tv Bloomberg Markets Bloomberg January 12, 2016 12:00pm-2:01pm EST
from bloomberg world headquarters in new york, good afternoon. i am out steel. here's what we're watching at this hour. the dow is in and out of negative territory and now back in the green. the bloomberg commodity index at a 25 year low. enoughina's efforts be to calm investors? him -- for oil prices to drop. to an hundredar $60 per barrel. and our twitter investors losing confidence in jack dorsey's efforts. uncertainty about the company's future. let's head more to the markets desk where julie hyman has the latest.
a very confusing day. it has been. you talk about what originally, assuring that up did create some optimism in the markets. we saw european stocks rise initially. problem is we do not know if they will continue to do so. current strategist's a hard time forecasting where the u.n. will go and what we will see chinese regulators do going forward. we see major averages for the moment hanging onto gains but yet -- as you know that has been volatile throughout the session. the s&p 500at throughout the day, we have seen at flirting with negative less than a half hour ago, now hanging on to one quarter of 1%. have not just china and we seen oil go down sharply. 3.5%, 3031 here. just off the lows of the day, we get the weekly inventory numbers tomorrow. it has been a rough time for oil
to say the least. and city out with a note , andechnical door is open horrible omen for the industry or what is the correlation between oil and stocks? it has not been consistent? it is-- julie: relatively consistent today. placed on top of each other. the s&p and white and oil in yellow. a close correlation. the s&p faring a little better than oil prices right now. you could say a lot better on a percentage basis. directionally, it has mostly been the same. the magnitude of the decline in oil has been much more. other things in the s&p 500 besides energy. also what is going on more broadly in commodities as out mentioned at the top of the show. the bloomberg commodity index at its lowest since 1990 one. here you have it over the span of time here. below we are seeing here today.
it is not just oil. we see the metals pulling back. the year asin people were looking for safety. that seems to have melted away despite the fact there is still an uneasy market sentiment. copper prices, we have been watching them as well. turned lower as well. they were higher. reporting its earnings, copper and gold just continue the incredible slide, down about 30% in the last two sessions. thank you so much, julie hyman. we will get to first word news this afternoon. mark crumpton has more. mark: thank you. a deadly explosion rocked an area popular with tourists. at least 10 people were killed and 15 wounded. turkish officials say it was likely caused by a suicide
bomber. turkey has been cracking down on a number of groups, including the islamic state and kurds seeking independence. at least nine of the victims or seeking internationals. the fight against islamic state until the country. the problems come a day after an attack on the baghdad shopping mall. at least 17 were killed and it triggered a wave of retaliatory attacks. of worsent was posted to come. bowe bergdahl is back in military court today charged with desertion and misbehavior before the enemy for leaving his post in afghanistan. he has not entered a plea and must decide whether his trial will be heard by a jury or just a judge. president obama will deliver his final state of the union tonight, expected to lay out an and broadvision for america's future. white house aides say the president will focus on what he
considers his administration's successes, including reaching a nuclear deal with iran, restarting relations with cuba, and negotiating a budget deal with congress. you can watch the president's speech live at 9:00 new york time right here on bloomberg television. news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. back to you. alix: thank you. china says no more weaker currencies. the people's bank of china bought hong kong in the offshore market, which triggered a spike --borrow u.n. in hong kong on -- hong kong interbank. the unfortunate expense of a functioning market. he is a member of the council and foreign relations and serves on the board of a national
committee for u.s. china relations. welcome and thank you for being here. what should they have done today? should they have continued to let the offshore continue to fall? >> they cannot do this all by themselves. they are doing as much as they can to create a sense of stability and strategy in terms .f what they will be doing there have been a number of missteps over the past week. policies have been introduced and rapidly redrawn. -- withdrawn. they must explain what they're doing, but they cannot do it all by themselves. they need to have alignment from their policy leadership of the bank if china will have any hope of communicating an effective strategy going forward. from an outsider who is not an expert, it seems they are trying to find a happy medium, but what is it? >> there are easy answers and hard answers to that here the easy answer is for them to
continue to demonstrate to everyone they have 3.5" early in chilean dollars to work with behind them. alix: meaning they would keep -- foreign exchange reserves. that would support the u.n. offshore or onshore. >> the problem is that does not make sense for china to go through 35 years worth of buffer they built up, for the purposes of sustaining income which cannot be sustained in the long there are not fundamentals underneath it. the hard way to do this, and i think what people expected coming into 2016, was that there was enough fundamental economic policy reform taking place in china itself that there would be a china risk on that from the world, that people would be willing to work without having to have perfect execution in the markets every day by the bank. gotten a little behind their own timetable for delivering bigger and more
fundamental reforms at home. alix: if they are not doing the reforms, the big question in the market seems to be, are we looking for a huge devaluation? that they should just get it over with, or are we looking at incremental and slower fixes that have these ripple effects? what do you think is the best course of action? classic really cannot be in the middle. it will have to be one or the other. of problem with the idea just getting it done and letting it fall to its bottom is that there is no bottom, no such thing as a low price where everybody comes in. is it at a level where they say, all right, it has decoupled enough from the dollar and we are good? >> there are some who think that. the problem is other emerging market currencies are not stable either. they are basically following suit on what china does.
china can let it fall, but they have none whatsoever that other currencies will not follow them down the path, leading them back where they were, not actually anywhere as competitive as they were in the first place, just with a lot of credibility lost by virtue of all of the uncertainty we see playing through presently. alix: not to mention they stay at a weaker base. appreciation over the last three or four years to work through. >> in thatcomes back to something you said a second ago. there is a lot of reform happening. the question is whether it is enough. china has let its capital account open to a significant degree, which is why we are putting pressure on the people's bank and the payments picture here in the first place. that, they not done would have the options they have have for decades to have it both ways. they did move forward with
reform on a capital account. they are doing a lot domestically to adjust to the economy to a more competitive place. the question is can they stay ahead in the synonymy of speculation out there that will test them in every step going forward to make sure they are staying on top of the timetable. it seems the market wants to see a huge domestic stimulus to help. authorities have made it clear they are not doing that and he will focus on the supply side, which makes better sense longer-term, better companies will function more properly in society. the short-term is difficult. >> to some extent, they are doing that. liquidity is looser, fiscal policy is somewhat supportive after last year's equity route. the equity markets were a new engine of growth. that is the kind of thing that could deliver an upside story for china. could get back engaged in the narrative and move forward on to want the equity market fell back, they have moved forward with more fiscal action,
the kind of domestic stimulus that would really make the difference here is not just opening the caps on more bank credit. it is opening up space for private chinese industries. they start to take the place of so many companies not generating any return on their assets anymore. tremendous potential, trillions of dollars of good stuff can happen in the years ahead. the problem is the communist party of china and the way the leadership has wanted to control the economy so far has to be modified. alix: trace the line for us. on tuesday. i wake up in the morning and i see what china did overnight, how does that trickle-down to the stocks here? readere are two ways to the papers and check out bloomberg when you wake up in the morning. somean either look for incremental step which we have seen fumbling over the past couple of weeks that start to sound more coherent, and a clear
indication from the people's bank and political leadership above them that there is a strategy going forward. that would be ok. tinkering atjust the margins with your trading portfolio here. what you are really on the lookout for right now is a move to one of those corners. a significant acknowledgment that the offshore cnh cannot be sustained at this level, probably going to take the hong kong dollar down with it if that were to transpire, or some pretty surprising demonstration of reform intention on the other side. opening up two or three industries to a major new wave of foreign investment direction for example. the steps for china and the united states to concluded bilateral treaty, something the magnitude would recapture some of the momentum on the upside. alix: thank you so much for the conversation. up, tim rogers says china
americanssince most in 2008 quit their jobs. robust demand for labor could mean faster wage growth. job cuts are on their way over at bp. they will cut 4000 jobs by the in the year. that will bring the number of upstream jobs to fewer than 20,000. bp's revenues and and profits. charging a smart phone in your car is not as free as you think. .03 a milerger cuts of gas. rodgers 70,000 tons of carbon dioxide pollution a year. automakers are jimmy more power ports into cars which means the pollution will only get worse. update.your let's send it over to the market
test where julie hyman has a look at the company movers at the retail sector. doing well forn the court -- current quarter and said it had a very successful holiday season. the ceo has been bringing back the company after its stumble at the supply chain a couple of years ago. shares were gaining about 7% today. we are also washing burlington coat factory. whether -- on the weather, as so many have. if you exclude its winter weather merchandise, as it so other types of clothing, it says sales were actually up by 4% on the measure. it looks like investors are happy about that. we are also watching walmart, a stock we have been watching. it is down today with the rest
of the market. as alice pointed out, the stock is the only stock to be higher this year in the dow. i have looked at the performance in 2016 and walmart is in the 4.5%. an interesting phenomenon here. take a look again at my bloomberg terminal. last year, oil was down 30% and walmart was down 29%. if it is helping, what has changed? that would be my question. alix: lower gas prices, and you will spend it. just a theory. thank you. a lot of negative comments regarding china passes economy. the chairman of holdings says he prefers investing in china versus in the u.s.
>> united states, china, as far as the stock market is concerned. i own a lot of u.s. dollars, many more than any other currency, but i would rather be invested in china and short the ..s. than the other way around that does not mean i want to repeat that. there will be problems with china. china trades with everybody in the world. haveare starting to problems such as japan, korea, and other countries. china will, too. >> volatile markets and a volatile currency in the next 10 days, what have you inferred on how policymakers want to handle currency? states, theited last 11 years, begging china to in the market set the rate
the currency. last summer, china said ok, we will do it your way. the currency subject to market fluctuations. but it has been the strongest currency in the world for 10 years, 2005 through 2018, it is normal it should have a correction and go down for a while. to me, the surprise is it has not gone down more. people toeasier for take money out of china. if you have been trapped with your currency for decades, you want to take some out. if it goes down further, i hope i am smart enough to buy some. >> talk to me about the u.s. what does it mean for u.s. treasuries? >> i am not sure, u.s. treasuries. u.s. stocks. the spreads between treasuries got to be very narrow. interest rates will be going
lower in twitter? >> there is a lot of uncertainty around the timeline. the product needs to be simplified for consumers. and it doors he might take a lot of time for that. it is all about the uncertainty, especially when competition is heating up. you have facebook and snapchat coming down the pike, so you're basically dealing with uncertainties like employee retention also. these are factors weighing on the company. did m&a get any more interesting when you have twitter at these lows? very blessed is the right price. i think the focus will be more on what the power users are doing. focuseds will be more about what the daily user engagement looks like. what is the product
strategy here? it will be great to have more and these are the metrics from a monetization structure. that is what the focus now will be on. alix: how long before the board has to rethink things? >> time will tell but in the coming corner -- quarter, investors will seek a look into what the problem he is dealing with and how exactly he will solve it. he wants to make twitter a window into the world. those are some of the things that will come in focus. what is the problem twitter has that others do not? >> if you look at the definition of twitter, jack dorsey has said a lot of times, it is host to be a crowd sourced, real-time information and consumption.
if you look at the products going around it, periscope, a lot of things are happening at the same time. any given product strategy so far, are the users being engaged? that is the bigger problem. you have to look at the advertisement loads right now. if it improves, it is a sign the demand side of the equation is ok. those are the factors investors will be more focused on. alix: thank you for joining us. ahead, where oil prices are headed. one expert says 150. ♪
mark crumpton has more from the news desk. is promisingmerkel quick action to expel refugees who commit crimes. tokel is responding political fallout from new year's eve's sexual assault blamed on refugees. -- thirds of those arrested germany took in more than one million refugees in 2015. the u.s. green court has struck down florida's system for opposing the death penalty saying it does not give jurors enough authority to decide whether capital punishment is warranted. case of a mane convicted in a fatal 1998 stabbing. he was sentenced to death after a jury recommended -- schools are closed again today because of an absence of teachers, though the number has dropped. the district reported at least 22 closings compared to at least
60 yesterday. it began last week with a handful of schools. are upset over class-size is pay, the condition of buildings, and a plan by rick snyder. the tide rolls again. alabama's 45 victory spoiled the tigers perfect season and gave their fourth national championship in the last several years. 24 hours a day powered by our journalists and news bureaus around the world. back to you. alix: oil will hit $150 per barrel in just two years. that is according to the president of the wealth management firm who has made successful calls on oil refineries in 2011. but the other analysts are not
so bullish on the market. michael: is the head of commodities research at barclays and he slashed his forecast to nearly in half. who has it right? dan? you are still sticking to it after the slide. >> one is the price of the barrel of crude. that continues to go up. the other thing is demand. we get another 10 million barrels. that is what we get. we're in the midst of an oil season. ist is happening is oil going to the downside in very much the same way it went to the upside in 2008. it will expedite several producers here in the united states. the canadians are in deep trouble in terms of oil.
there prices are a lot higher than here as well. auto production will come off-line in 2016 in that will pave the way for a huge supply shortfall in 2017 and i think prices rebound in a rebound quickly. alice colder -- alix: crude down. away from the handle. do you feel your optimistic in the short term? >> i think from our perspective, we see 29 in the quarter and a rebound over the course of the year. a couple of things got us here. those are going to play a role over the course of the next six months. the first thing is the weather. we had an extremely weak weather system in el niño in the united states. we have implementation day for iran.
the supply will come back on sooner than many in the market expected. show production has proved resilient. and continue to cut costs high-grade the assets they have here they continue to have more and more production coming out than they had before. what that essentially means is we need to see prices at the lower level to really see this shakeout that i think would lead us to a higher price level later into 17. alix: do you think the high price could the 150? >> i think it would be tough to break into the 100th. out into 75 and 85 2020. the point get to where it is apparent to the markets there is not a sufficient supply being invested toand currently producing
meet excess demand? as long as opec continues to push out more than the market expects, that time will be later on than 2016. how much of this is fundamental? all of the headlines you have cited we have known for. it is not news. there is confusion of how fast they could start off to begin with. >> that is why i made the comparison to 2008. it is knowledge drop we saw an early of 2009. it is the exact opposite in 2008,ve move we saw $45 per barrel. they do not quit. we have seen the highest number of speculative shorts in the last three years and the lowest number in five years. the dollar goes higher and we get more black foxes, more
players selling oil against the dollar. we all expected oil to go down to place where we would bankrupt -- i thought the bottom would be somewhere around $40. now you can make up any number on the downside. it all matters how long this in the equity market. i know fundamentally speaking it is wrong. you cannot get 12 or 14 million barrels per day out of the ground for $30 per barrel. sooner or later, that fixes itself. alix: you come inside the bloomberg terminal and take a look at short positioning overall. the overall sentiment in commodities is expecting a disaster the likes of which we have not seen in four decades.
>> what we have learned is they continue to be concerns about the chinese economic growth. that is what is new, that we did not have one oil was 45. we continue to test the hypothesis about chinese economic growth, the likelihood is we continue to move lower before we start moving higher again. you say seems both of yes, the next couple of weeks or months will be tough. download -- down the road, prices will rally. it seems like the area where you disagree the most could be demand. you downgrade your demand forecast for oil. what are you looking at? >> the first thing is subsidies. we see producers in the middle east are seeing at these low price levels, finally more and more incentive to make difficult decisions to reform subsidies.
a lowhough prices are at level, we are not seeing a full wes through the level and are not seeing a response to gasoline outside the u.s. activityrial timeframe in the new where the fed is raising rates in the u.s., and we have concerns about emerging markets, we are not seeing industrial lead diesel demand growth we saw in the past. we expect demand to not be nearly as robust as in the past. it is certainly not going to be at the level we saw in 2015 of 1.8 euros per day. >> i think michael does a great job talking about demand characteristics. they are slowing but still increasing. we are talking about a rate of change as opposed to demand numbers. they go up every year. that is what we see.
from a supply side, the difference between my viewpoint and others out there, i think supply is as far as it can get pretty much. i am talking about supply for opec. people looking to have an unlimited amount. i think they are at their limit now. think they will at one million barrels per day. they are thinking the iraqis will start to get their stuff together and push more product onto the market. i think that has no chance of happening the way things are politically now. i think there is no chance of that happening. in a lot of places around the globe where people are expecting supply to continue to increase, i see it disappearing. where most people are looking pera half a million barrel day drop in u.s. supply, i think we will see more like 1 million and a half barrels per day of a supply drop in the years coming.
of 4e a differential million barrels per day of total turnaround than most analysts do. michael: one of the reasons we revised our forecast was we saw a supply increased by about a half million barrels per day. as we carry that through, it means we do not get global supply and global demand coming to an equal level late 2016 at best. it is hard to argue we get back if thate $100 level adjustment is not taken into account. i fully agree with the hypothesis that production will not be rebounding anytime soon. i think the upside potential for iranian supply will be limited in 2016. when you look at it from a
comprehensive view of the entire balance of supply and demand, you have got 600 euros per day of decline, and increase of 500 barrels per day and one million barrel per day increase in demand. that amount of supply plus the inventories out there is sufficient to meet any of the supplies and demand for 2016. it becomes much more of an issue when we think about 2019. the final investment decisions are being deferred. >> it will be tough, we agree. alix: we are looking at crude. it will be a crazy day. such a pleasure. thank you so much, and michael cohen, head of commodities at work least.
matt: welcome back. i met the international auto show in it -- in detroit. you.me, a pleasure to see i was wondering about your with this italian carmaker, 40 years old. >> we are like family with ferrari. cars and weirst f1 have kept the relationship going and it has been a great partnership for us and ferrari. matt: i was talking
with people who said you are the only manufacturer in the world with these breaks. >> we specialize with high performance brakes. typet these on mid premium vehicles. cadillacs, range rover sports, things like that. specialized is technology and we are proud to build that capacity in the united states. most of the automakers i talked to are predicting record sales again this year. as goes the auto market so does the break market. dan: right now we would expect pretty much a solid year in 2016. a little bit of growth. i do not know if it will be 40% growth but 5% growth to 7% growth. we will follow along. matt: we saw the stocks turned negative again today and what do you make of it?
it is a rough start to the year. it has got to be difficult for planning. releases about 90 days out or do we do not see fluctuations based on the market. maets go up and down but the car market has been strong. a lot of old cars out there as we talked about earlier. we expect the build will hit that 18 million for sure. not all brakes are carbon ceramic per the majority i am guessing rin disk -- iron disc you make. i would think it will be a tailwind for margins with it falling so low. iron low ands with aluminum low, both of them are in advantageous positions right now. as the price goes up, customers pay a little more. as the price goes down, customers get that break. that does not affect our bottom line that much. it lowers our cost to the
manufacturer and makes life easier for all of us. matt: north america is your biggest market based in italy. how is the chinese market? operation ina good china. china is lagging behind the u.s. operations about two or three years. we came to the united states and we vertically integrated our business. caliber a brand-new plant in mexico. pretty much following in the same footsteps. we are building our base right now to make rotors their fully integrated operations in china. it is a big market and we expect it to be successful there as we have in north america. matt: let me ask you about technology. you have got new technology breaking by wire now. dan: we have been making these systems for seven years. we use it in the racing area and that is the way we -- we
approach break by wire. the same technology we have done with calibers, bring it down into the mainstream, and hopefully be as effective as we have been with the caliber business. we appreciate your time. i will toss it to you in the studio. alix: thank you. matt miller with brembo ceo dan. inr is facing competition china but there is still a lot of interest from investors in the region. we will break down the numbers in the latest round of funding. ♪
bp. will other companies follow suit? cooper's valuation got a big push in china. who is backing the car sharing company? first, let's start with comments from the ceo of airbus. the company broke a sales a superjumbo aircraft valued at $1.28 billion. speaking exclusively to bloomberg, the ceo's plans why rising tensions and falling oil prices are not impacting orders. >> a very eager plan. [indiscernible] last year, our largest consumer. we are pleased. we don't see that there is an impact on the traffic. speaking with the corporate impact of the
commodities route, job cuts are on their way at bp. they will cut jobs by the end of the year and that will bring the number of upstream jobs to fewer than 20,000. in an exclusive interview from paris, the new bank of france governor explains the central bank can take further actions if needed to boost europe's economy. >> inflation remains too low. facing the situation, we have been and the active and effective system. active, look at our decisions of december 3 last year. we decreased interest rates at -0.3 and expanded our asset purchase programs through march 17 and we said we would reinvest and we have been very active and it is effective.
alix: sap reported fourth-quarter sales in profits that beat estimates. the german companies using a revamped version of its management software to maintain thousands of corporate customers did also adding prescription revenue from cloud services. a new round of financing values the uber china division at $7 billion. passeshe backers, china largest insurance company and fourth-largest airline. uber faces increased competition in china. it is spending aggressively to expand partly by subsidizing the cost. for more stories, visit bloomberg.com. as the nasdaq fluctuates between gains and losses, now up by .2%, abigail doolittle has the latest live. aroundks are bouncing here at the nasdaq. red and green as you are talking about. biotech is in the red. the composite index is still modestly higher trying to break its eighth day moving streak in the longest since 2008 on the strength of starbucks.
taking a look at the tech, apple is the first they get single point to the composite index. we have a couple of analysts out there. defending this stock on its recent weakness around iphone concerns, weakness that has brought the stocks to levels last seen in the sum -- in september 2014. perhaps it'll turn around to buy support for shares higher. including facebook and out of that, these are right behind apple as point boosts to the composite index. as the credit suisse analyst says he expects them to 2016 asrm once again in long-term investments pay off. lastly, starbucks shares are up right hind big tech names, as a point boosts to the composite index. the company says it is on track to open 500 stores in china despite all the recent market turmoil. you so much we want to take a quick moment to check in on markets here in the u.s.
on the day.ining you start off with a bit of a rally. the s&p could not hold on to its gains and a big part of that has to do with oil prices. if you come inside the bloomberg terminal, you see the correlation between the two. the old we're looking at, oil trades be much all day, you can see it is a big -- a deep slide down. right around $30 per barrel. cities as we could see a to handle which means oil in the 20's. the s&p was the white line there and we saw the rally that did move back up here. take on aying to little bit of steam coming from china but could not hold on. you see now s&p and oil really moving overall in tandem. it is no surprise energy stocks are the worst forming on the s&p overall down by almost 2%. utilities and telecom and materials and financing are also in the red as well. only consumer discretionary and health care managed to eke out
some gains. markets, here at berg the arkansas governor hutchinson weighed in on the 2016 presidential election. you do not want to miss that. a special programming note for you. michael mckee is headed to dallas to speak with the fed president. this is robert's first national interview since his role last fall. that interview wednesday 8:00 a.m. in new york and 8:00 p.m. in london. we will be the -- we will be back. ♪
uber world headquarters in new york, good afternoon. i am out still. here is what we're watching at this hour. prices around $30 per barrel and one forecast says we could be headed for 10. biotech stocks under a sharp knife to start the year but his politics to blame? we will ask a ceo. president obama looses eighth and final state of the union address tonight. how will he does -- try to define his legacy? we want to get to the markets desk where julie hyman has latest, where we just do not seem to know the direction we're heading in. it does seem that way. it has not necessarily been that recent days.
back to oil in the driver's day. the nasdaq is hanging onto a gain. remember the nasdaq is coming in today with eight straight down days. it is its longest losing streak since 2008. that, arebound is just rebound from declines. we see other industries have on a relative basis better performance, though not much better. the s&p has done a lot of bouncing around. negativeit going from deposits to back again and crude muchas remained pretty negative at least since earlier today. you had it make a run at trying to go positive, and then just coming down and not being able to recover. if you look at my bloomberg terminal, i have laid this on top. i do this to emphasize the point alix made that they are moving quite closely together. here is the s&p. yellow is crude oil. gettingial stocks are hit hard on the downside because
of that. >> and it is interesting because they are not the most heavily weighted in the s&p but he gets to the point where the magnitude is such that it pulls everything down. down 16%. williams company was down and is in the process of being acquired by energy transfer partners. it did trade some questions about its balance sheet. southwestern energy, one of the worst-performing stocks last year. money-- where is all the going? one of the places we are seeing is the treasury market. buyers of treasuries are pushing the yield down. what we have got today is a relatively large as people are looking for what they call safety. gold prices are not catching a bit today. >> gold has done well as chinese stocks have moved off. there could be stability --
stability there. thank you, julie. with markcheck in crumpton, who has more mark: from our news desk. mark:mark: turkey says a person affiliated with the islamic state is responsible for a deadly blast today. authorities say the explosion in killed atic district least 10 people and at least eight of the dead were german tourists according to angela merkel, who told reporters in ago her short time ago cabinet would hold a special meeting tonight to discuss this. the house of representatives is expected to vote today to punish north korea for its latest nuclear test. the legislation would block kim jong-un's regime debt regime from getting the currency it needs to build weapons. experts say existing united states sanctions are not being enforced. russian pleasant -- russian president vladimir putin says it will be easier to grant asylum
to syria's leader than it was for edward snowden. a newspapertin told it is premature to consider whether to offer records to a sharp al-assad. he said if elections are held under a u.n. he's plan, president assad may not have to leave syria at all. paul ryan is blaming the federal for a week u.s. economy. during a briefing with reporters, he accused them of embracing liberal style policy that, along with president obama's, have hurt the economy. -- then: the pratt federal reserve has given us more regulations, higher taxes, more uncertainty, chick down economics. this is liberal style. high and are doing don well because of lose money from the fed and all of these regulations and uncertainty and taxes is giving us weak economic growth. mark: the speaker says the house will present a bold growth
agenda for the nation. president obama will deliver his seventh and final state of the union speech tonight. unlike years past, the address will not include many specific proposals. the president is expected to focus on things democratic candidates can adopt in their campaign. he will bring the speech live tonight at 9:00 washington time. news, 24 hours a day, from the first word desk, imr crumpton. the new year -- i am mark crumpton. the new year, looking to close right around $30 per barrel. what would make the crude market unravel more and push prices into the 20's? the biggest question in the oil industry and the answer lies in something you might not know much about, oil storage. richard is an analyst who joins me now from london with more.
you had a note out highlighting the available oil storage here million.s., up 200 barrels. why do we care? why is it so significant for the oil market? >> it is a good question. we are seeing the available crude storage along with the fact that refineries are still running and processing crude to produce gasoline, they are to support what is helping the global crude market. isn though flat prices falling, it is gaining support because crude can still be sent to the u.s., stored more cheaply than if we were having to put it in floating storage. >> the idea is they cannot find a home in a more, known will use it, they will go and storage there and that is why storage numbers are so important. >> exactly. while there is storage available and land storage is low-cost, we
have the van listed, there is fewer concerned about bringing the oil into the market and not being able to bring it out again. it gives the crude market and option to clear. at ank we would be looking 30, wider tango and a $21 maybe even wider, and that would be putting more pressure on prices still. basically means prices now are lower than in the future if you come inside the bloomberg terminal. so you are looking around $30 now versus 55 in the future. what would make this steep and a lot? at what point do they say, we are not taking any more oil and maxed outsed up -- and oil? what does that look like? >> we have got to be looking at
the relationship between international prices in u.s. prices. because of the list test the lifting of the ban, because of what is going on in the u.s. prices have been rising and that is making it attractive for international crude to head in. getting closesee to capacity in the u.s., that would be several months -- then we might find traders are having to start thinking about storing crude on the water and that could tango.wider >> maybe storage is expensive? so you need the actual oil price to be that much lower for it to make sense for you to store it on a tanker. the other thing you pointed out on your note that you are watching closely that could unravel the oil market is gasoline demand. >> gasoline has been the
standout performer in 2015 and we have a market firmly expect it remain strong in 2016. diesel has done much less well and that has meant that gasoline the defining margin, the profitability, the incentive for them to keep processing crude. everyone is expecting strong gasoline demand. are.thers are major light that is keeping refining markets high enough that refineries are still buying crude. if we were to see gasoline selling off and see that margin collapse as a result, that is the other support structure for crude that would be vulnerable. storage in the u.s. and gasoline >> are two critical factors for the market at the moment. alix: what do we see short-term? 25 dollars oil? certainly there is a
lot of downward pressure at the moment. that is coming from concerns about china, the u.s. dollar depreciating. have not worsened substantially over the last month and when we look at china, we have got to november the stock market is not the connected or heavily connected to the real economy. i think we will see some downward pressure. we probably will see prices dip into the 20's in the next month or two. as we get further through 2016, the signs that the oil market is finally rebalance will be coming to the surface. still solid demand growth and starting to see the supply slowed on kick in. alix: thank you. -- until thed 20 close. coming up in the next 20 minutes, investors pulling about $57 million from a bill growth fund. even as the investment on
jury selection was completed yesterday and in the case of an -- airbagsn who says from the plane when he crashed. scheduled over the next year, remaining lawsuits affecting at least 1000 people. nissan is planning to battle back against the car sharing culture with more connect did vehicles that drivers can personalize. the ceo is downplaying the impact uber and lift will have on economic of the car business. he says nissan will not facilitate the sharing trend and will make cars that are "much more sexy and much more attractive." another sign the labor market is boosting the economy in 2015 headed to a close, the labor department says job openings increased in november by 82,000 to more than 5.4 million, and hiring also climbed. your business update.
let's send it over to where julie hyman has a check, down 10% on the day or more. julie: a lot more in some of them. 16%, look at that. a company that has already been performing poorly within clean energy. it is the worst performance. raising concerns once again about its costly deb restructuring. the company has been spending a lot on expanding. the cost to expand has caught a lot of investors attention. they are getting once again today. sticking with energy but the decidedly unclean energy, peabody funding after cole filed for bankruptcy. the call miners have been troubled over the past couple of years. down 96% over the past year and down another 16.5% today. peabody is the most heavily
indebted u.s. coal miner. falling once again. let's switch over to retail related. the maker of headphones, the company coming out with fourth-quarter earnings per share on a preliminary basis, below analysts had predicted. the company says sales were flat year-over-year in its fourth order. if people are not buying headphones, pali they are not buying cowboy boots either. holdings coming out with the below analystngs estimates. revenue ahead of analyst estimates. comparable sales it said is down 2% and the shares collapsing by 25% there. ok.: a boosting earphones. though growths may have outperformed most of its rivals but $57 million out of janice global unconstrained on funds last month. moves? behind those let's ask charles, who booked --
who broke the story. he joins us from boston. what happened here? charles: mutual funds investors are a pretty tough crowd here if you disappoint them, they tend to take their money and go home and that has happened to bill growth -- bill gross since he started the fun in 2014. he got off to a slow start and people decided he was not going to make money for them. though he has done better since then, still not showing him any love. 83% of unconstrained bond funds. are we seeing this across the board or is this a bill gross specific issue? been a lotere have of funds. potentially zero for the last year. it is better than 83%. we know how the other 83% did. even though he is doing well on a relative basis, investors are looking at the fund and saying,
he has not made any money and why should i send him any? fair point. are any funds attracting money? -- jeffreyff lee good luck giving annual forecast today and has been pretty successful attracting money. his fund has done better. he was up a couple percentages last year. better the 95% of his peers. he has gone some money. other funds have taken in money, especially money that left pimco and bill gross. but it is a tough market. mostly mutual fund investors are sitting on their hands. a lot of hedge funds are closing sitting on their hands as well. you. charles broke the story for us. says to sellrbs everything. is it all doom and gloom? why it might actually be a good time to buy. ♪
alix: welcome back. oil sending shock waves to global markets just in times for earnings season. rbs is giving investors another reason to panic, advising clients in a note to sell everything. a bitt guest is optimistic. still seeing opportunity in u.s. stocks. the chief market strategist at boston private wealth joins us now from stamford, connecticut. that rbs note is quite staggering. oil is $16. stock markets are falling by 1/5. credit markets seeing the sign. what do you think about that? much of it atink all. it is probably the worst kind of recommendation you could make. trying to sell to the kind of weakness we had over the past so, would really just be
doing yourself a tremendous disservice. what you really want to be doing now is focusing on the concern but realizing many of these concerns have already been priced into the overall market. we might have more downside with oil but i do not see it going down to 16 or even $18 per barrel. trading intooil the upper 20's it if it gets there, we could see 23 or 24. i do not see it staying there. i think there is a lot of rebound that oil will this year. i think it gets back to 45. if it gets there on some strength, but i think then it pulls back and as the pullback occurs, you want to be a buyer especially if you are a long-term investor. see a thestocks, you 6% growth for the s&p this year. what does that leave for the growth? >> you will see a lot of interest initially going into the european markets. and the emerging markets. people look at emerging markets as representing a lot of value.
eventually you will see the hopes and to the quantitative easing really start to fade away because it is not going to produce any kinds of gains in the overall economy. first, they will look for relative savings, things like health care and consumer staples, technology. then i think they will migrate back into the big momentum names because they still represent growth. in thehat do you do short-term? it seems their the earnings season will be so confusing because you do not know what oil prices will do. it will be difficult for companies to give their forecast when you have oil and china being these two big question marks. a i think you have to take look not only at valuation levels but fundamentals. how the companies are operating, what the outlook is, what the growth prospects for their products are. the you have to look of
technicals. see how the stocks are trading prior to the most recent downward trend. if the stocks had been moving up, but have only come back with the overall market, it does not necessarily mean these are broken companies or broken charts. it just means that stocks have pared back with the market. 's you look at this corridor earnings expectations, you see a decline but that is analysts trying to kowtow to the overall companies. he will see plenty of companies be able to beat expectation. numbers will probably be relatively weak but then i focus on quality names like health care, murder, bristol-myers, things like lily, things like pfizer. i think the companies will be able to carry you over the near-term volatility the market will probably experience. look at things like consumer staples, costco, cbs -- cvs. and then in the consumer discretionary space, i look at
things like home depot, starbucks, disney i think is a prime example of a stock unfairly beaten down. so i take a look at them. companies that are serving the spacesin these types of are not necessarily going to be impacted by china's growth or global growth in the united states. make a good point. but in the case of disney, disney is undergoing a structural change in the media industry. there is a reason the stock got hit so hard last year. other names as well. a shift in how we are viewing our news, for example. how do you factor that in when you're looking at the calls isolated from china? you have to go back to the fundamentals, how the companies are being managed, what type of growth prospects they have. there is they question about espn out there, people bring up cable packages. for the most part, it will not be happening with the general population. maybe some people are
disconnecting themselves with cable but for the most part, espn will still be the way most people are entertained with sports. i am not that concerned with it. they have a tremendous franchise with the star wars brand, with the marvel brand. i think that will carry them over the short term. i am not overly focused on the short term. alix: great stuff. thank you, robert. chief strategist. still ahead, we will hear from biogen'ceo and take a closer look at why health care stocks are having their worst start of the year in 15 years. ♪ the only way to get better is to challenge yourself,
headquarters in new york, welcome back to bloomberg markets. mark: senate democrats want the white house to punish iran for its recent ballistic missile tests predict senators who supported the landmark nuclear deal with iran say the white house is delaying imposing sanctions from undermining the u.s. ability to enforce the agreement. iran has said that new sanctions would put the nuclear accord at risk. british counterterrorism police are deeply concerned about the increasing number of girls and women traveling to syria from the u.k. were believedirls to have gone to syria in 2015. that is compared to 43 the previous year. over the past year, business reported several high-profile cases of girls traveling to syria to support islamic state and mary militants. hillary clinton proposing more states be taxing at a higher rate.
that would mean taxing individual estates worth $3.5 million -- a 4%andidate called for surcharge on taxpayers who earn more than $5 million a year. donald trump's lead is growing in new hampshire, the site of the first presidential primary. ofmp has the support of 32% likely voters in the republican primary. ted cruz and john kasich are tied for second with 14% each. to surging ticket sales, the world's largest lottery prize is getting even larger. the jackpot for wednesday nights powerball drawing has reached $1.5 billion. the money would be paid in annual installments over 29 years or the winner could choose a lump sum payment of $930 million. your odds of winning, 292 million to one.
global news 24 hours a day powered by our 2400 journalists and more than 150 news bureaus around the world. i saw you very intently looking at that powerball story. alix: of course. we will mail it next time. companies across the border having a tough start to the year. one group really getting hammered is biotech. shares plunging since trading open for 2016. earlier today can betty liu spoke with the ceo of one biotech giant and ask for his outlook on the industry. >> there are always in cycles and biotech. we've had five amazing years from 2010-2015. it is pulling back now. that is not the end of the world. turn the sector around is really good news and product news and our companies have exciting compounds in our pipeline. it does generate good data come
that will bring some enthusiasm back into the sector. >> you have exciting data on alzheimer's treatment. still on a smaller scale, smaller trial. what can we expect from those treatments? >> we did have a very exciting data which we reported last year in which we were able to show removal of plaque from the brains of alzheimer's patients. that appeared to correlate with an improvement in their cognitive function. or a slowing of the decline of their cognitive function. that is a small study. it is very suggestive. we are now in the beginning of a phase three program that will hopefully demonstrate the safety and efficacy of that compound. if that is true, we have compounds like this and other companies are working hard on alzheimer's. that will mean a slowing or stopping of the progression of alzheimer's disease.
that is an incredibly exciting prospect. >> a huge development. you mentioned the other companies working on this. up toes your data stack some of the competition like eli lilly? george: eli lilly also has a program. it is hard to tell. we are very enthusiastic about our data. it is way too early to make comparisons. we are quite compelled by our data. this points to a whole part of the industry that maybe isn't appreciated right now. the science and medicine are advancing to such a stage we can see a line of sight to making a cure for alzheimer's disease and parkinson's disease and als and certain cards of cancer that are not treatablright now. -- certain kinds of cancer. fantasy --ave this we asked them about drug pricing.
price hikes have been a huge hot button issue in this election cycle. you will be the president elect of the pharma lobby. how will you address this whole issue of prices of drugs going up too much? george: there is a bit of a misconception. the drug prices have not increased faster than the cost of health care as a whole. what i would really want to avoid is that there would be simplisticerk solutions to what is actually a very competition issue. we've been criticized another companies have been criticized for raising drug prices. at what we'veck done over the past 10 years, we did raise drug prices and the question is, what did we do with that money? we started with one product with weand now we have several have brought forth. ms patients are better off now with several treatment options. we are using the money to fund
the alzheimer's research. whatever happens, we cannot have thaticy for drug prices deemphasizes and discourages that kind of innovation or we will slow the flow of new drugs. alix: that was the ceo of biogen earlier today on bloomberg markets. the industry's biggest names are meeting in the ideas come looking for fresh opportunities at j.p. morgan's health care conference. as we have been reporting, are seeing their worst start to the year since 2001. what has the sector spooked? let's ask drew armstrong. this anything more than profit-taking after years of the propping upsector the market? drew: one thing we did was jpmorgan mother their health care conference is the big investor meeting, it kicks off
every year, all of wall street flies out there. we looked at what was the first day of trading -- this is the worst start in 15 years. what we've seen happening is some of what you're talking about -- biotech stocks have done great, health care stocks have been great. the gains have outpaced the broader market, but there's been concerns. was just talking about drug prices. in major concern. can these gains continue? can the market continued to rise? no, it is due for a correction. alix: there is a distinction between technically the stocks versusved up fundamentally, there have been fundamental shifts in the health sector.c have the companies made the most
they can get? drew: we saw a lot of bad news from companies come a number of folks issued guidance for 2016 that was not positive. a number of insurers in the last few weeks have come out and said we thought we would do great under obamacare, we're taking some serious losses. united health care and humana plan on taking millions of dollars in losses under the program. there have been a ton of bad news. we are not seeing as much on drug pricing as we had been. from every sector from biotech, distribution, hospitals, pharma, youig farme can see what effect the tapping on the equity markets. alix: what is the biggest question going to be? we don't have a lot of euphoria headed into it. drew: people will look at the
rest of the year and see how it plays out. candidates who will end up in office at the beginning of next year -- what will the politics look like? will there be a bigger public debate in the u.s. that will impact the industry? what are the big news events. where are the catalysts where people will be able to say there's been a lot of bad news but look at the state on this drug trial? that's what drives the stock up. people are looking for a fundamental scum of news out of drug trial status and other events -- drug trials data. we just had a $32 billion deal. -- people are looking for fundamentals, news out of drug trials data. has $30 billion
to buy a drug company. evil want to know who that might be. -- people want to know who that might be. alix: coming up, canada heating up. at least to the real estate market. vancouver residential properties already the most expensive in the country. commercial real estate now in high demand. why the property is so attractive. tonight, president obama addresses the nation in his last state of the union. will there be any surprises in his speech? double line capital cofounder jeffrey gundlach set to announce his 2016 productions later today. he nailed his expectations last year. will he continue his winning track record? ♪
alix: welcome back to bloomberg markets. let's head over to the markets desk where julie hyman has the latest. you are looking at company earnings. julie: can earnings be the savior of the u.s. market? we will see. they happen in the past, but not looking so hot this time. a mixed picture. for the year to date, it has been a rough one for the three major averages. the nasdaq in particular which 7.25%. the s&p and dow down at nearly 6% each. will earnings help? they didn't do well, they did help in 2015. -- they did do well, they did help in 2015. stocks went up as we went into
the earnings season. showed that if you bought at the peak of each of the earnings seasons last year, you would have returned 11% last year in contrast to the little change we saw for the s&p 500. a better performance there. sachs derivative strategists say we should see a rebound in stocks in earning season. correlationat the between rising earnings and a rising stock market, we've seen that moderate to some extent. there has been an argument that even when earnings were falling, they were still underpinning valuations. from theuations bloomberg terminal. we heard from alcoa already. we will hear from csx after the close of trading. important because of the dow jones transportation average. an underperformance. thanks coming up later this week
we will hear from intel as well. coming up later this week. we will hear from intel as well. the forecast is for earnings to fall. even if they beat estimates by the same margin they have a mother will still be a decline year-over-year. -- by the same margin they have, they will still be in decline year-over-year. alix: what does that have to do with buybacks? the freeze kicks in after earnings, does that make a difference irrespective of the underlying growth? julie: especially as buybacks are moderating to some extent. thank you so much, julie hyman. an influx of chinese capital and tightening returns on vancouver buildings as competition for property is almost as hot as it is in manhattan. that is according to a recent
report by cbre group. vancouver building subtracting some any buyers -- so many buyers, some are approaching landlords even before the properties come on the market. why? what is with the huge rush? pamela: a couple of things at play here. you can look at the capitalization rates like yields. , manynd more investors foreign, some chinese, coming in pay a highero pap price for commercial space. this is high-end office space. sits at 3.75%. downuver by contrast now in the fourth quarter of 2015 to 4.25%. much yields, indicating a stronger demand overall. the low loonie is attractive.
it is even below $.70. the other thing at play, canada is seen as a very stable place to put your money. concern, butis of it is seen as not a bad place to have confidence in in terms of a safe economy. alix: vacancy rates are quite high in vancouver's commercial market. how does that square? the real estate reporter for bloomberg in canada was pointing out that this really -- the vacancy rate is for smaller commercial spaces. the big commercial spaces like law firms and corporate head offices and so on, this is what we are talking about. they are all bought up.
alix: tonight will be the last time president obama will walk the long hallway to give his state of the union address. what will you spend a lot of time talking about? the obama economy and how u.s. prosperity has changed since the great recession of 2008. matthew winkler offered a: today on this very subject and he joins us to talk about the state of barack obama's union. helps.fed always
they certainly contributed to this. the real story here is, if anyone told you seven years ago that the american economy and in particular, american companies would outperform their global peers in 2015 by a considerable margin, do so better than they've done at any time in the 21st century, that would have been laughable. >> those analysts who say momentum is now out of the market, companies are not doing so well. look at where earnings were. >> that is misleading. what jim saidbout yesterday about where toyota is, the largest carmaker in the world, guess what market they are excited about. the u.s. market. when you look at america today and american industry today, 10
of the world's largest companies american.ld are you have to go back decades to find something comparable to that. that does not happen by accident. there's a lot of activity. the three most important industries, the ones that have outperformed in the past seven years, consumer discretionary companies. technology and finance. those things are pillars of an economy that is doing well. alix: that was matt winkler. in case you missed anything, you can see our commentary at view go. let's get into more nitty-gritty details about the president's speech tonight. kevin is live on capitol hill. what will be the buzzwords wall street will be looking for? kevin: what wall street will be looking for tonight is to see what president obama says about continuing the implementation of dodd frank.
while the american economy has been performing better overall than its global counterparts, there's been concern about wage stagnationwage for the middle class. this is a huge 2016 part of the story. look for president obama to try to set the tone. he feels he will be able to get wages to increase. alix: looking for some kind of concrete plan. the gun debate is going to be a huge topic. we saw president obama get emotional last week. what do we expect to hear from them? is unablesident obama to pass any kind of universal gun reform legislation. it is not going to happen this year. politically speaking, the democrats view this as an opportunity
-- alix: you are back. we are having technical difficulties. we were talking about the specifics of the legislation or executive orders. kevin: i don't think you will be able to pass universal gun control legislation in his final year. looks like we are having too many technical difficulties. thank you very much. gun control is going to be on the agenda as well as perhaps prescription drugs and how all the will impact presidential hopefuls. bloomberg's coverage of the state of union will be hosted by brendan greeley and scarlet fu starting at 9:00 p.m. eastern. politics, make sure to catch arkansas governor is a asahison when he joins --
hutchison when he joins bloomberg markets in just a half hour time. to get his reaction. michael is heading to dallas to speak with the dallas fed president. his first national interview since starting his role last fall. onk for that interview wednesday at 8:00 a.m. in new york and 1:00 p.m. in london. a quick check in on the markets. we now have the doubt slipping back into positive territory. up by seven points. the s&p still up by one point and the nasdaq up by 12. in terms of oil, we are not seeing any relief there. when the market is able to slip into positive territory despite the fact that oil is increasingly lower -- new york crude at $20, $.25 shy of breaking into that 20 level.
copper still around a six year low come under two dollars a pound. that really impacting some of the companies. nonetheless, a selloff in stocks appears to have subsided for now. we will see if they can maintain of the factspective that oil continues to slide. much more bloomberg markets right after the break. stay with us. ♪
from bloomberg world headquarters in new york, good afternoon. u.s. stocks bouncing between gains and losses after this morning's rally. oil hovering close to $30 a barrel. thousands expected to tune in for jeffrey gundlach's 2016 announcement. the hits and the mrs.. sses.e hits and the mi how president obama plans to call for a divided nation to come together. first, let's head to the markets desk where julie hyman has the latest. julie: markets bouncing down again. every moment you look at it, there is something different going on. the doubt now lower come s&p now higher. it is very, very small. the nasdaq holding on to its