tv Bloomberg Markets Bloomberg January 4, 2016 10:00am-11:01am EST
from bloomberg world headquarters, good morning. here is what we are watching this hour. it is a global meltdown. the dow plunging more than 350 points at the open. we are reacting to the worst new year ever for chinese shares paid attention's flaring up in the middle east. saudi arabia and gulf allies cut ties to iran after an attack on the saudi embassy. look like general motors investing in- is the right against uber. markets are tanking. we are deeply in the red. all stocks are down.
i want to get to julie hyman with more on that news. >> that number is coming in worse than estimated. a 49 is what an -- is what economists said. this manufacturing number coming in worse than estimated. it is also a contraction at the path -- contraction at the fastest pace in six years. readings under 50 do indicate contraction. this adding to the already negative tone we have seen this morning with stocks deeply in the red. it looks like it will be the worst one day selloff for u.s. stocks. we had that steep decline in the correction.
began in china, where he also had a steep selloff you the shanghai composite falling 5%. this being triggered by manufacturing numbers there as well. if we can take a look at some of those chinese stocks we have been missing and chinese groups on the move, down nearly 7% on the day. this is the etf that attracts the onshore stocks in china. the individual stocks are also lower stocks. alibaba participating. >> we are seeing this rotation from last year. we are seeing investors going back into these safe haven assets.
>> netflix, far and away the best performer. downgrade,t by a being caught on the valuation of the stocks. saying a survey -- there wasn't much change in netflix. onyou talk about the groups the move today, energy is doing the least poorly, down very fractionally, last year being the worst performer by far as oil gets a bit of a list today. >> thank you so much. let's check in on the bloomberg first word news. allies areabia's deepening iran's stickleback isolation. ending relations with iran today. arabia executed a shiite cleric.
denmark says it will impose temporary spot checks to control the flow of refugees. danish leaders were angered by swedish is position. -- his wife's presidential campaign starting today. the nfl is starting down the road to the super bowl. four games next weekend. on the final day, peyton manning came off the broncos bench to lead denver over visiting san diego. that earns a weekend off. 24 hours a day, powered by 150 news bureaus around the world.
>> thank you so much, vonnie quinn at the news desk. the dow is down 100 points we are at the low of the session. part of that is china. a rough day in china. the country saw the worst ever start to the year. china's first economic -- manufacturing weekend for a fifth straight month. the longest a downward streak since 2009. the lowest in two weeks. to bring in nick wadhams. describe what exactly happened with these circuit breakers here? >> the government instituted the circuit breaker. this is the first data went into
effect. an effort to ease market volatility and soothed investors and prevent a massive swings. what ended up happening is the circuit breaker was in a vicious cycle where the market started to tumble, a lot of investors realized we are not going to be able to get out before the breaker trips. >> what was the trigger? was the manufacturing number? was going on here? >> the manufacturing numbers are down pretty marginally. it is really only based on 400 companies. you can get swings the time what happened to a couple companies. government is set to lift a ban on major shareholders of stocks selling their shares. that was put into effect last summer during the big markets.
that is supposed to end at the end of next week. lifting,pation of that a lot of people are anticipating major shareholders are going to be dumping stocks, so they wanted to get out or that happened. >> it then raises the problem, chinese officials, as they are trying to change their hands -- trying to take their hands off the markets. >> that has been a big question throughout. there is a lot of question about the government's ability to manage this market. this is a very volatile market. i think circuit breakers have been in effect over the last six months, you would have seen them trip about 20 times. there are huge swings in the chinese market that you wouldn't necessarily see elsewhere. more doubts about whether the circuit breakers are going to work long-term.
we are expecting to see some fine-tuning as to whether the government decides this is the best option. >> thank you so much. our beijing bureau chief on what happened overnight, and that is affecting us here. the dow is now down over 400 points. a lot of strategists said if it was going to be a make or break in the rally of this year, china would be a key factor. economic editor mike mckee for more on what is going on here. down 400 points based on china. worry that nervous? there was think anything new added to the fundamental picture. it doesn't really change the economic picture. you have a broad base.
it was a long ride, a lot of pickups. --n though the economy earnings have grounded to a halt. out they are expected to rebound. unless you think there is going to be a rebound in oil prices, some of the key things, that is going to change. the u.s. economy is solid. in mind chinaep is a huge contributor to global gdp. it is hard to get a picture on the global economy. it doesn't add anything terribly new to the conversation. there are jitters.
>> we are going to get quite a bit of economic numbers. >> a lot to look forward to. you mentioned the idea of the dollar softening. it has gone down since then. weekis one reason we see a number today. there is a bit of a turnaround on you manufacturing. flattening out and a rise back to expansion. the worrisome factor is you see the decline in the number of employees. we are still expecting 200,000 and expecting a significant jump in wages. at this point the economic
indicators are in a positive direction. >> which makes this plunge all the more sort of confusing. >> it is the first day of the year. i think julie pointed out the stocks that are losing today. a lot of the money has gone towards these beta names. --n you have the market feel market peeled back to you would expect those to come off a little bit. the netflix is down. there is not a lot to keep the market flow. >> thank you so much. an exclusives interview coming up with loretta master. that is at 1 p.m.
fall off, which was as expected. the s&p 500's volume is above the average. not only are we seeing this heavy selling, we are seeing it on high volume. it is basically what you heard all of are talking about, these volatile names. some cases, stocks have done very well. interesting, the analyst says there is somewhat a conflicted sentiment around the stock and downgrade, that the company has been making investments that will indeed pay off. we believe even winners need to take breathers sometimes as estimates recalibrate. then there was one big stock that that -- that did not do quite as well.
+++ continues to have its march down after a negative year in 2015. pandora is a never that we are watching go lower this morning. cutting his recommendation to neutral from buy, saying a new interactive service from the company and deals carry risks. there was a negative mention over the weekend. we were seeing casinos decline, many of them with exposure. >> anything china related is going to be -- thank you so much. now to a developing story on a car front. plansl motors announcing -- the deal giving lift evaluation of $5 billion. right now, shares of gm are down nearly 3%.
almost all the dow stocks are down. jamie butters is joining me now from detroit. why does this make sense for g.m.? >> not just in detroit but germany and japan, they see the toential for the industry change in the coming decades. they were trying to position themselves to be involved in the development. see what it's like and hedge their bets. cheaper, thecally price is better.
>> they have more room to grow and art is highly valued as super is. -- as uber is. >> they think there are going to be more changes in the next five years than the last 50. what do you think they want to get out of this? >> they are looking for security and looking for options. far along trying to develop a self driving car. aey are planning to bring semi-autonomous cadillac to market early next year. for thatest potential is seen in this ridesharing, ride hailing robo taxi service. if they can partner up with lift, they talk about wanting to
work with google and others. if they are not on the inside with somebody else they better give them lift. have that consumer interface. the it doesn't have capacity to develop self driving technologies. >> speaking about cars in -- yesterday they came out with their reports, just hitting the lower end of their target. is this something to cheer for investors? in the eyes of the beholder. there are a lot to see the
company as grossly overvalued. you say, well the model x is --ping up pretty slow area pretty slow. of people didn't think they could get to 50. they cleared 50, despite launching a second vehicle. they did it without screwing up their production. .hey seem to be accelerating i think they are hit by the general sentiment in the market. >> thank you so much, our bloomberg autos reporter. we have a lot more in potential ipos coming up.
>> welcome back to bloomberg markets. stilln see the dow is down, coming back from our lows of the session. all the s&p sectors except for energy are in the red. trump's first tv ad of the presidential campaign will start airing tomorrow. the ad focuses on terrorism and border security. it never mentions trumps republican rivals. bloomberg politics joins us now with more. spend $2expected to
million? >> per week. >> why spend all this on tv ads? >> he has said he is doing this because this is the beginning of the end game. has nationalized this election more than donald trump. donald trump understands there is a process to this. he needs to play that game now. more athim more and events trying to convert his supporters to actual voters, saying i need you to turn out. the fact that donald trump needs , build a ground game, go on the air with advertising. hesays he doesn't think needs it but he would regret it if he didn't try.
>> hillary clinton's team is bringing out bill clinton not to -- no clintonrial on to the campaign trail. he said the worst thing hillary can do is have her husband campaign for her, just watch. hard,has been going very this is trumps way of countering hillary clinton's attacks on him. his recorded about with women. hillary is rolling out in new hampshire, she is thinking about the primary. bill clinton is very popular, but especially in new hampshire. this is the state that made him the comeback kid. iowa today, bill clinton is in new hampshire today. playw is bill going to
overall for the national campaign? >> this is the big question, whether or not he will be an asset or liability. he got very defensive about his life and paid for that. in 2012 he was one of the rock stars of obama's reelection. which bill clinton we will see this time around is really the question. >> thank you so much. a programming note, tonight on with all due respect, a -- an interview with republican presidential candidate chris christie. . .
television. i'm betty liu. the market in melt down mode. i want to bring julie hyman in. julie? julie: concerns over new regulations in china, contributing to the selloff. u.s. cturing data in the all major averages down 2% or more. they are off the lows of the session, but still a very sharp selloff. other asseteck classes. oil is notable as tensions ratchet up between iran and saudi arabia. ambassadoring its after saudi arabia executed a shiite cleric. on the flip side, as people are selling stocks, they are fleeing
to what they perceive as relative safety. the yield is pushing down to 2.22%. if you look at gold prices, there we are also seeing a gate as people pursue what they perceive as refuge. up for sixlar straight sessions. up about a 10th of 1%. the dollar trading higher versus the euro, lower versus the japanese yen, betty. betty: vonnie quinn has more from our news desk. vonnie: thank you. workers and northeast china -- i and northeast china -- rescuers are drilling a new tunnel to save trapped miners. a newals are viewing
islamic state video. a man with a british accent speaks before shooting a man in the head. they say that they will soon invade britain. at aople were killed conference center, but it will remain closed. it serves the emotionally disabled. and the u.s. house returns to work today, repealing obama care topping its agenda. this bill could reach the president's desk. passed itsalready version. it faces a certain veto by president obama. global news 24 hours a day powered by 2400 journalists in 150 bureaus around the world. i'm vonnie quinn. betty? betty: thank you so much. as julie was talking about oil growing tensions
between saudi arabia and iran, energy stocks are gaining ground today. this comes as saudi arabia's allies are cutting ties with iran after the saudi embassy was attacked. our correspondent joins us live from london. first, describe how we got to hear. we know the events that kicked off what happened over the weekend. but this has been a tinderbox ready to light, right? with iranrelations has been rocky since 2009. betty: right. reporter: we had the saudi's and other gulf countries trying to and then we have the syrian war where saudi arabia was supporting president , and then saudi arabia in
trying toed iran spread its influence in yemen, prompting a military strike. arabia and its allies feeling abandoned by the united states because of the nuclear talks with iran. they felt the u.s. was basically open to iran having a bigger role. betty: right. way, this move was unexpected, but was it surprising totally? i would say not because the tensions have been growing up for the past four or five years. betty: alaa, that's a great timeline of what has been going on. there is another piece of context. saudi arabia's economy is in growing disarray. oil prices here at decade lows. is that related to the event this past weekend?
difficult tory relate that directly, but you can't talk about this without looking at the global oil environment, and wondering whether the confrontations will extend to oil markets. the saudi economy is -- i would not say in disarray, but it's not going through a great time because of the drop in oil prices. let's not forget the kingdoms that is going to allocate about a quarter of its spending in the 2016 to defense spending and they are blaming this on the war in yemen where they accuse the ukrainians of being behind all of this. it means more military spending. of being the iranians behind all of this. it means more military spending. on the other hand, iran is about to bring more oil supply on the
market and that could depress prices even further. we see in oil price war between saudi arabia and iran? it's difficult to predict where the prices are going to go. do not forget, we have the same tensions happening now in the 1980's. the two countries were engaged in an oil tanker war in the 1980's. we had that before. iran isbiggest risk to let's say hardline elements decided to take a more aggressive approach that would lead to iran breaking conditions of the nuclear deal. that would be a major setback and derail any further efforts to bring saudi arabia and supply into the market.
the irani ends on the other hand, because of sanctions, -- the other hand, because of sanctions, have been less exposed to the market. it's really difficult to see who has more leverage on the other if this were to extend to the oil market. betty: right, what are the repercussions from either side? thank you so much, alaa. for a closer look at what all of this means on the markets and much more through the middle east, i want to bring in a former adviser to saudi arabia's economic minister. he joins us now from athens. alaa provided really great context to the tensions between saudi arabia and iran. how is this going to affect the
war in syria? so many questions, given what has happened. absolutely, betty. there are so many things. first, there are the proxy wars which could heat up in yemen and syria, and of course, there is words which could heat up a little bit more. i do not think we will have an actual war going on between the two nations, and that will help somerices spike up, so countries will be happier. but nothing in the median term. i do not think oil prices will heat up endlessly. betty: just based on this. but how was iran going to retaliate? john: iran is going to keep helping the bashar al-assad regime in syria. that will aggravate the saudi's. they will not be entering the
negotiating table anytime soon. the russians will heat up and get involved yet again, and yemen is going to continue to be an issue. and in the eastern province of saudi arabia, we could see the arena is getting involved. twon, in bahrain, these are countries where they are heavily invested in domestic affairs. betty: we spoke to robert jordan who is the former ambassador to saudi arabia. i want you to listen to his take on the rising tensions between iran and saudi arabia. ambassador jordan: this is a situation that also represents a to theous challenge saudi leadership. the price of oil is down. haywire.get has gone come in withng to a strong hand.
they are trying to show their population that even peaceful dissent will not be tolerated. betty: would you agree with that? saudi'sdon't think the are yet in trouble. financially, at least, they are quite solid and it's an expansionary object. so, i think the saudi's are ok for the time being. i also do not expect there will insidet of instability saudi. there will be a war of words. it will infuriate everybody. will think about the geopolitical premium. but we see the ball in the court of iran. we have to wait and see what they do. betty: but i think robert jordan's point is they are trying to preempt any possibility of essentially any public outcry over what is going on in the oil markets and what
is going on around them. this is why they went on ahead, showing the strong hand, executing the shiite cleric. absolutely, they have to show that may have to indicate that the irani ends cannot meddle in the affairs of saudi arabia or other regional countries like bahrain or yemen. absolutely they have to show there is a redline and the irani ns have stepped over it. and are not going to accept it any longer, the saudi's. betty: all right, thank you. back to the u.s., energy stocks are the only gainers in a market that is completely in cell mode. almost 400off by points again, the s&p lowered by 2.25%. really affected by what is going on overseas. we will be right back. ♪
betty: welcome back. this is "bloomberg markets." marketsooking at the board, particularly the dow at the new york stock exchange. bouncing along the lows of the session. so, we are selling off here. in fact all major markets are selling off, including in europe where mark barton is standing by with a look at shares, trading. mark, welcome back. ahead mark: what -- mark: thank you, betty. what happened? i was gone for a few days? what have you done? this will be the worst ever day for the european stock markets. the last time we sold as much
with the end of august. remember what happened in august. china devalue the yuan. we have a bit of a repeat today. no china devalue wing. and indiscriminate selloff. every industry group is falling. betty.to quality, gold, treasuries, euro, yen, stocks getting hammered. absolutely, and people piling into energy given what is going on in the middle east. mark, you have gone and come back and now i know you have demanded the european close now be ian hour. them,what did you say to betty? how did you persuade them to let me share the airspace with you for an hour? just in case people do not know, is extended close
by half an hour. we have a big, big show for our purest, don't we, betty? today. a lot of data we have interesting german inflation data and manufacturing data out of the eurozone. buffett,alk warren steven wieting will be talking about these markets. it will be a crazy hour. they had to put us together for an extended 30 minutes. betty: "the mark and betty show." you in 15 minutes. abigail doolittle is standing by with some of the big movers, including amazon in the consumer space. ingail: true, betty, and keeping with the themes of the losses, the nasdaq is down 2% and is due to the consumer
discretionary space. amazon and netflix, the two top performers in the nasdaq 100 last year, were down the most. from -- tograded , on concernsa buy of profit growth among other reasons. investors think that the stock. ahead of itself last year. and turning to netflix -- shares downgraded to neutral from outperformance. a more balanced at risk-reward at current levels. this could be another momentum stock that investors are reevaluating the new year. betty? so much,ank you abigail. abigail doolittle at the nasdaq. venture capitalists are
encouraging companies to rein in spending. of companies in a will theo market, what year bring? i want to bring in bo peabody to talk about which companies are going to go public. i know you own city of these say they're- not to going to go public -- but you look at a day like today and thing -- a: it's a good day to be private investor. i would not want to walk the market today. we have to deal with this sometime, but what a tough one. there are companies that have to go public. that's really the issue. betty: because -- $7 millione burning
a month, $10 million a month. even these big cases, that does not go that long when you are burning that much capital. betty: even gm announcing today they will put $500 million in lyft. bo: i was amazed by that because we've had seen those big, late and byrivate financing the year. people got skittish. it will be interesting. skittish market, tepid ipo market, companies that have to go public. what is going to happen? betty: you have a list of companies you think have to go public -- snapchat, airbnb and -- bo: what is interesting about this market, it only takes one company like snapchat to go public and do great. and snapchat is funny. it's kooky. no one understands what he does.
kids love it. i don't think investors intrinsically understand how it works. there is funny stuff about hillary clinton figuring out. they haveis monetization that when they turn on, they can start doing a million dollars a day. betty: i have seen that. measuring that against degradation of user experience. betty: like instagram. bo: they all go through this trade-off between monetization and user experience. the question for snapchat is when will they hit that inflection point where their users are ingrained enough they will put up with monetization? it just takes one company going public with huge numbers and making or beating a quarter or two. betty: you think they will break that monetization by the time they go public? befores our to do that
they go public. they will do some of it. there are a number of levers they can pull. these companies are pretty smart. they know they have three or four quarters of visibility and making the numbers and they will set it up. companieson is, the going public in 2014, what happens to them? their visibility is coming to an end. betty: what about airbnb? you have high hopes for their ipo? a hugey are disrupting industry. i hear more people willing to use airbnb -- people i would not peg to do it. it is gaining credibility and i think ipo's bring credibility to companies. and that's one of the reasons to go. that is a good one. betty: there's also a list of companies you think will get acquired though. etsy. everyday health. bo: everyday health is
interesting. the market hate advertising-based companies that 's, which arei.o. in search and orders. the market generally does not like insertion order advertising, which everyone does. but health advertising because of medical legal review is hard to do programmatically. they sort of have to do it in format. it's case-by-case. it's hard to buy it and and electronic,- in an programmatic way. investors generally do not like the space. it hit the stock hard. but it's the second of two facing big consumer- health products. there's really not a third one. betty: ok, and fitbit, you think
betty: welcome back to bloomberg television. i'm betty liu. we are watching the worst intraday drop in the markets in september. julie: let's look at the major averages. betty mentioned the worst selloff since september when we saw that more than 10% correction many major averages. all major averages following -- falling to the lows of the session, down nearly three and a points on the dow at this time. not only are we seeing an
acceleration in the selling of the major averages, but also individual movers and energy. which earlier was little changed. now down more than 30%. financials and consumer discretionary also falling on the day. also, if you take a look at my bloomberg terminal, i have been tracking the volume and those various individual groups. thegy volume is down versus 20 day average. you see a big surge in consumer informationy, technology as well as increases, betty. trading is up on a day we are sharply down. betty: all right, julie. thank you so much, julie hyman at the markets desk. we will stay on the markets as we head to the european close. ♪
"european close." mark barton joins me. we're wrapping up the trade in the new year. mark: happy new year. the worst start to a new year ever as there is in equities route across the globe. rout across the globe. betty: we are going to take you from new york to london to men ilan in the next hour. we can blame what is going on. mark: betty, what a day. than 7% after two days of manufacturing -- two gauges of manufacturing contracted, one of them for the second month. that has not