turkish goods. in addition to the restrictions on russians traveling to turkey itself, it might go beyond that.
banning thelude export of grain from russia. it could go a really long way. alix: most people might not know, but total trade between these countries last year was over $30 billion, so any kind of stoppage in trade could really affect either player. terminal, iloomberg targeted turkish five-year credit default swaps versus russian five-year credit default swaps. they are starting to move in tandem, meaning that the risk has spread to both countries. russia could wind up hurting itself. it could. and there are other concerns like inflation and food imports. that would mean that russian food could get more expensive. that would push up inflation. inflation has been hovering around 60%. that would -- 16%.
not be helpful. about 3 million russian tourists went to turkey in the first nine months of this year. i direct and they left about $2 billion behind. about $2on they left billion behind. turkey needs that hard currency to offset the current account deficit. if that money is not coming in, that means more pressure on the lira, and as you know, the lira is one of the worst performing currencies of the year. needs natural gas and russia needs to sell natural gas. the gas comes from russia's pipeline into turkey. it has continued to climb year into year. at what point would this be a risk? i have notthing heard anyone seriously discussing is not exporting russian gas to turkey. money.sians need the
they are the world's largest exporters of natural gas. the price of gas is low anyway right now. i think they are also sensitive to this whole perception that russia uses its gas as a weapon when it wants to, or a carrot, in other cases. they were accused, in the case of ukraine. need turkey iny the gas market. it's a very important market to them. and they know that if they have to, the turks can get that gas from other places if they absolutely have to. alix: thank you for joining us. over to abigail doolittle, joining us live from the nasdaq. abigail: stocks are trading modestly higher and we do have an early holiday close in just a few minutes. ahead of that, we thought we would do an early preview of two top performers. netflix is up 20% this month
after trading down. a turnaround came after an ericsson mobility report came out saying mobile digital streaming could grow by 55% 2021, andhrough netflix posture could be 20% -- 20% of's share could be that. plus, the company has more subscribers in australia than what the market was looking for. another stock doing well is monster beverage. shares are up 20% this month on a better than expected third-quarter after recovering from a disappointing second-quarter. on the coca-cola partnership. ceo rodney saxe indicates that progress has been made there. were upany says sales 6.8% in october year over year. alex? alix: thank you so much. ceong up, a controversial
alix: welcome back. of color bios pharmaceuticals are soaring --ay after the company's ceo f kalobioscallo pharmaceuticals are soaring today after that accompanies ceo sent a tweet. >> as you know, he is a controversial figure. he came out yesterday on twitter and said he was no longer going to lend out his new companies makes, which essentially
it very, very difficult for shorts. i cannot believe this tweet. it has inconvenienced a whole lot of short-sellers. basically, if you're short, you can't be anymore, is that the take away? tracy: you can still short, it just becomes very expensive for you to cover your position. if the stock price is going up because it is almost impossible to get the shares because they have all been locked up by the company, it gets really, really painful. this is kind of reminiscent of what we saw with volkswagen back in 2008. that was another historic short squeeze. alix: why would he do this? tracy: good question. there are some conspiracy theories floating around. his exact rationale is that he
wants to speak with his lawyers and understand the benefits of lending out his shares. spoke with a guest earlier this week you had this to say. kalobiosdoing a great because it is stock, but it is a great way to get returns for your investors. alix: he seemed to believe and what the stock is and what the company is. for ad he was in it deeper reason. tracy: i would love to know more about his reason. two weeks ago, this company was on the brink of going under. its shares were -- i can't even it has awhat, but now market value of more than $100 million. and a lot of guys who have come
and have tried basically been smoked -- have come in have basically been smoked. we saw one guy try to crowd sources losses. alix: you read what was going on here in your total nerd alert for the day. walk us through it. tracy: it's not that nerdy. i read the complaint and it's amazing. if anyone is looking for weekend reading, this should be at. it's basically a comedy of actuallyxcept it's not that funny. barclays put together a structured note for its high net worth clients. you are supposed to go through intense due diligence to make sure people are not being bribed, that there is no money laundering going on. instead, it looks like barclays, as you can see on the screen, ,elied on a google search essentially, to verify its clients wealth.
they were obsessed with keeping everything quiet and privacy, so they didn't put any of the deal documents on electronic servers. they had physical printouts and they kept them locked in a safe. there is some stuff where, you know, one of the clients says they want to transfer unnamed -- transferdollars millions of dollars to an unnamed third party just because. and the client says that sounds kind of sketchy and berkley says oh nevermind, we want do that. of due- so, not a lot diligence. tracy: no, and everyone who was said to have approved the deal when asked by regulators said they never approved the deal. so we don't know how the deal went down. the other thing that caught my eye was the shanghai composite. -- well,de my screen
you can see a really big spike up in the shanghai composite. what does this do for china on monday when they open? tracy: that's an excellent question. we know that chinese stocks have been getting more volatile, and once they get into a volatile pattern, it tends to be difficult to break out without the government coming in and announcing something that -- calms investors down. alix: thank you. you're sticking with me through the close at 1:00 p.m. we will see how stocks settle and take a look at what ahead for next week. ♪
you are looking at the closing bell. u.s. markets closing early after the thanksgiving holiday. stocks fluctuating all day. disney weighs on the index. all caps are advancing. volume was very, very light. the dow jones volume was off about 50%. s&p off by about 31%. julie hyman is looking at the markets because this does set us up for a very busy week next week. julie: yes, commentating with the jobs report on friday, which is probably the most -- culminating with a jobs report on friday, which is probably the most important part of the week. take a look at my bloomberg terminal for the push and pull we are seeing within the market. energy shares are down along prices and