tv Bloomberg Markets Bloomberg November 30, 2015 3:00pm-4:01pm EST
good afternoon, i'm betty liu. here's what we're watching at this hour. stocks are in the red as we head into the final hour of trade. consumer shares leading the way as wall street analyzes black friday and cyber monday retail results. ,ompetitors scramble for sales and beijing gets its wish. will we see more reform in china? we are about an hour away from the close of trade. .att miller has the latest kind of a drag here in the markets today. mean as in not a lot of volume? betty: retail sales not that
great. and actually not a lot of movement in the indexes although we did have a little bit of a roller coaster ride this afternoon. we are down across the board here. we were doing much worse and although much of the day we been unchanged, the volume has been very weak pretty much across the board. index,look at the s&p you can see a really defensive play building up as far as the indexes. take a look at my bloomberg terminal and you can see the winners are telecom, energy, the losers health care, syndrome -- consumer staples and consumer discretionary. the real concern after black friday, after cyber monday, we've got a lot of retail stocks that just are not doing well. take a look at under armour,
lululemon, any of these retail stocks, there is real concern that they are discounting too much. analyst notes coming out, lululemon cut 200 points, piper jaffray saying under armour is too emotional. that is the problem as far as analysts are concerned with retail, that they are just giving away too much. betty: so too much deep discounting. are they the ones leading the stocks lower? matt: take a look at the dow jones industrial average, big , bigs or nike, for walmart losses across the board. retail etf, down big today. poorly.orming today andon came out said cyber monday will be up 18%.
if you believe the computer that beat a guy in jeopardy, then you can take their word for it. take a look at some of the leaders today. all the oil companies is what you will see. their,sult you see gains transocean with the $17 price target. oil was up this morning as well but came back down. i is down 10.5% just in november alone. and four months in a row it's under $50. it's the worst month we've seen in oil since july. betty: the story has not changed for oil. thank you so much, matt miller at the markets desk. lara keller has more from the news desk. laura: president obama said the threat posed by climate trained -- climate change is the defining issue of the country.
president obama: our task here in paris is to turn these achievements into an enduring framework for human progress. solution, but a long-term strategy that gives the world confidence in the future. >> the president said an agreement would be a rejection -- a deterrent to the attacks in paris. thise comes in response to month's attack in paris. the white house also said it are work with lawmakers who promoting restrictions to the program. approves visa free travel for 20 million people. one student in chicago has been connected in connection with threats made against university of chicago.
it reportedly mentioned the quad, a popular gathering place, and monday. a judge has sealed court documents for man accused of killing three people, including a police officer, at the planned parenthood cleaning in claude giroux screens -- planned parenthood clinic in colorado springs. makingtors said documents public would jeopardize the ongoing investigation. you can get more on these and other breaking stories 24 hours a day at bloomberg.com. thank you so much, laura keller at the news desk. stocks are gearing up for the final month of trade for the year, one that's chock-full of attention market moving news. yeneard that the chinese will be included in the basket of reserve currency. looking ahead to later in the
week we have a key ecb rate decision and testimony. plus the november jobs report and the opec meeting on friday. for more on the markets i'm bringing in john manley, chief equity strategist at wells fargo funds management. you say right now the markets are fairly valued, right? john: i did not think being fully are fairly valued would affect the upside. bettert to be a little than just ok for the market to go up but they have to be worse for to go down. we are stuck in a group, i think. >> why do you think that is? john: we've had a pretty good run over the last four or five years. the fundamentals are on hold at this point. you can point to oil and say it's energy and it some point in time you get that back, but the street gets tired.
we want the new news now and we are not getting any good new news in terms of earnings. i think 2016 will still be a pretty good year. betty: what makes you say that? john: i think the economy is going to get better. i think when the fed finally raises interest rate, it could be viewed as almost a blessing, the economy can take it. it is good enough for us to do that at this point in time and they are certainly not going to get ahead of themselves. in time, earnings will get better because the economy is stronger. i think the market could move significantly higher. betty: how will earnings get better when the dollar is rising and were going to see more wage pressure? is pressure but not necessarily a pressure we recognize or realize.
the people who run our corporations today are not like their fathers or grandfathers or grandmothers 50 years ago. they got there by pinching pennies, and they will keep doing that. one of the reasons we are overweight technology, what does that mean for a corporation? you see coming down the road, what are you going to do? essentially you have to make your people more productive. economies,t better it almost always means better earnings and so forth. so you don't see us rising much further from here until the end of the year? john: december tends to be a good month because you have the laggards who have not funded their pensions doing it. you have some money that could go into the market. happen, at some point
in time, all the savings from lower energy prices will get recycled back into the economy. i may pay less when i fill up my , and i start to change my spending habits. we are due for something like that pretty soon. at some point we put the great depression behind us and put the great inflation behind the. i think we can put the great recession behind us now. betty: 2016 is the year we do that? as good a year as any. john: why not? us, but nott of that far in front of us. betty: it may not be. finally we may realize we are not doing too bad. maybe the fed needs that wake-up call, right? john: you cannot predict it or it would have already happened. it's a little bit of a catch-22.
the fed has been extremely cautious in the way they looked at the interest rate issue. i think it is a good assumption when the fed starts raising interest rates, it is telling me , janet yellen is telling me she thinks the economy is robust enough to withstand this. at some point in time, people taperone through the tantrums, all these things. at some point in time the fact that the economy is better allows that to happen. are you nervous about the friday jobs report? i think the fed will be data dependent, and there's nothing wrong with that. has not landed, i'm not going to get off my flight. were going to watch this very carefully. i think they probably don't. betty: john, takes for stopping
afternoon and welcome back to bloomberg markets. breaking news on a american airlines, the union announcing today that their members approved a new five-year contract including immediate and significant pay raises. the union represents about 14,500 american airlines workers. we will keep our eye on the results of that. let's turn to more bloomberg business news and look at some of the biggest business stories in the news right now. a new power deal could be in the pipeline. options, sale according to people with knowledge of the matter. it's still evolving and may not lead to a deal. shares rose more than 10% earlier today giving the company a market value of five -- $5.5 billion.
also a potential sale that could value the company at as much as a billion dollars, according to people familiar with the matter. it will likely attract interest from private equity firms and other card processing companies. credit squeeze is extending paid toe off workers can take care for a child. the zürich-based lender is trying to retain and attract workers looking for more accommodating corporate culture. you can always get more business .ews at bloomberg.com more on the imf decision to add the end to the basket of reserve currencies. today's announcement by integrates aarde global economic system.
our guest joins us with his take on today's decision. it seemed like it was pretty much a foregone conclusion that they would be added to the basket. but the waiting was the mystery, right? it was expected to be between 10% and 13%, and it is 11%. short-term, it really doesn't mean a lot. we are looking at the total , roughly 6%f sdr's of the daily trading volume in the total foreign exchange, just 6%. roughly one third of global gdp and less than one percent of total trade. so it's a drop in the bucket in terms of big numbers that we deal with on a day-to-day basis. it's much more psychological effect than a long-term effect. toward anow moving
more integrated financial community to establish a currency that will -- that will be more widely used. did they need to have this happen in order for them to continue on their path? >> it didn't necessarily need to , it's a big vote of confidence from the international community. betty: do we know what went into this whole process, what was the thinking about saying we are going to include china and the chinese currency? and what if any lobbying chinese on this? >> there was a lot of lobbying from the chinese. is the second largest economy in the world not being really part of the -- not represented in a proper way.
it was a necessary step to take with the way things were going. , the longer-term applications could be interesting for the u.s. one of the options open to them andas more trade is done they build up that percentage, they do not need to carry such large u.s. currency reserves. they could sell some of their u.s. holdings, u.s. equities and treasuries. and use that money to build infrastructure to increase the mystic production. that would put pressure on the dollar. betty: as you say, this will not have a big move on currency trading. >> when the announcement came, absolutely nothing happened. betty: china said they were pleased with the decision, and
that sort of an understatement. i think they were really anticipating this and wanted to make sure they were a part of the basket. could this trigger or accelerate any kind of reforms in china that could affect the markets eventually? inclusion,ll their and i believe it's october of they cannot just let it go. it would be a train wreck. aey will have to establish band within other currencies and a wide range. when they do that, that's when things really happen. 6-6.5.ay it's that would suggest they are
anticipating -- betty: what happens now until october? vincent: not a lot. betty: thank you so much, our currency reporter, on china's inclusion in the imf basket. still ahead, the nasdaq 100 closed at a record high earlier this month. our more games ahead, or is it time to take some profit off the table? how to risk less and save more. ♪
equities. how does the broader options market look? kevin: it's kind of ho-hum. trading near the 2100 level or less. not much trading, everyone is positioned out into next year and that's what they are really looking forward to. i hate to say something is the highest it's been in two weeks, that isn't very long. abovell trading a little its level for this year but still below its average over the last 20 years. 19-20 level is historical for vix. is thehe anticipation -- iss been pretty much going to raise rates 25 basis points and figure it out later
on in the year. it's a position of what they want to be in for next year. matt: so how do you position for next year? it's only november 30. of people have a lot on wall street coming out with predictions for next year. returns of maybe less than 10%. you want to be in that market leadership, you want to be in facebook and amazon, with what is working in this type of environment. people are thinking much of the same for next year. the nasdaq 100 has outperformed. this is the trade that has worked all year. the nasdaq 100 over the s&p 500. it doesn't have energy and financials. want to buy the nasdaq 100 and sell at 10% out of the money call against it to lower your costs.
call on the nasdaq 100. the 5200 calls against it to reduce your cost. with that, you can make 2.2 times the amount that you pay for this trait. -- for this trade. the way to position the entire year for next your and get some good returns and mitigate the risk, because you're not spending a whole lot of money. matt: this is the trade you have been working all year? just: we talked about buying the 4400 callouts to next december. the market leadership is there. when you look at amazon, facebook, google, these are the names that are growing revenue and we are in an earnings recession. bottom line, instituting dividends, implementing him and eight, they
have great balance sheets, so they really have the great a.exibility -- implementing m& matt: thanks for joining us. betty, i will hand it back to you. ahead, amazon is not just about getting seasonal shoppers. their strategy is to grab them and then keep them. we will explain how they are making their loyal shoppers even more loyal. ♪
headquarters, i am betty liu. you are watching "bloomberg aura has more l from our news desk. lore: thanks, betty. bernie sanders is undergoing a hernia repair at george washington university hospital, being described as elective, according to his people on capitol hill. qi officials say there was a bombing of those taking part in an annual pilgrimage, ad the attack triggered in certain neighborhood. officials say four soldiers are among the dead, and for the first time in years, the israeli prime minister benjamin that yahoo! and the palestinian authority head mahmoud abbas shook hands with the world watching. they huddled on the sidelines of the global climate summit. peace talks between the two
sides collapsed last year, and talks about crafting a legal framework for climate emissions, and the world's richest man is gathering a group of the lancer lists, pumping $2 billion into the issue, including jack ma and others next year. they will collaborate with companies that create 80% of the energy r&d, and you can get these stories 24 hours a day on bloomberg.com. back to you. time for another check of the markets with lackluster trade. and abigail doolittle has more from the nasdaq. stocks lower, a lower day, i should say, but we are watching two stocks that have been trading higher, and one of those is apple, and they are saying that the apple watch and
are among the hottest items out there according to an in-store check by an analyst at best buy, target, and walmart. the stock is up modestly, but it is looking higher for the year-end, boosted by year-end sales, and microsoft is up after microsoft upgraded the shares to a strong buy from market perform, and the company is seen as a long-term winner in the cloud. this is consistent with other another making a technical case for the stock to retest its all-time high of $60 made back in 1999. betty? all right, abigail, thanks. the nasdaq.ittle at and friday's black friday a little bit of a letdown, sales
online up 18%, setting the stage for a smashing cyber monday, and there was a guest to wade in this morning. >> we have already had one great day on black friday, and we are looking for a record-breaking day. cyber monday could be our biggest deal -- day ever. say it is analysts not about winning one day but all year long, and a guest joint us now with more, so you are saying that they are not just winning the war, but they are totally redefining what the battle of the war is, right is to mark >> right. from walmart and target, they are talking about online and cutting prices, and amazon is saying, yes, we want to have sales, but we really have the game in mind, and it is all about amazon prime, and how many people can we get to pay the $99 a month and become a loyal customer. what about the prime
numbers? >> we do not know the data, and amazon does not release the number of prime numbers they half, but we do have numbers that take it around 47 million people, but we can look back at what happened during the amazon sales holiday that they had. exactly. that ended up driving up prime ever shipped by about 3 million. about 3 million, ok. how do they keep adding value for the prime members, and not just to add on the new members but to make sure that the existing members do not churn out? andt went from two days, there is also on demand video, photo storage, early access to deals. today, you saw a bunch of information about drones, one day coming to you with drones. we will see.
amazon reallyis the only one able to do something like this? who else has tried to replicate this amazon prime strategy? >> it actually goes back to costco, deriving most of their profits from membership, so it makes sense for costa members to shell out $100 or however much a year for that membership. yes, and as a former costco member, i totally get that. do the samed to thing, and they had to forgo their membership fee just to get more customers on board. intody else trying to get this space with amazon, or are they clearly the leader, and there is no way that anyone can catch up with them? >> amazon had a decade of loyalty built up before they started holding that out.
what nobody really knew that was, so why am i paying that membership upfront for you show me the value, and that is what amazon is trying to do. they are trying to ratchet up the value for the prime members, and prime members spend double the amount that non-prime members do. they spend a higher percentage of their budget at amazon than non-prime members. betty: and then the shipping, the big shipping that is free, is that the big draw? >> that an quicker access to deals for some customers if they sign up for the prime trial. betty: what could we see in the next 12 months for amazon prime members? says they are ratcheting up the numbers on prime. they have not released any numbers. they are extremely secretive, but they have said in numerous earnings calls that they are going to keep investing in
securing 8500 u.s. factory jobs. workers will get $8,500 in signing bonuses plus $1500 in early profit sharing, and american airlines. it is a new contract that is set to include significant pay raises, and the communication workers of america and the international brotherhood of teamsters who jointly represent the employees made the announcement with the carrier today, and a spokesperson for target says their website is not down. showed up.es target says they continue to process thousands of orders with record-breaking traffic today, and they are offering 15% off almost everything on sale. can always get more business news at bloomberg.com. now, morgan stanley is planning a significant reduction in its
fixed income staff, laos that could be as much as one quarter of those employees. they saw bond trading revenue plunge about 40% in just one quarter alone, so here is michael. it would seem inevitable, right, with what we saw with the fixed income revenues that we would see job cuts? michael: yes, and this has been going on for the past few years. it has been a steady decline, and they think on trading revenue will bounce back, but maybe not to the level that we or before the crisis immediately after, so this is more of a long-term trend. ok, they are adjusting. they are rightsizing, as they call it. are these cuts going to be? >> it is a be businesses within fixed income. credit has had a tough year. oferest rates trading, a lot
regulatory pressure with some of the new ratio rules, so it is really across the board. so morgan stanley is not the only one who has had trouble with asked income trading. are we expecting others to follow suit? michael: we have seen some of this in europe, but so far, they have not jumped on board with this. -- expected to be down for these fixed income traders, but it has been mostly with the european competitors who have been a little bit slower. betty: they have been retreating. michael: yes, so it will be interesting to see if anyone follows suit. morgan stanley is the smallest among the big u.s. firms, so that may factor into this. betty: into why they are doing this. is it expanding anywhere else, or is it just retrenchment? it has been retrenchment. over the past couple of years, they have gotten bigger in
equities, so this has offset this a little bit, and other major u.s. banks, they are the only one bigger in equities and fixed income on a regular basis, so they have that going for them, but this is certainly retrenchment. ok, thank you, michael, who covers banks for us. and morgan stanley: bad news for portfolio managers. a chief strategist says a mix of stocks and bonds and other investments that were called the efficient frontier is about to collapse. our bloomberg editor joe weisenthal is joining us now to explain mystery of the efficient frontier. why is it about to break down? joe: you have a portfolio assets, trying to find that perfect mix, and you put volatility in, because you can get more returns if you are willing to take on more volatility, but in the last few years, they have had kind of this free lunch, where you could get good returns without taking
on much volatility, thanks in part to the fed and the using and qe, which has the effect of reducing volatility and asset prices boosting, and they see this is coming to an end. if you look at the blue line, that is the trade-off between volatility and returns, and you can see you can go way out on the volatility line to the right and you do not increase your returns very much at all, according to their projections, so they are basically saying you're not going to get much juice out of that. betty: and, joe, their reasoning is because the quantitative easing period is over. joe: yes, it was an incredibly long period of excellent returns, starting from the eventually with the fed tightening, the free lunch is coming to an end. betty: all right. exactly. joe: we had a lot of good years. betty: more power to you if you
make money during that time. goingt is the right mix forward? do they make any recommendations, or it is all efficient frontier -- joe: there is still a mix of bonds, a normal diversified portfolio, but it is interesting because it is pretty consistent with what other strategists are saying. have come firms who out with their forecasts for next year, almost nobody is forecasting something particularly blistering strong for next year. goldman does not see much upside. betty: on the stock and bond side? joe: there are the very low rates of the bonds are paying and the idea that this extraordinary era is coming to hard-pressedu are to find anybody particularly bullish on anything next year. betty: is this for next year, or is this a new era that we are entering? era.this is like a new
betty: get used to it. joe: whereas bank of america for a few years. they are still saying that is the game to play, being long u.s. stocks. that will be it for a while, so it is kind of a mix on that front. ok, and your show is coming up next. what is on tap? joe: we will be talking about this and the decision of the imf to include the renminbi in the basket, and will be talking all of the data, the central banks, opec, friday's jobs report, so we will have a good look ahead. betty: it has been a little quiet today. maybe people are resting up in anticipation of all of that. thank you, joe weisenthal, the coanchor of "what'd you
betty: welcome back to "bloomberg markets." i am betty liu, and we want to head back to the market does, and matt miller. a look at the indexes, where we are right now, actually moving down a little bit lower. the s&p 500, the dow jones, and the nasdaq all off by about one third of 1%, but we are going to eke out a monthly gain. just barely about 2/10 of 1%, so it has not been a terrific month, but at least it has not
been negative, and taking a look at some of the chart that are much worse than the s&p. commodities in general, but oil, down almost 11%. -- west texas, the worst since july the we have seen four month in a row of oil averaging and only $50 a barrel, seven days was the oil trade up, and also for gold, the worst we have seen since june 2013 as the prospects of the fed raising rates becomes more and more clear. obviously, the fed will pay interest. gold still does not, in a matter what happens, so you can see old down for the month at 6.7%, and the best and worst performers in you see as a result, ,uge jump of 44% for a premium and then freeport matt moran,
they had a fantastic october, up , but down in november, so --eport matt and ran freeport mcmoran is down. it has been a down, down year for them. betty: matt miller, thank you at the markets desk. the ecb and janet yellen, these are big ticket items that investors have, and a look at how the market may react as we head into the final month of the year and the last few minutes of the trading day, and i want to -- oliver.l of her jobs are important, so there is always some volatility there. think, i would make
the argument that the ecb could relevant tobe more u.s. investors than the job market, and just looking at the certainty with which people are predicting this will happen, so there will probably be more stimulus put on the table. economists are saying that. ver: if the ecb puts more on the table, it brings more divergence, and that will continue to accentuate some of the issues we have had with the dollar and some of the companies in the u.s. with their earnings, but what is also interesting is my editor sent me this, and this is the european volatility versus the vix. you have to wonder why this is, and i think what could potentially happen is with this certainty being expected in terms of what the ecb does, and if they do not, for whatever are not satisfied
with what comes through, that could have potentially an effect on the u.s. market, and if you are a u.s. investor, you like to see investors coming from europe. if it does not come through, then you have some kind of reaction in u.s. stocks, and i think the biggest thing that could move the head to not go in december would be something with the european stock market. the economic numbers are pretty well lined up where they want. you see inflation creeping in, and you see the jobs number coming through on expectations. i think it will be right where if there is aut turned down and the stock market, i think that could be the only thing. catalystsnk about the between now and then that could potentially move u.s. stocks, and maybe the ecb is one of it. that, maybe to do not. betty: i think you are right about that complacency. you have got 100% of economists saying it is 100% going to happen, that is when you say oh.
: right now, we are going into the end of the year. everything is looked at with how it will affect the interest rate, and we see a decline of the s&p, even 5%, that could make these red hesitate. we have seen the fed funds move hand in hand, and i do not see why that could not change if there is a pullback in stocks or any kind of weakness. that could determine the fed, and make them wonder if that is the right kind of environment to go in. are amongrgy stocks the best performers today, and part of that is the volatility and the up and down days with the price, but how much of these commodities are going to be a really big factor for the market, not just for the next few weeks, but for 2016? what are people saying to you? : it is not the entire
picture, but as matt just pointed out with freeport mcmoran, looking at how much they demand from production and the industrial standpoint, it has a material effect on the stock, and in particular, it is highlighting the divergence that is really going to be a big story next year, and that is the diversion between industrial type companies and consumer-driven companies, and i think of the start to see strategists and analyst look at this at what is driving the market, it is kind of a push and pull. some of the materials companies, they might continue to hurt, especially if we have greater concerns for these international companies, but the flipside of that is there is a pretty strong consumer. hope. black friday and cyber monday -- betty: it is kind of lackluster right now. : if that comes through,
it paints a picture of a strong u.s. consumer, and at the same time, we do have a pull in a different direction. betty: so do you get a sense that the markets are more nervous, given all that is going on this week? oliver: i think you are starting to see more bears emerging. betty: ok, thank you. "what'd youead, " is up next, and then later, "with all due respect," with more on the presidential campaign. ♪
i am joe weisenthal. alix steel is off today. ♪ [bell rings] scarlet: u.s. stocks closing lower with the s&p 500 clinging to a tiny advance for the month of november. joe: but the question is, "what'd you miss?" scarlet: we break it all down for you. joh: and as we go into the final month of 2015, what are the banks predicting? and the reserve currency basket. we dig in and what it means for global markets. but we begin, of course, with the markets on the final trading day of november. we see that stocks are due to and the month with these smallest, the slimmest of gains, only be nasdaq finishing up more than 1%, so everything was solved 1%. we have already