tv Whatd You Miss Bloomberg November 27, 2015 1:00pm-1:31pm EST
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 consumer
discretionary. telecom, financials, consumer staples are trading higher. take a look at volume by group. this is the 20 day average. you see industrial volume in the s&p 500 down 52%. financials down 45%, just to give you an idea. i mentioned oil prices. let's take a look. earlier in the week, we saw a couple of back-to-back games in oil prices after the downing of the russian jet over turkey -- gains in oil prices after the downing of the russian jet over turkey. are going down. one of the groups doing better airline stocks. of course, it is a busy time for travel, so that doesn't hurt. yes, it is early for the
holiday season, but you have analysts out there pounding the dave meant. who is buying what, when? -- pavement. who is buying what, when? well, kohl's is doing american eagle outfitters, abercrombie & fitch. some of these companies that have been doing terribly and really struggling are named in the snow today. also, walmart versus target -- named ininner this note today. also, walmart versus target might be a winner. macy's moving the most of any of these retailers. within consumer discretionary, the group to watch is not retail, but media. disney shares have been lower said in its 10k filing after the close on wednesday that it has lost 3% of espn subscribers during the last fiscal year. that is where the concern over
profits have been centered. we are seeing other media stocks pulled back as well. disney shares, by the way, gained as much to be within one per -- 1.3% of their record close. so they have recovered. much, julieyou so hyman. the fdic quarterly bank profiles shows that regulators are increasingly worried about credit quality. will this change if and when the fed decides to raise interest rates? joining me is tracy alloway, bloomberg markets reporter. chris, we just saw on the screen, a chunk high-yield bond spread. we are not at the levels we have earlier, but what does that tell you? chris: the high-yield market has been disrupted since august when we had concerns about china. people started to wonder if the
statistics were as reliable as we pretend that they are. there was some recovery sense, but i think high-yield is still soft for a variety of reasons, the fed, other uncertainties. the investment grade specter -- sector is doing fine. we are probably still going to have a record year for debt issuance in the u.s., but the high-yield has certainly slowed down since this summer. alix: how is that impacting after theuse financial crisis, we had all of these things put in place that were supposed to prevent the banks from taking these risks? chris: a number of banks are lending to oil, energy, etc., and they have had to change their models pretty dramatically. the value of collateral, the value of reserves has been cut in half over the last 18 months.
a lot of business models were predicated on $100 oil. that's changed. this year, i think we are going to see a lot of interesting credit developments as we go through the 12 months ahead of us because a lot of these companies raised money last year even though oil prices had fallen. alix: we have been waiting for the capital markets to dry up. waiting for m&a's. tracy: it's funny, because banks can keep stuff going for a while, but the big question now, i think, is whether or not cracks in credit are confined to the oil and gas industry or whether they start to spread over other parts of high yield. how do you see that going? chris: the context here is the fed. still trying to figure out if the patient can live off life support. because of the focus on i acid prices and changing investor
preferences, -- on asset prices and changing investor , if we move back to something approaching normal, we will then see if these credits are able to function in a different kind of risk environment. it has been relatively easy whether you are high-yield or not. the banks we have rated. insurance companies are literally lined up up the door to buy that investment grade paper. alix: the founder of global strategies talk to me earlier today. listen to what he had to say. >> if you raise interest rates at this time, i think you have to tolerate a shock to the market in terms of equity markets taking a hit and the u.s. dollar strengthening massively, especially with the ecb expected to increase quantitative easing on december 23. she will bee risks
running. it is not coming from the inflation side. it is not employment related. but for the rate hike, she is causing more and more distortions in the market. alix: december 17, 1 p.m., what going to happen? chris: i hope the fed is going to move, but he is right. they are totally out of step with the global narrative when it comes to monetary policy. the trough of credit losses was 2013 if you look at the banks. -- classes losses are different. but that is when they should have raised rates. the fed today should be doing nothing, maybe easing slightly. but i am so concerned about zero rates. zero rates don't. and negative rates -- we have lower growth and twice as much said as one of your guests this morning.
we have to stop doing the same thing over and over again and realize that debt restructuring -- it's interesting. the italians are starting to talk about a bad bank to deal with the debt in their system. that is the only way we can fix this. the u.s. needs to restructure to a degree, but countries in europe have just added more debt. alix: what do we see as we continue to get negative rates in germany? up changing the rate even more and the fed winds up diverging, where will we see the volatility in the market? chris: the u.s. is acting as a magnet for capital. capital out sucking of china. they finally had to put effective capital controls and china because they were making an open market for people to leave. i think the danger here is that the u.s. asset prices could continue to go up for a. of time -- for a time because of othercertainty in these
economies. tracy: you have a bunch of european investors, thanks to the free flow of capital, who just moved to the u.s. chris: if you look at different asset classes and banks, you're all must down to zero loss. you are not losing anything on loan defaults. somebody shows up and buys the building to cover the full amount of the loan even though it's defaulted. when you see that kind of behavior in the credit markets, nosuggests that credit has costs. and we know that's not true. the last time we saw that was 2005. in 2006. rates haven't moved since then. the same thingg for 10 years. alix: thank you for the joy. chris: i wore black. it's black friday. alix: thank you for joining me. coming up, how much is that
alix: welcome back. i'm alix steel. let's check in on the first word mark: russia is retaliating downst turkey for shooting a warplane. russia has now suspended visa free travel with turkey. the russians are already making it tougher for turkish produce to be brought into the country. further sanctions maybe coming
soon. france today held a memorial service for the 130 people killed in the paris terror attacks. some of those who were wounded in the attacks attended in wheelchairs. some were even carried in on stretchers. the name and age of each victim was read aloud. have and special forces -- malian special forces have arrested two men in connection with the attacks last week. people were killed when two anmen stormed the lobby of radisson hotel and opened fire. ben carson is in the middle east to visit syrian refugees. the retired research and has been facing questions about his command of foreign policy. carson's campaign says he will majorne of jordan's camps. an insurance group says the most lawless and dangerous u.s.
drivers are in montana, new mexico and south carolina. these andt more on other breaking stories 24 hours a day on bloomberg.com. i'm mark crumpton. back to you. reallyaybe they drive fast. mark: really fast. alix: investigating a retail etf over the long-term may prove to be a jelly idea, but trying to time a play for the holiday season might put some coal in your portfolio. so many puns. etf analyst.is our eric, talk about overall etf versus s&p and what the performance has been over the past year. eric: if you look at retail etf's, they are a great case of how you need to watch your wait. waiting onssive
amazon, home depot. this etf is up 9% this year. it is up at 10 the past three years, beating the s&p by 30%. the other one, the more popular one, equal weighted, urban outfitters, men's wearhouse get , thatme waiting as amazon one is more in line with the s&p, but it is down 6% this year. depends on how you want to play retail. do you want the big ones to dominate? you live and die by amazon and walmart, that's fine. ifx: will macy's be offset amazon declines for some reason? eric: a little. but i agree with you, if you look, amazon has been the stud in a few etf's and literally contributed more than any other stock, not only in retail, but also in internet etf's.
fdn. that has been doubling the s&p, but then youazon, throw in ebay, netflix, a lot of companies, and this would be more of an e-commerce play. again, not perfect retail, so to speak, but all of this speaks to retail being a good performer over the last couple of years. but i looked back over the holiday season and they typically lag. alix: portfolio rebalancing. the other big news that came out today is china. dropping since august. how are stocks and etf's here holding up versus the s&p? most -- china the etf's are the most complicated area other than maybe futures. they are down -- mainland etf's
are down like 6% today. but it is still beating the s&p over the past year. basis?n a normalized eric: yes. it is up 30% more than the s&p still. that is how massive the surge was at the beginning of the year. it's still living off that. alix: what about extra bowl and extra bear. bull andey -- extra extra bear? how do they stack up? eric: one goes short and inverse and one goes long. if you look at the 41 leveraged in burst etf's launched this etf's launchede this year, there was a real demand to play in china before you weren't able to do this. you got general exposure. now you can play going long, , and we have seen short interest go up a little bit.
all of this is seeing investors come around and say ok, i want to play this. i don't know how many long-term investors are using these products because you can tell the assets are really dictated by performance. people are coming in, trying to ride it hot, and then get out. they make it so easy to make speculations on mainland stocks in china. not: good tools, but maybe a good fundamental long-term investing tool. always nice to see you. u.s. crude oil stockpiles are just 2.7 million barrels shy of april's record. basically, we are swimming in oil. what is opec going to do? ♪
aig is considering whether to sell off books of life insurance contracts according to people familiar with the company's planning. n is encouraging aig to do so. andpean surveys of consumer executive confidence come out as the ecb considers whether to add stimulus to the economy. says that espn lost 3 million subscribers in the fiscal year that ended in october. that has revived concerns that consumers are getting away from traditional cable tv packages. always get more business news at bloomberg.com. opec members will meet a week from today indiana to discuss oil targets and -- as inventories continue to mount across the world. iran has announced it will move production by 500,000 barrels a day.
what is opec going to do? going toudi arabia is cut, yes or no? >> i think the odds are very high that the opec policy will remain in place in the near term , which means that you will have this elevated output for the for sealable future. it also means that room has to be made for -- for seeable future. also means the room has to be made for iran to put its barrels back in the marketplace. goingsaudi arabia is not to leave money on the table. >> odds are they will not. if you think back to pre-sanction and back to maybe 10 years ago, we had roughly an additional million barrels a day that iran was pumping out. there is capacity to be reintroduced into the marketplace that will act as a suppressant for broader prices across the globe. all this has done -- city
put it so well, saying the u.s. is a sinkhole for oil prices. it has really wreaked havoc on the curve of oil prices. if you come inside the bloomberg right now arees much cheaper than prices in the future. how does this ever reverse itself? >> think about the secular ship we had in the u.s.. about production floor at 500 million barrels a day in 2008. today we stand at 9.1 million barrels a day. that hasn industry strong efficiency gains and is able to reintroduce supplies into the marketplace when supplies improve. likely be maintained. also think about this. this price peak in
june, we have had a 50% cut in output is actually higher year-over-year. that says a lot about the resiliency about the u.s. industry. means that saudi arabia, a.k.a. opec, really needs to get russia, mexico, brazil. this is the deepwater, onshore, non-shale that needs to cut production. it seems like that is what saudi arabia wants to see. toeverybody needs to come the table, but i think saudi arabia is trying to thwart the influence of a resurgent iran and iraq. you could suggest that there is a sectarian influence here as well. alix: opec production over 31 million barrels a day. what do you think it is next year? >> again, depends on how quickly iran can introduce these barrels into the marketplace. roughly 10 years ago, output was
close to 3.9 million barrels a day. it's now right around 2.8 million. they will introduce roughly half a million barrels in 2016, at least they expect to. be pushed higher. again, excess capacity is the key that could suppress the overall environment. alix: what i have been noticing in the base metal market is that it seems like demand is not holding up. supply needs to adjust to balance the market because is not there. what do you see? >> the extra demand had come from the likes of the emerging economies and emerging markets like china. it's not there this point. we always felt it was more of a demand-side equation than supply. you can count the barrels. it's much more difficult to count people in consumption. the: does that mean that demand is there?
>> its sluggish. it is a sluggish demand outlook relative to the structural shift in capacity the u.s. has. so it's still really needs to come from the supply picture. >> its a wide in balance and you need the demand-side to come back up. is there a point at which saudi arabia is going to say ok, i am cutting? grexit has less to do with economics and more to do with the -- >> it has less to do with economics and more to do with the geopolitics of the region. alix: totally with you on that. that wraps it up for bloomberg markets. thank you for watching. we will see you back here on monday. have a wonderful thanksgiving weekend. travel safe. ♪
♪ emily: he is the owner of the world's very first model s, and an early backer of elon musk's tesla and spacex. a fast talker with an unconventional investing philosophy who once shadowed steve jobs. he has amassed one of the biggest private space collections in the world, and has spent his days pondering the future of artificial intelligence, genomics, and self driving cars. joining me today on "studio 1.0," steve jurvetson.