tv Bloomberg Markets Bloomberg January 14, 2016 10:00am-11:01am EST
good morning. i'm betty liu. here's what we're watching at this hour. we are a happen hour into the trading session, shares fluctuating as european stocks are falling, but crude is holding onto those gains after briefly falling below $30 a barrel this week. prop it popping at j.p. morgan, the biggest u.s. banker up 10% in the fourth quarter acid/his expenses again. a new shocker for the auto industry. ault shares plunging after its offices in france are rated by the government. quarter% in the fourth expenses again. matt miller has the latest on the markets. we are bouncing along these lows
of the session so far. matt: that's right. we've turned negative on a few of the index is. -- indexes. this morning, we got a goldman sachs note, sing the drops we've seen so far have been emotional and u.s. expansion in earnings it should turn that around. the dow down 59 points, the nasdaq down 44. i pulled up the imap. so fascinating. gainersnd utilities right now. consumer discretionary and materials are losers. you can click on any of these pipe pieces and see, for instance, consumer staples overall is winning, but there's a couple that are red, food, beverage and tobacco.
such an interesting function on a day like today. crude, also interesting. nymex crude continues to march higher today. only a gain of .9%. $30.76, still hovering around that 12 year low. betty: what about treasury markets? matt: i did not realize what we'd seen, the yields down every single day this year except for one. you can see again, buyers of bonds pushing yields down once more. 2.05% is the level we are looking at here. investors have been running for safety of government that. -- government debt. they have not as much for gold, though. the first few days we were really up, then back down,
bouncing around. gold pretty much unchanged. does not look like investors are seeking too much of safety in the precious metal. betty: let's get to the first word news this morning. vonnie: good morning. the core of the nation's only reactor has been removed. international inspectors will verify that. the nuclear deal requires iran end -- no let up in the refugee crisis in europe. three times as many refugees arrived in europe as in all of last january. the european commission president says the upcoming months must be dedicated to regaining control of national borders.
the leading republican presidential candidates will do battle once again tonight. only seven of the parties 12 candidates will be included in the primetime event. donald trump is sending off a challenge to ted cruz. a big story in the new york times about ted cruz. are you concerned about that? do you think voters should be? >> i know nothing about it, but i hear it is a very big thing. i think he is a nice guy and i hope he gets it salt. test gets it salt. >> he is relatively new. do you think it is possible there are lots of things about him in the background that now should be investigated? >> he has been in the last few days -- he's been very nice to me, very respectful of my ideas
and my whole being. i hope that is not a big problem. vonnie: you can see the entire interview today at 5:00 p.m. eastern on bloomberg tv. at least three winning tickets were sold in last night's record $1.5 billion powerball jackpot. inkets were bought california, tennessee and ford appeared the identities have not yet been revealed. -- tennessee and california. thank you so much. thergan kicking off earnings season on a pretty high note, the stock up as the biggest u.s. bank reported its fourth quarter profit rose 10% thanks to shrinking expenses. the stock coming off of its high so far in the first half hour. jamie dimon has been optimistic about the bank's business as well. >> the credit card commercial
bank middle-market is as good as it's ever been. i would not call it a cycle, per se. if you have a recession, you will see a normal cyclical increase in those losses. we not forecasting a recession. betty: pretty good. for a closer look at the fourth quarter report, i want to bring .n paul miller he joins us now from arlington, virginia. i feel like every quarter, we ask this question. they beat on the bottom line because they are getting so good at cutting expenses. when are we going to see that kind of growth, that type line -- topline growth and not get so excited about them cutting costs. >> it all depends on the economy. we you will not get that -- you will not get that hard topline growth win that you need gdp to
grow 5%. higherou start to get rates. until we get out of this growth depression, you will not see a lot of topline growth at these big banks. you will see a lot more cost-cutting, reserve releases. it will be difficult for these guys to beat that topline growth. betty: white easy 2016 will be transformative year for banks -- why du say 2016 will be a transformative year for banks? >> if you start seeing rate increases, starting see these gets do well -- if we don't economic growth, we don't see opportunities in these big banks. these banks have been tested by the u.s. government. are not really gung ho about
a lot of these institutions unless you see real economic growth this year. betty: i want to get back to that. i read that in the notes. could something change? are you just betting on interest rate increases as a game changer for these banks? if rates go up by 150 basis points, yes, it will be very good for these banks. it is hard to predict when that is going to happen. a couple weeks ago, a lot of people had rates going up six or seven times in 22016. ,iven the market volatility given that oil is now down $15 of the last month, it is hard to see rates increasing that much given where we are today. it depends on what the rates do, what the economy does.
thispends on how economy plays out over the next year. betty: what about the interest rate hike? we've only gotten one. are we going to see anything flow into the banks earnings from that? we are today with a negative market sentiment come it is hard to see them taking rates up again this year. this is only a days into the air. we have to wait and see how this plays out. jamie saying we are not going in a credit cycle. we have to see these numbers play out and as investors get comfortable with the fact that we are not starting a credit cycle, maybe they come back into the markets, maybe the fed can raise rates again. this creditabout cycle of energy companies having to refinance? in 2016.g a big issue will we see a big risk coming out from these oil producers and
oil companies that have been on easy debt for some time? >> the energy is a big issue. there's benefits to lower energy prices for consumers. there's concern that some of these banks have to take increased reserves relative to where these oil companies stand today. on the flip side, you've got lower consumer prices, lower energy prices. it is very difficult to sit there and say we will circle $30 a barrel and then straight line that out for the next 18 months. it could go to $20 or $45. a lot of people have that negative sentiment and will go lower -- it will go lower instead of higher. betty: will we see more of the from citigroup, bank of
america, goldman sachs in the coming days? >> i think so. you will see more of a discussion about what type of energy provisions he will take -- positions he will take. be more of the same, more positive numbers here and there. betty: thank you so much. paul miller joining me on jpmorgan. much more ahead. raising a flago -- are we seeing a bottom for oil prices? what lies ahead for the commodity and the lifting of iranian sanctions them ahead -- loom ahead. ♪
back to bloomberg markets. it is almost friday. let's move on to the central bank. the bank of england voted to keep its key interest rate at a record low of .5%, citing oil, dampening projections. who better to give us insight been tom keene joining us from london? you love charts come i know you have an oil chart that will explain it all, right? who ismes from the same fed came out and just did what -- citigroup strongly endorsed his view, worrying about this inflation -- disinflation.
let's go to the oil chart could i've shown this a couple of times across surveillance. the goal here is you need to get off the stage set today in new york with oil still green on the screen. we have not seen that. betty: explain this oil chart, tom. this is oil from the beginning of the year, west texas intermediate. a curve down. and accelerating decline in oil. we've had a bit of stability here at $30 a barrel. that held up this morning. on the right side of the chart -- the heart of the matter on oil, we have to get through the afternoon in new york. that will be the focus across all of bloomberg media. betty: i was joking the other day, 26 packs of beer i can buy a barrel of oil.
two six packs of beer. >> the market needs to clear and then it will work its way back to where normal as. thati would watches terminal value on oil. it was $70. it was $60. if we get to a $40 terminal value of oil, that is a challenge for some nations. betty: i expect that oil disinflation or the threat of disinflation will be big topics at davos next week. >> absolutely a lot going on --ut innovation and robots it will be about the global economy. good to see you in
betty: welcome back to bloomberg markets. i'm betty liu. julie hyman has a check on some big decliners today. go pro. >> one we've been watching closely good expectations have been poor for a while. the worst fears have been realized as the company said its holiday sales were disappointing. the company talked about negative sales over the holiday. this comes back to the idea of
is it a one trick pony. it came up with the to original product, that did well and now it's not able to duplicate that success. the chipmaker is also trading lower. the company's exposure to go pro should not be overstated. that is not mitigating the declines. speaking of electronics, best buy shares trading lower. the company also saying it's all week holiday sales. saw weak holiday sales. yelp is also on the list of declines, down 12% now. aarter over quarter, it's all
traffic dropped because of google and the potential for further decline in advertising effectiveness. we are seeing google and other countries get more into the local advertising game. finally, twitter continuing its slide. negative analyst commentary yesterday, the momentum continues to be down. it did dip below $18, it is now down for the ninth straight session. that ninet 20% over session period. betty: momentum has been a good strategy for tech stocks, but not for twitter. >> people asking questions about , useroad appeal engagement, etc. betty: thank you. renault shares also getting slammed today. fraudgovernment investigators searched headquarters in an apparent
vehicles emissions probe coming in the wake of bolts wagons -- woes.agen's emission the vw situation was likely contain. every company has a challenge. we decide to face the challenge it is a moving target because the technology is moving all the time. betty: now, we are here. this has happened. matt miller joining me now for more. you did that interview with carlos. is this another vw situation in the making? matt: we don't know anything like that yet. renault hasis that told us it has been -- it's offices have been searched by
the fraud department, the french ministry. it is cooperating in that investigation. department has already tested for its vehicles randomly. its vehicles randomly. and tested four renaults they have intimated that they that the tech the devices -- detect the devices that volkswagen used. betty: a huge amount of shares have been sold. recovery%, bit of a right now. it has not helped shares of the auto industry. the dax down big because the shares of renault are down. eugeot shares down.
fiat chrysler down. just give us the exact details of this raid. what exactly happened? what do we know in particular? i talked to carlos on monday here in detroit. i asked them about the diesel motors they sell in the u.s. that they almost sell none, only in one truck, .he nissan titan xd he says what we are trained to do is be as transparent as possible with our customers about which engines these are. as long as we are incredibly transparent, they will not be a misunderstanding. , it is a different story because renault sells 60% -- 60% of their cars
are diesel powered. it is a very different story for those manufacturers then for our market over here. what we don't know is what investigators were looking for, what investigators have found. we don't know which models. renault says they have tested four, they want to test 25. they are trying to tell the market as much as they can without telling too much. almed the market to some extent. when there's so much concern about the automotive industry, reactions can be intense. betty: do we know who regulators have already tested and who they haven't? matt: they want to test 100 vehicles. they've tested a dozen or two dozen so far. this is just french regulators. german regulators are testing
vehicles. testing.l be a lot of we've had a lot of companies come out and say we don't have to feed devices. their lab't mean that test results will matchup at all with the real-world results. , what youst results see on the window sticker of the car has almost no bearing on what you actually get. betty: thank you. matt miller here on the raid on run no. -- renault. a top-rated fund manager says now is the time to dip your toe in and think small. we will be back. ♪
claiming responsibility for a a.rrorist attack indonesi a suicide bomber blew himself up inside a starbucks and other attackers opened fire. people were killed and five attackers were killed. the worst terror attack in jakarta since 2009. the southeast asian economy has boomed in the last decade. carbon dioxide emissions rose more rapidly than in any other part of the world. the michigan city where the water supply is poisoned now has a new health crisis. spikingires disease is in flint. it has killed 10 residents. high levels of lead were found in the water last fall.
maine will debate whether the governor should be in paged. the shrimp each. be.should the should bed be -- impeached. kirk alex forming in the atlantic. alex forming an atlantic. let's get back to those turbulent oil markets. u.s. crude holding onto gains today after falling below $30 a barrel this week. below trading near it 12 -- a 12 year low.
we take you from london to dallas. seth, let's talk about a few points about oil that if you are talking about. few are talking about. nobody is talking about demand. what do you mean by that? talking about demand, but there seems to be this common wisdom out there that a low oil price will be a big stick was for oil demand. -- stimulus for oil demand. in houston orting washington or london come a little oil price would seem to make you want to drive more. if you are sitting in nigeria or russia or the middle east or s are aerica, oil price negative because they are growth weivers of the saw from 2004-2014.
we are seeing the positive feedback loop coming into rivers. -- reverse. betty: where does that leave oil? >> in trouble. over the past couple of weeks, oil keeps flirting with self $30 but it will not commit. ub $30 but it will not commit. you will have 300 million barrels a day of refining going off-line for maintenance. it will be hard to see how crude does not ultimately submit in the near future. betty: a to handle. is a one handle even likely? >> possible, especially if this does become an even bigger negative for the global economy. we are at problematic levels. any slight economic pickup you from an extra five
dollars lower is swamped by the negative financial and even geopolitical stresses. betty: let's talk about iran. i've heard two different sites. one that you just expressed, they will be coming on with millions of barrels and that will further depress prices. i hear on the other side saying hang on, they will not be able to push that oil out into the market for several years. certainly not at full capacity right from the start. is a large degree of uncertainty about the ability of iran to come back. i ran is down 1.4 million barrels a day in terms of production from where it was pre-sanctions. getting back the first one third of that, that should not be too difficult. getting back to pre-sanctions levels will be part. .- hard
iran has more oil, more gas than iraq and investor -- and a better domestic security situation. it will take time and a lot of capital investment. betty: this is not new news. we've known ever since that deal was put together that they were going to come back, the sanctions would be lifted and they would come back to the oil market. isn't that priced in already? >> yes, the deal has been in the process for a long time, except there's a lot of people -- this endless flurry of rallies over the last year. time i ran comes back, we would have seen an impact of these oil prices on non-opec supplies. everyone was assuming that russia and/or the north sea or somewhere would have seen
dramatic declines because of these low oil prices. with russia at record production and the north sea looking great, has beenreturn of iran a long time coming. people thought we would have cleared some room for that by now. we're really congested. betty: everyone all on full speed at this point. thank you so much. the european head of energy research at citigroup. our next guest says all this volatility will create buying opportunities for those who have a lot of risk and those who are patient. first, you have to think small. eric marshall is the comanager of the high just small-cap fund. fund.ges small-cap you were just listening to our prior guest.
i want to get your take on what he was sing about more bad news for oil. >> this is really a supply driven problem. we don't know exactly where oil is going to stabilize in the near term. productionina, opec and what the dollar does relative to other currencies all playing a big part in where oil goes in the near term. at the hodges funds, we are not try to predict what oil prices are going to do in the near term. timead, we're spending our focusing on what's going on in the underlying companies we are investing in. you can find opportunities in --se being down oil stocks beaten down oil stocks and companies that have been beneficiaries of a lower oil prices. betty: what areas do you think will recover first? >> some of the really low cost
that have under leveraged balance sheets that will be able to take advantage asdistressed asset sales well as some of the companies the nearnot as tied to term of what the oil price does. betty: you have a few names here come all of these stocks have gone down 40%-50% so far. is there a common theme between these three? >> this really unique characteristics. b permian is a low cost producer in the midland basin. they have a pristine balance sheet and the staying power to make it through this downturn
they come out the other side in a stronger competitive position. enlink has been thrown out with the bathwater in the mlps base. we like the general partner here because 95% of their business is fixed rate. t sensitive to the commodity price. they haven't fixed minimum --umes would provide them they have fixed minimum volumes -- thatovide them offers a great risk reward and you get paid a nice dividend while the weight. they distribute or of marine -- a distributor of marine fuel, they've gotten beaten up with oil tankers and transportation.
they are a floating gas station for the marine industry. we like that stock, it has been oversold here and represents a very attractive risk reward relative to the underlying values of their assets. betty: good ideas if you are looking to take big risks and y uy. still ahead, donald trump reacts to ted cruz's failure to disclose a goldman sachs loan. about teds to say cruz and ronald reagan. that is coming up. ♪
things have turned around here in equity markets. the dow is now up almost 190 points. we actually touched above 200 points a few moments ago. is it earnings, is it oil? crude oil prices are up, nymex up 3% trading above that $30 a barrel level. trading near its high of the session. what'srrelation may be driving each other. mark barton is also seeing european stocks coming up a little bit from that one year low. mark: we were down 3.3% earlier. i'm trying to overlay the price of brent crude onto the stoxx 600. the red line is brent crude. last half hour or so, we've seen this move upward. it seems the stocks are following oil higher. brent is high for the day come
up by 1.8%. -- it was600 is down down by 3.3%. we are on track for the lowest close in the year. resources -- concerns about the global economy dominating sectors today. betty: we are going to be talking a lot about the boe. not hiking rates or doing anything on rates. mark: how exciting can i make the boe when they done absolutely nothing -- they've done absolutely nothing? rob joins us from merrill lynch international. hisoved back expectations. joining me.qua
john weighed in on the brexit +++ renault is the big story of the day. the shares falling 22%. its offices were searched by government investigators. we will be talking about this -- it is a lovely restaurant. have you been there, is it expensive and is it any good? betty: yes, yes, yes. >> why is the new york times criticizing it, then? betty: it is not just you, it's a whole lot of foodies who are wondering the same thing. we will be covering that. when you come to the u.s., we will go. mark: as long as you pay. betty: deal. we are coming up to our highs of the session. abigail doolittle is live from
the nasdaq. decliners. abigail: go pro is undoubtedly today's big story at the nasdaq. the stock plunging after the company preannounced its fourth quarter after the bell. they said revenues will come in 15% light of estimates. they announced a 7% staff reduction. the degree of the miss and the plunge and the stock is completely in line with the story, the stock down 80% from august on slowing sales. stock not so long ago was trading closer to $100. it is now trading about half of its ipo price. another stock getting hit by go berella, down 25%. through lasting
year's list. -- last year's lows. thank you so much. abigail doolittle at the nasdaq. we are seeing markets rebound today. the s&p had its worst ever start to the year, sending the index down 7.5% in 2016. do not panic. so says goldman sachs. this is not the tip of the iceberg. investors are nervous, but the underlying performance of the u.s. economy is quite good. the unemployment rate has fallen 5%. new jobs are being created at a good pace, companies are profitable. our feeling is this is a reaction to some of the important news around the world, declineg the sharp
in oil prices, the race but china and what the federal reserve will do next. -- the worries about china and what the federal reserve will do next. when we apply our valuation models, we think fair value for the s&p 500 is 2100. several percentage points above where we are right now. >> i guess you've already answered my next question. we had the bank of scotland warning of a fairly cataclysmic year ahead for 26 income urging investors to sell everything except high-quality bonds. george soros says the china volatility is reminding him of the crisis of 2008. you don't think we are quite there. >> there are some important differences between 2008 and the current situation. first from the standpoint of the stability of the financial tough lovee've had a
regulation, banks that are still in business. the weak sisters are gone, but the banks and still in business have significantly improved capitalization come a very strong balance sheets. we don't see them as vulnerable come as was the case in 2008-2009. our economy is moving in a more sustainable way. it's interesting, we can look at the china situation and the energy situation and run the math. we can do the arithmetic about decline leads to the following in the economy. what we are seeing is an emotional response. investors always have the idea of what could some of the alternative scenarios be. at the end of the day, what we need to do as professional investors is think about the as opposed tose
betty: ted cruz and donald trump running neck and neck in iowa in the newest bloomberg politics poll. ted cruz is under fire after the new york times revealed he failed to disclose loans totaling up to $1 million used to finance his winning 2012 senate bid. donald trump sat down with with all due respect and took a
friendly tone on the issue. >> the big story in the new york times about ted cruz, his having not reported a loan for his senate campaign from goldman sachs. you concerned about that? donald trump: i know nothing about it. i hear it is a very big thing could i hope you salts it. he is a nice guy. >> you've been in the public spotlight for years and years. he has not. think it is possible there are lots of things about him in the background that now as he becomes a leading candidate should be investigated? well and i canry understand it. he's been very nice to me, very respectful of my ideas and my whole being. i hope that is not a big footnote for him. betty: joining us from washington is the former communications director for the nd.
why did donald trump not go for the jugular? he had a chance. we'vet we saw is what seen a lot from donald trump, great a trolling. he says he is a nice guy, but i hear it is a big thing. that will be asked about in the debate. ted cruz has done an amazing job over the last six months of staying on message. donald trump has knocked him off his message over the last week or two. ted cruz is said donald trump is running -- he should be playing new york new york at his rallies. sachs loans against that. betty: do you think it will be a big thing for ted cruz? >> it will certainly come up. as we are going through the penultimate debate come it takes
ted cruz office message. the number one thing and political communications is a candidate wants to talk about what they want to talk about and they want their opponent to talk about what their opponent doesn't want to talk about. this is obviously what ted cruz does not want to talk about right now. betty: what about hillary clinton? the latest poll out shows she is only leading by 2%. >> she is in a lot of trouble right now. it is surprising to everybody, just as donald trump has surprised a lot of people. i don't think anybody would have noected bernie sanders to be end and in some cases leading. hillary has struggled to find a message. she attacked bernie over guns. we are seeing clinton attacks on bernie sanders not working. she has to be
careful, finding what works but not trying to look desperate. betty: you don't like trump. you will not support him. >> i think he is dangerous for the party and dangerous for the country them up for the world. he's never talk about issues and solutions. it has been a lot of name-calling, a lot of trolling. never how he will defeat isis, andhe will grow drops increase wages and pick schools. i will be voting republican come november. i hope it will be for the republican nominee. betty: you can watch the full interview with donald trump tonight at 5:00 p.m. eastern respect."ith all due ♪ . .
session in the next hour. you guys were down as much as 3%. you have cut those losses in half. mark: we are headed for a lower close following the first today gain. the european close starts right now. betty: we are going to take you from new york to london in the next hour. talk to us about the trade today. down by 1.2 percent. we were 3.3% lower and we are still headed for the lowest close in a year. 18% below the april record and you know